FTNT
Fortinet, Inc.NasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Aug 17, 2026 · Valuation Aug 16, 2026
What drives FTNT's base case?
base-case thesisThe latest results show broad demand, led by a sharp product rebound and strong billings, while recurring services provide visibility into future sales. The base case assumes those forces keep growth healthy but do not preserve the latest surge indefinitely. Scale and a richer service mix largely fund continued investment, leaving profitability near recent levels.
What shapes the assumptions
Strong orders precede future recognized sales
Q2 2026 billings growth of 0.33
Raises revenue growth
Recurring services remain the larger revenue category
service revenue of 1.275 billion in Q2 2026
Raises operating margin
Strategic spending offsets part of the scale benefit
2026 infrastructure plan of 0.35 billion to 0.55 billion
Raises reinvestment
Growth normalizes as Fortinet becomes larger
five-year annual sales-growth path
Lowers terminal growth
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 46.2% a year. Over the last 5 years it grew 20.9% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- How much of this is timing?
- The price has fallen 3.3% since this valuation was struck on 2026-08-16, so some of the gap opened up after these figures were set.
- How confident is this estimate?
- Robustness 60.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$7.5B
Diluted shares
739,900,000
Net cash
$2.4B
Bear
low confidence$32.93
IV / share
-79.4% vs $160.01
- Explicit cash flows
- $7.81
- Terminal value
- $21.82
- Net cash
- $3.30
- Intrinsic value / share
- $32.93
66.3% of the value rests on the terminal value — elevated dependency.
Revenue growth12.0% → 10.0% → 8.0% → 7.0% → 6.0%medium
How derived: Starting from management's 0.19 full-year 2026 revenue-growth outlook and the recent product-led acceleration, this path assumes the hardware refresh fades quickly while service growth remains near its recent 0.14 pace before competitive and market maturity pressures drive further slowing.
Why this confidence: Management's current-year guidance anchors the near term ↑, The duration of the hardware refresh is uncertain ↓, The five-year horizon extends beyond company guidance ↓
Evidence for
- Service revenue, the larger and more recurring revenue category, grew 0.14 in Q2 2026, materially slower than product revenue.[Fortinet Q2 2026 earnings presentation]· primary
- Fortinet warns that slower market growth, competition, economic weakness, and lower IT or firewall spending could reduce revenue growth.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Q2 2026 revenue grew 0.26, billings grew 0.33, and management raised its full-year revenue outlook to approximately 0.19 growth.[Fortinet Q2 2026 earnings presentation]· primary
Operating margin29.0%medium
How derived: Starting from recent GAAP quarterly profitability above 0.31 and the 0.307 full-year 2025 result, this case assumes strategic hiring, price competition, cloud-service costs, and normalization of unusually strong product demand reduce sustainable profitability.
Why this confidence: Several years of reported profitability provide a strong baseline ↑, Management has explicitly signaled continued investment ↑, Future product and service mix is uncertain ↓
Evidence for
- Fortinet said full-year 2026 profitability would decline from 2025 as it continued strategic investment, and it expects personnel costs to rise as the workforce expands.[Fortinet 2025 Form 10-K]· primary
- Fortinet disclosed that service gross profitability declined in 2025 because cloud-service costs increased.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Q2 2026 GAAP operating income was 0.337 of revenue, while non-GAAP profitability reached 0.38.[Fortinet Q2 2026 earnings presentation]· primary
Tax rate21.0%medium
How derived: Starting from Fortinet's 0.192 effective rate in 2025 and management's 0.18 non-GAAP 2026 assumption, this case moves to the 0.21 US statutory rate as stock-award benefits, credits, and international tax advantages become less favorable.
Why this confidence: Audited tax reconciliation supplies a reliable starting point ↑, International tax rules and credit utilization can change ↓
Evidence for
- The US federal statutory corporate tax rate applicable in Fortinet's 2025 reconciliation was 0.21, before credits and other adjustments.[Fortinet 2025 Form 10-K]· primary
- Fortinet reported uncertain tax positions and ongoing examinations in several foreign jurisdictions.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Management's full-year 2026 non-GAAP guidance assumes a 0.18 effective tax rate, and the reported 2025 rate was 0.192.[Fortinet Q2 2026 earnings presentation]· primary
Reinvestment rate34.0%low
How derived: Starting from 2025 property investment of 0.365 billion and management's 0.35 billion to 0.55 billion 2026 infrastructure plan, this case adds heavier inventory, cloud-capacity, sales, and product-development needs while assuming less working-capital funding from customer prepayments.
