Fortinet (NasdaqGS:FTNT) Conference Transcript

Fortinet Conference Summary Company Overview - Company: Fortinet (NasdaqGS:FTNT) - Date of Conference: September 11, 2025 Key Industry Insights - AI and Network Security: The discussion highlighted the increasing CapEx buildouts for AI and the critical role of network security in this context, particularly with major players like Oracle and Microsoft expanding their data centers for AI applications [3][4] - AI-Related Security Business: Fortinet categorizes its AI-related security offerings into three segments: AI Assist, AI Protect, and AI Secure AI, with AI Assist contributing approximately 11% of the business and growing at 35% [4][6] - Market Dynamics: The shift from training to inference workloads in AI is expected to change security needs, as enterprise adoption increases [7][8] Financial Performance and Growth Drivers - Revenue Growth: Fortinet's secure networking segment is projected to grow at a CAGR of 8% over the next five years, while unified SASE is expected to grow around 20% [29][30] - Product Revenue Outlook: Despite potential short-term fluctuations, the company anticipates product revenue growth of around 10% in a normal market environment, driven by new functions and technology upgrades [32][33] - Enterprise Engagement: Fortinet is seeing increased engagement from enterprise customers, particularly in optimizing networks for AI and addressing new security risks [25][35] Strategic Initiatives - SASE Development: Fortinet has shifted its strategy to develop its own SASE infrastructure, which has shown rapid growth and shorter sales cycles compared to competitors [44] - OT Security Market: The company is focusing on the operational technology (OT) security market, which is expected to grow significantly as more devices connect and require protection [40][41] - Sales Strategy: Fortinet is enhancing its sales force to improve cross-selling opportunities, particularly in the enterprise segment, where different buying centers exist [42][43] Technology and Innovation - ASIC Development: Fortinet has developed its own ASIC chips, which provide superior computing power for security applications, enhancing the performance of its products [5][15] - Integration of Functions: The company is integrating multiple security functions into its FortiOS platform, which is expected to drive growth in network security [13][14] Market Position and Competitive Landscape - Leadership in Cybersecurity: Fortinet claims to have more AI-related patents than any other cybersecurity company, positioning itself as a leader in the AI security space [6] - SASE vs. Traditional Firewalls: The company believes that while SASE will not replace network security, it will evolve the role of firewalls, necessitating the integration of SASE functions into firewall products [20][21] Financial Management - Share Buyback Program: Fortinet has authorized an additional $1 billion for share repurchases, reflecting confidence in its long-term growth and market position [51][52] Conclusion - Fortinet is strategically positioned to capitalize on the growing demand for AI-related security solutions and the integration of network security functions. The company is focused on innovation, market expansion, and enhancing customer engagement to drive future growth.