Fortinet, Inc.

Fortinet operates in the cybersecurity industry, driving the convergence of networking and security. The company's integrated platform, the Fortinet Security Fabric, spans secure networking, unified Secure Access Service Edge (SASE) and artificial intelligence-driven security operations (SecOps). As of December 31, 2025, Fortinet's end-customers were located in over 100 countries and included enterprises across a wide variety of market verticals, including financial services, retail, healthcare and operational technology market verticals, communication and security service providers, and government organizations. The company believes the demand for secure networking will overtake the pure networking market by 2030.

Fortinet's competitors include Check Point Software Technologies Ltd., Cisco Systems, Inc., CrowdStrike Holdings, Inc., F5 Networks, Inc., Hewlett-Packard Enterprise, Huawei Technologies Co., Ltd., Microsoft Corporation, Netskope Inc., Palo Alto Networks, Inc., SonicWALL, Inc., Sophos Group Plc and Zscaler, Inc. The company believes it competes favorably based on its products' security performance, throughput, reliability, breadth and ability to work together, its ability to add and integrate new networking and security features and its technological expertise. As of December 31, 2025, Fortinet held 1,064 ¹ U.S. patents and a total of 1,405 ² global patents, including 321 ³ AI-related patents, and has been recognized in over 140 ⁴ enterprise analyst reports.

Fortinet generates revenue primarily from sales of its hardware and software products and from FortiGuard and other security subscriptions and FortiCare technical support services. The company primarily sells its products and services through a two-tier distribution model, selling to distributors that sell to resellers and to service providers and managed security service providers, who, in turn, sell products and/or services to end-customers. In certain cases, Fortinet sells directly to large service providers, major systems integrators and large end users. The company's end-customers are located in over 100 countries and include small, medium and large enterprises and government organizations across a wide range of industries.

Fortinet's product revenue is primarily generated from sales of its physical and virtual machine appliances, with the majority of product revenue continuing to be generated by its secure networking product lines. Product revenue also includes revenue from sales of unified SASE and SecOps. Service revenue is generated primarily from FortiGuard and other security subscription services and FortiCare technical support services. Security subscription revenue was $2,633.2 million ⁵ in 2025, and technical support and other revenue was $1,948.0 million ⁶ in 2025. The company's competitive differentiators include FortiOS, FortiASIC, FortiCloud, FortiAI, FortiEndpoint, and OT Security, which provide networking and security professionals with a cyber security platform comprised of over 50 ⁷ products across three solution pillars: Secure Networking, Unified SASE, and AI-Driven SecOps.

In January 2025, Fortinet acquired all of the remaining outstanding Series A Preferred Stock of Linksys for $20.8 million ⁸ in cash, now owning 100% ⁹ of the outstanding equity. In August 2025, the board of directors approved a $1.0 billion ¹⁰ increase in the authorized stock repurchase amount under the Repurchase Program and extended the term to February 28, 2027. In January 2026, the board of directors approved an additional $1.0 billion ¹¹ increase, bringing the aggregate amount authorized to be repurchased to $10.25 billion ¹² of outstanding common stock through February 28, 2027. During 2025, Fortinet purchased certain real estate properties in California, United States; Burnaby, Canada; Frankfurt, Germany; Almere, the Netherlands; and London, the United Kingdom, totaling $255.8 million ¹³.

For the year ended December 31, 2025, Fortinet generated total revenue of $6,799.6 million ¹⁴ and net income of $1,853.4 million ¹⁵. Total revenue increased 14% ¹⁶ compared to $5,955.8 million ¹⁷ in 2024. Product revenue was $2,218.4 million ¹⁸ in 2025, an increase of 16% ¹⁹ compared to $1,908.7 million ²⁰ in 2024. Service revenue was $4,581.2 million ²¹ in 2025, an increase of 13% ²² compared to $4,047.1 million ²³ in 2024. Total gross margin was 80.5% ²⁴ in 2025, remaining comparatively flat compared to 80.6% ²⁵ in 2024. Operating income was $2,084.7 million ²⁶ in 2025, an increase of 16% ²⁷ compared to $1,803.4 million ²⁸ in 2024. Cash flows from operating activities were $2,590.6 million ²⁹ in 2025, an increase of $332.5 million ³⁰, or 15% ³¹, compared to 2024.

Fortinet's growth strategy includes capitalizing on the convergence of networking and security, vendor consolidation of various cyber security solutions, SD-WAN, infrastructure security, security operations, SASE and other cloud security solutions, endpoint protection, IoT and OT security opportunities and product refresh cycles. The company anticipates a significant firewall refresh and upgrade cycle in the coming years, presenting a strategic opportunity to expand its footprint within existing customer environments. Fortinet is also focused on increasing sales to large- and medium-sized businesses, service providers and government organizations, though such sales involve unique risks including longer sales cycles, increased competition, and more stringent support requirements.

