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Fortinet Q1 Earnings Surpass Expectations, Sales Increase Y/Y
FTNTFortinet(FTNT) ZACKS·2025-05-08 16:10

Core Insights - Fortinet Inc. reported strong first-quarter 2025 results, with both earnings and revenues exceeding expectations and showing year-over-year improvement [1][2]. Financial Performance - Non-GAAP EPS for Q1 2025 was 58 cents, beating the Zacks Consensus Estimate by 9.43%, and up 34.9% from 43 cents in the same quarter last year [1]. - Total revenues reached 1.54billion,surpassingtheconsensusmarkby0.211.54 billion, surpassing the consensus mark by 0.21% and reflecting a 13.8% year-over-year increase, driven by growth in services and product revenues [2]. - Product revenues increased by 12.3% year over year to 459.1 million, with notable growth in both hardware and software solutions [3]. - Service revenues grew 14.4% year over year to 1.08billion,accountingfor701.08 billion, accounting for 70% of total revenues, with security subscriptions rising 16% [4]. Growth Metrics - Fortinet added over 6,300 new logos in Q1, supported by investments in channel partners [2]. - Remaining Performance Obligations (RPO) grew 12% to 6.5 billion, while total billings rose 14% to 1.6billion,drivenbygrowthinAI−drivenSecOpsandUnifiedSASE[2].−AI−drivenSecurityOperationsbillingsincreasedby291.6 billion, driven by growth in AI-driven SecOps and Unified SASE [2]. - AI-driven Security Operations billings increased by 29%, representing 10% of Fortinet's business [5]. Margins and Efficiency - Total gross margin increased by 380 basis points to 81.9%, exceeding the high end of the guided range by 90 basis points [6]. - Operating margin reached a record 34.2%, up 570 basis points, reflecting strong gross margins and cost efficiencies [7]. Cash Flow and Balance Sheet - Fortinet ended Q1 2025 with cash and cash equivalents of 4.78 billion, an increase from 4billionattheendofQ42024[8].−Cashflowfromoperationswas4 billion at the end of Q4 2024 [8]. - Cash flow from operations was 863.3 million, compared to 830.4millioninQ12024,whilefreecashflowroseto830.4 million in Q1 2024, while free cash flow rose to 782.8 million from 608.5million[9].Guidance−ForQ22025,Fortinetestimatesrevenuesbetween608.5 million [9]. Guidance - For Q2 2025, Fortinet estimates revenues between 1.59 billion and 1.65billion,withbillingsexpectedbetween1.65 billion, with billings expected between 1.685 billion and 1.765billion[10].−Forthefullyear2025,revenuesareprojectedbetween1.765 billion [10]. - For the full year 2025, revenues are projected between 6.65 billion and 6.85billion,withservicesrevenuesexpectedbetween6.85 billion, with services revenues expected between 4.575 billion and $4.725 billion [11].