Fortinet's stock slides after earnings as guidance misses the mark yet again

By Emily Bary

Palo Alto Networks, Zscaler stocks dip after Fortinet's results

Fortinet Inc. whiffed badly with its guidance three months ago, and the company's third-quarter report Thursday brought another disappointment.

The cybersecurity company came up short with its fourth-quarter revenue forecast, which calls for $1.38 billion to $1.44 billion. Analysts were looking for $1.50 billion. Fortinet's (FTNT) management also projects $1.56 billion to $1.70 billion in billings, which is defined as GAAP revenue plus the change in deferred revenue from the beginning to the end of the period, minus any deferred revenue balances.

The FactSet consensus on that metric was for $1.90 billion in billings.

Fortinet is looking for 42 cents to 44 cents in adjusted earnings per share during the fourth quarter, which compares with the 42-cent FactSet consensus.

Shares were off 17% in after-hours trading Thursday. The stock had seen a 25% post-earnings drop when Fortinet posted second-quarter results in early August, which made for the stock's worst single-day percentage drop on record.

Fortinet shares are still up 18% so far this year.

See also: CrowdStrike's and Zscaler's stocks are top plays in rocky cybersecurity market, analyst says

The company generated third-quarter revenue of $1.34 billion, up from $1.15 billion a year before, while analysts were modeling $1.35 billion. Billings reached $1.49 billion, up 6% from a year before, whereas analysts had been looking for $1.59 billion.

Third-quarter net income came in at $322.9 million or 41 cents a share, compared with $231.6 million, or 29 cents a share, a year before. The FactSet consensus was for 36 cents a share.

Shares of fellow cybersecurity names, including Palo Alto Networks Inc. (PANW) and Zscaler Inc. (ZS), also fell in after-hours trading Thursday following Fortinet's report.

-Emily Bary

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11-02-23 1659ET

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