Why this confidence: Current infrastructure guidance is specific ↑, Customer prepayments make accounting reinvestment volatile ↓, Future inventory-cycle requirements are difficult to forecast ↓
Evidence for
- Fortinet guided to 0.35 billion to 0.55 billion of infrastructure investment in 2026 and reported 1.37 billion of inventory purchase commitments at March 2026.[Fortinet Q1 2026 Form 10-Q]· primary
Evidence against
- Deferred revenue increased by 0.754 billion in 2025, providing customer-funded working capital that offset part of Fortinet's investment requirement.[Fortinet 2025 Form 10-K]· primary
- Q2 2026 free cash flow was 0.966 billion after only 0.078 billion of property purchases, demonstrating strong cash conversion.[Fortinet Q2 2026 earnings presentation]· primary
Terminal growth2.0%low
How derived: Starting from management's much faster medium-term cybersecurity market outlook, this case assumes Fortinet eventually matures to growth below the current risk-free rate as competition, pricing pressure, and market saturation limit perpetual expansion.
Why this confidence: The rate is constrained below the current risk-free rate ↑, Perpetual industry conditions cannot be observed directly ↓
Evidence for
- Fortinet warns that product prices and gross profits generally decline over product life cycles and that competition or slower security spending could reduce growth.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Fortinet's presentation estimates a combined 0.13 annual growth rate through 2029 across the cybersecurity markets it addresses.[Fortinet Q2 2026 earnings presentation]· estimate
Base
low confidence$50.54
IV / share
-68.4% vs $160.01
- Explicit cash flows
- $11.13
- Terminal value
- $36.12
- Net cash
- $3.30
- Intrinsic value / share
- $50.54
71.5% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
base revenue growth (avg 13%) runs well above the trailing -5% trend
Revenue growth17.0% → 15.0% → 13.0% → 11.0% → 9.0%medium
How derived: Starting from management's approximately 0.19 full-year 2026 outlook, 0.33 Q2 billings growth, and 0.14 service growth, this path assumes the product refresh and SASE, SecOps, and operational-technology demand support several strong years before scale and market maturity produce a gradual slowdown.
Why this confidence: Current guidance and billings give near-term visibility ↑, Deferred service revenue reduces near-term volatility ↑, Later years depend on refresh-cycle durability ↓
Evidence for
- Q2 2026 billings grew 0.33, total revenue grew 0.26, and product revenue grew 0.52, while full-year revenue guidance implied approximately 0.19 growth.[Fortinet Q2 2026 earnings presentation]· primary
- Fortinet said 0.71 of 2025 service revenue was already included in deferred revenue at the beginning of that year, improving near-term visibility.[Fortinet 2025 Form 10-K]· primary
Evidence against
- The larger service category grew only 0.14 in Q2 2026, and Fortinet identifies competition, economic weakness, execution, and slower firewall spending as risks.[Fortinet filings and Q2 presentation]· primary
Operating margin33.0%medium
How derived: Starting from the 0.307 GAAP margin in 2025 and the recent quarterly range above 0.31, this case assumes recurring service revenue and scale roughly offset higher research, sales, cloud, and infrastructure spending.
Why this confidence: Recent GAAP quarterly results are close to the assumption ↑, Recurring services support scale economics ↑, Management controls the pace of discretionary investment ↓
Evidence for
- Q2 2026 GAAP operating income equaled 0.337 of revenue, and 2025 profitability improved because revenue grew faster than expenses.[Fortinet Q2 2026 presentation and 2025 Form 10-K]· primary
- Service revenue and software licenses generally carry higher gross profitability than hardware, supporting scale benefits as recurring revenue grows.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Fortinet expected full-year 2026 profitability to decline from 2025 because of strategic investment, while service gross profitability had already fallen due to cloud costs.[Fortinet 2025 Form 10-K]· primary
Tax rate19.0%high
How derived: Starting from the reported 0.192 effective rate in 2025, this case holds the rate near that level because the 0.21 statutory burden is partly offset by foreign-derived income deductions, tax credits, and equity-award deductions.
