Fortinet Stock Price Sinks Despite ‘Momentum’ For Firewall Refresh

Executives also said during the company’s quarterly call Wednesday that geopolitical uncertainties have not weakened demand.

Fortinet executives said Wednesday that geopolitical and economic uncertainties have not weakened customer demand and that the vendor continues to expect a substantial revenue boost ahead from device refreshes in its core firewall business.

Despite those optimistic indicators, however, Fortinet’s stock price dropped 12.3 percent in after-hours trading Wednesday to $93.57 a share after the company’s second-quarter guidance came slightly below analyst expectations.

In results for the first quarter, ended March 31, Fortinet reported that revenue grew 14 percent from the year before to reach $1.54 billion, in line with the Wall Street consensus.

Fast-growing segments of the company’s business included SASE (secure access service edge), which saw annual recurring revenue climb 25.7 percent from a year earlier to reach $1.15 billion as of the end of March.

ARR for Fortinet’s security operations business, meanwhile, was up 30.3 percent year-over-year to $434.5 million by the end of the quarter.

During the company’s quarterly call with analysts Wednesday, Fortinet Chief Accounting Officer Christiane Ohlgart also said that the “record firewall upgrade cycle” that has been previously discussed by Fortinet executives remains on track.

“We continue to expect the firewall upgrade cycle to gain momentum in both purchasing and planning activities in the second half of 2025,” said Ohlgart, who is set to succeed Keith Jensen as Fortinet’s CFO next week.

Jensen will be retiring May 15 after more than a decade at Fortinet, as previously announced by the company in February.

Ohlgart also addressed the potential impact of the Trump administration’s tariff policies, which have particularly targeted manufacturing in China.

“The U.S. tariff situation landscape is evolving rapidly,” she said. “However, despite the current geopolitical uncertainties, demand for our cybersecurity solutions remains strong.”

Notably, “our pipeline continues to grow, and we are not seeing signs of near-term erosion,” Ohlgart said. “Additionally, our close rates remain robust, and sales cycles are tracking within our normal historical range.”

Fortinet is not expecting U.S. tariffs “to have a meaningful impact” on its operating margin during the second quarter, since “only a few components are subject to tariff charges,” she said. “Should tariffs increase in the future, we expect any resulting impact on our operating margin to be limited to hardware sales to U.S. customers.”