Fortinet is investing in its unified SASE and SecOps offerings, which are expected to drive growth. The company's global and scalable cloud network includes over 190 ³² PoPs to deliver a seamless secure access experience. Fortinet believes it is well positioned to support customers expanding from SD-WAN to a single-vendor SASE platform. The company also offers a full suite of integrated cloud security solutions that enable customers to secure their applications from code to cloud, including application security, cloud network security, cloud-native application protection and code security. Additionally, Fortinet continues to develop all the core SASE capabilities in a single operating system, FortiOS, including Next-Gen Firewall, SD-WAN, ZTNA, secure web gateway, cloud access security broker and DLP.

For the full year 2026, Fortinet expects its operating margin to decrease compared to 2025 as it continues to make strategic investments. Total revenue is expected to increase in 2026 compared to the prior year; however, expenses are expected to outpace revenue growth, primarily reflecting investments in sales and marketing headcount, product development and the continued capital expenditures in data centers and real estate. The company's service gross margin is expected to remain relatively consistent for full year 2026 compared to full year 2025, despite continued expansion of its data center footprint and colocation and cloud hosting capacity. Product gross margin may decline if pricing actions do not fully offset rising input costs.

Fortinet estimates 2026 capital expenditures to be between approximately $350 million ³³ and $450 million ³⁴. The company expects to continue to increase its data center, PoP, office and warehouse capacity to support growth and the expansion of existing services or introduction of new services. Headcount increased 7% ³⁵ to 15,109 ³⁶ employees as of December 31, 2025, up from 14,138 ³⁷ as of December 31, 2024. Fortinet expects personnel costs to continue to increase in absolute dollars as it expands its workforce.

Research and development expenses were $815.5 million ³⁸ in 2025, an increase of 14% ³⁹ compared to $716.8 million ⁴⁰ in 2024. Fortinet expects research and development expenses to increase in absolute dollars in 2026 as it continues to invest in its technology and talent. Sales and marketing expenses were $2,347.5 million ⁴¹ in 2025, an increase of 15% ⁴² compared to $2,044.8 million ⁴³ in 2024. Fortinet expects sales and marketing expenses to increase in absolute dollars in 2026 and anticipates that these growth investments may drive sales and marketing expenses to increase at a rate faster than revenue. General and administrative expenses were $233.4 million ⁴⁴ in 2025, a decrease of 2% ⁴⁵ compared to $237.8 million ⁴⁶ in 2024. Fortinet expects general and administrative expenses to increase in absolute dollars in 2026.

Fortinet faces headwinds from adverse economic conditions, including a possible economic downturn or recession, and possible impacts of inflation or stagflation, tariffs, trade policies or other trade disruptions, changing interest rates, changes in government spending or regulation or reduced information technology spending, including firewall spending. The company is also susceptible to supply chain constraints, supply shortages and disruptions, long or less predictable lead times for components and finished goods and supply changes because some of the key components in its products come from limited sources of supply. As a result of the rapid global build-out of AI infrastructure, there is currently a global shortage of memory chips, which are a component in certain of Fortinet's products, leading to constraints on availability.

Fortinet generates a majority of billings, revenue and cash flow from sales outside of the United States, exposing it to risks associated with international operations, including fluctuations in foreign currency exchange rates, political instability, changes in trade agreements, tariffs and conflicts such as the war in Ukraine, tensions between China and Taiwan, conflicts in the Middle East. Approximately 87% ⁴⁷ of Fortinet's hardware is manufactured in Taiwan, and any increase in tensions between China and Taiwan could adversely affect its manufacturing operations. The company also faces intense competition in its market and may not maintain or improve its competitive position.

Fortinet's operating results are likely to vary significantly and be unpredictable due to factors including adverse economic conditions, supply chain constraints, and the timing of channel partner and end-customer orders. The company relies on third-party channel partners for substantially all of its revenue, and a small number of distributors represents a large percentage of its revenue and accounts receivable; one distributor accounted for 32% ⁴⁸ of total net accounts receivable as of December 31, 2025. Fortinet faces intense competition from companies such as Check Point, Cisco, CrowdStrike, Palo Alto Networks, and Zscaler, and may not maintain or improve its competitive position. The company is susceptible to defects or vulnerabilities, including critical vulnerabilities, in its products or services, and any actual or perceived defects could harm its operational results and reputation. Fortinet's internal enterprise IT networks, operational networks, and cloud stacks hosted in its data centers or PoPs are subject to compromise, which could harm public perception of its products and services and lead to liability. The company has incurred indebtedness of $996.3 million ⁴⁹ as of December 31, 2025, which may adversely affect its financial condition and future financial results.

Management's message emphasizes Fortinet's position as a leader in cybersecurity, driving the convergence of networking and security. The company's mission is to secure people, devices and data everywhere. Key strategic priorities for the period ahead include capitalizing on the anticipated significant firewall refresh and upgrade cycle, expanding the company's footprint within existing customer environments by leveraging its integrated security and networking capabilities, and driving opportunities across its broader portfolio including LAN, SD-WAN, SASE, CNAPP and SecOps solutions. Management also highlights the company's commitment to addressing the cybersecurity skills shortage through training and certification programs, with the Fortinet Training Institute having issued approximately two million ⁵⁰ certifications to date.