Fortinet Shares Plunge More Than 24 Percent After Hours Despite Beating Third Quarter Estimates

Fortinet shares tumbled more than 24 percent in extended trading on Wednesday to about $131.95, even though the cybersecurity company beat estimates for third quarter earnings and revenue and raised its full year guidance.

The company reported adjusted earnings of 91 cents a share, up 23 percent from a year earlier, on revenue of $2.08 billion, up 20 percent. Analysts had expected adjusted earnings of 86 cents a share on sales of $2.064 billion, according to reports by Investor's Business Daily and Barron's. The stock had closed the regular session down 5.9 percent, and it had advanced 132 percent in 2026 heading into the report, a run that left expectations high.

Why the beat was not enough

Billings rose 29 percent to $2.336 billion, slightly ahead of estimates of $2.308 billion. The size of that beat was the problem for investors. Wells Fargo analyst Richard Polland noted that billings came in roughly 2 percent above the midpoint of the company forecast, compared with a beat of about 11 percent in the second quarter.

Product revenue grew 37 percent to $765 million. That was a slower rate than the 52 percent growth recorded in the second quarter. Service revenue was $1.31 billion, below the $1.33 billion that analysts tracked by FactSet had expected, according to RBC analyst Dan Bergstrom, in reporting by Morningstar and MarketWatch.

Other cybersecurity stocks fell in extended trading alongside Fortinet. Palo Alto Networks, Zscaler and SentinelOne were each off more than 6 percent, and CrowdStrike and Okta were each off more than 5 percent, according to Morningstar and MarketWatch.

Guidance raised for the full year

Fortinet raised its full year guidance. It now forecasts adjusted earnings of $3.54 to $3.58 a share and revenue of $8.125 billion to $8.215 billion. Analysts had expected profit of $3.45 a share and revenue of $8.12 billion.

For the fourth quarter, the company expects adjusted profit of 93 cents to 95 cents a share and revenue of $2.155 billion to $2.245 billion, with billings of $2.775 billion to $2.925 billion.

Chief executive Ken Xie said, in remarks reported by Barron's, that demand for security products allowed Fortinet to raise its billings guidance for the third time this year. He said that as artificial intelligence introduces new attack surfaces, network security remains the foundation of AI security. Those remarks are a summary of his comments, not a word for word quote.

The result was a sharp split between the headline numbers and the market reaction. Earnings, revenue and billings all came in ahead of estimates, and guidance moved higher. Investors focused instead on the smaller billings beat, the slower product growth and the service revenue shortfall after a year in which the shares had more than doubled.