10-K 0001262039-26-000007 (2026-02-25) vs 10-K 0001262039-25-000011 (2025-02-21)
| Section | Compared text | Words now | Changed |
|---|
| Risk Factors | Item 1A | 29,750 |
15.6% |
| MD&A | Item 7 | 10,597 |
22.5% |
| Legal Proceedings | Item 3, via Note 11 – COMMITMENTS AND CONTINGENCIES | 1,602 |
49.0% |
| Accounting Policies | Item 8, Note 1 – THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 5,975 |
13.0% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 253 words changed in this paragraph; it is 55% similar to last year's version.
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.
Source: Item 1A, 10-K 0001262039-26-000007 vs Item 1A, 10-K 0001262039-25-000011
MD&A 170 words changed in this paragraph; it is 51% similar to last year's version.
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.
Source: Item 7, 10-K 0001262039-26-000007 vs Item 7, 10-K 0001262039-25-000011
Accounting Policies 121 words changed in this paragraph; it is 48% similar to last year's version.
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.
Source: Item 8, Note 1 – THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0001262039-26-000007 vs Item 8, Note 1 – THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0001262039-25-000011
Legal Proceedings 108 words changed in this paragraph; it is 48% similar to last year's version.
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.
Source: Item 3, via Note 11 – COMMITMENTS AND CONTINGENCIES, 10-K 0001262039-26-000007 vs Item 3, via Note 12 – COMMITMENTS AND CONTINGENCIES, 10-K 0001262039-25-000011
Every change, by type
Sentences and paragraphs of FTNT's Risk Factors and MD&A, 10-K 2026-02-25 against 10-K 2025-02-21.
Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
Our billings, revenue and free cash flow growth, including our product and service billings and revenue, may slow, and our operating margins may decline, particularly if our billings and revenue do not improve or grow as anticipated, or if customer demand, renewal rates, pricing, competitive dynamics, implementation timing, cost structure, or macroeconomic conditions adversely affect our business, which could negatively impact our financial condition and results of operations.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
•unexpected lack of power access or unexpected increases in power needs or connectivity;
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
in providing protection from a single type of security threat are often able to deliver these specialized security products to the market more quickly than we can.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
organizations involve risks that may not be present, or that are present to a lesser extent, with sales to smaller entities. These risks include:
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
•funding authorizations and requirements unique to government agencies, with funding or purchasing reductions or delays adversely affecting public sector demand for our products. Our business operations, contract awards, and revenue streams are subject to governmental actions, which may introduce risks to our financial performance and strategic growth. In addition, these actions could eliminate or reduce the operations of an agency that we work with, terminate employees with whom we have business relations with or cancel or modify a contract with us. Any failure to comply with these actions, shifts in federal procurement strategies, or budgetary reductions imposed by the agency could adversely impact our financial results, competitive positioning, and overall business operations; and
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
practice. Such lack of action to remediate known product vulnerabilities in the customer environment could negatively impact their own security posture, increasing the likelihood of exploitation and negatively impacting our reputation. Our networks and products, including cloud-based technology, could be targeted by attacks specifically designed to disrupt our business and harm our operational results and reputation.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
potential increased costs for shipping and products, and potential delays and interruptions in the supply chain. We may face challenges in sourcing materials, fulfilling orders and managing logistics efficiently, which could ultimately affect our operations, financial performance and overall business continuity. For example, as a result of the rapid global build-out of AI infrastructure, there is currently a global shortage of memory chips, which are a component in certain of our products. As a result, we are currently experiencing, and may continue to experience, constraints on the availability of memory chips. If we are unable to obtain sufficient quantities of memory chips on commercially reasonable terms, we have experienced, and may continue to experience, delays in the production and delivery of our products and increased costs to source available memory chips, any of which could harm our business, financial condition and results of operations. To mitigate increased hardware costs resulting from these shortages, we are implementing price increases, which may negatively impact demand for our products and may not be sufficient or timely to offset rising input costs, potentially resulting in margin compression and adversely affecting our business, financial condition and results of operations.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
The rapid evolution of AI, including potential government regulation of AI, may require significant additional resources related to AI in our solutions. Our AI-related initiatives may result in new or enhanced governmental or regulatory
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
defend such lawsuits and any settlement payment or adverse result in such lawsuits could have a material adverse effect on our results of operations and financial condition.
