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November 10, 2025 • 4 min read
Fortinet, a titan in the cybersecurity industry known for its integrated security platforms, recently filed its quarterly report for the period ending September 30, 2025. In this post, we'll slice through the numbers from the official 10-Q filing to understand the company's performance, focusing on its revenue streams, profitability, and key financial activities.
Fortinet continues to demonstrate impressive growth, with total revenue for the third quarter reaching $1.72 billion, a solid 14% increase from the $1.51 billion reported in the same quarter last year. This growth was well-balanced between its two main segments:
Another key forward-looking metric for subscription-based businesses is "billings," which represents revenue plus the change in deferred revenue. Fortinet's billings for the quarter were $1.81 billion, up 14% year-over-year, suggesting a healthy pipeline for future revenue. The company’s total deferred revenue, a liability representing cash collected for services yet to be delivered, now stands at a massive $6.65 billion.
To see how this quarterly revenue trickles down through costs and expenses to the bottom line, the following flow diagram provides a visual breakdown of the income statement.
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While revenue grew, the story on profitability has a few more layers. Fortinet's total gross margin saw a slight compression, moving from 82.5% in Q3 2024 to 80.8% in Q3 2025. This was primarily driven by a dip in product gross margin, which fell from 71.3% to 67.7%, potentially reflecting changes in component costs or product mix.
Despite this, the company showed excellent cost discipline. Operating expenses grew by only 9%, slower than revenue growth. This efficiency led to a 16% increase in operating income, which rose to $547.3 million for the quarter. Consequently, the operating margin improved slightly, from 31.2% to 31.7%.
However, the final net income figure tells a different story, declining to $473.9 million from $539.9 million a year ago. This drop wasn't due to poor operational performance. Instead, two key factors were at play:
One of the most striking developments is Fortinet's use of its cash. The company’s cash and investments fell from $4.1 billion at the end of 2024 to $3.4 billion. The primary reason for this decrease is a massive share buyback program.
Over the first nine months of 2025, Fortinet spent $2.23 billion repurchasing its own stock. In the third quarter alone, the company bought back 23.4 million shares for approximately $1.83 billion. This aggressive return of capital to shareholders often signals management's strong belief that the company's stock is undervalued and reflects confidence in its long-term prospects.
Fortinet's Q3 2025 report showcases a company with a strong, growing business. The robust expansion in both product and service revenue, coupled with improving operational efficiency, paints a positive picture of its core business. While the headline net income figure was down, this was due to non-operating factors rather than a decline in the company's fundamental health. The significant investment in share repurchases highlights a strategic focus on delivering shareholder value. In the highly competitive cybersecurity landscape, Fortinet's performance demonstrates continued momentum and financial strength.
Last updated: November 10, 2025