Financial Data and Key Metrics Changes - For the full year 2025, the company reported a revenue growth of 10% to $669.1 million, with an adjusted EBITDA margin of 47% and net income of $257.8 million, reflecting a 13% increase [18][19] - In Q4 2025, revenues grew 10% to $175.3 million, with channel partners contributing 51% of total revenues, up from 48% a year ago [19][20] - Free cash flow reached $304.4 million, representing 45% of revenues, exceeding expectations [18] Business Line Data and Key Metrics Changes - Customers spending $500,000 or more grew by 4% to 215, indicating a stable demand for the company's services [12] - New product contributions to bookings increased, with CyberSecurity Asset Management combined with ETM making up 10% of total bookings, up from 8% the previous year [21] - Patch Management accounted for 8% of total bookings, up from 7% last year, indicating strong demand for this service [21] Market Data and Key Metrics Changes - The company experienced 15% growth outside the US, compared to 6% growth in the domestic market, highlighting stronger international demand [20] - The US and international revenue mix was 56% and 44%, respectively, showing a balanced geographical revenue distribution [20] Company Strategy and Development Direction - The company is focusing on unifying fragmented security stacks into a centralized risk fabric, leveraging agentic AI to enhance risk management capabilities [5][6] - The introduction of an agentic AI risk management marketplace aims to provide customers with specialized autonomous experts to improve remediation speed and accuracy [8][9] - The company plans to accelerate ETM adoption through its VMDR customer base, positioning itself for larger upsell opportunities [11] Management's Comments on Operating Environment and Future Outlook - Management anticipates a low to mid-single-digit growth in security spending to persist, reflecting a stable operating environment [20] - The gross dollar retention rate remained above 90%, with a net dollar expansion rate of 103%, indicating customer loyalty and potential for upsell [21] - The company expects revenue growth for 2026 to be in the range of 7%-8%, with a focus on maintaining profitability while investing in growth initiatives [24][25] Other Important Information - The company has authorized an increase of $200 million to its share repurchase program, bringing the total available for repurchases to $360.5 million [23] - The company is actively enhancing its partner ecosystem, with a focus on partner-led sales motions to drive growth [15] Q&A Session Summary Question: Can you talk about Q-Flex offerings and their impact on platform adoption? - Management highlighted that Q-Flex allows customers to consolidate capabilities on a single platform at their own pace, enhancing flexibility and encouraging broader adoption [27][30] Question: What is the customer sentiment regarding AI and its impact on net retention? - Management noted that the introduction of agentic AI capabilities is expected to enhance customer outcomes and drive net retention as customers leverage these advanced features [31][34] Question: How is Agent Val improving ETM efficacy and reducing man-hours? - Management explained that Agent Val confirms exploitability of vulnerabilities, saving IT teams time by reducing false positives and enabling quicker remediation [38][41] Question: What are the growth levers for 2026? - Management indicated that successful execution of ETM and ROC, along with partner engagement and Q-Flex adoption, are key to driving growth in 2026 [44][76] Question: What are the implications of the ServiceNow acquisition of Armis? - Management expressed confidence that their integrated patch management and risk management solutions differentiate them from competitors, including those resulting from acquisitions [50][52]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported a revenue growth of 10% to $669.1 million, with an adjusted EBITDA margin of 47% and net income increasing by 13% to $257.8 million [18][19] - In Q4 2025, revenues grew 10% to $175.3 million, with channel partners contributing 51% of total revenues, up from 48% a year ago [19] - Free cash flow reached $304.4 million, representing 45% of revenues, exceeding expectations [18] Business Line Data and Key Metrics Changes - The CyberSecurity Asset Management combined with ETM accounted for 10% of total bookings and 13% of new bookings in 2025, up from 8% and 9% respectively [20] - Patch Management made up 8% of total bookings and 16% of new bookings in 2025, an increase from 7% and 16% [20] - TotalCloud represented 5% of total bookings in 2025, up from 4% a year ago [21] Market Data and Key Metrics Changes - The company experienced 15% growth outside the U.S., surpassing the domestic business growth of 6% [19] - The U.S. and international revenue mix was 56% and 44% respectively [19] - The gross dollar