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AddedRisk Factors
In addition to the GDPR, the EU has also enacted legislation that would regulate non-personal data and establish new cybersecurity standards, and other countries, including the U.K., may similarly do so in the future. In particular, the EU Data Act went into effect in 2024 and imposes certain data and cloud service interoperability and switching obligations to enable users to switch between cloud service providers (as well as certain requirements concerning cross-border international transfers of non-personal data outside the EEA). Additionally, the EU’s Network and Information Security Directive II, adopted in 2023, regulates resilience and incident response capabilities of entities operating in a number of sectors, including the digital infrastructure sector and provides for EU member states to have issued implementing legislation by October 2024. Further, DORA became effective in January 2025 and imposes certain requirements on entities in the financial sector and their third-party cloud service providers related to managing and mitigating information and communication technology risk. If we are unable to transfer data, including personal data, between and among countries and regions in which we operate, or are otherwise required to modify our practices, including our data privacy and security controls and procedures, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
We are currently, and may in the future become, involved in litigation that may adversely affect us.
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AddedRisk Factors
We are regularly subject to claims, suits and government investigations and other proceedings including patent, product liability, class action, personal injury, property damage, labor and employment, commercial disputes, securities litigation, compliance with laws and regulatory requirements and other matters, and we may become subject to additional types of claims, suits, investigations and proceedings as our business expands. Such claims, suits and government investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, any of these types of legal proceedings can have an adverse impact on us because of legal costs and diversion of management attention and resources, and could cause us to incur significant expenses or liability, adversely affect our brand recognition and/or require us to change our business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect our results of operations. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, consolidated financial position, results of operations or cash flows in a particular period. These proceedings could also result in reputational harm, sanctions, consent decrees or orders requiring a change in our business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations, and prospects. Any of these consequences could adversely affect our business and results of operations. For additional information regarding our litigation, claims and related contingencies, see Note 11. Commitments and Contingencies, of our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Read it in 10-K 2026-02-25 at sec.gov ↗
RemovedRisk Factors
•as the supply chain challenges normalize, our product revenue growth rate may be lower versus prior quarters where delivery from backlog contributed more to billings. For fiscal year 2024, the comparably lower backlog contribution to billings resulted in decreased year-over-year quarterly growth rates;
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
SASE and other cloud security solutions, endpoint protection, IoT and OT security opportunities and product refresh cycles;
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
Our billings, revenue and free cash flow growth may slow or may not continue, and our operating margins may decline.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
Any new sales channel partner will require extensive training and may take several months or more to achieve productivity. Our channel partner sales structure could subject us to lawsuits, potential liability and reputational harm if, for
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
Some of our existing and potential competitors enjoy competitive advantages such as:
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
•funding authorizations and requirements unique to government agencies, with funding or purchasing reductions or delays adversely affecting public sector demand for our products; and
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
The network security market is expected to continue to evolve rapidly. Moreover, many of our end-customers operate in markets characterized by rapidly changing technologies and business plans, which require them to add numerous network access points and adapt increasingly complex networks, incorporating a variety of hardware, software applications, operating systems and networking protocols. In addition, computer hackers and others who try to attack networks employ increasingly
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
and end-customers and could cause delays in shipment of our products and adversely affect our results of operations. In addition, increased component costs could result in lower gross margins.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedRisk Factors
Additionally, we may be subject to other legal regimes throughout the world governing data handling, protection and privacy. For example, in June 2018, California passed the CCPA, which provides new data privacy rights for consumers and
Read it in 10-K 2025-02-21 at sec.gov ↗
RewordedRisk Factors
