Summary
Fortinet closed fiscal 2025 with fourth quarter revenue of $1.90 billion, up 14.8% from the prior year quarter. Billings reached $2.37 billion, up 18%. The top line held up, but profitability slipped. GAAP operating income was $625.6 million, up 9.0%, while GAAP operating margin fell to 32.8% from 34.6%, a decline of 1.7 percentage points. Gross margin came in at 79.6%, down 1.5 percentage points. Net income was $506.0 million, down 3.8% from $526.2 million a year earlier. Non-GAAP operating margin was 37%.
For the full year, revenue was $6.80 billion, up 14.2%. Gross profit rose 14.0% to $5.47 billion and operating income climbed 15.6% to $2.08 billion. Net income was $1.85 billion, up 6.2%, and diluted EPS was $2.42, up 7.1%. Full year gross margin was 80.5%, down 0.1 percentage points, while operating margin improved 0.4 percentage points to 30.7%. Operating cash flow was $2.59 billion, up 14.7%, and free cash flow was $2.21 billion. Deferred revenue, current portion, was $3.64 billion, up 11.0%, and remaining performance obligations were $7.18 billion, up 11.8%.
Unified SASE billings grew 40% in the quarter, and Unified SASE SecOps billings grew 24% for the full year. Management described demand as broad-based across the portfolio and pointed to a 55% unit market share in firewalls. Revenue stayed geographically diversified. The Americas contributed 40% of full year revenue and grew 11%, EMEA contributed 42% and grew 18%, and APAC contributed 18% and grew 13%. Headcount rose 7% to 15,109 employees as of December 31, 2025.
Guidance for the first quarter of 2026 includes billings of $1.770 billion to $1.870 billion, non-GAAP gross margin of 80.0% to 81.0%, and non-GAAP operating margin of 30.0% to 32.0%, with diluted non-GAAP net income per share of $0.59 to $0.63. For the full fiscal year 2026, the company guided billings to $8.400 billion to $8.600 billion, non-GAAP gross margin of 79.0% to 81.0%, non-GAAP operating margin of 33.0% to 36.0%, and diluted non-GAAP net income per share of $2.94 to $3.00.
The MD&A warns that operating margin is expected to decrease in 2026 as expenses outpace revenue growth, with spending aimed at sales and marketing headcount, product development, and data centers. A global shortage of memory chips is constraining availability and raising costs, and Fortinet is implementing price increases that may not fully offset the higher input costs. Tariffs and trade policy remain another overhang, though the company does not currently expect U.S. tariffs to have a meaningful impact on gross margin. Capital expenditures were $42.8 million in the quarter, down 56.1%, and full year capital expenditures were $364.8 million, down 3.7%. Management estimates 2026 capital expenditures of $350 million to $450 million. The board raised the share repurchase authorization by $1.0 billion to $10.25 billion through February 28, 2027, with roughly $1.38 billion available as of February 4, 2026.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.91B | $1.72B | +10.4% | $1.66B | +14.8% |
| Gross profit | $1.52B | $1.39B | +8.8% | $1.35B | +12.6% |
| Gross margin | 79.6% | 80.8% | -1.2 pp | 81.1% | -1.5 pp |
| Research & development | $205.0M | $202.4M | +1.3% | $191.1M | +7.3% |
| Sales & marketing | $629.3M | $583.5M | +7.8% | $526.5M | +19.5% |
| General & administrative | $57.3M | $61.4M | -6.7% | $55.1M | +4.0% |
| Total operating expenses | $890.2M | $845.9M | +5.2% | $771.5M | +15.4% |
| Operating income (loss) | $625.6M | $547.3M | +14.3% | $574.1M | +9.0% |
| Operating margin | 32.8% | 31.7% | +1.1 pp | 34.6% | -1.7 pp |
| Net income (loss) | $506.0M | $473.9M | +6.8% | $526.2M | -3.8% |
| Net margin | 26.6% | 27.5% | -0.9 pp | 31.7% | -5.1 pp |
| Diluted EPS | $0.66 | $0.62 | +$0.04 | $0.68 | -$0.02 |
Risks
MD&A discloses a global shortage of memory chips caused by the rapid build-out of AI infrastructure, and Fortinet is currently experiencing constraints on availability that may delay production and delivery and increase sourcing costs. The company is implementing price increases to offset higher hardware costs, but these may not be sufficient or timely, potentially causing margin compression.
Competitors such as CrowdStrike and Zscaler are focusing on delivering security services from the cloud, and competitors may bundle products or leverage AI capabilities to discourage customers from buying Fortinet solutions. MD&A notes Fortinet must successfully anticipate market changes related to cloud-based and AI solutions to sell, support and meet SLAs.
The Chinese government recently instructed domestic companies in certain industries not to use cybersecurity products manufactured by U.S. or Israel-based companies, including Fortinet. This could weaken demand for Fortinet products in China and add to difficulty forecasting results amid tensions between China and Taiwan.
One distributor accounted for 32% of total net accounts receivable as of December 31, 2025, and six distributor customers represented 67% and 69% of total net accounts receivable as of December 31, 2025 and 2024, respectively. If key channel partners fail to pay or reduce selling Fortinet products, billings, revenue and operating results could be harmed.
MD&A expects operating margin to decrease in full year 2026 compared to 2025 as expenses are expected to outpace revenue growth, driven by investments in sales and marketing headcount, product development, and data centers. Sales and marketing expenses may increase at a rate faster than revenue.
As a cybersecurity vendor, Fortinet faces risk from defects or critical vulnerabilities in its products, failure to detect or prevent security incidents, or compromises of its internal networks, R&D networks, back-end labs, or cloud stacks. Such events could harm public perception and customer trust.
U.S. tariffs and any retaliatory tariffs from other countries could increase product costs, disrupt operations, and affect customer sentiment. MD&A states that while Fortinet currently does not expect U.S. tariffs to have a meaningful impact on gross margin, changes in trade policy could adversely affect gross margin in the future.
Fortinet's strategy to increase sales to large and medium-sized end-customers involves longer sales cycles, unique sales skillsets, higher discount levels, and uneven traction with government organizations and service providers. Execution risks and unpredictability of timing for larger enterprise deals could slow revenue growth.
MD&A states product gross margin may decline if price increases do not fully offset rising hardware component costs, and total gross margin will be impacted by service and product revenue mix. Service gross margin decreased 0.7 percentage points in 2025 compared to 2024 due to higher cloud service costs.
Inventory purchase commitments totaled $810.6 million as of December 31, 2025, an increase of $219.5 million compared to $591.1 million as of December 31, 2024. The company records liabilities for commitments in excess of demand forecasts, and supply constraints or rapid technology changes could lead to inventory obsolescence.
Fortinet is subject to evolving and inconsistent data, privacy, and cybersecurity requirements across jurisdictions, including GDPR, DORA, and the EU Data Act. Noncompliance could result in litigation, fines, penalties, or prohibitions on importing or exporting products and services.
Fortinet's provision for income taxes increased 55% in 2025 compared to 2024, and its effective tax rate rose to 19% from 14%. The company has ongoing tax audits in the United Kingdom, Canada, Germany, and several other foreign jurisdictions focused on allocation of profits among legal entities.
SaaS KPIs
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Free Cash Flow Margin
Summary, forecast, risks and KPIs are extracted from Fortinet, Inc.'s SEC filings for Q4 FY2025 (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.