Core Insights - Fortinet (FTNT) reported strong fourth-quarter 2025 results, with both earnings and revenues exceeding expectations and showing year-over-year growth [2][9] Financial Performance - Non-GAAP earnings per share (EPS) for Q4 2025 was 81 cents, surpassing the Zacks Consensus Estimate by 9.46% and increasing by 9.5% year over year [2][9] - Total revenues reached $1.9 billion, beating the consensus mark by 2.54% and growing 15% year over year, driven by strong demand across its portfolio [3][9] - Total billings increased by 18% year over year to $2.37 billion, with Unified SASE leading the growth at 40% [4][9] Revenue Breakdown - Product revenues rose 20% year over year to $691.1 million, accounting for 36.3% of total revenues, supported by strong demand for multiproduct deals and operational technology security [5] - Service revenues grew 12% year over year to $1.21 billion, making up 63.7% of total revenues, with 7,200 new organizations added to the customer base [6] Margins and Profitability - Total gross margin was 79.6%, a decrease of 160 basis points year over year, while product gross margin fell to 66.9% and service gross margin remained at 86.8% [7] - Operating margin improved by 90 basis points year over year to 33% on a GAAP basis, with a non-GAAP operating margin of 37.3% [7] Balance Sheet and Cash Flow - Fortinet ended Q4 2025 with cash and cash equivalents of $3.58 billion, an increase from $3.12 billion at the end of Q3 2025 [8] - Cash flow from operations was $620.2 million for Q4 2025, down from $655.2 million in the previous quarter, while free cash flow increased to $577.4 million [8] Guidance - For Q1 2026, Fortinet expects revenues between $1.7 billion and $1.76 billion, with billings estimated between $1.77 billion and $1.87 billion [10] - For the full year 2026, revenues are projected to be between $7.50 billion and $7.70 billion, with billings expected in the range of $8.4 billion to $8.6 billion [11]

Core Insights - Fortinet (FTNT) is experiencing significant growth driven by the rising demand for Unified SASE and SecOps, with Unified SASE billings increasing by 21% year over year and SecOps billings rising by 31% in Q2 2025, together accounting for approximately 35% of total billings [1][10] - The company has raised its full-year billings outlook midpoint by $100 million, reflecting strong enterprise adoption and demand for cloud-delivered services [3][10] - Fortinet's unique position as the only vendor to develop all core SASE capabilities within a single operating system, FortiOS, enhances its competitive edge by reducing cost and complexity [4] Financial Performance - Projected revenues for 2025 are expected to grow by 12.8% year over year to $6.72 billion, with total billings anticipated to increase by 13.9% to $7.44 billion, highlighting the momentum from SASE and SecOps as long-term growth drivers [5] - The consensus estimate for 2025 earnings is $2.51 per share, indicating a year-over-year growth of 5.91% [14] Competitive Landscape - Cisco Systems (CSCO) leverages its network dominance to provide integrated security solutions, focusing on large enterprises with advanced threat protection and scalability, contrasting with Fortinet's cost-effective approach [6] - Check Point Software (CHKP) is recognized for its Infinity Platform and emphasizes real-time threat prevention, often outperforming Fortinet in malware and phishing benchmarks, thus strengthening its market position [7] Market Performance - Year to date, FTNT shares have declined by 19%, underperforming the Zacks Security industry's gain of 8.6% and the Zacks Computer and Technology sector's rise of 11.8% [8][11]

Core Insights - The cybersecurity market is projected to grow significantly, reaching $351.9 billion by 2030, with Fortinet and Qualys as key players addressing critical security needs [1][2] - Organizations are increasing their security budgets by 15% in 2025 due to escalating cyber threats [2] Fortinet (FTNT) - Fortinet reported a revenue growth of 14% year-over-year to $1.63 billion in Q2 2025, with billings increasing by 15% to $1.78 billion [4] - The company maintains a strong market position with its Security Fabric platform and leadership in network firewalls, but faces challenges in sustaining growth momentum [4][5] - Following its earnings announcement, Fortinet's stock dropped 17% in after-hours trading, indicating investor concerns about future growth despite beating earnings estimates [5] - The guidance for Q3 revenues is between $1.67 billion and $1.73 billion, suggesting a moderation in growth trajectory [5] - The consensus mark for 2025 earnings is $2.51 per share, indicating a 5.91% year-over-year growth [6] Qualys (QLYS) - Qualys demonstrated a 10% revenue growth to $164.1 million in Q2 2025, with 82% GAAP gross margins, showcasing operational efficiency [7] - The launch of the AI-powered Risk Operations Center positions Qualys as a leader in next-generation threat management, with the ability to reduce risk exposure by 85% and accelerate remediation by 70% [7] - Qualys raised its 2025 revenue guidance to $656-662 million, representing 8-9% growth, while maintaining strong profitability metrics [9] - The consensus mark for 2025 earnings is $6.35 per share, indicating a 3.59% year-over-year growth [10] Valuation and Performance Comparison - Fortinet trades at a P/E ratio of 30.18, while Qualys trades at a more attractive P/E ratio of 19.88, indicating better relative value for Qualys [11][8] - Fortinet's stock has dropped over 25% from its 52-week high and is down 14.5% year to date, while Qualys has shown more stability with a decline of 6.8% year to date [14] Conclusion - Qualys is viewed as a more compelling investment opportunity due to its innovative AI-driven platform, superior margins, and attractive valuation [18] - The focus on autonomous risk management positions Qualys for accelerated growth in the face of increasing security threats [18]