Christiane will then review our financial results for the third quarter of 2025 before providing guidance for the fourth quarter and updating the full year. Our GAAP results and GAAP to non-GAAP reconciliations are located in our earnings press release and in the presentation of the company today's remarks, both of which are posted on our Investor Relations website. The prepared remarks will also be posted on the quarterly earnings section of our Investor Relations website following today's call. Lastly, all references to growth are on a year-over-year basis unless noted otherwise.
Billings and revenue both grew by 14%, with a record third-quarter operating margin of 37%. Unified SaaS billings grew 19%, driven by Fortinet SaaS billings growth of over 100%, making us one of the fastest-growing SaaS leaders at scale. Our solution also enables sovereign SaaS for service providers and large enterprises to deploy Fortinet SaaS within their own data center for data privacy. Our strong leadership position is reflected in customer adoption, with 15% of large enterprise customers now using Fortinet SaaS representing 55% growth, as shown on slide 10.
In secure networking, building growth 10% outperformed the overall secure networking market as we continued to gain market share. Fortinet is the number one leader in firewall with a unit market share of over 50% and has the highest product revenue among our cybersecurity peers. AI-driven secure ops was the fastest-growing pillar in the third quarter, with building growth of 33%. Operational technology and critical infrastructure solutions are another significant growth driver for Fortinet, with over 30% building growth.
What went well
- Total billings and revenue both grew 14% (billings $1.81B, revenue $1.72B), with product revenue up 18% to $559M as Fortinet continued to gain firewall market share (over 50% unit share).
- Non-GAAP operating margin hit a third-quarter record of 36.9% (up 80 bps) and total gross margin of 81.6% beat expectations on cost discipline.
- Faster-growing pillars accelerated: Unified SASE billings +19% (Fortinet SaaS billings up over 100%), SecOps +33%, and OT/critical-infrastructure billings up more than 30%.
- Strong cash generation and capital return: free cash flow of $568M (37% adjusted FCF margin), $1.63B year-to-date FCF, and 23.3M shares repurchased for $1.83B (cutting share count ~3%); the Board added $1B to the buyback authorization in August.
- Large-enterprise momentum: deals over $1M rose 26% with total value up over 30%, and ~6,600 new organizations were added; Fortinet was named a leader in the 2025 Gartner Magic Quadrant for SASE and the inaugural hybrid mesh firewall MQ.
What went wrong
- Service revenue growth remained muted at 13% ($1.17B); management framed improving product revenue as a leading indicator for service growth only expected in the second half of 2026, signaling a continued lag.
- The 2026 end-of-support (product refresh) cohort was explicitly not a significant driver of product revenue in the quarter, deferring an expected upgrade tailwind.
- Q4 guidance implied deceleration to roughly 12% billings and revenue growth at the midpoint, below the 14% posted in Q3.
- Infrastructure investments rose to $88M (up $51M year-over-year) as Fortinet built out owned cloud data centers, a growing spend headwind, alongside higher inventory purchases to meet demand.
Reported 2025-11-05 · figures from the Fortinet, Inc. Q3 2025 earnings call.