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Fortinet's Q3 EPS rose 23% year over year to 91 cents, while revenues climbed 20.5% to $2.08 billion.
Billings grew 29.2% to $2.34 billion, driven by SASE Firewall, OT and AI security demand.
Fortinet raised 2026 revenues, billings and EPS forecasts, with non-GAAP EPS now projected at $3.54-$3.58.
Fortinet (FTNT - Free Report) reported third-quarter 2026 non-GAAP earnings per share (EPS) of 91 cents, which beat the Zacks Consensus Estimate by 7.06% and rose 23% year over year.
Total revenues of $2.08 billion beat the consensus mark by 0.79% and increased 20.5% year over year. Demand was broad across customer segments, industry verticals and geographies.
Customers upgraded their network security infrastructure for the AI era. The SASE Firewall pillar kept up its momentum, and operational technology (OT) demand stayed strong. The U.S. large enterprise business contributed heavily, and the total value of deals greater than $1 million grew 51% year over year.
Total deferred revenues (current plus long-term portions combined) came in at $7.93 billion, up 19% year over year. The current portion was $3.96 billion as of Sept. 30, 2026, up 14.5%, its highest growth rate in five quarters.
Total billings increased 29.2% year over year to $2.34 billion, near the high end of the guided range of $2.25-$2.35 billion. SASE Firewall billings grew 31%, OT billings grew nearly 40%, and AI-driven security operations billings grew 15%. Management noted that price increases contributed roughly 10 percentage points to year-over-year billings growth, though pricing has stabilized compared with the first half of the year.
Product revenues increased 36.8% year over year to $765 million, representing 36.8% of total revenues. Customers continued to shift toward higher-performing FortiGate models, which lifted average selling prices. Enterprises also bought FortiGates to secure AI data center and OT environments. Product demand held up even as lead times for certain components lengthened. During the quarter, an AI company developing frontier models chose Fortinet for a seven-figure expansion, deploying its high-end data center firewalls across five additional data centers.
Service revenues of $1.31 billion grew 12.7% year over year, accounting for 63.2% of total revenues. Service revenue growth was held back by new large enterprise customers whose service activations ramped up over time. Large expansion deals that folded existing service arrangements into enterprise agreements also weighed on growth. Management reiterated that the first quarter of 2026 marked the trough for service revenue growth. It pointed to 26% service billings growth as a leading indicator and expects 2027 service revenue growth to be higher than in 2026.
Margins of FTNT
Total GAAP gross margin was 79%, contracting 180 basis points (bps) year over year. Non-GAAP gross margin came in at 79.6%, contracting 200 bps year over year but within the guided range of 79-81%. The decline reflected the continued high mix of product revenues and rising component costs. In the first half, lower-cost inventory on hand had cushioned costs, and that benefit faded in the third quarter. Improving service gross margin partially offset the pressure.
GAAP operating margin expanded 220 bps year over year to 33.9% in the third quarter. On a non-GAAP basis, operating margin expanded 130 bps to a third-quarter record of 38.2%. That beat the high end of the 35-37% guidance, reflecting stronger-than-expected revenue growth and disciplined cost management.
FTNT’s Balance Sheet & Cash Flow
Fortinet exited the third quarter of 2026 with cash and cash equivalents and short-term investments of $4.80 billion, up from $4.07 billion at the end of the second quarter. Inventory rose to $591.2 million from $399.5 million at the end of 2025 as the company sourced components amid longer lead times.
Cash flow from operations was $946 million for the third quarter, up 44.4% from $655.2 million in the prior-year quarter. Free cash flow of $864.8 million grew 52.4% year over year from $567.5 million, representing a free cash flow margin of 41.6%. Adjusted free cash flow reached $912.2 million, up 41.2% year over year, representing a margin of 43.9%. Year-to-date free cash flow grew 74% to $2.84 billion.
Fortinet’s board approved an increase of about $1.2 billion to the share repurchase program, lifting the remaining authorization to $2 billion. Year-to-date repurchases stood at $972.8 million at the end of the third quarter, essentially unchanged from the first-half total, indicating no buybacks in the third quarter.
FTNT’s Key Developments
Fortinet launched the FortiGuard Inline AI Security Service, which delivers AI-specific inspection and guardrails to FortiGate customers through a cloud-delivered service. It also introduced the FortiLink SASE service, which lets FortiAP and FortiSwitch devices connect to FortiSASE. That allows organizations to secure small branches and remote sites without a dedicated on-site firewall.
NVIDIA selected Fortinet as a top OpenShell Reference Architecture Partner to secure AI. Fortinet and Oracle announced a collaboration combining OCI Enterprise AI with FortiAIGate to protect and govern AI applications and agents. Microsoft also selected Fortinet to join its Sovereign Partner Ecosystem to deliver sovereign AI security solutions to highly regulated industries.
