Core Viewpoint - The Gross Law Firm has issued a notice to shareholders of Fortinet, Inc. regarding a class action lawsuit due to alleged false statements and misrepresentations made by the company during a specific class period [1]. Group 1: Allegations and Misrepresentations - The complaint alleges that Fortinet misrepresented the potential profitability of its product refresh cycle, claiming it would be more lucrative than it actually was, as it involved old products that constituted a "small percentage" of the company's business [1]. - It is claimed that Fortinet did not have a clear understanding of the actual number of FortiGate firewalls eligible for upgrades, misleading investors about the refresh gaining momentum over two years while it had already pushed through about half of the refresh in just a few months by the end of Q2 2025 [1]. Group 2: Class Action Participation - Shareholders who purchased shares of Fortinet during the class period from November 8, 2024, to August 6, 2025, are encouraged to register for the class action, with a deadline for lead plaintiff appointment set for November 21, 2025 [2]. - Once registered, shareholders will receive updates through a portfolio monitoring software regarding the status of the case, with no cost or obligation to participate [2].

Core Insights - Fortinet reported third-quarter earnings that exceeded estimates, with earnings rising 17% to $0.74 per share and revenue increasing 14% to $1.72 billion, although guidance for future quarters fell short of analyst expectations [2][3][4] Financial Performance - For Q3, Fortinet's earnings were $0.74 per share on an adjusted basis, surpassing analyst expectations of $0.63 per share [2] - Revenue for the quarter reached $1.72 billion, compared to analyst estimates of $1.704 billion [2] - Billings for Q2 rose 14% to $1.81 billion, slightly below the expected $1.804 billion [2] Guidance and Market Reaction - Fortinet's guidance for the upcoming quarter is revenue between $1.825 billion and $1.885 billion, below the estimate of $1.875 billion [3] - Expected billings for the next quarter are projected to be between $2.185 billion and $2.285 billion, also below the estimate of $2.231 billion [3] - Following the earnings report, Fortinet's stock fell over 10% to $76.82, reflecting investor concerns over weak guidance [4] Competitive Landscape - Fortinet operates in the firewall network security market, competing with companies like Palo Alto Networks and Check Point Software Technologies [5] - Palo Alto Networks is planning to acquire CyberArk for $25 billion, indicating ongoing consolidation in the cybersecurity sector [5] Strategic Focus - Fortinet is shifting focus towards the Secure Access Service Edge (SASE) market, which is seen as a new growth opportunity for the company [6][7] - Analysts suggest that investors should concentrate on Fortinet's growing SASE and platform businesses rather than the traditional firewall refresh cycle [7] Stock Ratings - Fortinet holds a Composite Rating of 76 out of a possible 99, indicating a relatively strong position in the market [7] - The stock has an Accumulation/Distribution Rating of B, suggesting moderate institutional buying activity [8]

Market Overview - US stock index futures are all up ahead of the market opening on November 6, with Dow futures up 0.02%, S&P 500 futures up 0.09%, and Nasdaq futures up 0.06% [1] - European indices show a decline, with Germany's DAX down 0.08%, UK's FTSE 100 down 0.37%, France's CAC40 down 0.44%, and the Euro Stoxx 50 down 0.04% [2][3] - WTI crude oil is up 0.64% at $59.98 per barrel, while Brent crude is up 0.49% at $63.83 per barrel [3][4] Market Sentiment - A report from SentimenTrader indicates that despite recent market stability, there are ominous signs suggesting potential weakness ahead, with the "Titanic Syndrome" appearing four times in the last five trading days [5] - Deutsche Bank is exploring ways to hedge its exposure to data center risks, including shorting a basket of AI-related stocks, amid concerns of a potential AI bubble [6] Economic Indicators - Federal Reserve Governor Milan emphasizes that current interest rates are too high and suggests further cuts may be necessary, citing limited job growth and declining wage increases [7] - The ongoing US government shutdown is impacting the airline industry, with plans to cut 10% of flights at 40 major airports due to air traffic control safety concerns [7] Company News - Tesla is facing a critical vote on Elon Musk's compensation plan, which could lead to significant stock price volatility depending on the outcome [8][9] - Arm reported a 34% increase in revenue to $1.14 billion for Q2, with a 155% increase in operating profit, exceeding market expectations [9] - Qualcomm's Q4 sales reached $11.27 billion, driven by demand for high-end smartphones, with a forecast for Q1 sales also above market expectations [10] - Snap's Q3 revenue grew 10% to $1.51 billion, with a significant partnership with Perplexity AI valued at $400 million [11] - AppLovin's Q3 revenue increased by 8.9% to $1.41 billion, with a strong cash flow and a $3.2 billion share buyback plan [12] - Robinhood's Q3 net revenue doubled to $1.274 billion, with a 271% increase in net profit, although cryptocurrency revenue fell short of expectations [12] - DoorDash's Q3 revenue grew 27% to $3.45 billion, but rising costs led to a decline in profit, causing a nearly 10% drop in pre-market trading [13] - IonQ's Q3 revenue surged 221.5% to $39.87 million, but the company reported significant losses due to acquisitions [14] - American Superconductor's Q2 revenue increased over 20% but fell short of expectations, leading to a drop in pre-market trading [15] - Fortinet's Q3 core business revenue growth hit a decade low, with a 14% increase in total revenue [15] Upcoming Events - Key speeches from Federal Reserve officials are scheduled, including remarks from New York Fed President Williams and Cleveland Fed President Mester [16]