Why this confidence: The assumption closely matches the latest audited effective rate ↑, Management's current-year guidance provides a cross-check ↑, Tax credits and equity-award benefits vary by year ↓
Evidence for
- Fortinet's reported 2025 effective tax rate was 0.192, very close to this assumption.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Management's 2026 non-GAAP guidance assumes a lower 0.18 rate, while the statutory federal rate before adjustments is 0.21.[Fortinet Q2 2026 earnings presentation]· primary
Reinvestment rate29.0%low
How derived: Starting from current infrastructure guidance and material product-development, sales, and contract-cost spending, this case assumes Fortinet reinvests 0.29 of after-tax operating profit, with customer prepayments and its asset-light software and security-service mix limiting the net cash requirement.
Why this confidence: Reported capital and contract-cost investment provide a baseline ↑, Deferred revenue materially distorts annual net investment ↓, The model must estimate future working-capital behavior ↓
Evidence for
- Fortinet spent 0.365 billion on property and equipment in 2025, added 0.449 billion of deferred contract costs, and plans 0.35 billion to 0.55 billion of 2026 infrastructure investment.[Fortinet filings and Q2 2026 guidance]· primary
Evidence against
- Deferred revenue increased by 0.754 billion in 2025, and Q2 2026 free cash flow substantially exceeded property purchases, showing that customer prepayments fund part of growth.[Fortinet Q2 2026 presentation and 2025 Form 10-K]· primary
Terminal growth2.5%low
How derived: Starting from management's 0.13 medium-term growth estimate for Fortinet's addressable markets, this case assumes substantial long-run maturation to 0.025 as cybersecurity remains essential but company growth converges toward the broader economy.
Why this confidence: Cybersecurity has durable structural demand ↑, The assumption concerns an indefinite period beyond management guidance ↓
Evidence for
- Fortinet's disclosed addressable cybersecurity markets are expected to expand substantially through 2029, and recurring subscriptions address persistent security needs.[Fortinet Q2 2026 earnings presentation]· estimate
Evidence against
- Fortinet states that competition, product-price declines, economic weakness, and slower market growth could reduce its long-run growth and profitability.[Fortinet 2025 Form 10-K]· primary
Bull
low confidence$71.73
IV / share
-55.2% vs $160.01
- Explicit cash flows
- $14.32
- Terminal value
- $54.11
- Net cash
- $3.30
- Intrinsic value / share
- $71.73
75.4% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
bull revenue growth (avg 17%) runs well above the trailing -5% trend
Revenue growth20.0% → 19.0% → 17.0% → 15.0% → 13.0%low
How derived: Starting from 0.26 Q2 revenue growth, 0.33 billings growth, and rapid product, SASE, and operational-technology demand, this path assumes Fortinet converts its broad installed base and integrated platform into sustained share gains across markets management estimates are growing at a combined 0.13 rate.
Why this confidence: Billings and multiple growth products support the thesis ↑, The path exceeds management's current full-year outlook ↓, Sustained market-share gains are difficult to forecast ↓
Evidence for
- Q2 2026 billings grew 0.33, product revenue grew 0.52, FortiSASE billings grew 0.68, and operational-technology billings grew 0.56.[Fortinet Q2 2026 earnings presentation]· primary
- Management's presentation shows Fortinet growing faster than the cited market rates in secure networking, SASE, and security operations during Q2 2026.[Fortinet Q2 2026 earnings presentation]· estimate
Evidence against
- Management's full-year 2026 revenue outlook implies approximately 0.19 growth, below the latest quarter, and service revenue is expected to grow only about 0.14.[Fortinet Q2 2026 earnings presentation]· primary
Operating margin36.0%low
How derived: Starting from the recent GAAP quarterly result above 0.33 and 0.38 non-GAAP Q2 profitability, this case assumes faster revenue, subscription and software mix gains, and disciplined stock-based compensation allow operating leverage to outweigh continued investment.
Why this confidence: Recent quarterly performance demonstrates the margin is operationally possible ↑, The assumption exceeds the latest GAAP quarterly level ↓, Investment and product mix can vary materially ↓
Evidence for
- Q2 2026 non-GAAP operating profitability reached 0.38 and GAAP operating income was 0.337 of revenue.[Fortinet Q2 2026 earnings presentation]· primary
- Fortinet has been GAAP profitable every year since its public listing, and service and software sales generally carry higher gross profitability than hardware.[Fortinet Q2 presentation and 2025 Form 10-K]· primary
Evidence against
- Management previously expected 2026 profitability to decline as it increased strategic investment, and rising component and cloud-service costs could pressure gross profitability.[Fortinet 2025 Form 10-K]· primary
Tax rate18.0%medium
How derived: Starting from management's 0.18 non-GAAP 2026 tax assumption and the 0.192 reported 2025 rate, this case assumes tax credits, foreign-derived income benefits, and equity-award deductions keep the long-run cash burden near the lower current guidance level.