In January 2024 and October 2024, August 2025, our board of directors approved $500.0 million and a $1.0 billion increases increase in the authorized stock repurchase amount under the Repurchase Program, respectively, Program and extended the term of the Repurchase Program to February 28, 2027, and in January 2026, our board of directors approved an additional $1.0 billion increase in the authorized stock repurchase amount under the Repurchase Program, bringing the aggregate amount authorized to be repurchased to $8.25 $10.25 billion of our outstanding common stock. stock through February 28, 2027.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Our FortiGuard and other security subscriptions and FortiCare technical support services in arrears or revenue has historically accounted for shorter periods a significant percentage of time than annually, such as monthly or quarterly, this may negatively impact our billings and total revenue.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Many organizations have invested substantial personnel and financial resources to design and operate their networks and have established deep relationships with other providers of networking products, which may make them reluctant to add new components to their networks, particularly from other vendors such as us.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Our ability to grow our revenue depends, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth and on the effectiveness of our sales strategy, sales execution, and sales personnel selling successfully in different contexts, each of which has its own different complexities, approaches and competitive landscapes, such as managing and growing the channel business for sales to small businesses and more actively selling to the end-customer for sales to larger organizations.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
If we are required to change third-party manufacturers, our ability to meet our scheduled product deliveries to our customers would be adversely affected, which could cause the loss of sales and existing or potential customers, delayed revenue or an increase in our costs, which could adversely affect our gross margins.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
The effects of these events may continue due to potential U.S. government shutdowns and shutdowns, the transition in administrations, changing in the U.S. government’s trade policy and the United States’ ongoing trade disputes with Russia, China and other countries, including the United States’ tariffs, and any new or additional retaliatory tariffs from foreign countries.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Any increase in tensions between China and Taiwan, including threats of military actions or escalation of military activities, could adversely affect our manufacturing operations in Taiwan. Taiwan, which, given the large percentage of our hardware that is manufactured in Taiwan, could have significant impacts on our business and operations.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Weak global and regional economic conditions and spending environments, based on a downturn in the economy, a possible recession and the effects of ongoing or increased inflation or possible stagflation in certain geographies, tariffs or other trade disruptions, changing interest rates, geopolitical instability and uncertainty, a reduction in information technology spending regardless of macroeconomic conditions, the effects of epidemics and pandemics and the impact of the war in Ukraine Ukraine, tensions between China and Taiwan or conflicts in the Middle East could have a material adverse impacts on our financial condition and results of operations and our business, including resulting in longer sales cycles, lower prices for our products and services, increased component costs, higher default rates among our channel partners, reduced unit sales, lower prices and slower or declining growth.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
There is an evolving focus from certain Certain investors, employees, customers and other stakeholders concerning have a focus on corporate responsibility, specifically related to ESG matters. responsibility.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
The conflicts Conflicts in the Middle East highlights potential risks associated with geopolitical instability in the region, including disruption to shipping routes, longer lead times for components and products, increased insurance costs for vessels passing through conflict zones, potential increased costs for shipping and products, and potential delays and interruptions in the supply chain.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
We are also subject to other litigation in addition to patent infringement claims, such as employment-related litigation and disputes, as well as general commercial litigation, such as the Alorica Inc. and could become subject to other forms of litigation and disputes, including stockholder litigation.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
If we stop hedging against any of these risks or if our attempts to hedge against these currency exposures are not successful, our financial condition and results of operations could be adversely affected.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesRisk Factors
A Generally, a reduction to backlog increases our aggregate billings and revenue during the quarter when delivered;
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesRisk Factors
In addition, if we do not have certain certifications, this may restrict our ability to sell to certain customers until we have obtained certain the required certifications and we may not obtain the certifications in a timely manner or at all.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesRisk Factors
Further, certain components for our products come from Taiwan and approximately 88% the majority of our hardware is manufactured in Taiwan.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
•expansions, development, improvements, operating, subleasing and other real property holdings activities;
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
