Fortinet Shares Plunge 25% Despite Q3 Earnings Beat Due to Services Revenue Concerns
Fortinet (FTNT) experienced a significant stock price decline of approximately 25% following its third-quarter earnings report. While the company beat analyst expectations with total revenue of $2.08 billion (up 20% year-over-year) and adjusted EPS of $0.91, investors reacted negatively to a slowdown in services revenue growth. Despite a 37% jump in product revenue, services revenue grew only 13%, leading the company to lower its full-year services forecast. This discrepancy has raised concerns regarding 'low attach rates,' where customers purchase hardware without accompanying high-margin subscriptions. Management attributed the shortfall to timing issues related to large enterprise deals, noting that deferred revenue increased to $7.93 billion.
Tickers: $FTNT
Topics: earnings beat guidance revision revenue growth services revenue stock price drop