Group 1 - Fortinet (FTNT.US) experienced a significant pre-market decline of nearly 10% following disappointing earnings results [1] - The company's service segment revenue for Q3 fell short of market expectations, leading to an unexpected downward revision of the revenue guidance for fiscal year 205 [1] - The largest business segment reported a year-over-year growth of 13% in Q3, reaching $1.17 billion, which was slightly below Wall Street analysts' average expectations [1] - This quarter marked the slowest growth rate for Fortinet's service revenue in at least a decade [1] Group 2 - The closing price for Fortinet on November 5 was $85.990, with a pre-market price of $77.500 on November 6, reflecting a drop of $8.490 or 9.87% [2] - The stock's trading volume was 8.7135 million, with a market capitalization of $65.891 billion [2] - The stock has a 52-week high of $114.820 and a low of $70.120, indicating significant volatility in its price [2]

Core Insights - Fortinet Inc. experienced a significant stock decline of over 12% after reporting earnings that fell short of market expectations, particularly in its services segment [1] - The company lowered its revenue guidance for the fiscal year 205, adjusting the upper limit from $6.83 billion to $6.78 billion [5] Financial Performance - For Q3, Fortinet's service revenue grew by 13% year-over-year to $1.17 billion, slightly below Wall Street's average expectations [1] - This growth rate marks the slowest quarterly increase in service revenue for Fortinet in at least a decade [4] - The total revenue for Q3 2025 was approximately $1.72 billion, reflecting a 14% year-over-year increase, with diluted earnings per share at $0.62 compared to $0.70 in the same period last year [1] Market Position and Strategy - Fortinet is recognized as a leading player in the enterprise network security and firewall sector, but it lags behind competitors like Palo Alto Networks and Zscaler in emerging areas such as cloud security, AI security, SASE, and XDR [6] - The company's business model focuses on a combination of hardware and subscription services, with core products including FortiGate firewalls, SD-WAN, and various security gateways [5]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Viewpoint - Fortinet, Inc. is facing a class action lawsuit alleging securities fraud due to misleading statements about the company's product upgrade cycle and revenue expectations [3][4]. Group 1: Lawsuit Details - The class action lawsuit is on behalf of investors who purchased Fortinet securities between November 8, 2024, and August 6, 2025 [3]. - Allegations include that Fortinet's management made materially false statements regarding a "record" round of FortiGate unit upgrades, claiming it would generate $400 million to $450 million in product revenue for 2025 and 2026 [3]. - The lawsuit asserts that the management misrepresented the upgrade cycle's potential, stating it would gain momentum in the second half of 2025, while in reality, it was not as lucrative as claimed [3]. Group 2: Financial Impact - On August 6, 2025, Fortinet reported that it was only "approximately 40% to 50% of the way through" the 2026 firewall upgrade cycle, which was below investor expectations [4]. - Following the release of weaker-than-expected revenue guidance for the third quarter, Fortinet's share price dropped by $21.28, or approximately 22%, from $96.58 to $75.30 [4]. Group 3: Investor Actions - Investors have until November 21, 2025, to request the Court to appoint them as lead plaintiff in the class action lawsuit [2]. - Interested investors are encouraged to contact Kirby McInerney LLP for more information regarding their rights or interests in the lawsuit [5].

The cybersecurity company Fortinet sank as revenue in its service segment missed expectations https://t.co/3e1xG5vV2c ...

