Shares of Fortinet (NASDAQ: FTNT) plummeted 15.10% in after-hours trading on Wednesday, despite the cybersecurity firm reporting better-than-expected second-quarter results. The sharp decline appears to be primarily driven by weaker-than-anticipated guidance for the upcoming quarter, overshadowing the company's strong performance in Q2.
For the second quarter, Fortinet reported adjusted earnings per share of $0.64, surpassing the analyst consensus estimate of $0.59. Revenue came in at $1.63 billion, slightly above the expected $1.624 billion. The company's billings, a key metric for future revenue, grew 15% year-over-year to $1.78 billion.
"Our strong second quarter performance and consistent track record of growth are a direct result of our continued innovation and customer-first strategy, enabling us to beat our billings guidance for the quarter and raise our full year billings outlook," said Ken Xie, Founder, Chairman and Chief Executive Officer of Fortinet.
However, investors seem to be focusing on Fortinet's third-quarter outlook, which fell short of expectations. The company forecasts third-quarter revenue between $1.67 billion and $1.73 billion, with the midpoint slightly below the analyst consensus of $1.71 billion. Adjusted earnings per share for Q3 are expected to be between $0.62 and $0.64, compared to the $0.65 analysts were anticipating.
Despite the disappointing guidance, Fortinet raised its full-year 2025 billings guidance midpoint by $100 million, suggesting confidence in its long-term prospects. The company also announced an expansion of its FortiCloud services, introducing new offerings in identity management, secure file storage, and communication, aiming to strengthen its position in the rapidly evolving cybersecurity market.
The after-hours stock plunge highlights the high expectations investors have for high-growth cybersecurity firms like Fortinet, especially in the face of increasing competition and macroeconomic uncertainties. While the company continues to show strong growth and innovation, the market's reaction underscores the importance of forward-looking guidance in today's volatile trading environment.