Fortinet (FTNT) Rosenblatt's 6th Annual Technology Summit: The Age of AI (Part II) summary

Quarterly performance highlights

• Achieved broad-based demand growth across all geographies, with hardware sales accelerating and strong performance in multiple use cases including OT, SD-WAN, and AI-enabled networking.

• Unified SASE billings grew 35% and now represent a quarter of sales, with SD-WAN as a key driver due to a large install base and integrated cloud functionality.

• Product revenue grew 52% year-over-year, driven by both unit growth and customers upgrading to higher-performance hardware, reflecting increased network traffic and AI adoption.

• OT billings accelerated 55% year-over-year, with growth driven by heightened awareness of infrastructure security across all customer segments, including public sector and manufacturing.

• International sales outpaced competitors due to a long-term focus on global markets and strong channel partnerships in Europe, Latin America, and Canada.

Product and innovation updates

• Launched new SD-WAN and SASE bundles, including teaser licenses to encourage cloud adoption and upsell opportunities.

• Introduced the FortiGate 1200G AI internet firewall, targeting large enterprise and AI data center buyers, with plans to expand sales teams and partnerships for AI infrastructure.

• Continued innovation in integrating hardware and software, with new outpost functionality enabling SASE PoPs in rural or local areas, reducing reliance on distant cloud PoPs.

• Expanded secure networking offerings, with increased sales of switches and integrated security fabric, appealing to both existing and new customers seeking consolidation.

• AI-related services are being added both as incremental SKUs and as enhancements to existing offerings like FortiGuard.

Market trends and strategic positioning

• Success in large enterprise SASE adoption, particularly among customers with distributed environments and on-premise data centers, with most upsell coming from the existing SD-WAN base.

• Sovereign SASE and hybrid opportunities are growing, especially in Europe, with telcos and public sector as key buyers; pipeline is currently more weighted toward hybrid.

• Customers are consolidating networking and security to reduce operational costs and complexity, with integrated solutions favored over fragmented best-of-breed approaches.

• Heightened threat landscape, especially due to AI, is accelerating demand for integrated security solutions and driving investment across all regions.

• New market expansion is expected to be the largest contributor to growth through 2027, both within the existing base and by capturing share from competitors.