Fortinet stock plunged on Thursday after the cybersecurity firm reported second-quarter earnings, revenue and billings that edged by estimates while June-quarter guidance roughly met expectations, underwhelming investors.
The company backed off growth estimates for its core product, network firewall appliances. Firewalls block online intrusions and monitor web-based apps. At an investor day in 2024, Fortinet said many companies were in the process of replacing old network firewall appliances with new ones.
Fortinet earnings were released after the market close on Wednesday. Fortinet earnings in the June quarter rose 12% to 64 cents on an adjusted basis. Including acquisitions, revenue climbed 14% to $1.63 billion.
Analysts expected Fortinet earnings of 59 cents a share on sales of $1.625 billion.
"Fortinet delivered solid second-quarter results, beating the street on billings and revenue," said William Blair analyst Jonathan Ho in a report. "However, investors were left confused by the company's formal statement that 40% to 50% of its accelerated firewall refresh (estimated to be a $450 million, 650,000 unit opportunity) was now completed. This is driving confusion about why Fortinet is not seeing stronger product revenue growth and billings materialize."
Additionally, the Sunnyvale, Calif.-based firm said Q2 billings, a sales growth metric, rose 15% to $1.78 billion, compared with analyst estimates of $1.722 billion.
Guidance Underwhelms
For the current September quarter, Fortinet forecast revenue of $1.7 billion at the midpoint of guidance vs. estimates of $1.71 billion.
Also, Fortinet expects billings of $1.8 billion vs. estimates of $1.793 billion.
At TD Cowen, analyst Shaul Eyal on Thursday downgraded Fortinet stock to hold from buy. "While second half 2025 billings guide was raised by one point to 15% year-over-year growth we believe the current refresh cycle at 50% attainment is posing uncertainty of core appliance growth once the cycle is complete in four to six quarters."
Morgan Stanley analyst Keith Weiss downgraded Fortinet stock to equal-weight from over-weight.
"While Q2 billings and outlook were better than expectations, revelation on the earnings that firewall refresh was already 40% to 50% complete was disappointing, particularly as subscription revenue and free cash flow disappointed on weaker upsell," he said in a report.
On the stock market today, Fortinet stock plunged 23.2% to 74.22 in afternoon trading. Heading into the Fortinet earnings report, the cybersecurity stock was up 2% in 2025.
Shares in Crowdstrike Holdings, Cloudflare, Zscaler, Okta and other cybersecurity stocks also sold off on Thursday.
The company competes in the firewall network security market against Palo Alto Networks, Check Point Software Technologies and others.
Palo Alto plans to buy CyberArk for $25 billion. Check Point Q2 earnings also underwhelmed investors. Palo Alto stock and Check Point stock also fell on Thursday.
Fortinet Stock: Technical Ratings
Fortinet and many other cybersecurity firms are focused on a new growth market: Secure Access Service Edge. SASE offers a fast and cost-effective way of securing an organization's branch offices and remote workers.
Fortinet stock holds a Composite Rating of 90 out of a best-possible 99, according to IBD Stock Checkup.
Meanwhile, Fortinet stock holds an Accumulation/Distribution Rating of D. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. (A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.)
The Computer Software-Security group ranks No. 82 out of 197 industry groups that IBD tracks.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
