Fortinet Stock Plunges 18% Despite Strong Q2, Firewall Concerns Weigh

Fortinet (NASDAQ: FTNT) shares fell 18% in premarket trading on Thursday, as investors reacted to concerns around the company's firewall business, despite better-than-expected second-quarter results.

Revenue rose 14% year over year to $1.63 billion, while billings climbed 15% to $1.78 billion. The company also raised its full-year billings guidance midpoint by $100 million and posted a 33% non-GAAP operating margin.

CEO Ken Xie highlighted Fortinet’s “consistent track record of growth,” citing leadership in network security, unified SASE, and recognition in five separate Gartner Magic Quadrant reports.

He also pointed to the company's 1,400 issued patents and expanded FortiCloud platform as signs of ongoing innovation.

However, according to CRN, analysts on Fortinet’s earnings call questioned the performance of its highly anticipated firewall refresh cycle.

CRN noted that Goldman Sachs’ Gabriela Borges highlighted that the company had previously forecast 2025 as a “larger-than-normal refresh cohort,” and asked why that has yet to materialize in stronger revenue growth.

Borges is said to have suggested that some customers may still have excess firewall capacity from the pandemic period. CFO Christiane Ohlgart responded that the full financial impact of the refresh may not yet be visible, though some demand may be met internally by customers.

Looking ahead, Fortinet guided Q3 revenue between $1.67 billion and $1.73 billion, with billings of up to $1.84 billion. For the full year, it expects billings between $7.325 billion and $7.475 billion.

Despite the upbeat outlook, investor concerns around core product momentum overshadowed the strong financials.