Fortinet Drops Up to 25% After Hours Despite Q3 Beat and Raised FY2026 Guidance

Fortinet reported third-quarter 2026 results after Wednesday's closing bell that beat Wall Street estimates on both revenue and earnings, yet shares cratered as much as 25% in after-hours trading. The Sunnyvale, California-based cybersecurity company posted adjusted earnings per share of $0.91, topping the consensus estimate of $0.86 by $0.05, while revenue of $2.08 billion edged past the $2.06 billion expected and grew 20% year over year. Billings surged 29% to $2.34 billion, product revenue jumped 37% to $765 million, free cash flow reached $865 million, and the non-GAAP operating margin came in at 38.2%.

Fortinet raised its full-year 2026 outlook, guiding revenue of $8.13 billion to $8.22 billion and adjusted EPS of $3.54 to $3.58, above the prior consensus of $3.44. The company noted it was raising its 2026 billings guidance for the third time this year, projecting $9.57 billion to $9.72 billion for the full year. For the fourth quarter, Fortinet guided revenue of $2.155 billion to $2.245 billion and adjusted EPS of $0.93 to $0.95, ahead of the $0.87 analyst estimate. The company also increased its share repurchase authorization by $1.2 billion, leaving $2 billion remaining.

Despite the headline beats, investors focused on a weaker spot in the report: service revenue grew only 13% in the quarter, and Fortinet trimmed its full-year service revenue guidance to $5.15 billion to $5.17 billion from the prior range of $5.18 billion to $5.22 billion. That deceleration in the higher-margin, recurring services segment appeared to overshadow the broader strength, sending shares down sharply in a session where FTNT had already fallen nearly 4% before the report was released.