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Fortinet Inc. FTNT reported strong first-quarter 2025 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate and improved year over year.
Fortinet reported first-quarter 2025 non-GAAP earnings per share (EPS) of 58 cents, which beat the Zacks Consensus Estimate by 9.43%. The bottom line climbed 34.9% from the year-ago quarter’s earnings of 43 cents.
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Total revenues of $1.54 billion beat the consensus mark by 0.21% and improved 13.8% year over year, driven by strong growth in services and product revenues.
In the first quarter, Fortinet added more than 6,300 new logos, driven by continued worldwide investments in its channel partners.
RPO grew 12% to $6.5 billion and total billings rose 14% to $1.6 billion, driven by double-digit growth in AI-driven SecOps and Unified SASE.
Fortinet, Inc. Price, Consensus and EPS Surprise
Fortinet, Inc. price-consensus-eps-surprise-chart | Fortinet, Inc. Quote
FTNT Quarter in Detail
Segment-wise, Product revenues increased 12.3% year over year to $459.1 million, driven by growth in both hardware and software solutions. FortiGate hardware revenues grew outpacing total product revenue growth, driven by strong performance in low-end and high-end models. Software license revenue growth was driven by on-prem, time-based software license growth of more than 30%.
Service revenues of $1.08 billion grew 14.4% year over year, accounting for 70% of total revenues. Security subscriptions revenues rose 16%, and support and related service revenues increased 12%. Service billings grew 14%, which was Fortinet’s highest growth rate in the past 5 quarters.
Unified SASE and Security Operations gained considerable traction, with security service edge billings growth of more than 110%, which drove FTNT’s Unified SASE billings growth to 18%, accounting for 25% of the business.
AI-driven Security Operations billings increased 29%, accounting for 10% of FTNT’s business, driven by customers continuing to consolidate multiple security vendors on the company’s integrated and AI-enhanced FortiFabric solution.
Margins of FTNT
Total gross margin increased 380 basis points (bps) to 81.9% and exceeded the high end of the guided range by 90 bps.
Product gross margin of 67.7% increased 1,200 bps as inventory-related charges normalized from last year’s highly elevated levels, adding 1,300 bps to product gross margin and 400 bps to total gross margin.
Service gross margin of 87.8% decreased 10 bps, as Fortinet absorbed increased costs associated with the expansion of hosted security solutions.
Operating margin increased 570 bps to a first-quarter record of 34.2% and was 320 bps above the high-end of the company’s guidance, reflecting the strong gross margin, a Fx tailwind of 100 bps, as well as cost efficiencies in the business.