Fortinet, Inc. Discusses Strategic Growth and Market Position at JPMorgan Global Technology Conference 2025

Key Takeaways

TL;DR: Fortinet (FTNT) emphasized strong LT growth drivers (SASE, OT security, AI integration) despite near-term macro caution. Key themes include dominance in firewalls/SD-WAN, SASE momentum (11% SD-WAN penetration upside), EOS-driven refresh cycle (accelerating in 2026), and margin resilience via AI/operational efficiencies. Guidance reflects macro prudence but reaffirms 12%+ CAGR through 2027.

1. Financial Outlook & Macro Factors

• 2025 Guidance: Reflects macro uncertainty (tariffs, USD volatility, client delays) despite solid Q1 and early Q2. Downside guardrails include Lacework churn (additional ~$5M impact in Q1 beyond prior expectations).
• LT Growth: Reiterates 12%+ billings CAGR (2023–2027), driven by refresh cycles (COVID-era upgrades expiring 2025–2026), SASE expansion, and OT/IT convergence.
• Services Revenue Softness: Attributed to Lacework attrition (now “mostly done”), fewer days in Q1, and prior-period adjustments.

2. Product & Market Growth Drivers

• Secure Networking Leadership:
  • #1 in Firewalls, SD-WAN, OT Security; 80% of SASE deals are upsells from SD-WAN/firewall installed base.
  • SASE Momentum: Sovereign SASE (data localization) and hybrid PoP strategy (GCP + owned infra) driving cost advantages vs. peers. Closed a “large retail enterprise” displacing a competitor.
  • OT Security: High-growth segment (outpacing core) via ruggedized devices and converged IT/OT use cases.
• EOS Refresh Cycle:
  • ~1/3 of FortiGate FW base (pre-2019) faces EOS by 2026, driving upgrades. Larger enterprises likely to refresh earlier; SMBs may wait.

3. Innovation & Efficiency

• AI Adoption:
  • Reduced L1 support headcount via GenAI, maintaining CSAT scores.
  • Threat analysis acceleration via ML (FortiGuard Labs).
• R&D Strategy: ~80% organic focus, supplemented with 3–4 annual tuck-ins (e.g., quantum-resistant tech). Platform integration (single OS) drives stickiness.

4. Competitive Positioning

• SASE Differentiation: “Mature” solution with advanced DLP/CASB roadmap. Targeting #1 share by leveraging SD-WAN leadership.