Fortinet first quarter revenue surges to USD $1.54 billion

Fortinet has reported its financial results for the first quarter of 2025, with total revenue reaching USD $1.54 billion and marking a 14 per cent year-on-year increase.

The cyber security company detailed product revenue of USD $459.1 million, a rise of 12.3 per cent on the same period last year when product revenue stood at USD $408.9 million. Service revenue contributed USD $1.08 billion, representing a 14.4 per cent increase from USD $944.4 million in the first quarter of 2024.

Billings for the quarter climbed to USD $1.60 billion, a 13.5 per cent rise compared to the USD $1.41 billion reported a year earlier. Remaining performance obligations as of 31 March 2025 were USD $6.49 billion, up 11.7 per cent from USD $5.81 billion as of 31 March 2024. The company expects to recognise approximately USD $3.38 billion of these obligations as revenue over the next 12 months, indicating a 15.4 per cent increase from the comparable period last year.

Fortinet's annual recurring revenue (ARR) for Unified Secure Access Service Edge (SASE) grew by 25.7 per cent to USD $1.15 billion, while security operations ARR increased by 30.3 per cent to USD $434.5 million for the quarter ending 31 March 2025. These increases reflect the company's investment in these rapidly expanding segments.

The quarter delivered a record generally accepted accounting principles (GAAP) operating margin of 29.5 per cent, translating to GAAP operating income of USD $453.8 million. This compares with a GAAP operating income of USD $321.2 million, or a margin of 23.7 per cent, in the first quarter of 2024. The company also posted a non-GAAP operating margin of 34.2 per cent with non-GAAP operating income at USD $526.2 million, up from USD $386.1 million and a margin of 28.5 per cent a year before.

GAAP net income was USD $433.4 million for the first quarter of 2025, up from USD $299.3 million a year earlier. GAAP diluted net income per share was USD $0.56, based on 776.8 million diluted weighted-average shares, compared to USD $0.39 per share and 770.5 million diluted shares in the corresponding quarter of 2024. Non-GAAP net income increased to USD $452.3 million, from USD $333.9 million, with non-GAAP diluted net income per share at USD $0.58, up from USD $0.43 a year earlier.

The company also registered record cash flow from operations of USD $863.3 million for the first quarter, including USD $14.0 million in proceeds from an intellectual property matter. Free cash flow was reported at USD $782.8 million, compared to USD $608.5 million in the first quarter of 2024.

Ken Xie, Founder, Chairman, and Chief Executive Officer of Fortinet, said, "We are pleased to report another strong quarter as non-GAAP operating margin increased 570 basis points year over year to a first quarter record of 34 per cent, while billings grew 14 per cent year over year."

Xie added, "We continue to accelerate our growth strategy by investing in the rapidly expanding Unified SASE and security operations markets, while strengthening our leadership in secure networking. Leveraging our deep expertise in networking and security convergence, a strong track record of artificial intelligence (AI)-driven innovation, and seamless product development and integration through our FortiOS operating system, we have established ourselves as the leader in organic innovation and will continue setting the industry standard in cybersecurity."

Looking ahead, Fortinet provided guidance for the second quarter of 2025, with revenue expectations between USD $1.590 billion and USD $1.650 billion, and billings in the range of USD $1.685 billion to USD $1.765 billion. The company also anticipates a non-GAAP gross margin of 80.0 to 81.0 per cent, a non-GAAP operating margin of 31.5 to 32.5 per cent, and diluted non-GAAP net income per share in the range of USD $0.58 to USD $0.60, assuming an 18 per cent non-GAAP effective tax rate and a diluted share count of 773 million to 777 million.

For the full fiscal year 2025, Fortinet expects revenue in the range of USD $6.650 billion to USD $6.850 billion, service revenue between USD $4.575 billion and USD $4.725 billion, and billings in the range of USD $7.200 billion to USD $7.400 billion. Guidance also includes a non-GAAP gross margin of 79.0 to 81.0 per cent, a non-GAAP operating margin of 31.5 to 33.5 per cent, and diluted non-GAAP net income per share between USD $2.43 and USD $2.49, based on a presumed diluted share count of 769 million to 779 million and a non-GAAP effective tax rate of 18 per cent.