Summary
Fortinet closed fiscal 2024 with fourth quarter total revenue of $1.66 billion, up 17.3% year over year, and full year revenue of $5.96 billion, up 12.3%. Gross profit was $1.35 billion in the quarter, up 22.4%, and $4.80 billion for the full year, up 18.0%. The company reported fourth quarter gross margin of 81.1%, up 3.4 percentage points year over year, and full year gross margin of 80.6%, up 3.9 percentage points. Operating income reached $574.1 million in the quarter, up 49.0%, and $1.80 billion for the full year, up 45.3%. Operating margin was 34.6% in the quarter, up 7.3 percentage points, and 30.3% for the full year, up 6.9 percentage points. Net income was $526.2 million in the quarter, up 69.3%, and $1.75 billion for the full year, up 52.0%. Full year diluted EPS was $2.26, up 54.8%.
The cash and backlog picture was similarly strong. Operating cash flow was $477.6 million in the quarter, up 149.1%, and $2.26 billion for the full year, up 16.7%. Capital expenditures for the full year were $378.9 million, up 85.6%. Short-term deferred revenue was $3.28 billion, up 15.0% year over year, and remaining performance obligations were $6.42 billion, up 11.7%. On a non-GAAP basis, free cash flow was $380.0 million in the quarter and $1.88 billion for the full year. Billings were $2.00 billion in the quarter, up 7.4%, and $6.53 billion for the full year, up 2.1%. Unified SASE ARR reached $1.12 billion, up 27.9%, while Security Operations ARR reached $422.4 million, up 32.2%. Non-GAAP operating margin was 39.2% in the quarter, compared with 32.0% a year earlier, and 35.0% for the full year, compared with 28.4%. The company also highlighted its #7 ranking on the Forbes Most Trusted Companies in America 2025 list. Headcount was 14,138 as of December 31, 2024, up 4% from a year earlier.
Guidance points to continued growth but with margin pressure. For the first quarter of 2025, Fortinet expects revenue of $1.500 billion to $1.560 billion, billings of $1.520 billion to $1.600 billion, non-GAAP gross margin of 80.0% to 81.0%, and non-GAAP operating margin of 30.0% to 31.0%. Diluted non-GAAP net income per share is expected at $0.52 to $0.54, based on a non-GAAP effective tax rate of 18% and a diluted share count of 774 million to 780 million. For the full fiscal year 2025, the company guides revenue of $6.650 billion to $6.850 billion, service revenue of $4.575 billion to $4.725 billion, billings of $7.200 billion to $7.400 billion, non-GAAP gross margin of 79.0% to 81.0%, and non-GAAP operating margin of 31.0% to 33.0%. Full year diluted non-GAAP net income per share is guided to $2.41 to $2.47, with the same 18% non-GAAP effective tax rate and a diluted share count of 773 million to 783 million.
Management expects several headwinds in 2025. The MD&A states that service revenue growth rates should slow because short-term deferred revenue growth has slowed over recent quarters. Service gross margin is expected to decrease for full year 2025 compared with full year 2024 as Fortinet expands its data center footprint and colocation and cloud hosting capacity. Operating expenses as a percentage of revenue are expected to increase for full year 2025 compared with full year 2024, and operating margin is expected to decrease for full year 2025 compared with full year 2024 as the company grows sales and marketing and research and development headcount, increases product development investments, and expands its data center footprint. The company estimates 2025 capital expenditures between $380.0 million and $430.0 million. Macroeconomic and geopolitical risks include inflation, changing interest rates, tariffs and trade disruptions, longer sales cycles, delayed purchases, supply chain challenges, the war in Ukraine, and tensions between China and Taiwan. Product revenue remained comparatively flat in 2024, and the company expects product revenue growth rates to be higher in 2025 compared with 2024, which had a challenging comparison to a 2023 year benefiting from greater backlog contribution to billings.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.66B | $1.51B | +10.1% | $1.42B | +17.3% |
| Gross profit | $1.35B | $1.24B | +8.1% | $1.10B | +22.4% |
| Gross margin | 81.1% | 82.5% | -1.5 pp | 77.7% | +3.4 pp |
| Research & development | $191.1M | $187.3M | +2.0% | $152.5M | +25.3% |
| Sales & marketing | $526.5M | $515.9M | +2.1% | $507.4M | +3.8% |
| General & administrative | $55.1M | $71.7M | -23.2% | $55.1M | ±0.0% |
| Total operating expenses | $771.5M | $773.8M | -0.3% | $713.8M | +8.1% |
| Operating income (loss) | $574.1M | $470.9M | +21.9% | $385.4M | +49.0% |
| Operating margin | 34.6% | 31.2% | +3.4 pp | 27.2% | +7.3 pp |
| Net income (loss) | $526.2M | $539.9M | -2.5% | $310.9M | +69.3% |
| Net margin | 31.7% | 35.8% | -4.1 pp | 22.0% | +9.7 pp |
| Diluted EPS | $0.68 | $0.70 | -$0.02 | $0.39 | +$0.29 |
Risks
Worsening economic conditions, including inflation or possible stagflation, tariffs and other trade disruptions, changing interest rates, and geopolitical conflicts such as the war in Ukraine and China-Taiwan tensions, may reduce IT spending and demand. MD&A notes these factors have already contributed to longer sales cycles, delayed purchases, and increased inventory commitments.
The company faces longer sales cycles and delayed purchases, especially for larger enterprise and government deals, with unpredictability in timing to close. MD&A states worsening economic conditions may result in decreased sales productivity and growth.
Intense competition from larger and cloud-focused security vendors such as Check Point, Cisco, CrowdStrike, Microsoft, Palo Alto Networks, and Zscaler, plus vendor consolidation, may pressure pricing, revenue, and gross margins. Risk factor notes competitors may bundle products or leverage broader offerings.
Substantially all revenue is generated through channel partners, and a small number of distributors represent a large percentage of revenue and receivables. One distributor accounted for 31% of total net accounts receivable as of December 31, 2024, and six distributor customers accounted for 69% of total net accounts receivable in aggregate.
MD&A expects operating margin to decrease for full year 2025 compared to full year 2024 as the company grows sales and marketing and R&D workforce, increases product development investments, and expands data center footprint and cloud hosting capacity. Service gross margin is also expected to decrease in 2025.
MD&A expects service revenue growth rates to continue to slow down in 2025 due to slowing short term deferred revenue growth over the past several quarters, partially offset by increases in SaaS revenue. A decline in new or renewed FortiGuard and FortiCare contracts would not be fully reflected in current revenue but would negatively affect future quarters.
As supply chain challenges normalize, product revenue growth rate may be lower versus prior quarters where delivery from backlog contributed more to billings. MD&A notes product revenue remained comparatively flat in 2024 and faces a challenging comparison to 2023.
The company depends on senior management, and in February 2025 CFO Keith Jensen announced his upcoming retirement after 11 years. Competition for skilled sales, support, and engineering personnel is intense, especially in the San Francisco Bay Area and Vancouver.
Expansion of data centers, points of presence, and office/warehouse capacity exposes the company to construction delays, increased costs, power access issues, and regulatory risks. MD&A estimates 2025 capital expenditures between $380.0 million and $430.0 million, and capital expenditures were up 85.6% year to date in 2024.
Changes in tax rates, OECD guidelines, and ongoing tax audits in the United Kingdom, Canada, Germany, and other jurisdictions could increase the effective tax rate. The 2024 effective tax rate was 14% compared to 11% in 2023.
SaaS KPIs
All quarters →Billings
Free Cash Flow
Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from Fortinet, Inc.'s SEC filings for Q4 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.