Fortinet was named a Leader in the 2026 Gartner Magic Quadrant for Hybrid Mesh Firewall and was positioned highest for Ability to Execute for the second consecutive year.
Notable wins in the quarter included an eight-figure competitive OT win with a large transportation company. Fortinet also won an eight-figure deal to standardize and secure 1,500 store locations for a large U.S. retailer.
FTNT’s Q4 & 2026 Guidance
Fortinet expects fourth-quarter revenues in the range of $2.155-$2.245 billion, which implies 15% year-over-year growth at the midpoint. Billings are estimated in the range of $2.775-$2.925 billion, implying 20% growth at the midpoint. The non-GAAP gross margin is expected in the range of 78-80%, while the non-GAAP operating margin is anticipated between 35.5% and 37.5%. Non-GAAP EPS is projected in the range of 93-95 cents.
For 2026, FTNT raised its billings and revenue outlook for the third time this year. It now predicts revenues of $8.125-$8.215 billion (up from the prior $8.02-$8.18 billion), implying 20% growth at the midpoint. Billings are expected in the range of $9.568-$9.718 billion (up from the prior $9.35-$9.55 billion), implying 28% growth at the midpoint. Service revenues are now projected at $5.15-$5.17 billion, trimmed from the prior $5.18-$5.22 billion. The non-GAAP gross margin is expected at 79.7-80.3% (prior: 79-81%), and the operating margin is projected at 36.5-37.5% (prior: 35-37%). Non-GAAP EPS is anticipated to be between $3.54 and $3.58 (up from the prior $3.41-$3.47).
FTNT’s Zacks Rank and Other Stocks to Consider
Currently, Fortinet carries a Zacks Rank #2 (Buy).
Shares of Analog Devices have rallied 54.4% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $13.00 per share, up by a penny over the past seven days, indicating an increase of 66.9% year over year.
Shares of Applied Materials have jumped 54.5% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.79 per share, unchanged over the past 30 days, indicating a rise of 35.8% year over year.
Cisco Systems shares have surged 45.3% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is pegged at $5.11 per share, unchanged over the past 30 days, indicating an increase of 18% year over year.
View the Zacks #1 Rank List
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Fortinet Q3 Earnings & Revenues Beat Estimates, Increase Y/Y
Key Takeaways
Fortinet (FTNT - Free Report) reported third-quarter 2026 non-GAAP earnings per share (EPS) of 91 cents, which beat the Zacks Consensus Estimate by 7.06% and rose 23% year over year.
Total revenues of $2.08 billion beat the consensus mark by 0.79% and increased 20.5% year over year. Demand was broad across customer segments, industry verticals and geographies.
Customers upgraded their network security infrastructure for the AI era. The SASE Firewall pillar kept up its momentum, and operational technology (OT) demand stayed strong. The U.S. large enterprise business contributed heavily, and the total value of deals greater than $1 million grew 51% year over year.
Total deferred revenues (current plus long-term portions combined) came in at $7.93 billion, up 19% year over year. The current portion was $3.96 billion as of Sept. 30, 2026, up 14.5%, its highest growth rate in five quarters.
Total billings increased 29.2% year over year to $2.34 billion, near the high end of the guided range of $2.25-$2.35 billion. SASE Firewall billings grew 31%, OT billings grew nearly 40%, and AI-driven security operations billings grew 15%. Management noted that price increases contributed roughly 10 percentage points to year-over-year billings growth, though pricing has stabilized compared with the first half of the year.
Fortinet, Inc. Price, Consensus and EPS Surprise
Fortinet, Inc. price-consensus-eps-surprise-chart | Fortinet, Inc. Quote
FTNT’s Q3 in Detail
Product revenues increased 36.8% year over year to $765 million, representing 36.8% of total revenues. Customers continued to shift toward higher-performing FortiGate models, which lifted average selling prices. Enterprises also bought FortiGates to secure AI data center and OT environments. Product demand held up even as lead times for certain components lengthened. During the quarter, an AI company developing frontier models chose Fortinet for a seven-figure expansion, deploying its high-end data center firewalls across five additional data centers.
Service revenues of $1.31 billion grew 12.7% year over year, accounting for 63.2% of total revenues. Service revenue growth was held back by new large enterprise customers whose service activations ramped up over time. Large expansion deals that folded existing service arrangements into enterprise agreements also weighed on growth. Management reiterated that the first quarter of 2026 marked the trough for service revenue growth. It pointed to 26% service billings growth as a leading indicator and expects 2027 service revenue growth to be higher than in 2026.
