Fortinet (FTNT) Q1 2025 earnings summary

Executive summary

• Total revenue for Q1 2025 was $1.54 billion, up 14% year-over-year, with product revenue up 12% and service revenue up 14%.

• Unified SASE ARR grew 26% and Security Operations ARR rose 30% year-over-year, with SASE and SecOps billings up 18% and 29%, now 25% and 10% of total billings.

• Record first quarter operating margin of 34.2% (non-GAAP) and 29.5% (GAAP), with free cash flow of $783 million and adjusted free cash flow of $839 million.

• Large enterprise segment led growth, with deals over $1 million up 30% and three eight-figure deals closed; EMEA and financial services/government verticals outperformed.

• Notable acquisitions (Next DLP, Lacework, Linksys) and leadership transition, with CFO change announced.

Financial highlights

• Product revenue: $459 million (+12% YoY); service revenue: $1.08 billion (+14% YoY); total billings: $1.6 billion (+14% YoY).

• Gross margin (non-GAAP): 81.9%; product gross margin: 67.7%; service gross margin: 86.7%.

• Net income: $433 million (GAAP), $452 million (non-GAAP); diluted EPS: $0.56 (GAAP), $0.58 (non-GAAP).

• Free cash flow: $783 million (51% margin); adjusted free cash flow: $839 million (54% margin).

• Deferred revenue/RPO: $6.42–$6.5 billion, up 12% year-over-year.

Outlook and guidance

• Q2 2025 revenue expected at $1.59–$1.65 billion; billings at $1.685–$1.765 billion.

• FY2025 revenue guidance: $6.65–$6.85 billion; billings: $7.2–$7.4 billion; service revenue: $4.575–$4.725 billion.

• FY2025 non-GAAP gross margin: 79–81%; operating margin: 31.5–33.5%; EPS: $2.43–$2.49.

• Infrastructure investments for 2025 expected at $380–$430 million.

• Sufficient liquidity projected for at least the next 12 months.