Fortinet beat market expectations and raised its 2026 outlook, but its share price has fallen 31% over the past week. The decline in software stocks, driven mainly by ServiceNow's disappointing results and concerns about AI, combined with a retreat in investor expectations.
Following its announcement, Fortinet reported revenue of $2.08 billion, up 20% year on year, while non-GAAP earnings per share came to $0.91, above the market forecast of $0.86. Billings rose 29% to $2.34 billion, and free cash flow came to $865 million. The company raised its 2026 outlook for the third time.
Product revenue rose 37% to $765 million, but growth slowed from the previous quarter. Service revenue was affected by delays in customer activations, causing billings growth to lag relatively. Several major securities firms revised their views on FtNT. BofA downgraded the stock to Neutral, Goldman Sachs cut its price target from $190 to $165, and Wells Fargo cut its target to $115.
Fortinet's share price plunged after the results. The decline was also affected by ServiceNow's disappointing results announced during the same week, while software stocks broadly fell on concerns about AI. The view was also expressed that growth could slow to about 10% in 2027. Fortinet expects 2026 service revenue of $5.15 billion to $5.17 billion.