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][12] - Operating margin reached a record 37%, with total gross margin at 81.6% [18] - Free cash flow was strong at $568 million, with year-to-date free cash flow reaching $1.63 billion, up $135 million [18] Business Line Data and Key Metrics Changes - Unified SaaS billings grew by 19%, with Fortinet SaaS billings growth exceeding 100% [5][11] - SecOps billings increased by 33%, contributing to overall growth [11] - Product revenue rose by 18% to $559 million, driven by strong performance in multi-product deals and operational technology security [13] Market Data and Key Metrics Changes - EMEA led revenue growth, followed by APAC and the Americas [12] - 15% of large enterprise customers are now using Fortinet SaaS, representing a 55% increase [6][11] - Operational technology solutions saw over 30% billing growth, indicating strong demand in that segment [10][12] 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 [5][6] - The company plans to continue investing in its go-to-market strategy, including cloud delivery infrastructure and strategic partnerships [23] - Fortinet's leadership in firewall and secure networking is supported by its proprietary ASIC technology, which enhances performance and reduces total cost of ownership [8][9] 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 strong growth driven by increased cybersecurity spending and vendor consolidation [21][22] - The rise of AI is anticipated to further boost demand for Fortinet's solutions, particularly in securing AI workloads [23][60] - Management noted that product revenue growth is expected to remain solid, with multiple growth drivers identified [43][62] Other Important Information - The company repurchased 23.3 million shares for $1.83 billion in Q3, reducing the total share count by approximately 3% [19] - Infrastructure investments were $88 million, reflecting ongoing efforts to expand data center capabilities [18] Q&A Session Summary Question: What are the drivers behind the product revenue growth? - Management indicated strong demand across SaaS, SecOps, and operational technology as key growth drivers, with the end of service not being a significant factor [24][25] Question: Why is the guidance for next quarter considered uninspiring? - The guidance reflects the impact of service revenue, which is influenced by prior product revenue performance [28][29] Question: What is the trajectory of services revenue growth? - Management expects service revenue growth to improve in the second half of 2026, driven by stronger product revenue [31][32] Question: Can you elaborate on the eight-figure deal with the police force? - The deal involved a combination of SD-WAN and Sovereign SaaS, highlighting Fortinet's unique advantage in providing flexible deployment options [34][35] Question: How does Fortinet plan to leverage its SaaS business? - Fortinet aims to accelerate SaaS adoption by leveraging its existing customer base and enhancing the integration of its solutions [37][39] Question: What is the outlook for product revenue growth next year? - Management remains confident in continued product revenue growth, supported by new technology launches and market opportunities [43][62]