Important points
- Fortinet fell on lower billings and product revenue despite better-than-expected first-quarter results.
- The cybersecurity company's product revenue fell 18.3%.
- Cybersecurity companies like Fortinet are struggling as companies tighten their budgets.
Fortinet (FTNT) stock fell after the cybersecurity company posted lower-than-expected first-quarter results with lower billings and product revenue.
Billings, a measure that includes unrealized revenue that the company uses to show future business, fell 6.4% to $1.41 billion. However, overall revenue increased 7.2% to $1.35 billion, and adjusted earnings per share (EPS) came in at $0.43. Both exceeded expectations.
Founder and CEO Ken Xie said Fortinet is leveraging the “fast-growing” Secure Access Service Edge (SASE) around VPN and cloud security. But Mizuho analysts said competition in the cybersecurity field is so intense that new initiatives alone may not be enough to differentiate the company.
Despite the scary bill, the company raised its full-year guidance for adjusted EPS to a range of $1.73 to $1.79 and revenue to a range of $5.75 billion to $5.85 billion.
Rivals are cornered in cybersecurity competition
Fortinet was not the only cybersecurity company to underperform as companies grapple with enterprise customers tightening their budgets amid an uncertain macroeconomic outlook and fierce competition.
Shares of global cloud service provider Cloudflare (NET) also fell sharply on Friday after the company announced weak revenue guidance for the current quarter.
Fortinet stock was down 8.5% at $59.68 as of 12:07 p.m. ET, while Cloudflare stock was down 18% at $73.36.
TradingView