retention rate remained above 90%, with a net dollar expansion rate of 103%, down from 104% in the previous quarter [20] Company Strategy and Development Direction - The company is focused on unifying fragmented security stacks into a centralized risk fabric, leveraging agentic AI to enhance risk management capabilities [5][6] - The introduction of the agentic AI risk fabric and the Risk Operations Center (ROC) aims to provide a comprehensive solution for pre-breach risk management [10][11] - The company plans to accelerate ETM adoption through its VMDR customer base and position itself for larger upsell opportunities [11][16] Management's Comments on Operating Environment and Future Outlook - Management anticipates a low to mid-single-digit growth in security spending to persist in 2026, reflecting customer prioritization of security within IT budgets [19] - The company expects revenue for 2026 to be in the range of $717 million to $725 million, representing a growth rate of 7% to 8% [23] - Management expressed optimism about the potential for upsell opportunities and the impact of new product discussions with existing customers [47][76] Other Important Information - The board authorized an increase of $200 million to the share repurchase program, bringing the total available amount for share repurchases to $360.5 million [22] - The company has been recognized as the number one patch management vendor by analysts, highlighting its strong position in the market [60] Q&A Session Summary Question: Can you talk about Q-Flex offerings and their impact on platform adoption? - Management highlighted that Q-Flex allows customers to consolidate capabilities on a single platform at their own pace, enhancing flexibility and encouraging broader adoption [26][29] Question: What is the customer sentiment regarding AI and its impact on net retention? - Management noted that the introduction of agentic AI capabilities is expected to enhance customer outcomes and drive upgrades from existing solutions, positively impacting net retention [30][33] Question: How does Agent Val improve ETM efficacy and reduce man-hours? - Management explained that Agent Val confirms exploitability of vulnerabilities, saving IT teams time by reducing false positives and enabling quicker remediation [38][41] Question: What are the growth levers for 2026? - Management indicated that growth will be driven by product innovation, partner engagement, and the successful rollout of ETM and ROC solutions [46][76] Question: What are the implications of the ServiceNow acquisition of Armis? - Management expressed confidence that their integrated patch management capabilities differentiate them from competitors, including those resulting from acquisitions [51][60]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported revenue growth of 10% to $669.1 million, with an adjusted EBITDA margin of 47% and net income increasing by 13% to $257.8 million [17][18] - In Q4 2025, revenues grew 10% to $175.3 million, with channel partners contributing 51% of total revenues, up from 48% a year ago [18][21] - Free cash flow reached $304.4 million, representing 45% of revenues, exceeding expectations [17] Business Line Data and Key Metrics Changes - CyberSecurity Asset Management combined with ETM accounted for 10% of total bookings and 13% of new bookings in 2025, up from 8% and 9% respectively [19] - Patch Management made up 8% of total bookings and 16% of new bookings in 2025, an increase from 7% and 16% [19] - TotalCloud represented 5% of total bookings in 2025, up from 4% the previous year [20] Market Data and Key Metrics Changes - The company experienced 15% growth outside the US, compared to 6% growth in the domestic market, with a revenue mix of 56% from the US and 44% from international markets [18] - The gross dollar retention rate remained above 90%, with a net dollar expansion rate of 103%, down from 104% in the previous quarter [18] Company Strategy and Development Direction - The company is focusing on unifying fragmented security stacks into a centralized risk fabric, leveraging agentic AI to enhance pre-breach risk management [4][5] - The introduction of an agentic AI risk management marketplace aims to provide organizations with autonomous experts to reduce remediation time and costs [6][9] - The company plans to accelerate ETM adoption through its VMDR customer base and position itself for larger upsell opportunities [9][15] Management's Comments on Operating Environment and Future Outlook - Management anticipates a low to mid-single-digit growth in security spending to persist in 2026, reflecting customer prioritization of security within IT budgets [18] - The company expects revenue for 2026 to be in the range of $717 million to $725 million, representing a growth rate of 7% to 8% [23] - Management expressed optimism about the potential for upsell opportunities and the impact of new product discussions with