Fortinet reported accelerating demand for its Unified SASE platform during the second quarter of 2026, with FortiSASE billings growing more than 100% as the company expanded its strategy for combining cloud-delivered security with traditional network firewalls.
Management is now combining Fortinet’s Secure Networking and Unified SASE businesses into a category it calls “SASE Firewall.” Fortinet said the combined business grew 34% to more than $2 billion during the quarter.
The SASE Firewall category is a management-defined strategic grouping rather than a separately reported financial segment. It combines firewall, software-defined wide-area networking, SASE, and hybrid mesh capabilities through Fortinet’s FortiOS operating system.
Fortinet said the architecture can protect users, applications, and data across data centers, cloud environments, branch locations, and remote workforces. The company’s FortiASIC processors are designed to improve performance and lower the cost of delivering those capabilities.
Unified SASE billings increased 35% year over year, with momentum building throughout the quarter. FortiSASE adoption reached 19% of Fortinet’s installed base of large-enterprise customers.
FortiSASE billings grew more than 100%, benefiting from expansions among existing customers, replacements of competing products, and new large-enterprise contracts.
Fortinet believes its ability to offer cloud, hybrid, on-premises, and sovereign SASE deployments differentiates the company from providers that primarily rely on cloud-delivered security.
The company estimates that its combined deployment approach addresses a market approximately two to three times larger than the cloud-only SASE opportunity served by many competitors.
Fortinet recently introduced the FortiGate 1200G series with FortiSASE Outpost. The system combines local security enforcement with cloud-delivered capabilities, addressing requirements involving data sovereignty, performance, privacy, and AI infrastructure.
Local enforcement allows customers to inspect high-volume internal traffic without routing all data through a cloud point of presence. FortiSASE can then be used for outbound traffic and remote access.
The company highlighted a seven-figure FortiSASE contract with a global pharmaceutical company covering more than 45,000 users.
The customer replaced an incumbent security service edge provider and selected Fortinet’s integrated approach across SASE, SD-WAN, next-generation firewalls, and switching. Fortinet said its ability to extend security processing to on-premises appliances was an important factor in the contract.
Secure Networking billings increased 34%, supported by demand for FortiGate products across enterprise networks, operational technology environments, local area network edges, and AI data centers.
Fortinet’s total billings increased 33% to $2.37 billion from $1.78 billion. The quarter included a $324.2 million increase in deferred revenue, compared with a $149.2 million increase in the prior-year period.
Total revenue increased 26% to $2.05 billion from $1.63 billion.
Product revenue surged 52% to $773 million, driven by higher FortiGate unit sales and customers shifting toward more powerful models with higher average selling prices. Product revenue represented approximately 38% of total revenue, compared with roughly 31% a year earlier.
Product gross margin increased to 69.8% from 67.4%, allowing Fortinet to maintain an overall GAAP gross margin of 80.2% despite the faster growth of hardware-oriented revenue.
Service revenue increased 14% to $1.27 billion. Service billings grew 26%, while total deferred revenue increased 17%.
Management believes the first quarter of 2026 marked the lowest point for service revenue growth and expects the larger installed product base to support accelerating service growth over time.
Fortinet also reported growing demand from companies building artificial intelligence infrastructure.
A neocloud provider selected Fortinet for an eight-figure contract to secure generative AI data centers. The agreement expanded a seven-figure contract secured during the first quarter, with the customer choosing Fortinet for its price-to-performance characteristics and ability to secure high-throughput infrastructure.
Operational technology was another major area of growth. OT billings increased more than 55% as industrial customers invested in protecting factories, utilities, critical infrastructure, and distributed networks.
Fortinet disclosed a seven-figure contract with a major utility organization covering thousands of field locations as part of a communications modernization project.
Billings from Fortinet’s AI-driven Security Operations business increased 25%, supported by customers consolidating individual security products onto the company’s broader platform.
Fortinet recently launched FortiSOC, a cloud-delivered platform that combines six security operations functions into an AI-supported security operations center experience. The company also expanded FortiEndpoint to combine additional endpoint security capabilities within one agent.
Non-GAAP operating margin reached a second-quarter record of 38%, increasing 490 basis points. GAAP operating margin improved to 33.7% from 28.1%.
Non-GAAP sales and marketing expense declined to 30.7% of revenue from 34.1%, while headcount increased approximately 4% year over year to 15,472. This indicates that Fortinet generated substantial operating leverage while continuing to invest in its platform.
GAAP net income increased to $606.3 million from $440.1 million. Diluted GAAP earnings per share rose 44% to $0.82, while diluted non-GAAP earnings per share increased 41% to $0.90.
Operating cash flow reached $1.04 billion. Free cash flow more than tripled to $965.6 million from $284.1 million, producing a free cash flow margin of 47.2%.
Adjusted free cash flow reached $995.9 million, representing a margin of 48.6%. Fortinet ended the quarter with approximately $2.93 billion in cash and cash equivalents.
Fortinet repurchased 1.9 million shares for $146 million during the quarter. Year-to-date repurchases totaled 12.5 million shares for $973 million, at an average price of approximately $78 per share.
The company had approximately $766 million remaining under its share-repurchase authorization following the quarter.
Fortinet raised its full-year 2026 outlook following the stronger-than-expected first half.
The company now expects revenue of between $8.02 billion and $8.18 billion, representing approximately 19% growth at the midpoint. Billings are projected to range from $9.35 billion to $9.55 billion, implying growth of approximately 25% at the midpoint.
Service revenue is expected to range from $5.18 billion to $5.22 billion, while non-GAAP operating margin is projected to remain between 35% and 37%.
Fortinet expects diluted non-GAAP earnings per share of between $3.41 and $3.47 for the year.
For the third quarter, Fortinet projected revenue of between $2.01 billion and $2.1 billion and billings of between $2.25 billion and $2.35 billion.
The company’s SASE Firewall strategy positions Fortinet to pursue both its established network-security market and the expanding demand for cloud-delivered, hybrid, and sovereign SASE platforms. FortiSASE’s triple-digit billings growth indicates that the newer cloud and hybrid capabilities are beginning to represent a more meaningful part of Fortinet’s broader platform.
KEY QUOTES:
“We are very pleased with our excellent second quarter results, which reflect the differentiated value of our innovation in the AI Era. Our results reflect that customers value Fortinet’s unique ‘SASE Firewall’, with leading firewall, SD-WAN and SASE functionality integrated together on our single FortiOS operating system and powered by our purpose-built FortiASIC, offering customers flexible deployment in a sovereign form factor, on-prem and in the cloud.”
Ken Xie, Founder, Chairman And Chief Executive Officer Of Fortinet
