FTNTFortinet

AI presents new risks and challenges that may affect our business. We have made, and expect to continue to make investments to integrate AI and machine learning ML technology into our solutions, as evidenced by our acquisition of Lacework. AI presents risks, challenges, and potentially unintended consequences that could impact our ability to effectively use of AI successfully in our business. Given the nature of AI technology, we face an evolving regulatory landscape and significant competition from other companies. Our AI efforts may not be successful and our competitors may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively effectively, reduce demand for our products and services and adversely affect our financial results. Increased competition from other companies implementing AI more effectively or rapidly could impact customer preferences and reduce demand for our products or services. Data practices by us or others others, AI governance, AI development and validation practices that result in controversy could also impair the acceptance of AI solutions. This in turn could undermine confidence in the decisions, predictions, analysis, and effectiveness of our AI-related initiatives. The rapid evolution of AI, including potential government regulation of AI, In addition, vulnerabilities within our AI systems or solutions may require significant additional resources related to AI in our solutions. Our AI-related initiatives may be identified by competitors, researchers, or malicious actors before we detect or remediate them, which could result in new security incidents, reputational damage, or enhanced governmental or regulatory scrutiny, including regarding the use of AI in our solutions and the marketing of products using AI, litigation, customer reporting or documentation requirements, ethical or social concerns, or other complications. For example, AI technologies, including generative AI, may create content that appears correct but is factually inaccurate (hallucinations) or flawed, or contains copyrighted or other protected material, and if our customers or others use this flawed content to their detriment, we may be exposed to brand or reputational harm, competitive harm, or legal liability. If customer data is used to train AI based systems and such data is not adequately anonymized, this may lead to breach of sensitive information and loss of customer trust. The use of AI also brings ethical issues related to privacy, surveillance and consent of use, as well as potential for bias and discrimination. Any of the foregoing could adversely affect our business, reputation, or financial results. confidence.

In January 2024, our board of directors approved a $500.0 million increase in the authorized stock repurchase amount under the Repurchase Program, bringing the aggregate amount authorized to be repurchased to $7.25 billion of our outstanding common stock. In February 2024, our board of directors approved an extension of the Repurchase Program to February 28, 2025. In October 2024, August 2025, our board of directors approved a $1.0 billion increase in the authorized stock repurchase amount under the Repurchase Program and extended the term of the Repurchase Program to February 28, 2026, 2027, bringing the aggregate amount authorized for repurchases to be repurchased to $8.25 $9.25 billion of our outstanding common stock through February 28, 2026. 2027. In 2024, 2025, we repurchased less than 0.1 28.7 million shares of common stock under the Repurchase Program for an aggregate purchase price of $0.6 million. $2.29 billion. As of December 31, 2024, 2025, approximately $2.03 billion $738.6 million remained available for future share repurchases under the Repurchase Program. In January 2026, our board of directors approved a $1.0 billion increase in the authorized stock repurchase amount under the Repurchase Program, bringing the aggregate amount authorized to be repurchased to $10.25 billion of our outstanding common stock through February 28, 2027. As of February 24, 2026, approximately $1.27 billion remained available for future share repurchases. Subsequent to December 31, 2025 and through the filing of this Annual Report on Form 10-K, we repurchased 6.1 million shares of our common stock at an average price of $76.68 per share, for an aggregate purchase price of $470.5 million, under the Repurchase Program.

Business Combinations—We include the results of operations of the businesses that we acquire as of the respective dates of acquisition. We allocate the fair value of the purchase price of our business acquisitions to the tangible and intangible assets acquired and liabilities assumed, assumed based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. The excess of the fair values of the net assets acquired over the net purchase consideration is recorded as a gain on bargain purchase within other income (expense)—net on the consolidated statements of income. We often continue to gather additional information throughout the measurement period, not to exceed one year from the acquisition date. Measurement period adjustments that relate to facts and circumstances that existed as of the acquisition date are generally recorded with a corresponding adjustment to goodwill, as if the accounting had been completed at the acquisition date. Adjustments identified after the measurement period are recognized in the consolidated statements of income in the period identified.

Periodically we, like Similar to other security companies and companies in other industries, we have experienced, experienced and may experience in the future, cybersecurity threats, malicious activity directed against our information technology infrastructure and or unauthorized attempts to gain access to our and our customers’ sensitive information and systems. For example, in the third quarter We currently are unaware of 2024, we discovered that an individual gained unauthorized access to a limited number of files stored on Fortinet’s instance of a third-party cloud-based shared file drive, which included limited data any claims or proceedings related to a small number these types of Fortinet customers. We matters that we believe are likely to have completed our investigation of this incident and we do not currently believe that it had a material impact adverse effect on our business or that of any of our customers. We are currently not aware of any significant claims arising from this matter. financial position.