Chip Stock Investor Podcast What Happened to Fortinet? FTNT Stock Analysis
Aug 11, 2025
Fortinet's stock took a hit after its recent earnings report, leading to a deep dive into the implications of its hefty investments in data centers. Analysts discuss concerns over profitability but highlight the company's enduring growth potential. The conversation also touches on the impressive expansion of cybersecurity, particularly through SASE services and key partnerships with Google Cloud. Engaging discussions invite listeners to explore investment strategies in this fast-evolving industry.
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Hardware+Security Drives Growth
- Fortinet sits at the intersection of networking hardware and cybersecurity, seeing a hardware refresh cycle boost product and subscription sales.
- Billings rose 15% YoY and security operations software billings grew 31%, driving total revenue growth near 14%.
CapEx Spike Hurt Free Cash Flow
- Cash from operations rose to $452M but CapEx jumped to $168M, pushing free cash flow per share toward multi-year lows.
- The spike in CapEx caused free cash flow to fall back to levels seen several years ago during the pandemic.
Fortinet Buying Data Centers
- Fortinet began building its own data center points of presence instead of relying solely on Google Cloud locations.
- Owning data center real estate adds a new capital-intensive dimension to Fortinet's business model and differentiation.