Fortinet, Inc. (FTNT) Business Profile

What it does

Fortinet sells cybersecurity products and services that help organizations protect their networks, users, devices and data. Its customers range from small businesses to large enterprises, service providers and government organizations. Founded in 2000 and headquartered in Sunnyvale, California, Fortinet is led by founder and chief executive Ken Xie.

The Fortinet Security Fabric brings its products together across three areas: secure networking, secure cloud access and security operations. Secure networking includes FortiGate firewalls, which inspect and control network traffic. Customers can deploy them as physical appliances, software or cloud-based solutions, including in offices, data centers and cloud environments.

Fortinet also sells secure access services for employees and devices connecting to applications, whether they are on a company network or working remotely. Its security operations products help teams identify threats, investigate alerts and respond to incidents. Other offerings protect industrial systems, such as those used in manufacturing, energy and transportation.

FortiOS is the operating system underlying the platform. Fortinet designs specialized chips for its appliances and operates cloud infrastructure for delivering services. FortiGuard supplies security capabilities and threat intelligence, while FortiCare provides technical support. Customers can use multiple products together and manage security across different parts of their operations.

How it makes money

Fortinet operates as one reportable segment and earns revenue from products, security subscriptions, and technical support and other services. In FY2025, reportable segment revenue was $6.8 billion; in Q3 2026, revenue grew 20% to 2.08 billion.

Product revenue comes from offerings including network security appliances and software. FortiGate appliances can be deployed in offices, data centers and other locations, while virtual and cloud versions serve customers that do not rely solely on physical hardware. Product revenue varies with the timing of customer orders, equipment upgrades and the mix of devices sold.

Security subscriptions provide capabilities such as threat protection and intelligence. FortiGuard Labs monitors threats and develops protection updates for customers. Technical support includes FortiCare, which offers different service levels and options such as priority hardware replacement. These subscription and support relationships provide continuing revenue alongside product sales.

Customers can buy products and services as a package. Smaller customers often buy services in a bundle, while large enterprises may deploy hardware first and add security subscriptions as they expand their use. Fortinet prices FortiCare and SD-WAN as a percentage of hardware price. Networking components can have lower service attachment rates, and sovereign deployments, where customers control the infrastructure, have a more product-heavy mix than cloud solutions.

In Q3 2026, service revenue grew 13% to $1.31 billion. Fortinet said some large new customers activated services gradually, while expansion deals consolidated existing service arrangements into enterprise agreements. Both affected the timing of service revenue.

Customers and how it sells

Fortinet serves enterprises of different sizes, government organizations, communications providers and security service providers. Its customers operate in industries including financial services, retail, healthcare, manufacturing and telecommunications. An installation can involve one product or dozens of integrated products and services, depending on the customer’s needs.

As of December 31, 2025, end-customers were located in over 100 countries. EMEA revenue was $2.8 billion in FY2025. United States revenue was $1.9 billion. APAC revenue was $1.3 billion. Other Americas revenue was $770.9 million.

Fortinet primarily sells through distributors, which sell to resellers, service providers and managed security service providers. Those partners then sell to end-customers. The company also sells directly in some cases to large service providers, major systems integrators and large end users. Distributor A accounted for 28.0% of FY2025 revenue. Distributor B accounted for 15.0% of FY2025 revenue. Distributor C accounted for 12.0% of FY2025 revenue.

Fortinet’s sales teams work with channel partners and engage directly with large end-customers on their security requirements. Customers can also access cloud offerings through Fortinet facilities, colocated infrastructure and public cloud providers. In Q3 2026, a large U.S. retailer selected Fortinet to standardize and secure 1,500 store locations.

Suppliers and costs

Fortinet outsources production of its security appliances to contract manufacturers and original design manufacturers. Approximately 87% of its hardware is manufactured in Taiwan. Finished products go to facilities in California, the Netherlands or Taiwan for accessory packaging and quality-control testing.

The company develops its own specialized chips, which are manufactured by contractors including Toshiba America and Renesas. Those contractors use foundries in Taiwan and Japan. Some important components have limited or sole sources of supply, including processors, network and wireless chips, and memory devices. Suppliers named by Fortinet include Intel, AMD, Broadcom and Micron. Fortinet has no long-term contracts for its ASICs or other components that guarantee manufacturing capacity or pricing.

