Fortinet Stock Plummets 25% Despite Third-Quarter Earnings Beat
Fortinet shares fell 25% after the company lowered its full-year services revenue forecast despite exceeding third-quarter revenue and earnings expectations.
Fortinet reported third-quarter results on Wednesday that exceeded analyst expectations, with revenue growing 20% year-over-year to $2.08 billion and adjusted earnings per share reaching $0.91. The company also raised its full-year billings guidance and added $1.2 billion to its buyback authorization.
Despite these gains, the company's stock fell approximately 25% due to a shortfall in services revenue, which grew 13% to $1.31 billion. This prompted the company to lower its full-year services forecast to a range between $5.15 billion and $5.17 billion. Investors expressed concern that low attach rates indicate customers are purchasing hardware without accompanying services.
CFO Christiane Ohlgart described the shortfall as "really a timing issue," explaining that several large enterprise deals include services that only begin after the initial hardware rollout.
