Fortinet Earnings

Quick Take: Fortinet Q1 2024 Earnings

Fortinet released its earnings for its fiscal Q1 2024. During the quarter, Fortinet demonstrated robust financial performance across several key metrics:

  1. Operating Margin: Fortinet’s first-quarter operating margin was 28.5%, surpassing expectations and setting a new record.
  2. Cash Flow: The company generated record cash flow from operations of $830 million during the quarter.
  3. Billings: Total billings declined by 6%, as anticipated, primarily due to a challenging year-earlier comparison. However, unified Secure Access Service Edge (SASE) and Security Operations (SecOps) showed strong growth, offsetting the decline.
  4. Revenue: Total revenue grew by 7% to $1.35 billion during the quarter. Service revenue, which includes unified SASE and SecOps, experienced significant growth of 24%, indicating strong demand for these offerings.
  5. Gross Margin: The total gross margin improved to 78.1%, up 180 basis points from the previous quarter. A favorable mix shift towards higher-margin service revenues drove this improvement.
  6. Service Revenue: Service revenue accounted for 70% of total revenue and grew by over 30%, driven by unified SASE and SecOps.
  7. Product Revenue: Product revenue decreased by 18%, in line with expectations. Software license revenue, however, increased by 20%.
  8. Free Cash Flow: Free cash flow was $609 million, representing a 45% margin. Adjusted free cash flow, which excludes real estate investments, was $821 million.

During the conference call Ken Xie, the Founder, Chairman, and CEO, highlighted the company’s strong performance in Q1, emphasizing the company’s focus on investing in the fast-growing unified Secure Access Service Edge (SASE) and secure operation market, which accounted for one-third of first-quarter billings.

Fortinet’s differentiated unified SASE offering integrates all SASE functionality into one operating system, FortiOS, providing comprehensive networking and security capabilities. In 2024, the company plans to run attractive promotions to introduce customers to its new unified SASE solution.

Looking ahead, Fortinet expects billings in Q2 to decline by 1% year-over-year, with revenue growing by 9%. For the full year, the company forecasts billings in the range of $6.4 billion to $6.6 billion, with revenue growth of 9%. Fortinet remains committed to driving effective security solutions worldwide and anticipates a more normalized firewall market in the second half of 2024.


Fortinet’s recent earnings report contains a mix of performance indicators, showing both strengths and areas for potential improvement. On the positive side, the company achieved a notable first-quarter operating margin of 28.5%, surpassing expectations and setting a new record. This shows Fortinet’s ability to effectively manage costs and drive operational efficiency in a competitive cybersecurity landscape.

Looking ahead, Fortinet’s outlook appears positive, with forecasts for continued revenue growth and a more normalized firewall market expected in the second half of 2024. The company’s strategic focus on unified SASE and SecOps, coupled with its robust operating margin and cash flow generation, positions it well to capitalize on opportunities in the evolving cybersecurity landscape.

While Fortinet’s earnings reflect some areas of strength and resilience, particularly in operational efficiency and service revenue growth, addressing challenges in total billings and product revenue will be key to sustaining long-term growth and competitiveness in the cybersecurity market.

Disclosure: The author is an industry analyst, and NAND Research an industry analyst firm, that engages in, or has engaged in, research, analysis, and advisory services with many technology companies, which may include those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.