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Investing.com -- Fortinet Inc (NASDAQ:FTNT) shares fell 7.8% in after-hours trading Wednesday as the cybersecurity firm’s guidance fell short of analyst expectations, following a relatively in-line first-quarter earnings report.
The company reported adjusted earnings per share of $0.58 for the first quarter, surpassing the analyst estimate of $0.53. Revenue came in at $1.54 billion, lower than consensus expectations of $1.55 billion and representing a 13.8% increase YoY.
However, Fortinet’s outlook for the second quarter and full year 2025 disappointed investors. The company forecasts second-quarter revenue between $1.59 billion and $1.65 billion, with the midpoint slightly below the $1.63 billion analyst consensus. For the full year 2025, Fortinet expects revenue in the range of $6.65 billion to $6.85 billion, compared to the $6.76 billion analyst estimate.
Ken Xie, Founder, Chairman and CEO of Fortinet, commented on the results: "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%, while billings grew 14% year over year."
Despite the positive first-quarter performance, including a 12.3% YoY increase in product revenue to $459.1 million and a 14.4% rise in service revenue to $1.08 billion, the market’s focus appears to be on the company’s future outlook.
Fortinet’s Unified SASE ARR grew 25.7% YoY to $1.15 billion, while Security Operations ARR increased 30.3% to $434.5 million. The company also reported record first-quarter GAAP operating margin of 29.5% and non-GAAP operating margin of 34.2%.
The cybersecurity firm’s free cash flow for the quarter reached a record $782.8 million, up from $608.5 million in the same period last year.