Fortinet lowers its service revenue outlook as product sales climb

What happened

Fortinet lowered its 2026 service revenue outlook on Wednesday 28 October, to between $5.150 billion and $5.170 billion, from the $5.180 billion to $5.220 billion it gave on Wednesday 29 July. ^{[1, 2]}

Total revenue for the third quarter was $2.078 billion, up 20 percent from $1.725 billion a year earlier, the company reported. In the second quarter it had reported growth of 26 percent. ^{[1, 2]}

Why it matters

Service revenue, the subscriptions and support sold with Fortinet's firewalls, was $1.313 billion of the quarter's $2.078 billion. It was up about 13 percent from $1.166 billion, by the desk's arithmetic on the filed figures, while product revenue was up 37 percent to $765.0 million. By the same arithmetic, the full-year range came down by $40 million at its midpoint, even as the company raised its total revenue range. ^{[1, 2, 4]}

The quarter as filed

Operating income was $704.3 million, against $547.3 million a year earlier. Net income was $635.5 million, against $473.9 million. ^[1]

Billings, revenue plus the change in deferred revenue, were $2.336 billion, up 29 percent, the company reported. Billings are the company's own measure, not a figure under accounting rules. ^[1]

The outlook, July against October

For 2026 the company now expects revenue of $8.125 billion to $8.215 billion, up from $8.020 billion to $8.180 billion in July. Billings are now expected at $9.568 billion to $9.718 billion, from $9.350 billion to $9.550 billion. For the fourth quarter it expects revenue of $2.155 billion to $2.245 billion and billings of $2.775 billion to $2.925 billion. ^{[1, 2]}

Chief Financial Officer Christiane Ohlgart said on the call that service revenue 'faced some headwinds from winning new large enterprise customers with ramp service activations'. She called it 'really a timing issue', said service billings grew 26 percent, and said the company expects service revenue to grow faster in 2027 than in 2026. ^[4]

SiliconANGLE reported the change as a cut to the full-year service revenue forecast, with the same ranges as the release. It also reported that services grew 13 percent in the quarter. ^[5]

What settles it next

The quarterly report on Form 10-Q, with the full notes, was not yet on EDGAR on Thursday 29 October. The release lists management at conferences on Thursday 12 November, Wednesday 2 December and Wednesday 9 December; the fourth-quarter results will show the year's service revenue against the new range. ^{[1, 3]}

Who it reaches

Fortinet (FTNT) is direct: the results and the outlook are its own, filed with its current report of Wednesday 28 October. No source read for this piece gives a path to another company in the record's terms, so none is tagged. ^{[1, 3]}