•FortiAI—FortiAI provides a dual-layered defense across the Fortinet Security Fabric through the AI for Security and Security for AI framework. Within AI for Security, FortiAI-Assist uses generative and agentic AI to support NOC and SOC teams in monitoring, analysis and response activities across enterprise environments. Security for AI comprises of FortiAI-Protect and FortiAI-SecureAI. FortiAI-Protect utilizes AI/ML to address AI-driven threats and zero-day attacks, and support governance over GenAI applications, FortiAI-SecureAI focus on protecting an organization’s AI infrastructure, including LLMs and APIs, and preventing data leakage into and out of LLMs. FortiAI protects the AI ecosystem, infrastructure, models, workloads, data and supply chains, while leveraging unified AI intelligence across the Fortinet Security Fabric to defend against threats.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
•OT Security—The Fortinet Security Fabric enables security for OT systems and CPS, including converged IT/OT architectures. Our OT Security Platform is purpose-built to protect the engineered systems that underpin critical infrastructure and supply chains around the world. This includes securing energy and utilities systems, manufacturing environments, and transportation, utilizing FortiGuard OT Security Services. These offerings include security capabilities for CPS assets and tools that support centralized NOC and SOC functions.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
Product revenue grew 16% in 2025 compared to 2024. We experienced product revenue growth across our hardware products and software licensing, which mainly benefited from growth in secure networking hardware products and term licenses. We expect our product revenue to continue to grow in 2026.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
Operating margin increased 0.4 percentage points in 2025, driven by revenue growth exceeding expense growth, resulting in improved operating leverage. For the full year 2026, we expect our operating margin to decrease compared to 2025 as we continue to make strategic investments. Total revenue is expected to increase in 2026 compared to the prior year; however, our expenses are expected to outpace revenue growth, primarily reflecting investments in sales and marketing headcount, product development and the continued capital expenditures in data centers and real estate. While these strategic investments are intended to drive long-term revenue growth and market expansion, we anticipate they may result in near-term compression of our operating margins. In addition, we may experience higher operating expenses driven in part by the weakening of the U.S. dollar relative to foreign currencies, as a portion of our expenses are incurred and paid in currencies other than the U.S. dollar.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
Our overall performance depends in part on worldwide economic and geopolitical conditions, such as trade policies and tariffs, GDP growth or contraction (both domestically and internationally), geopolitical instability and uncertainty, the war in Ukraine, tensions between China and Taiwan or conflicts in the Middle East, and their impact on customer behavior. Worsening economic conditions, including tariffs, inflation, changing interest rates and other trade disruptions, slower growth, any recession, fluctuations in foreign exchange rates and other changes in economic conditions, may result in decreased sales productivity, lower growth and adversely affect our results of operations and financial performance. We have seen, and could continue to see, certain impacts on our business, results of operations, financial condition, cash flows, liquidity and capital and financial resources such as longer sales cycles, delayed purchases and increased commitments with certain suppliers and increased inventory and inventory purchase commitment reserves. Tariffs imposed by the United States, as well as any new or additional retaliatory tariffs that could be imposed by other countries in response, could have a material adverse impact on global trade, supply chains and other worldwide economic and geopolitical conditions, which could increase our product costs and also affect customer sentiment in deciding whether to purchase our products. We continue to monitor the impact of tariffs on our business. In addition, as a result of the rapid global build-out of AI infrastructure, there is currently a global shortage of memory chips, which are a component in certain of our products. As a result, we are currently experiencing, and may continue to experience, constraints on the availability of memory chips, which may lead to delays in the production and delivery of our products and increased costs to source available memory chips, any of which could harm our business, financial condition and results of operations. To mitigate increased hardware costs resulting from these shortages, we are implementing price increases, which may negatively impact demand for our products and may not be sufficient or timely to offset rising input costs, potentially resulting in margin compression and adversely affecting our business, financial condition and results of operations.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
Year Ended December 31, 2025 2024 2023 (in millions) Billings: Revenue $ 6,799.6 $ 5,955.8 $ 5,304.8 Add: Change in deferred revenue 754.9 625.9 1,094.7 Less: Deferred revenue balance acquired in business combinations (0.8) (49.2) — Total billings (non-GAAP) $ 7,553.7 $ 6,532.5 $ 6,399.5
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AddedMD&A
Product revenue increased $309.7 million, or 16% in 2025 compared to 2024. We experienced product revenue growth across our hardware products and software licensing, mainly driven by growth in secure networking hardware products and term licenses.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
global sales and marketing organization to capture additional market share, and we anticipate that these growth investments may drive sales and marketing expenses to increase at a rate faster than revenue.
