Fortinet Inc (FTNT)
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Fortinet (Nasdaq: FTNT), the firewall company run by brothers Ken and Michael Xie, ranks second in our in-house Terry Smith quality scanner (U.S. selection, as of July 18, 2026): an 80 percent gross margin, an operating margin above 30 percent, net cash. We read the annual report (10-K) for 2025 and the quarterly report (10-Q) as of March 31, 2026 — and they also tell the other story: 55 percent of revenue flows through just three distributors, a class action is litigating the communication of the company's own growth story, and management itself guides to falling margins in 2026. Not investment advice — just a cross-check of whether a quality seal survives its own fine print.
Appears in These Scanners
This stock currently matches 3 of our scanner strategies — each hit links to the scanner.
Only genuine hits from verified scanners count; pure ranking metrics (P/E, P/S, and similar, which just sort the whole universe) don't count as a hit. View all scanners
Basics
Performance
Valuation
Profitability
Balance Sheet & Safety
Growth
Quality & Screener
AI Rating
Sells AIFortinet verkauft KI-gestützte Sicherheitsprodukte als dokumentierte Umsatzquelle: Die FortiGuard-Sicherheitsabos — laut 10-K eine Suite „AI-powered security capabilities“, deren Bedrohungsdaten FortiGuard Labs per KI auswertet — stellen historisch einen wesentlichen Teil des Umsatzes (Service-Umsatz GJ 2025: 4,58 Mrd. US-Dollar von 6,80 Mrd. gesamt). Dazu vermarktet das 10-K die eigenständige Produktfamilie FortiAI (FortiAI-Assist mit generativer und agentischer KI, FortiAI-Protect, FortiAI-SecureAI) im Produktkapitel Item 1. Vorrang-Regel: verkauft vor nutzt.
View the full file — quotes, sources, reviewed filings
„Using millions of global network sensors, FortiGuard Labs monitors the worldwide attack surface and employs AI to mine that data for new threats. FortiGuard and Other Security Services are a suite of AI-powered security capabilities that are natively integrated as part of the Fortinet Security Fabric to deliver coordinated detection and enforcement across the entire attack surface."
Mit Millionen globaler Netzwerksensoren überwacht FortiGuard Labs die weltweite Angriffsfläche und setzt KI ein, um aus diesen Daten neue Bedrohungen zu gewinnen. FortiGuard and Other Security Services sind eine Suite KI-gestützter Sicherheitsfunktionen, die nativ in die Fortinet Security Fabric integriert sind, um koordinierte Erkennung und Durchsetzung über die gesamte Angriffsfläche zu liefern.
„FortiAI provides a dual-layered defense across the Fortinet Security Fabric through the AI for Security and Security for AI framework."
FortiAI bietet eine zweischichtige Verteidigung über die gesamte Fortinet Security Fabric hinweg — über das Rahmenwerk „AI for Security“ und „Security for AI“.
„Within AI for Security, FortiAI-Assist uses generative and agentic AI to support Network Operations Center (“NOC”) and Security Operations Center (“SOC”) teams in monitoring, analysis and response activities across enterprise environments."
Innerhalb von „AI for Security“ nutzt FortiAI-Assist generative und agentische KI, um Teams im Network Operations Center („NOC“) und Security Operations Center („SOC“) bei Überwachung, Analyse und Reaktion in Unternehmensumgebungen zu unterstützen.
„Our FortiGuard and other security subscriptions and FortiCare technical support services revenue has historically accounted for a significant percentage of our total revenue."
Die Umsätze aus unseren FortiGuard- und anderen Sicherheitsabonnements sowie den technischen FortiCare-Supportdiensten machten historisch einen erheblichen Anteil unseres Gesamtumsatzes aus.
Filings Reviewed: 10-Q 2026-05-08 · 10-Q 2025-11-07 · 10-Q 2025-08-08 · 10-Q 2025-05-08 · 10-K 2026-02-25 · 10-K 2025-02-21
Rated on July 18, 2026 · How the Rating Is Built
Highlighted are things our editorial team noticed: green = stands out as strong, red = deserves a closer look. No single metric is a verdict on its own — always read it in context.
Quarterly Figures
| Quarter | EPS (Earnings Per Share) | EPS YoY (%) | Sales ($M) | Sales YoY (%) | Net Margin (%) | OCF ($M) | FCF ($M) |
|---|---|---|---|---|---|---|---|
| 2024: Q4 | 0.68 | 68.60 | 1,660 | 17.30 | 31.70 | 478 | 380 |
| 2025: Q1 | 0.56 | 43.60 | 1,540 | 13.80 | 28.10 | 863 | 797 |
| 2025: Q2 | 0.57 | 15.10 | 1,630 | 13.60 | 27.00 | 452 | 284 |
| 2025: Q3 | 0.62 | -12.00 | 1,725 | 14.40 | 27.50 | 655 | 568 |
| 2025: Q4 | 0.68 | -0.30 | 1,905 | 14.80 | 26.60 | 620 | 577 |
| 2026: Q1 | 0.72 | 29.00 | 1,850 | 20.10 | 28.90 | 1,077 | 1,007 |
- EPS (Earnings Per Share):
- Quarterly profit divided by the total share count — how much of the profit works out to a single share.