Product gross margin depends on the types of products sold, their costs and selling prices. Service costs include personnel, repairs and replacements, cloud infrastructure, software and delivery. Fortinet also spends on research and development, sales and marketing, and facilities.

In Q3 2026, Fortinet said component lead times had lengthened and its earlier inventory buffer was becoming less of an advantage. Costs were rising in the second half of the year and affecting product gross margin, partly offset by improvement in service gross margin.

Competitive position

Fortinet competes in cybersecurity and networking markets where customers compare security performance, features, interoperability, reliability, price, support and distribution. Competitors named by the company include Palo Alto Networks, Cisco, CrowdStrike, Zscaler and Check Point. Some competitors have broader product lines and greater resources; others concentrate on individual security technologies.

Fortinet’s approach combines networking, cloud access and security operations in a single platform. FortiOS provides a common operating system, while Fortinet-designed ASICs accelerate functions in its firewall appliances. Its products can be delivered through physical, virtual, cloud and software-as-a-service forms. The company also has a distributor and reseller network and provides security subscriptions and support to customers using its products.

Our reading: The integrated platform is a meaningful source of differentiation because customers can use and manage several security functions together, although rivals also offer competing products. Our reading: Fortinet’s proprietary chips and patents support its technology position, but the available evidence does not establish that competitors cannot match particular capabilities. Our reading: Its channel relationships and installed products can help it sell additional services, though partners also carry other suppliers and customers can choose point solutions.

Fortinet may respond to competition by lowering prices or adding features. It also faces the possibility that competing products are cheaper, perform better or gain greater market acceptance.

Growth opportunities

Fortinet is pursuing growth through network upgrades, secure access, industrial security and protection for AI infrastructure. It expects a firewall refresh and upgrade cycle to create opportunities to expand within existing customer environments, including into secure access and security operations. Its cloud and sovereign SASE offerings give customers options for deploying secure access through Fortinet’s infrastructure or infrastructure they control.

The company recently launched FortiLink SASE services to connect existing Fortinet networking hardware with FortiSASE. It also launched FortiGuard inline AI security services for FortiGate devices. Fortinet expects the new security services to be relevant to both existing and new customers.

In Q3 2026, product revenue grew 37%, and Fortinet said customers were moving toward higher-performing models. A company developing AI models selected Fortinet for an expansion to protect its workloads and deployed its data-center firewalls across five additional data centers. A transportation company also selected Fortinet to secure its operational technology infrastructure.

Fortinet raised its 2026 revenue and billings guidance after the third quarter. It expects service revenue to grow at a higher rate in 2027 than in 2026, citing short-term deferred revenue growth as an indicator. The company also expects its 2027 billings and revenue growth to outpace growth in its overall addressable market.

Structural risks

• Supply and manufacturing: Taiwan accounts for much of Fortinet’s hardware production, and some components have limited or sole sources. Component shortages, trade restrictions, tariffs or disruption to manufacturers and logistics could affect availability, costs and delivery.
• Competition and technology: Competitors may offer lower-cost products or gain acceptance with alternative technologies. A shift from physical appliances to cloud-based security could affect Fortinet’s revenue, margins and cash flow.
• Product and security failures: Failure to prevent a security incident, a compromised internal network or cloud system, or customers’ failure to apply updates could disrupt operations and harm perceptions of Fortinet’s products and services.
• Channel concentration: Fortinet relies on distributors and resellers, including distributors that each account for a material share of revenue. Partner financial difficulties, consolidation or termination of important relationships could disrupt sales or collections.
• Demand and timing: Orders, product refresh cycles, service renewals and the mix of products and services can vary. Fortinet’s results also depend on its ability to forecast demand and manage inventory and purchase commitments.

Bottom line

Our reading

Our reading: Fortinet combines hardware, software and ongoing security services, with its integrated platform and partner network providing routes to expand within customer accounts. [item1; call_qa] Its ability to turn product deployments into service revenue matters alongside the pace of hardware upgrades. [call_prepared; call_qa] The business remains exposed to component supply, manufacturing concentration and competitors across both appliance and cloud security markets. [item1; item1a]