Financial Data and Key Metrics Changes - Total billings grew by 14% to $1.81 billion, with revenue increasing by 14% to $1.72 billion [11][13] - Operating margin reached a record 37%, with total gross margin at 81.6% [18] - Free cash flow was strong at $568 million, with adjusted free cash flow up to $646 million, representing a margin of 37% [18] Business Line Data and Key Metrics Changes - Unified SaaS billings grew by 19%, with Fortinet SaaS billings growth exceeding 100% [11][6] - SecOps grew by 33%, contributing significantly to overall growth [11][10] - Product revenue increased by 18% to $559 million, driven by strong performance in multi-product deals [14] Market Data and Key Metrics Changes - EMEA led revenue growth, followed by APAC and the Americas [13] - 15% of large enterprise customers are now using Fortinet SaaS, representing a 55% increase [7][11] - Operational technology solutions saw over 30% billing growth, indicating strong demand in that segment [10] Company Strategy and Development Direction - Fortinet aims to become the number one SaaS market leader in the coming years, leveraging its unique integration of NextGen Firewall, SD-WAN, and SaaS on a single operating system [6][8] - The company plans to continue investing in its go-to-market strategy, including cloud delivery infrastructure and increased sales capacity [23] - Fortinet's focus on AI-driven secure operations is expected to capture significant growth opportunities as customers scale AI globally [9][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the rule of 45 and continuing to gain market share, supported by strong demand for cybersecurity solutions [10][22] - The company anticipates continued strong growth driven by increased cybersecurity spending and the convergence of networking and security [22][23] - Management acknowledged that product revenue growth is a leading indicator for future service revenue, with expectations for improvement in the second half of 2026 [34][41] Other Important Information - Fortinet repurchased 23.3 million shares for $1.83 billion, reducing the total share count by approximately 3% [19] - Infrastructure investments were $88 million, up $51 million, as the company builds out its infrastructure footprint [18] Q&A Session Summary Question: Product revenues went up 18%, below expectations. What are the drivers? - Management attributed growth to strong demand across various segments, including SaaS and SecOps, rather than end-of-service upgrades [27][30] Question: Why is the guidance for next quarter less inspiring? - Management indicated that service revenue may be impacted by previous negative product revenue growth, which affects future service revenue [33][34] Question: What is the trajectory of services growth in the next 12 months? - Management expects service revenue growth to improve in the second half of 2026 due to increased product sales [41][42] Question: Can you elaborate on the eight-figure deal with the police force? - The deal included a combination of product and services, with a focus on sovereign SaaS to meet local data governance requirements [47][48] Question: How is the SaaS penetration rate from the SD-WAN install base? - Management noted that 15% of enterprise customers are adopting SaaS, with expectations for continued growth as more customers transition [60][61] Question: What are the growth drivers for operational technology security? - Management highlighted the increasing number of connected devices and the need for network security as key growth drivers in operational technology [77] Question: What is the impact of the 2026 end-of-service cohort on growth? - Management clarified that while the end-of-service cohort is a factor, the primary growth drivers are new features and technology advancements [81][82]

Financial Data and Key Metrics Changes - Total billings grew by 14% to $1.81 billion, with revenue increasing by 14% to $1.72 billion [11][13] - Unified SaaS billings grew 19%, while SecOps saw a 33% increase [11][12] - Operating margin reached a record 37%, with total gross margin at 81.6% [18][19] Business Line Data and Key Metrics Changes - Unified SaaS and SecOps now account for 26% and 11% of total billings, respectively, reflecting a combined increase of three percentage points [11] - Product revenue increased by 18% to $559 million, driven by strong performance in multi-product deals and operational technology security [14] - Service revenue grew by 13% to $1.17 billion, indicating a healthy demand for services [14] Market Data and Key Metrics Changes - EMEA led revenue growth, followed by APAC and the Americas [13] - The number of deals greater than $1 million increased by 26%, with their total dollar value growing by over 30% [12] Company Strategy and Development Direction - The company aims to become the number one SaaS market leader in the coming years, leveraging its unique integration of NextGen Firewall, SD-WAN, and SaaS on a single operating system [6][8] - Continued investment in cloud delivery infrastructure and strategic partnerships is planned to enhance market presence [23] - The rise of AI is expected to drive demand for Fortinet's solutions, particularly in securing AI workloads [23][106] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the rule of 45 for the sixth consecutive year, expecting continued growth in demand for cybersecurity solutions [22] - The company anticipates product revenue growth to remain solid, driven by multiple growth drivers including new features and customer upgrades [67][113] Other Important Information - Free cash flow reached $568 million, with adjusted free cash flow up to $646 million, representing a margin of 37% [18] - The company repurchased 23.3 million shares for an aggregate purchase price of $1.83 billion, reducing the total share count by approximately 3% [19] Q&A Session Summary Question: Product revenues went up 18%, below expectations. What are the drivers? - Management attributed growth to strong demand across various segments, including SaaS and operational technology, rather than end-of-service upgrades [27][30] Question: Why is the guidance for next quarter less inspiring? - Management indicated that service revenue is a leading indicator of future performance, and product revenue growth is expected to positively impact service revenue in the future [33][34] Question: What is the trajectory of services growth in the next 12 months? - Management expects service revenue growth to improve in the second half of 2026 due to increased product sales and customer behavior [41][42] Question: Can you elaborate on the eight-figure deal with the police force? - The deal involved a combination of product and services, with a focus on sovereign SaaS to meet local data governance requirements [47][48] Question: What is the rate of SaaS penetration from the SD-WAN install base? - Management noted that 15% of large enterprise customers are now using Fortinet SaaS, indicating strong adoption and growth potential [60][61] Question: How is the company positioned in the operational technology security market? - Management highlighted significant growth potential in OT security, with a unique approach to securing diverse devices across various industries [77] Question: What are the growth drivers for product revenue next year? - Management is confident in continued product growth driven by new features, customer upgrades, and strong demand in operational technology [67][113]