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Introduction & Market Context
Fortinet Inc. (NASDAQ:FTNT) presented its Q2 2025 earnings results on August 6, 2025, showcasing continued growth across its cybersecurity portfolio. The company’s stock closed at $96.21 before the earnings release and showed modest movement in aftermarket trading, up 0.5% to $96.69.
The results follow a mixed market reaction to Fortinet’s Q1 2025 earnings, when the stock dropped nearly 12% despite beating earnings expectations. This quarter’s presentation emphasized Fortinet’s strategic positioning in the evolving cybersecurity landscape, particularly in Unified SASE (Secure Access Service Edge) and SecOps (Security Operations).
Quarterly Performance Highlights
Fortinet reported total billings of $1.78 billion for Q2 2025, representing a 15% year-over-year increase from $1.54 billion in Q2 2024. Total (EPA:TTEF) revenue grew 14% year-over-year to $1.63 billion, with product revenue up 13% to $509 million and service revenue increasing 14% to $1.12 billion.
As shown in the following chart of key financial highlights:
The company highlighted particularly strong growth in high-value deals, with the value of deals exceeding $1 million growing 51% year-over-year. Unified SASE solutions, which include SD-WAN, SSE (LON:SSE) and related offerings, saw billings growth of 21% year-over-year, while SecOps billings grew even faster at 31%.
The following chart illustrates this billings growth by segment:
From a geographic perspective, EMEA led regional performance with 18% year-over-year growth, while both the Americas and APAC regions grew at 11%. Security subscriptions increased by 15% year-over-year, and support and related services grew by 13%.
This regional and product revenue breakdown is shown here:
Fortinet’s remaining performance obligations (RPO), an important indicator of future revenue, grew 12% year-over-year to $6.64 billion, with current RPO growing 15%. The company’s annual recurring revenue (ARR) for Unified SASE and SecOps exceeded $1.6 billion, with Unified SASE ARR growing 22% to $1.15 billion and SecOps ARR increasing 35% to $463 million.
The following charts show the growth in RPO and ARR:
Profitability and Cash Flow
Fortinet achieved record second-quarter gross margins, with total gross margin reaching 81.6%, up 10 basis points year-over-year. Product gross margin improved to 67.8%, up 180 basis points from Q2 2024, while service gross margin slightly declined to 87.8% from 88.6% as the company increased investments in cloud delivery capacity for hosted security solutions.
The gross margin performance is illustrated here:
Operating margin was 33.1% for Q2 2025, down from 35.1% in Q2 2024, reflecting planned increased investments in sales headcount to drive growth. Adjusted free cash flow reached $428 million, representing a 26% margin, up 4 percentage points year-over-year.
The operating margin and adjusted free cash flow are shown in this chart:
Fortinet highlighted its continued achievement of the "Rule of 45" (defined as GAAP revenue year-over-year growth plus non-GAAP operating margin) for five consecutive years, with expectations to exceed this benchmark again in 2025.
Strategic Positioning and Product Development
The presentation emphasized Fortinet’s leadership position in network security, highlighting its recognition as a Leader in four Gartner (NYSE:IT) Magic Quadrants (Network Firewall, SD-WAN, SASE Platforms, and Wired and Wireless LAN) and as a Challenger in Secure Service Edge (SSE).
As shown in the following chart of Gartner Magic Quadrant positions:
The company showcased its "New-Generation SASE Firewall" architecture, which integrates advanced networking and security capabilities. Fortinet noted that it has achieved over 50% market share for global firewall units shipped, with SD-WAN reaching 73% penetration in large enterprises and SASE at 13% penetration in the same segment.
A key strategic focus highlighted in the presentation was the integration of AI across Fortinet’s Security Fabric Platform. The company’s FortiAI is embedded throughout its product portfolio, covering protection, assistance, and secure AI infrastructure.
The AI integration across Fortinet’s platform is illustrated here:
Forward Guidance
For Q3 2025, Fortinet expects billings between $1.76 billion and $1.84 billion, representing year-over-year growth of 13.8% at the midpoint. Revenue is projected to be between $1.67 billion and $1.73 billion, a 12.7% increase at the midpoint.
For the full year 2025, the company forecasts billings of $7.325 billion to $7.475 billion (13.3% growth at midpoint) and revenue of $6.675 billion to $6.825 billion (also 13.3% growth at midpoint). Service revenue is expected to reach $4.55 billion to $4.65 billion, growing 13.7% at the midpoint.
The detailed guidance is presented in this chart:
Fortinet expects to maintain gross margins between 79.0% and 81.0% for the full year, with operating margins between 32.0% and 33.5%. Earnings per share is projected to be between $2.47 and $2.53 for the full year.
Conclusion
Fortinet’s Q2 2025 results demonstrate continued strong performance across its cybersecurity portfolio, with particular strength in high-growth areas like Unified SASE and SecOps. While the company is investing in sales capacity and cloud infrastructure to support future growth, it continues to maintain healthy margins and strong cash flow generation.
The guidance for Q3 and full-year 2025 suggests management expects the growth momentum to continue, albeit at a slightly moderated pace compared to Q2. With its leadership position across multiple security domains and increasing integration of AI capabilities, Fortinet appears well-positioned to capitalize on the ongoing digital transformation and evolving cybersecurity needs of enterprises globally.
Full presentation:
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