existing customers [46][77] Other Important Information - The company has authorized an increase of $200 million to its share repurchase program, bringing the total available amount for share repurchases to $360.5 million [22] - The company is focusing on enhancing its partner ecosystem, with an increase in partner-led deal registrations reflecting deeper alignment and execution across the channel [14] Q&A Session Summary Question: Can you talk about Q-Flex offerings and their impact on platform adoption? - The Q-Flex proposal allows customers to consolidate capabilities on a single platform at their own pace, enhancing flexibility and encouraging broader adoption [26][29] Question: What is the customer interest in AI and its impact on net retention? - The introduction of an AI agent marketplace allows customers to augment their security teams, potentially improving net retention as they leverage agentic AI capabilities [31][34] Question: How is Agent Val enhancing ETM efficacy and reducing man-hours? - Agent Val confirms exploitability in the environment, saving IT teams time by reducing false positives and enabling immediate remediation actions [41][42] Question: What are the growth levers for 2026? - The company is focusing on product innovation, partner engagement, and federal opportunities to drive growth, with expectations for continued upsell potential [46][77] Question: How does the acquisition of Armis by ServiceNow impact the competitive landscape? - The company believes that the lack of integrated patch management in competitors' offerings, like Armis, will allow it to maintain a competitive edge [52][60]

Financial Data and Key Metrics Changes - Q3 bookings reached $1.3 billion, up 27% year-over-year, and revenue was $1.2 billion, up 26% year-over-year [20] - Non-GAAP EPS increased by 14% year-over-year, reaching $0.64 [26] - Operating income was $629 million, translating to a 51% operating margin [26] Business Line Data and Key Metrics Changes - Cyber safety segment bookings grew 5% year-over-year, with revenue increasing by 3% [20] - MoneyLion experienced nearly 40% revenue growth in Q3, driven by strong demand for personal financial products [23] - The Engine Marketplace processed over 360 million inquiries annually, with significant growth in both first-party and third-party products [16][54] Market Data and Key Metrics Changes - The paid customer base grew to over 78 million, with an increase of 1 million sequentially [25] - Cyber safety direct customers increased by 500,000, reflecting ongoing expansion [25] - The partnership with Equifax is expected to enhance product adoption and provide deeper insights into consumer risk profiles [50] Company Strategy and Development Direction - The company aims to build a trusted AI-powered platform focused on cyber safety and financial wellness [4] - The introduction of the Agent Trust Hub and Norton Neo browser highlights the company's commitment to securing AI interactions [10][12] - The strategy emphasizes the convergence of identity threats and financial risks, positioning the company as a leader in integrated solutions [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the threat landscape is evolving, with AI-driven scams becoming more prevalent [5][6] - The company is raising its revenue and EPS guidance for fiscal 2026, reflecting strong performance and momentum [30] - Management expressed confidence in the long-term growth potential driven by the integration of MoneyLion and ongoing investments in AI capabilities [31] Other Important Information - The company generated $541 million in operating cash flow and $535 million in free cash flow during Q3 [28] - A quarterly cash dividend of $0.125 per common share was approved, to be paid on March 11, 2026 [29] - The company is exploring refinancing options for its term loan maturing in September 2028 [28] Q&A Session Summary Question: How is Gen addressing the trust consumers need in AI? - Management acknowledged the growing need for trust in AI and highlighted the launch of the Agent Trust Hub to validate risks associated with AI agents [33][39] Question: What is the current status of the MoneyLion business transition? - Management confirmed that MoneyLion is progressing cautiously towards subscription models, with strong growth in personal financial offerings [40][42] Question: Can you elaborate on the Equifax partnership and its impact? - The partnership with Equifax is expected to enhance consumer risk visibility and drive incremental product adoption through Engine [48][50] Question: How is the company managing sales and marketing expenses? - Management indicated an increase in sales and marketing investments to capture higher returns, particularly in membership adoption [84][86] Question: What are the future plans for capital deployment? - The company plans to maintain a balanced approach to capital deployment, focusing on dividends, debt paydown, and opportunistic share buybacks [77][79]

