On its third-quarter 2026 earnings call, held on Oct. 28, 2026, Fortinet (FTNT -2.17%) announced an increase to its full-year billings guidance. The move reflects growing demand for integrated security platforms as corporate customers adapt to artificial intelligence threats. Three key takeaways from the call highlight what matters for long-term investors.
1. Firewall Convergence Drives Accelerated Growth Across AI Security
Management sees network firewalls as the core enforcement point for securing artificial intelligence data flows. By integrating secure access service edge (SASE), which combines networking and cloud security into one platform so businesses avoid managing separate tools, Fortinet expanded its SASE billings 31% year over year.
We believe that network security is the most critical foundation of AI security with the firewall serving as a centralized point of in-line enforcement across enterprise, operation technology and hybrid cloud environment.
— Ken Xie, Founder, Chairman and Chief Executive Officer
2. Large Enterprise Expansion Creates Temporary Delay in Service Revenue
Deals larger than $1 million grew 51% during the quarter. These multiyear contracts often involve phased rollouts, creating a brief delay in recognized service revenue even as short-term deferred revenue, which represents money collected for services delivered in future quarters, grew 14.5%.
Service revenue grew 13% to $1.31 billion and faced some headwinds from winning new large enterprise customers with ramp service activations and large new expansion deals that also consolidated various existing service arrangements into enterprise agreements.
— Christiane Ohlgart, Chief Financial Officer
3. Operational Technology Protection Expands as Boardrooms Target Industrial Threats
Billings for operational technology (OT), the specialized hardware and software that run physical infrastructure like power grids and factories, grew nearly 40%. Corporate boards are prioritizing security upgrades to protect legacy industrial machinery from automated cyberattacks.
Safeguarding the edge and industrial networks has become one of the most urgent issues discussed at Board levels of our customers today.
— Christiane Ohlgart, Chief Financial Officer
Looking Ahead
Cybersecurity threats are expanding as attackers use artificial intelligence to target corporate systems, driving steady demand for hardware upgrades.
This AI threat, no one has a crystal ball as someone mentioned earlier, just seems a lot more durable and sustainable in some of those earlier kind of threat drivers.
— John Whittle, Chief Operating Officer
Custom microchips and unified software give the company lower unit costs than competitors, supporting long-term pricing flexibility.
As we look ahead to 2027, we expect our total billings and revenue growth to outpace the growth of our overall addressable market.
— Christiane Ohlgart, Chief Financial Officer
The Motley Fool has positions in and recommends Fortinet. The Motley Fool has a disclosure policy.
