Fortinet shares sank over 20% at the open on Friday after it reported disappointing third-quarter sales and provided 4Q guidance that fell short of expectations as the Secure Networking market experiences slower growth.
The cybersecurity company said product demand is returning to normal levels following two years of elevated growth. As a result, it said it is shifting its attention to the faster growth SASE (Secure Access Service Edge) and Secure Operations markets, in addition to Secure Networking.
“We are well-positioned to capitalize on these emerging growth opportunities by leveraging our integrated FortiOS operating system, industry leadership in firewall and SD-WAN, and exceptional solutions in each of the SASE and Security Operations markets,” founder, chairman and CEO Ken Xie commented in a statement.
Revenue for the quarter to September 30, 2023, rose 16% to $1.33 billion, below the $1.35 billion consensus estimate of analysts.
Net income per share jumped 24% to $0.41, above the $0.36 expected by analysts.
The company has guided for 4Q revenue of between $1.38 billion and $1.44 billion, below the $1.5 billion expected by the market, and adjusted net income of $0.42 to $0.44 per share, in line with the $0.42 FactSet consensus.
Fortinet’s shares recovered some of their losses to trade 18% down at $47.59 by 10am in New York. Some other cybersecurity companies also declined. Palo Alto Networks fell 2.8% and Zscaler declined 0.4%.
Contact the author at stephen.gunnion@proactiveinvestors.com