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Why Is Fortinet (FTNT) Up 12% Since Last Earnings Report?
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It has been about a month since the last earnings report for Fortinet (FTNT - Free Report) . Shares have added about 12% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Fortinet due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Fortinet, Inc. before we dive into how investors and analysts have reacted as of late.
Fortinet reported second-quarter 2026 non-GAAP earnings per share (EPS) of 90 cents, beating the Zacks Consensus Estimate by 20% and rising 40.6% year over year.
Total revenues of $2.05 billion beat the consensus mark by 9.1% and increased 25.6% year over year, driven by strong demand across customer segments, industry verticals, and geographies. Growth was fueled by accelerating investment in securing AI infrastructure, the convergence of firewall, SD-WAN and SASE technologies into the company's newly defined SASE Firewall platform, and continued strength in operational technology (OT) security amid rising regulatory and critical infrastructure requirements.
Total deferred revenues (current plus long-term portions combined) came in at $7.68 billion, while the current portion was $3.84 billion as of June 30, 2026.
Total billings increased 33.4% year over year to $2.37 billion, led by 34% growth in secure networking, more than 55% growth in OT, 35% growth in Unified SASE and 25% growth in AI-driven security operations.
FTNT's Q2 in Detail
Segment-wise, Product revenues increased 51.9% year over year to $773 million, representing 37.7% of total revenues. The acceleration was driven by strong FortiGate unit growth and higher average selling prices as customers shifted toward higher-performing models, along with customer investments to secure AI workloads and support AI data center buildouts.
Service revenues of $1.27 billion grew 13.7% year over year, accounting for 62.3% of total revenues, with growth improving from the prior quarter. The first quarter of 2026 marked the trough for service revenue growth, with a positive trajectory expected going forward as accelerating product revenue feeds through to attached services. Service billings accelerated to 26% growth and total deferred revenues grew 17%. FortiSASE adoption within the large enterprise installed base rose to 90%, with FortiSASE billings growing more than 100% year over year, benefiting from expansion sales, competitive replacements and new large enterprise wins.
Margins of FTNT
Total GAAP gross margin was 80.2%, contracting 50 basis points (bps) year over year. Non-GAAP gross margin came in at 80.9%, contracting 70 bps year over year but exceeding the high end of guidance.
GAAP operating margin expanded 560 bps year over year to 33.7% in the second quarter. On a non-GAAP basis, operating margin expanded 490 bps to a second quarter record of 38%, reflecting stronger than expected revenue growth, disciplined cost management and growing efficiencies from internal AI initiatives.
FTNT's Balance Sheet & Cash Flow
Fortinet exited the second quarter of 2026 with cash and cash equivalents and short-term investments of $4.07 billion, up from $3.29 billion reported at the end of the first quarter of 2026.
Cash flow from operations was $1.04 billion for the second quarter of 2026, up from $451.9 million in the prior year quarter, an increase of 130.9%. Free cash flow of $965.6 million grew 239.9% year over year from $284.1 million in the prior year quarter, reflecting improved linearity, higher billings and strong working capital discipline, representing a free cash flow margin of 47.2%. Adjusted free cash flow reached $995.9 million, up 132.7% year over year, representing a margin of 48.6%.
The company repurchased 1.9 million shares of common stock for $146 million during the second quarter, bringing year-to-date repurchases to 12.5 million shares for $973 million, at an average price of approximately $78 per share. The remaining share repurchase authorization stands at approximately $766 million.
FTNT's Q3 & 2026 Guidance
Fortinet expects third-quarter revenues in the range of $2.01-$2.10 billion. Billings are estimated in the range of $2.25-$2.35 billion. The non-GAAP gross margin is expected in the range of 79-81%, while the non-GAAP operating margin is anticipated between 35-37%. Non-GAAP EPS is projected in the range of 83-87 cents.
For 2026, FTNT raised its outlook and now predicts revenues in the range of $8.02-$8.18 billion (up from prior $7.71-$7.87 billion). Service revenues are projected in the range of $5.18 to $5.22 billion. Billings are expected in the range of $9.35-$9.55 billion (up from prior $8.8 to $9.1 billion). The non-GAAP gross margin is expected in the range of 79-81% and the operating margin is projected in the band of 35-37%. Non-GAAP EPS is anticipated to be between $3.41 and $3.47 (up from prior $3.10-$3.16).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 13.51% due to these changes.
VGM Scores
Currently, Fortinet has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fortinet has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Fortinet belongs to the Zacks Security industry. Another stock from the same industry, Varonis Systems (VRNS - Free Report) , has gained 12.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Varonis reported revenues of $180.02 million in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $0.04 for the same period compares with $0.03 a year ago.
For the current quarter, Varonis is expected to post earnings of $0.02 per share, indicating a change of -66.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Varonis. Also, the stock has a VGM Score of D.