Margins of FTNT
Total GAAP gross margin was 79%, contracting 180 basis points (bps) year over year. Non-GAAP gross margin came in at 79.6%, contracting 200 bps year over year but within the guided range of 79-81%. The decline reflected the continued high mix of product revenues and rising component costs. In the first half, lower-cost inventory on hand had cushioned costs, and that benefit faded in the third quarter. Improving service gross margin partially offset the pressure.
GAAP operating margin expanded 220 bps year over year to 33.9% in the third quarter. On a non-GAAP basis, operating margin expanded 130 bps to a third-quarter record of 38.2%. That beat the high end of the 35-37% guidance, reflecting stronger-than-expected revenue growth and disciplined cost management.
FTNT’s Balance Sheet & Cash Flow
Fortinet exited the third quarter of 2026 with cash and cash equivalents and short-term investments of $4.80 billion, up from $4.07 billion at the end of the second quarter. Inventory rose to $591.2 million from $399.5 million at the end of 2025 as the company sourced components amid longer lead times.
Cash flow from operations was $946 million for the third quarter, up 44.4% from $655.2 million in the prior-year quarter. Free cash flow of $864.8 million grew 52.4% year over year from $567.5 million, representing a free cash flow margin of 41.6%. Adjusted free cash flow reached $912.2 million, up 41.2% year over year, representing a margin of 43.9%. Year-to-date free cash flow grew 74% to $2.84 billion.
Fortinet’s board approved an increase of about $1.2 billion to the share repurchase program, lifting the remaining authorization to $2 billion. Year-to-date repurchases stood at $972.8 million at the end of the third quarter, essentially unchanged from the first-half total, indicating no buybacks in the third quarter.
FTNT’s Key Developments
Fortinet launched the FortiGuard Inline AI Security Service, which delivers AI-specific inspection and guardrails to FortiGate customers through a cloud-delivered service. It also introduced the FortiLink SASE service, which lets FortiAP and FortiSwitch devices connect to FortiSASE. That allows organizations to secure small branches and remote sites without a dedicated on-site firewall.
NVIDIA selected Fortinet as a top OpenShell Reference Architecture Partner to secure AI. Fortinet and Oracle announced a collaboration combining OCI Enterprise AI with FortiAIGate to protect and govern AI applications and agents. Microsoft also selected Fortinet to join its Sovereign Partner Ecosystem to deliver sovereign AI security solutions to highly regulated industries.
Fortinet was named a Leader in the 2026 Gartner Magic Quadrant for Hybrid Mesh Firewall and was positioned highest for Ability to Execute for the second consecutive year.
Notable wins in the quarter included an eight-figure competitive OT win with a large transportation company. Fortinet also won an eight-figure deal to standardize and secure 1,500 store locations for a large U.S. retailer.
FTNT’s Q4 & 2026 Guidance
Fortinet expects fourth-quarter revenues in the range of $2.155-$2.245 billion, which implies 15% year-over-year growth at the midpoint. Billings are estimated in the range of $2.775-$2.925 billion, implying 20% growth at the midpoint. The non-GAAP gross margin is expected in the range of 78-80%, while the non-GAAP operating margin is anticipated between 35.5% and 37.5%. Non-GAAP EPS is projected in the range of 93-95 cents.
For 2026, FTNT raised its billings and revenue outlook for the third time this year. It now predicts revenues of $8.125-$8.215 billion (up from the prior $8.02-$8.18 billion), implying 20% growth at the midpoint. Billings are expected in the range of $9.568-$9.718 billion (up from the prior $9.35-$9.55 billion), implying 28% growth at the midpoint. Service revenues are now projected at $5.15-$5.17 billion, trimmed from the prior $5.18-$5.22 billion. The non-GAAP gross margin is expected at 79.7-80.3% (prior: 79-81%), and the operating margin is projected at 36.5-37.5% (prior: 35-37%). Non-GAAP EPS is anticipated to be between $3.54 and $3.58 (up from the prior $3.41-$3.47).
FTNT’s Zacks Rank and Other Stocks to Consider
Currently, Fortinet carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices (ADI - Free Report) , Applied Materials (AMAT - Free Report) and Cisco Systems (CSCO - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have rallied 54.4% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $13.00 per share, up by a penny over the past seven days, indicating an increase of 66.9% year over year.
Shares of Applied Materials have jumped 54.5% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.79 per share, unchanged over the past 30 days, indicating a rise of 35.8% year over year.
Cisco Systems shares have surged 45.3% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is pegged at $5.11 per share, unchanged over the past 30 days, indicating an increase of 18% year over year.