Fortinet Falls Short of Revenue Forecast in Q3

by Warren Seah

Fortinet Inc. experienced another disappointment with its third-quarter report. The cybersecurity company did not meet expectations for its fourth-quarter revenue forecast. The forecast calls for $1.38 billion to $1.44 billion, while analysts were anticipating $1.50 billion.

Fortinet’s management also projected $1.56 billion to $1.70 billion in billings, which is defined as GAAP revenue plus the change in deferred revenue from the beginning to the end of the period, minus any deferred revenue balances. However, the FactSet consensus for that metric was $1.90 billion.

In terms of adjusted earnings per share, Fortinet is looking for 42 cents to 44 cents during the fourth quarter, which aligns with the 42-cent FactSet consensus.

Following the release of this report, shares of Fortinet dropped 17% in after-hours trading on Thursday. This decline comes after a 25% drop in stock value when Fortinet posted its second-quarter results in early August, marking the stock’s worst single-day percentage drop on record.

Despite these setbacks, Fortinet shares have still seen an 18% increase so far this year.

Strong Financial Performance in Q3

During the third quarter, Fortinet generated $1.34 billion in revenue, up from $1.15 billion the previous year. This performance slightly fell short of analysts’ projections, which were set at $1.35 billion.

Billings for the quarter reached $1.49 billion, reflecting a 6% increase from the previous year; however, analysts had anticipated $1.59 billion.

Fortinet’s net income for the third quarter amounted to $322.9 million or 41 cents per share, compared to $231.6 million or 29 cents per share the previous year. The FactSet consensus had forecasted earnings of 36 cents per share.

Following Fortinet’s report, shares of fellow cybersecurity companies, including Palo Alto Networks Inc. and Zscaler Inc., also experienced a decline in after-hours trading on Thursday.

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