View the Zacks #1 Rank List
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Why Is Fortinet (FTNT) Up 12% Since Last Earnings Report?
It has been about a month since the last earnings report for Fortinet (FTNT - Free Report) . Shares have added about 12% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Fortinet due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Fortinet, Inc. before we dive into how investors and analysts have reacted as of late.
Fortinet Q2 Earnings & Revenues Beat Estimates, Increase Y/Y
Fortinet reported second-quarter 2026 non-GAAP earnings per share (EPS) of 90 cents, beating the Zacks Consensus Estimate by 20% and rising 40.6% year over year.
Total revenues of $2.05 billion beat the consensus mark by 9.1% and increased 25.6% year over year, driven by strong demand across customer segments, industry verticals, and geographies. Growth was fueled by accelerating investment in securing AI infrastructure, the convergence of firewall, SD-WAN and SASE technologies into the company's newly defined SASE Firewall platform, and continued strength in operational technology (OT) security amid rising regulatory and critical infrastructure requirements.
Total deferred revenues (current plus long-term portions combined) came in at $7.68 billion, while the current portion was $3.84 billion as of June 30, 2026.
Total billings increased 33.4% year over year to $2.37 billion, led by 34% growth in secure networking, more than 55% growth in OT, 35% growth in Unified SASE and 25% growth in AI-driven security operations.
FTNT's Q2 in Detail
Segment-wise, Product revenues increased 51.9% year over year to $773 million, representing 37.7% of total revenues. The acceleration was driven by strong FortiGate unit growth and higher average selling prices as customers shifted toward higher-performing models, along with customer investments to secure AI workloads and support AI data center buildouts.
Service revenues of $1.27 billion grew 13.7% year over year, accounting for 62.3% of total revenues, with growth improving from the prior quarter. The first quarter of 2026 marked the trough for service revenue growth, with a positive trajectory expected going forward as accelerating product revenue feeds through to attached services. Service billings accelerated to 26% growth and total deferred revenues grew 17%. FortiSASE adoption within the large enterprise installed base rose to 90%, with FortiSASE billings growing more than 100% year over year, benefiting from expansion sales, competitive replacements and new large enterprise wins.
Margins of FTNT
Total GAAP gross margin was 80.2%, contracting 50 basis points (bps) year over year. Non-GAAP gross margin came in at 80.9%, contracting 70 bps year over year but exceeding the high end of guidance.
GAAP operating margin expanded 560 bps year over year to 33.7% in the second quarter. On a non-GAAP basis, operating margin expanded 490 bps to a second quarter record of 38%, reflecting stronger than expected revenue growth, disciplined cost management and growing efficiencies from internal AI initiatives.
FTNT's Balance Sheet & Cash Flow
Fortinet exited the second quarter of 2026 with cash and cash equivalents and short-term investments of $4.07 billion, up from $3.29 billion reported at the end of the first quarter of 2026.
Cash flow from operations was $1.04 billion for the second quarter of 2026, up from $451.9 million in the prior year quarter, an increase of 130.9%. Free cash flow of $965.6 million grew 239.9% year over year from $284.1 million in the prior year quarter, reflecting improved linearity, higher billings and strong working capital discipline, representing a free cash flow margin of 47.2%. Adjusted free cash flow reached $995.9 million, up 132.7% year over year, representing a margin of 48.6%.
The company repurchased 1.9 million shares of common stock for $146 million during the second quarter, bringing year-to-date repurchases to 12.5 million shares for $973 million, at an average price of approximately $78 per share. The remaining share repurchase authorization stands at approximately $766 million.
FTNT's Q3 & 2026 Guidance
Fortinet expects third-quarter revenues in the range of $2.01-$2.10 billion. Billings are estimated in the range of $2.25-$2.35 billion. The non-GAAP gross margin is expected in the range of 79-81%, while the non-GAAP operating margin is anticipated between 35-37%. Non-GAAP EPS is projected in the range of 83-87 cents.
For 2026, FTNT raised its outlook and now predicts revenues in the range of $8.02-$8.18 billion (up from prior $7.71-$7.87 billion). Service revenues are projected in the range of $5.18 to $5.22 billion. Billings are expected in the range of $9.35-$9.55 billion (up from prior $8.8 to $9.1 billion). The non-GAAP gross margin is expected in the range of 79-81% and the operating margin is projected in the band of 35-37%. Non-GAAP EPS is anticipated to be between $3.41 and $3.47 (up from prior $3.10-$3.16).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 13.51% due to these changes.
VGM Scores
Currently, Fortinet has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fortinet has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Fortinet belongs to the Zacks Security industry. Another stock from the same industry, Varonis Systems (VRNS - Free Report) , has gained 12.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Varonis reported revenues of $180.02 million in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $0.04 for the same period compares with $0.03 a year ago.
For the current quarter, Varonis is expected to post earnings of $0.02 per share, indicating a change of -66.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Varonis. Also, the stock has a VGM Score of D.