Fortinet (FTNT) Beats First Quarter Earnings and Revenue Estimates


Fortinet Inc. ftnt Started 2023 on a strong note by reporting huge first quarter results. Revenue and earnings exceeded the respective Zacks Consensus Estimate and posted significant year-over-year improvement.

Fortinet reported first quarter 2023 non-GAAP earnings per share (EPS) of 34 cents, which topped the Zacks consensus estimate of 28 cents. The bottom line improved 79% from the year-ago quarter’s earnings per share of 19 cents.

Total revenue of $1.26 billion came in ahead of the consensus mark of $1.20 billion and improved 32.2% year-over-year. The top line was driven by strong demand for the company’s core and advanced platform technologies.

Fortinet’s quarterly performance was helped by strategic investments in the development of powerful products and services, and efforts to expand into adjacent markets and boost the firm’s global sales force.

Fortinet, Inc. Price, Consensus and EPS Surprises

Fortinet, Inc. price-consensus-eps-surprise-charts , Fortinet, Inc. Citation

quarter in detail

Segment-wise, product revenue grew 35% year-over-year to $500.7 million. This surge can be attributed to the continued adoption of FortiGate-based secure SD-WAN solutions, strong revenue from non-FortiGate products, and growing demand for integrated security fabric products.

Services revenue grew 30.5% to $761.6 million, driven primarily by strong growth in the company’s security subscriptions. Billings were up 29.6% to $1.5 billion, driven primarily by strong customer demand across its core and advanced platform technologies.

As of March 31, 2023, deferred revenue was $4.88 billion, up 33.4% year-over-year.

Geographically, the EMEA region posted the highest top-line growth at 38.2%, followed by the Americas at 36.8% and APAC at 15.2%. In the first quarter, the Americas accounted for 41.5% of total revenue, while EMEA and APAC accounted for 37.9% and 20.6%, respectively.

During the quarter ending March, the company secured a total of 124 deals valued at $1 million or more.


Non-GAAP gross margin increased 190 basis points (bps) year over year to 76.3% in the first quarter of 2023. This reflects an expansion of 440 bps in product gross margin, while services gross margin grew by 70 bps.

The product’s gross margin expanded due to legacy pricing actions, reduced supply-chain cost pressures and improved discounting. Service gross margin improved due to price increases, which more than offset the negative impact of increased investments in data centers and points of presence.

Non-GAAP operating income increased 58.9% to $334 million in the reported quarter. Meanwhile, non-GAAP operating margin expanded 450 bps to 26.5%, benefiting primarily from higher revenue, improved gross margin and the positive impact of foreign currency exchange rates.

Balance Sheet and Cash Flow

Fortinet exited the first quarter with $2.19 billion in cash and cash equivalents and short-term investments of $2.85 billion reported at the end of the fourth quarter of 2022.

During the reported quarter, FTNT generated operating and free cash flow of $677.5 million and $647.2 million, respectively. In the first quarter, the company did not repurchase common stock.


Buoyed by strong first quarter performance, Fortinet raised revenue and non-GAAP EPS guidance for full year 2023. -$5.43 billion.

Services revenue is now forecast in the range of $3.37-$3.40 billion, up from a previous forecast in the band of $3.335-$3.365 billion. Billings are now expected to be in the range of $6.75-$6.81 billion instead of the previously estimated $6.71-$6.79 billion band.

Non-GAAP gross margin and operating margin are expected to be in the bands of 75-76% and 25-26%, respectively. Non-GAAP EPS is now estimated between $1.44 and $1.48, up from an earlier estimate of $1.39-$1.41. It assumes a non-GAAP effective tax rate of 17% and a diluted share count of between 795 million and 805 million.

Fortinet issued impressive guidance for the second quarter. The company forecasts revenue in the range of $1.28-$1.32 billion for the second quarter of 2023. Billings are estimated in the band of $1.56-$1.60 billion.

Non-GAAP gross margin is expected in the range of 75.5-76.5%, while non-GAAP operating margin is estimated between 24.5% and 25.5%. Non-GAAP EPS is projected in the range of 33-35 cents. The company assumes a non-GAAP effective tax rate of 17% for the second quarter and diluted shares outstanding to be between 790 million and 800 million.

Zacks Rank and Other Stocks to Consider

Currently, Fortinet has a Zacks Rank #2 (Buy). FTNT shares have gained 26.1% over the last year.

Here are some other top-ranked stocks from the broader technology sector visitor, Zscaler zs And check point software chkp, each has a Zacks Rank #2. you can see Full list of today’s Zacks #1 Ranked (Strong Buy) stocks here,

The Zacks Consensus Estimate for’s first quarter 2023 earnings has been revised down to 23 cents per share from 16 cents a share 60 days ago. For 2023, earnings estimates have been revised northward from 7 cents over the past 60 days to $1.49 per share.’s earnings beat the Zacks consensus estimate three times over the past four quarters, while missing it on one occasion, with an average surprise of 225%. Shares of WIX have declined 2% YTD.

The Zacks Consensus Estimate for Zscaler’s third-quarter fiscal 2023 earnings has been revised northward over the last 60 days by 2 cents to 39 cents per share. For fiscal 2023, earnings estimates have been revised northward from 8 cents over the past 60 days to $1.52 per share.

Zscaler’s earnings beat the Zacks Consensus Estimate each of the past four quarters, with an average surprise of 29.7%. ZS shares have declined 21.2% YTD.

The Zacks Consensus Estimate for Check Point Software’s second quarter 2023 remains unchanged over the past 60 days at $1.89 per share. For 2023, earnings estimates have risen one penny over the past seven days to $7.98 per share.

Check Point Software’s earnings beat the Zacks Consensus Estimate each of the past four quarters, with an average surprise of 3.7%. CHKP shares have declined 6.1% YTD.

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