Financial Data and Key Metrics Changes - Total billings grew by 18% to $2.37 billion in Q4 2025, driven by strong growth in Unified SASE and operational technology security [15][22] - Total revenue increased by 15% to $1.91 billion, with product revenue up over 20% to $691 million and service revenue growing 12% to $1.21 billion [16][17] - Operating margin was strong at 37.3%, exceeding guidance, while gross margin was 80.3% [21][22] - Free cash flow reached $577 million, representing a margin of 31% [22][24] Business Line Data and Key Metrics Changes - Unified SASE billings grew 40%, representing 27% of total billings, indicating strong demand for cloud security solutions [8][15] - Operational technology solutions saw billings growth of over 25%, reflecting broad-based demand [10][16] - AI-driven SecOps billings grew 6% in Q4 and 22% for the full year, with ARR up 21% [10][16] Market Data and Key Metrics Changes - The U.S. and Europe were the largest contributors to growth in $1 million-plus deals, each delivering more than 30% growth [16] - 16% of large enterprise customers purchased FortiSASE, an increase of over 50% [15][16] - The company gained market share, maintaining a 55% unit market share in firewalls [7][10] Company Strategy and Development Direction - The company aims to continue growing faster than the overall market, targeting billings and revenue CAGR above 12% and achieving the Rule of 45 [11][27] - Fortinet is focused on integrating networking and security through its FortiOS platform, which is expected to drive upsell opportunities [12][13] - The company is investing in R&D across custom silicon, OS convergence, AI-driven security, and cloud infrastructure to support innovation and growth [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth driven by strong demand across various sectors, including AI and operational technology [33][34] - The company is well-prepared for supply chain challenges and is maintaining healthy margins through strategic pricing and inventory management [42][43] - Management highlighted the importance of AI in cybersecurity, viewing it as an opportunity for growth [37][38] Other Important Information - The company plans to repay $500 million of senior debt at maturity at the end of Q1 2026 [27] - The board approved a $1 billion increase in the authorized stock repurchase amount, with approximately $1.4 billion remaining [22] Q&A Session Summary Question: What drove the strength in Unified SASE billings and the strong guidance for 2026? - Management attributed the growth to unique advantages in Sovereign SASE and the integration of network security, SD-WAN, and SASE on a single OS, which none of their competitors offer [31][32] Question: How is the company navigating the current environment regarding memory prices? - The company has prepared for supply chain issues by maintaining inventory and adjusting prices to manage margins effectively [42][43] Question: What is the revenue mix between Sovereign and public SASE? - Management indicated that the Sovereign SASE market is likely larger than the public SASE market, with strong growth expected due to the lack of competition in this area [50][51] Question: How does the company view the refresh cycles for technology upgrades? - Management noted that while some customers may seek extended support, the primary driver for growth is the demand for new functions and technology upgrades [56][61] Question: What is the expected pricing increase for appliances in 2026? - Management indicated that pricing for appliances is expected to increase between 5% and 20%, depending on the product [73][84] Question: What is the company's M&A philosophy moving forward? - The company remains open to M&A opportunities, particularly in secure operations, but emphasizes a disciplined approach to acquisitions [87][88]

Financial Data and Key Metrics Changes - Total billings grew by 18% to $2.37 billion in Q4 2025, driven by strong growth in Unified SASE and operational technology security [15][22] - Total revenue increased by 15% to $1.91 billion, with product revenue up over 20% to $691 million and service revenue growing 12% to $1.21 billion [16][17] - Operating margin was strong at 37.3%, exceeding guidance due to better-than-expected revenue growth and cost management [21][22] - Free cash flow reached $577 million, representing a margin of 31% [22][24] Business Line Data and Key Metrics Changes - Unified SASE billings grew 40%, representing 27% of total billings, indicating strong demand for cloud security solutions [8][15] - Operational technology solutions saw billings growth of over 25%, reflecting broad-based demand for both hardware and software [10][16] - AI-driven SecOps billings grew 6% in Q4 and 22% for the full year, with annual recurring revenue (ARR) up 21% [10][16] Market Data and Key Metrics Changes - The U.S. and Europe were the