Fortinet Reports First Quarter 2025 Financial Results

Total revenue of US$1.54 billion, up 14 per cent year over year | Product revenue of US$459 million, up 12 per cent year over year | Billings of US$1.60 billion, up 14 per cent year over year | Unified secure access service edge (SASE) annual recurring revenue (ARR) (1) up 26 per cent and security operations ARR (1) up 30 per cent, year over year | Record first quarter generally accepted accounting principles (GAAP) operating margin of 29 per cent | Record first quarter non-GAAP operating margin of 34 per cent | Record cash flow from operations of US$863 million | Record free cash flow of US$783 million.

Posted: Friday, May 09

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Fortinet Reports First Quarter 2025 Financial Results

Fortinet Reports First Quarter 2025 Financial Results

May 08, 2025 – Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, has announced financial results for the first quarter ended March 31, 2025.

Ken Xie, founder, chairman, and chief executive officer, Fortinet, said, “We are pleased to report another strong quarter as non-GAAP operating margin increased 570 basis points year over year to a first quarter record of 34 per cent, while billings grew 14 per cent year over year.

“We continue to accelerate our growth strategy by investing in the rapidly expanding Unified SASE and security operations markets, while strengthening our leadership in secure networking. Leveraging our deep expertise in networking and security convergence, a strong track record of artificial intelligence (AI)-driven innovation, and seamless product development and integration through our FortiOS operating system, we have established ourselves as the leader in organic innovation and will continue setting the industry standard in cybersecurity.”

Financial highlights for the first quarter of 2025

Revenue: Total revenue was US$1.54 billion for the first quarter of 2025, an increase of 13.8 per cent compared to US$1.35 billion for the same quarter of 2024.
Product revenue: Product revenue was US$459.1 million for the first quarter of 2025, an increase of 12.3 per cent compared to US$408.9 million for the same quarter of 2024.
Service revenue: Service revenue was US$1.08 billion for the first quarter of 2025, an increase of 14.4 per cent compared to US$944.4 million for the same quarter of 2024.
Billings: Total billings were US$1.60 billion for the first quarter of 2025, an increase of 13.5 per cent compared to US$1.41 billion for the same quarter of 2024.
Remaining performance obligations: Remaining performance obligations were US$6.49 billion as of March 31, 2025, an increase of 11.7 per cent compared to US$5.81 billion as of March 31, 2024. We expect to recognise approximately US$3.38 billion as revenue over the next 12 months, an increase of 15.4 per cent compared to US$2.93 billion as of March 31, 2024.
Unified SASE ARR (1): Unified SASE ARR was US$1.15 billion as of March 31, 2025, an increase of 25.7 per cent compared to US$914.7 million as of March 31, 2024.
Security operations ARR (1): Security operations ARR was US$434.5 million as of March 31, 2025, an increase of 30.3 per cent compared to US$333.5 million as of March 31, 2024.
GAAP operating income and margin: GAAP operating income was US$453.8 million for the first quarter of 2025, representing a GAAP operating margin of 29.5 per cent. GAAP operating income was US$321.2 million for the same quarter of 2024, representing a GAAP operating margin of 23.7 per cent.
Non-GAAP operating income and margin: Non-GAAP operating income was US$526.2 million for the first quarter of 2025, representing a non-GAAP operating margin of 34.2 per cent. Non-GAAP operating income was US$386.1 million for the same quarter of 2024, representing a non-GAAP operating margin of 28.5 per cent.
GAAP net income and diluted net income per share: GAAP net income was US$433.4 million for the first quarter of 2025, compared to GAAP net income of US$299.3 million for the same quarter of 2024. GAAP diluted net income per share was US$0.56 for the first quarter of 2025, based on 776.8 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of US$0.39 for the same quarter of 2024, based on 770.5 million diluted weighted-average shares outstanding.
Non-GAAP net income and diluted net income per share: Non-GAAP net income was US$452.3 million for the first quarter of 2025, compared to non-GAAP net income of US$333.9 million for the same quarter of 2024. Non-GAAP diluted net income per share was US$0.58 for the first quarter of 2025, based on 776.8 million diluted weighted-average shares outstanding, compared to US$0.43 for the same quarter of 2024, based on 770.5 million diluted weighted-average shares outstanding.
Cash flow: Cash flow from operations was US$863.3 million for the first quarter of 2025, compared to US$830.4 million for the same quarter of 2024. Cash flow from operations for the first quarter of 2025 includes US$14.0 million proceeds from an intellectual property matter.
Free cash flow: Free cash flow was US$782.8 million for the first quarter of 2025, compared to US$608.5 million for the same quarter of 2024.

Guidance

For the second quarter of 2025, Fortinet currently expects:

Revenue in the range of US$1.590 billion to US$1.650 billion.
Billings in the range of US$1.685 billion to US$1.765 billion.
Non-GAAP gross margin in the range of 80.0 per cent to 81.0 per cent.
Non-GAAP operating margin in the range of 31.5 per cent to 32.5 per cent.
Diluted non-GAAP net income per share in the range of US$0.58 to US$0.60, assuming a non-GAAP effective tax rate of 18 per cent. This assumes a diluted share count of 773 million to 777 million.

For the fiscal year 2025, Fortinet currently expects:

Revenue in the range of US$6.650 billion to US$6.850 billion.
Service revenue in the range of US$4.575 billion to US$4.725 billion.
Billings in the range of US$7.200 billion to US$7.400 billion.
Non-GAAP gross margin in the range of 79.0 per cent to 81.0 per cent.
Non-GAAP operating margin in the range of 31.5 per cent to 33.5 per cent.
Diluted non-GAAP net income per share in the range of US$2.43 to US$2.49, assuming a non-GAAP effective tax rate of 18 per cent. This assumes a diluted share count of 769 million to 779 million.

These statements are forward looking and actual results may differ materially.

Our guidance with respect to non-GAAP financial measures excludes stock-based compensation, amortisation of acquired intangible assets, gain on intellectual property matters, gain on bargain purchase related to acquisition, gain from an equity method investment and a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We have not reconciled our guidance with respect to non-GAAP financial measures to the corresponding GAAP measures because certain items that impact these measures are uncertain or out of our control, or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is not available without unreasonable effort.

(1) ARR is defined as the annualised value of renewable/recurring customer agreements as of the measurement date, assuming any contract that expires during the next 12 months is renewed at its existing value.

About Fortinet

Fortinet (Nasdaq: FTNT) is a driving force in the evolution of cybersecurity and the convergence of networking and security. Our mission is to secure people, devices and data everywhere, and today we deliver cybersecurity everywhere our customers need it with the largest integrated portfolio of over 50 enterprise-grade products. Well over half a million customers trust Fortinet’s solutions, which are among the most deployed, most patented and most validated in the industry. The Fortinet Training Institute, one of the largest and broadest training programs in the industry, is dedicated to making cybersecurity training and new career opportunities available to everyone. Collaboration with esteemed organisations from both the public and private sectors, including Computer Emergency Response Teams (“CERTs”), government entities, and academia, is a fundamental aspect of Fortinet’s commitment to enhance cyber resilience globally. FortiGuard Labs, Fortinet’s elite threat intelligence and research organisation, develops and utilises leading-edge machine learning and AI technologies to provide customers with timely and consistently top-rated protection and actionable threat intelligence. Learn more at https://www.fortinet.com, the Fortinet blog, and FortiGuard Labs.

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