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AddedMD&A
On July 4, 2025, H.R. 1, an Act to Provide for Reconciliation Pursuant to Title II of House Concurrent Resolution 14 (the “Act”) commonly referred to as the One Big Beautiful Bill Act, was enacted. The Act makes permanent certain elements of the Tax Cuts and Jobs Act, including immediate expensing of U.S. research and development expenditures, immediate expensing of certain eligible assets, and various modifications to the international tax framework. The income tax effects of the Act have been recognized in our provision for income taxes as of December 31, 2025. As a result of the Act, our income tax liability in 2025 decreased by $120.0 million and our GAAP effective tax rate for 2025 increased by one percentage point.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
maturity. Based on current projections, we expect to have sufficient liquidity to fund this repayment and meet our operating requirements for at least the next 12 months and thereafter for the foreseeable future, including our foreseeable future supply obligations, capital expenditures and share repurchases.
Read it in 10-K 2026-02-25 at sec.gov ↗
RemovedMD&A
•expectations that our operating expense will increase year over year in absolute dollars during 2025;
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
FortiOS has been recognized across five Gartner Magic Quadrants, including Firewall, SD-WAN, SSE, SASE Platforms and Wired and Wireless LAN.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
•FortiAI—Our AI innovations encompass generative AI, big data AI for threat intelligence to process and analyze trillions of events using AI/ML, network operations AI for self-healing networks and automated network orchestration, automation and response, and AI for LLM leakage to protection against data leakage into LLMs. Our GenAI assists security teams to make better decisions, rapidly respond to threats and save time on even the most complex tasks. FortiAI is seamlessly integrated into the user experience of several of our products, including FortiAnalyzer, FortiSIEM and FortiSOAR, to help optimize threat investigation and response, SIEM queries, SOAR playbook creation, among other functions.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
•OT Security—The Fortinet Security Fabric enables security for converged IT/OT ecosystems. It also provides an OT Security Platform with features and products to extend Security Fabric capabilities to OT networks in factories, plants, remote locations and ships. To help alleviate security risks across the organization, we have continued to enhance our OT Security Platform offerings. These innovations range from edge products to NOC and SOC tools and services to provide effective and efficient networking and cybersecurity performance and operation.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
•On August 1, 2024, we closed our acquisition of Lacework, a privately held data-driven cloud security company. On August 5, 2024, we completed the acquisition of Next DLP, a privately held insider risk and DLP company. From August 2024 to December 2024, revenue from these two acquired companies was $33.5 million, or 0.6% of total revenue in 2024.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
Product revenue remained comparatively flat in 2024 compared to 2023. We expect product revenue growth rates to be higher in 2025 compared to 2024 which had a challenging comparison to a 2023 year benefiting from the greater backlog contribution to billings.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
Operating margin increased 6.9 percentage points in 2024 as a result of improvement in gross margin and decrease in operating expenses as a percentage of revenue. We expect our operating margin to decrease for full year 2025 compared to full year 2024 as we grow our sales and marketing, and research and development workforce organically and through acquisitions, increase our product development investments, and expand our data center footprint and our colocation and cloud hosting capacity to support business growth.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
Our overall performance depends in part on worldwide economic and geopolitical conditions, such as GDP growth, the war in Ukraine or tensions between China and Taiwan, and their impact on customer behavior. Worsening economic conditions, including inflation, changing interest rates, tariffs and other trade disruptions, slower growth, any recession, fluctuations in foreign exchange rates and other changes in economic conditions, may result in decreased sales productivity and
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
growth and adversely affect our results of operations and financial performance. We have seen certain impacts on our business, results of operations, financial condition, cash flows, liquidity and capital and financial resources such as longer sales cycles, delayed purchases and increased commitments with certain suppliers and increased inventory and inventory purchase commitment reserves.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
Our backlog may fluctuate over quarters. A reduction to backlog increases our aggregate billings and revenue during the quarter when delivered. If we experience supply chain shortages and cannot fulfill orders or if customers cancel or delay delivery of orders, our backlog may be affected, which will negatively impact our aggregate backlog to billings conversion and revenue in such quarter, and as the supply chain challenges normalized, our product revenue growth rate may be lower versus prior quarters where delivery from backlog contributed more to billings.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
Of the service revenue recognized in each quarter of 2024, from 88% to 90% was included in deferred revenue as of the beginning of the respective quarter. We expect service revenue growth rates to continue to slow down in 2025 due to slowing short term deferred revenue growth over the past several quarters, partially offset by increases in SaaS revenue.