largest contributors to growth in $1 million-plus deals, each delivering more than 30% growth [16] - 7,200 new organizations selected the unified FortiOS platform, reinforcing the company's strong position across all market segments [16] Company Strategy and Development Direction - The company aims to continue growing faster than the overall market, with a target of achieving billings and revenue CAGR above 12% [11][27] - Fortinet is positioned as a leader in the 2025 Gartner Magic Quadrant for SASE platform, with a focus on integrating networking and security [10][11] - Continued investment in R&D across custom silicon, OS convergence, AI-driven security, and Fortinet-owned cloud infrastructure supports rapid innovation and organic growth [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth drivers for 2026, citing strong demand across various sectors, including AI and operational technology [33][34] - The company is well-prepared for supply chain challenges, maintaining healthy margins and inventory levels [42][43] - Management believes that the Sovereign SASE market presents a significant growth opportunity, as competitors have not yet entered this space [32][50] Other Important Information - The company reaffirmed its commitment to the Rule of 45 for the seventh consecutive year, indicating strong financial health [24][27] - Pricing actions have been implemented, with expected increases between 5% and 20% on specific products, which will positively impact service revenue over time [73][84] Q&A Session Summary Question: What drove the strength in Unified SASE billings and the strong guidance for 2026? - Management highlighted strong growth in Sovereign SASE and the unique advantages of their integrated platform as key drivers [31][32] Question: How is the company navigating the current environment regarding memory prices? - The company has prepared for supply chain issues and maintains a healthy margin, adjusting prices as necessary [42][43] Question: What is the revenue mix between Sovereign and public SASE? - Management indicated that the Sovereign SASE market is likely larger than the public SASE market, with strong growth expected [50] Question: How does the company view the potential for cannibalization between SASE and traditional products? - Management believes SASE will complement rather than cannibalize traditional networking and security solutions, creating additional business opportunities [68][70] Question: What are the expected pricing actions for 2026? - Pricing for appliances is expected to increase between 5% and 20%, depending on the product [73][84]

Financial Data and Key Metrics Changes - Total billings grew by 18% to $2.37 billion in Q4 2025, driven by strong growth in Unified SASE and operational technology security [13][20] - Total revenue increased by 15% to $1.91 billion, with product revenue up over 20% to $691 million and service revenue growing 12% to $1.21 billion [15][21] - Operating margin was strong at 37.3%, exceeding guidance, while gross margin was 80.3% [20][22] - Free cash flow reached $577 million, representing a margin of 31% [20][23] Business Line Data and Key Metrics Changes - Unified SASE billings grew 40%, representing 27% of total billings, indicating strong demand for cloud security solutions [6][15] - Operational technology solutions saw billings growth of over 25%, driven by demand for both hardware and software [9][14] - AI-driven SecOps billings grew 6% in Q4 and 22% for the full year, with annual recurring revenue (ARR) up 21% [9][15] Market Data and Key Metrics Changes - The U.S. and Europe were the largest contributors to growth in $1 million-plus deals, each delivering more than 30% growth [14] - 16% of large enterprise customers purchased FortiSASE, an increase of over 50%, highlighting continued expansion [13][15] - The company maintains a leading position in the firewall market with a 55% unit market share [5] Company Strategy and Development Direction - The company aims to continue growing faster than the overall market, targeting a billings and revenue CAGR above 12% [10][26] - Focus on integrating networking and security through FortiOS, which enhances performance and reduces total cost of ownership [6][12] - Continued investment in R&D, particularly in AI-driven security and quantum readiness, supports rapid innovation and organic growth [12][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth driven by strong demand across cybersecurity markets, including Secure Networking and Unified SASE [11][32] - The company anticipates service revenue growth to accelerate in the second half of 2026, driven by product revenue growth [24][26] - Management highlighted the importance of addressing supply chain challenges and maintaining healthy margins through strategic pricing [41][42] Other Important Information - The company has a disciplined approach to capital allocation, with a focus on maintaining