Shares in Fortinet climbed Wednesday after the company reported December-quarter earnings, revenue and billings that topped analyst estimates amid lowered expectations. Fortinet's 2024 revenue and billings guidance for FTNT stock came in better than feared.
The cybersecurity firm reported Fortinet earnings after the market close on Tuesday. On the stock market today, FTNT stock rose 3.8% to close at 70.03. Fortinet stock initially popped double digits on the earnings report.
Shift To Cloud Products
The big picture: Fortinet is dealing with a fast-changing competitive landscape. Cybersecurity services delivered via cloud computing platforms are in favor. Many companies are moving away from on-premise computer network "firewall" appliances. That's Fortinet's core business. But it's moving into new markets.
"We view the quarter as a positive sign that Fortinet's business is not broken and that the company will be able to rebuild its pipeline in a more normalized environment," said William Blair analyst Jonathan Ho in a report. "While it has become clear that the company's firewall business is likely to grow at slower rates than in the past and faces tough comparisons in 2024, we were also pleased to see Fortinet win several large SASE deals."
Fortinet earnings in the fourth quarter rose 16% to 51 cents on an adjusted basis. Revenue climbed 10% to $1.42 billion.
Analysts expected Fortinet earnings of 43 cents a share on sales of $1.41 billion for the period ended Dec. 31.
Additionally, the Sunnyvale, Calif.-based firm said billings, a sales growth metric, rose 8.5% to $1.86 billion compared with analyst estimates of $1.63 billion.
At Evercore ISI, analyst Peter Levine said in a report: "Fortinet put up a solid Q4 vs. muted expectations following a disappointing Q3. The 2024 guide came in mixed and likely assumes a more conservative/cautious outlook in terms of a product cycle recovery."
Fortinet Stock: Guidance Better Than Feared
For full-year 2024, Fortinet said it expects per-share earnings in a range of $1.65 to $1.70 per share. The cybersecurity firm forecast revenue in a range of $5.71 billion to $5.81 billion. Fortinet said it expects billings in a range of $6.4 billion to $6.6 billion.
Analysts had projected earnings of $1.66 per share on revenue of $5.93 billion and billings of $6.477 billion.
Heading into the Fortinet earnings report, the cybersecurity stock was up 12% in 2024 after underperforming last year.
The company competes in the firewall network security market versus Palo Alto Networks, Check Point Software Technologies and others. Firewalls block online intrusions and monitor web-based apps.
FTNT Stock: Firewall Growth Slows
Growth has slowed in the firewall market as companies buy less computer network gear for on-premises data centers. Companies are shifting business apps and workloads to distributed cloud platforms.
Fortinet and many other cybersecurity firms are focused on a new growth market: Secure Access Service Edge. SASE offers a fast and cost-effective way of securing an organization's branch offices and remote workers.
FTNT stock holds a Relative Strength Rating of 86 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