Why this confidence: Current management guidance directly supports the assumption ↑, The assumption depends on recurring tax benefits ↓
Evidence for
- Fortinet's full-year 2026 non-GAAP guidance explicitly assumes a 0.18 effective tax rate.[Fortinet Q2 2026 earnings presentation]· primary
- Foreign-derived income deductions, foreign tax credits, and excess tax benefits from stock awards reduced Fortinet's 2025 rate.[Fortinet 2025 Form 10-K]· primary
Evidence against
- The reported 2025 rate was 0.192, the federal statutory rate was 0.21, and Fortinet faces uncertain tax positions and foreign examinations.[Fortinet 2025 Form 10-K]· primary
Reinvestment rate25.0%low
How derived: Starting from strong recent cash conversion and customer-funded deferred revenue, this case assumes Fortinet's integrated software and subscription platform scales efficiently enough that faster growth requires only 0.25 of after-tax operating profit to be retained for net investment.
Why this confidence: Recent cash conversion and deferred revenue support capital efficiency ↑, Rapid growth could require more inventory and infrastructure than assumed ↓, A single strong cash-flow quarter may not be representative ↓
Evidence for
- Q2 2026 free cash flow was 0.966 billion after 0.078 billion of property purchases, while adjusted free-cash generation equaled 0.486 of revenue.[Fortinet Q2 2026 earnings presentation]· primary
- The 0.754 billion increase in deferred revenue during 2025 financed a meaningful portion of growth.[Fortinet 2025 Form 10-K]· primary
Evidence against
- Fortinet plans 0.35 billion to 0.55 billion of 2026 infrastructure investment and had 1.37 billion of inventory purchase commitments in March 2026.[Fortinet Q1 2026 Form 10-Q]· primary
Terminal growth3.0%low
How derived: Starting from management's estimate of 0.13 combined market growth through 2029 and Fortinet's expanding SASE, security-operations, and operational-technology presence, this case assumes the company retains modest long-run share gains but eventually slows to 0.03.
Why this confidence: Large expanding cybersecurity markets support durable demand ↑, Perpetual share gains cannot be verified ↓, The terminal period is far beyond disclosed forecasts ↓
Evidence for
- Fortinet estimates its combined addressable markets will grow 0.13 annually through 2029, and its Q2 billings growth exceeded the cited market growth rates across major categories.[Fortinet Q2 2026 earnings presentation]· estimate
Evidence against
- Fortinet acknowledges that competition, technological change, declining product prices, and slower IT spending could limit long-run growth.[Fortinet 2025 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating60 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 71% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | 13.0% | 0.74 | 21.8% | 771.9M | -2.4% |
| Q1 2025 | 13.8% | 1.03 | 29.9% | 776.8M | 0.8% |
| Q2 2025 | 13.6% | 0.37 | -11.2% | 772.7M | 0.4% |
| Q3 2025 | 14.4% | 0.75 | 0.6% | 761.2M | -1.4% |
| Q1 2026 | 20.1% | 1.36 | 32.1% | 742.8M | -4.4% |
| Q2 2026 | 25.6% | 1.31 | 254.9% | 739.9M | -4.2% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 0.0468 rate is the US Treasury's official 10-year par yield for 2026-08-14, the latest business day before the valuation date.
A beta of 1.05 uses the five-year monthly regression measure reported for FTNT, consistent with a stock whose systematic volatility has been close to the broad equity market.
The 0.0418 input is the trailing-twelve-month adjusted-payout implied US equity risk premium calculated for 2026-07-01 from prevailing index prices, cash distributions, growth expectations, and Treasury yields.
The input uses the latest specifically time-stamped FTNT market price located before the valuation date, observed on 2026-08-07, because the exchange historical page had not yet exposed the 2026-08-14 close in its accessible table.
Generated 8/16/2026, 8:32:54 AM · pipeline v1.1.0