- YoY (Year over Year):
- Change versus the same quarter a year ago — this is how you compare without seasonal distortion (e.g. the holiday shopping season).
- Sales:
- All revenue for the quarter, before any costs are deducted — the top line of the income statement.
- Net Margin:
- What percentage of sales is left over as profit in the end. Negative means the company is posting a loss.
- OCF (Operating Cash Flow):
- The cash that actually flows into the till from the core business during the quarter — harder to dress up than book profit.
- FCF (Free Cash Flow):
- Operating cash flow minus capital expenditures — the money that's genuinely free to use, say for paying down debt, buybacks, or dividends.
Assessment: Opportunities & Risks
Textbook quality: an 80.5 percent gross margin, a 30.7 percent operating margin and $1,853 million of net income in fiscal year 2025; free cash flow of $2,212 million, crossing $1 billion in a single quarter for the first time in Q1 2026 (10-K FY 2025, 10-Q as of 03/31/2026).
Revenue +14 percent in 2025, +20 percent in Q1 2026 with product revenue +41 percent — the announced firewall refresh cycle delivers first hard evidence; billings re-accelerated to +16 percent after the sputtering year 2024 (+2 percent) (10-K FY 2025, 10-Q).
Three distributors stood for 55 percent of 2025 revenue, one distributor for 32 percent of net receivables, six for 67 percent — the business model's most critical bottleneck never surfaces in a quality metric (10-K FY 2025, Item 1A and Note 15).
The consolidated securities class action (In re Fortinet, Inc. Securities Litigation) litigates the communication of the "2026 firewall refresh cycle" — the central growth story; plus two derivative suits. Fortinet considers everything without merit, no accrual exists, the outcome is open (10-Q as of 03/31/2026, Note 10).
Net cash of roughly $2.9 billion and $7.35 billion of prepaid subscriptions stand against nearly bought-away equity ($1.24 billion, accumulated deficit of $507.9 million) and a P/E around 30; for 2026, management itself guides to a lower operating margin (10-K FY 2025; data as of Q1 2026).
By its SEC filings, Fortinet is a genuine quality company: an 80 percent gross margin, net cash, a subscription cushion above $7 billion and a refresh cycle that measurably began in the first quarter of 2026 with 41 percent product growth. But no quality filter measures the three biggest risks: 55 percent of revenue flows through three distributors, a federal court is examining the communication of the very growth story that carries the stock, and management itself guides to falling margins for 2026 — while $8.51 billion of buybacks have nearly consumed the equity and turned every ROE-style metric into a distortion. Not investment advice.
- FTNT reached the research list via rank 2 in the in-house Terry Smith quality scanner (U.S. selection, as of July 18, 2026); additionally a hit in the Altman-Z "balance-sheet fortress" filter. A quality scanner measures financial statements, not distribution structure, lawsuits or guidance — it never replaces the cross-check in the SEC filings.
- Valuation figures are deliberately anchored evergreen: the price anchors are the average buyback prices Fortinet itself reported in the 10-K/10-Q ($76.68 to $77.95 between early 2026 and May 2026); P/E and P/S computed from TTM figures as of 03/31/2026. Analyses are evergreen, daily prices are not a buy argument.
- Identity verified via EDGAR submissions (CIK 0001262039, Delaware, Nasdaq: FTNT, domestic filer 10-K/10-Q, no Form 15; the only former name is the styling variant "FORTINET INC" until May 2019). Fiscal year ends December 31.
About the Company
Fortinet, Inc. bietet weltweit Cybersicherheits- und konvergierte Netzwerk- und Sicherheitslösungen an.
| CEO Insider Trades (12 Mo.) | selling own stock |
|---|---|
| Employees | 15,311 |
| Headquarters | Sunnyvale, CA |
| Website | fortinet.com |
| IPO Date | 18. Nov 2009 |
| Next Earnings | 5. Aug 2026 |
Management
| Name | Title | Birth Year |
|---|---|---|
| Ken Xie | Co-Founder, Chairman & CEO | 1963 |
| Michael Xie | Co-Founder, President, CTO & Director | 1969 |
| Christiane Ohlgart | Chief Accounting Officer, CFO and Principal Financial & Accounting Officer | 1968 |
| John Whittle J.D. | Chief Operating Officer | 1969 |
| Anthony Luscri | Vice President of Investor Relations | – |
| Russ Schafer | Executive Vice President of Marketing | – |
| Anthony James | Senior Vice President of Product & Solution Marketing | – |
| Robert May | Executive Vice President of Technology & Product Management | – |
| Joe Sarno | Executive Vice President of International Sales | – |
| Carl Windsor | Chief Information Security Officer | – |
Executives per the latest required filings; titles kept in their original language. Source: fundamental data.
Chart
Interactive price chart (TradingView).
Data as of: July 20, 2026 · Source: fundamental data & SEC filings (annual and quarterly reports, 10-K/10-Q)
Note: pure fact-based analysis, not investment advice and not a solicitation to buy or sell. All figures without guarantee.