the Rule of 45 and strong free cash flow generation [12][13] - A $1 billion increase in the authorized stock repurchase amount was approved by the board of directors [20] Q&A Session Summary Question: What drove the strength in Unified SASE billings and the strong guidance for 2026? - Management attributed the 40% growth in Unified SASE to unique advantages such as Sovereign SASE and the integration of network security, SD-WAN, and SASE on a single OS [30][31] Question: How is the company navigating the current environment regarding memory prices? - The company has prepared for supply chain issues by maintaining inventory and adjusting prices to manage margins effectively [41][42] Question: What is the revenue mix between Sovereign and public SASE? - Management indicated that the Sovereign SASE market is likely larger than the public SASE market, with strong growth expected due to a lack of competition in this area [49] Question: How does the company view the potential for AI to impact cybersecurity? - Management sees AI as an opportunity to enhance cybersecurity measures and control data leakage, with significant demand for AI-driven solutions [36][38] Question: What is the company's approach to M&A? - The company remains open to M&A opportunities, particularly in secure operations, but emphasizes a disciplined approach to acquisitions [86]

Core Insights - Fortinet reported strong quarterly earnings of 81 cents per share, exceeding the consensus estimate of 74 cents [2] - Quarterly revenue reached $1.91 billion, surpassing the Street estimate of $1.86 billion [2] Financial Performance - Product revenue increased by 20% year-over-year to $691 million [4] - Total billings grew by 18% to $2.37 billion [4] - Unified SASE billings experienced significant growth of 40% [4] - Non-GAAP operating margin stood at 37% [4] Future Outlook - For fiscal 2026, Fortinet anticipates adjusted EPS in the range of $2.94 to $3, aligning with the $2.94 estimate [3] - Revenue expectations for fiscal 2026 are set between $7.5 billion and $7.7 billion, compared to the $7.51 billion estimate [3] Market Reaction - Following the earnings report, Fortinet's stock rose by 2.69% to $81.62 in extended trading [4]

Investor Presentation Security and Compliance for the Digital Transformation Sumedh Thakar, President and CEO Joo Mi Kim, CFO February 5, 2026 Safe harbor This presentation includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this presentation include, but are not limited to, the following list: Our expectations and beliefs regarding t ...

Market Overview - The markets are focusing on earnings and economic news, with the University of Michigan's consumer sentiment index expected to fall by -1.4 points to 55.0 [1] - Bitcoin has plunged more than -12% to a 1.25-year low, down nearly 50% from its October record high, with significant outflows from Bitcoin ETFs totaling about $2 billion in the past month and over $5 billion in the past three months [2] - Stock indexes have extended their sell-off, with the S&P 500 falling to a 1.5-month low and the Nasdaq 100 dropping to a 2.5-month low [4] Economic Indicators - Fed Governor Lisa Cook supports the decision to hold interest rates steady, citing risks tilted toward higher inflation [3] - Challenger's January job cuts rose +117.8% year-over-year to 108,435, marking the largest amount of job cuts for a January since 2009 [3] - Weekly initial unemployment claims rose by +22,000 to an 8-week high of 231,000, exceeding expectations of 212,000 [3] - US December JOLTS job openings unexpectedly fell by -386,000 to a 5.25-year low of 6.542 million, against expectations of an increase to 7.250 million [3] Earnings Reports - Q4 earnings season is underway, with 150 S&P 500 companies scheduled to report earnings this week; 79% of the 275 companies that have reported so far have beaten expectations [6] - S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [6] - Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6% [6] Stock Performance - Qualcomm led the decline in technology stocks, falling more than -8% after forecasting weaker-than-expected Q2 revenue [4][13] - The Magnificent Seven technology stocks retreated, with Amazon.com and Microsoft closing down more than -4% [14] - Cryptocurrency-exposed stocks fell sharply, with MARA Holdings down more than -18% and Coinbase Global down more than -13% [15] - Cybersecurity stocks also sold off, with CrowdStrike Holdings down more than -9% [16] Notable Company Movements - Estee Lauder closed down more than -19% after forecasting full-year adjusted EPS below consensus [17] - McKesson Corp closed up more than +16% after reporting better-than-expected Q3 adjusted EPS and raising its full-year adjusted EPS estimate [19] - Corpay closed up more than +11% after reporting Q4 revenue above consensus [20] - Align Technology closed up more than +8% after reporting stronger-than-expected Q4 adjusted EPS [21]