Read it in 10-K 2025-02-21 at sec.gov ↗
RemovedMD&A
Interest income, interest expense, gain on bargain purchase and other income (expense)—net
Read it in 10-K 2025-02-21 at sec.gov ↗
RewordedMD&A
Research and development 12 12 12 Sales and marketing 35 34 38 38 General and administrative 4 3 4 4 Gain on intellectual property matter — — — Total operating expenses 50 53 50 53 Operating margin 31 30 23 22 Interest income 2 3 2 — Interest expense — — — Gain on bargain purchase 2 — — Other income (expense)—net — — 1 2 — Income before income taxes and loss from equity method investments 34 35 25 22 Provision for income taxes 6 5 3 1 Loss Gain (Loss) from equity method investments — — (1) (2) Net income including non-controlling interests 29 22 19 Less: net loss attributable to non-controlling interests, net of tax — — — Net income attributable to Fortinet, Inc. 27% 29% 22% 19% Percentages have been rounded for presentation purposes and may differ from unrounded results.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
In addition, changes in operating assets and liabilities were driven by an increase of $311.1 $449.0 million in deferred contract costs, costs which primarily consists of sales commissions, an increase of $223.2 $215.9 million in deferred tax accounts receivable—net, an increase of $95.9 million in prepaid expenses and other current assets, a decrease an increase of $131.2 $90.6 million in inventory, a decrease of $106.7 $66.2 million in deferred tax assets, an increase of $55.0 million in accrued liabilities, payroll and compensation and an increase of $45.4 $27.9 million in accounts receivable—net. payable.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Research and development $ 815.5 12% $ 716.8 12% $ 613.8 12% $ 103.0 17% 98.7 14% Sales and marketing 2,347.5 35 2,044.8 34 2,006.0 38 38.8 2 302.7 15 General and administrative 233.4 3 237.8 4 211.3 4 26.5 13 (4.4) (2) Gain on intellectual property matter (4.6) matters (10.4) — (4.6) — — — (5.8) 126 Total operating expenses $ 3,386.0 50% $ 2,994.8 50% $ 2,826.5 53% $ 168.3 6% 391.2 13%
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
During 2024, 2025, cash used in investing activities was $727.4 $599.1 million, primarily driven by $378.9 $364.8 million used for the purchases of property and equipment, $275.5 million used for the acquisitions of Lacework, Next DLP and Perception Point, net of cash and $56.4 $192.8 million spent for purchases of investments, net of maturities and sales of investments. investments, and $41.6 million used for payments made in connection with business combinations, net of cash.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
In the long term, our ability to support our requirements and plans for cash, including our working capital and capital expenditure requirements will depend on many factors, including our growth rate; rate, the timing and amount of our share repurchases and debt retirement; retirement, the expansion of sales and marketing activities, pricing actions, the introduction of new and enhanced products and services offerings; offerings, the continuing market acceptance of our products; products, the timing and extent of spending to support development efforts; efforts, our investments in purchasing, developing or leasing real estate; estate, cash paid for taxes and macroeconomic impacts such as rising inflation and changing interest rates; rates, changes in tariffs and other trade restrictions, impacts of international conflicts, including the war in Ukraine. Ukraine, tensions between China and Taiwan or conflicts in the Middle East.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
These inventory purchase commitments as of December 31, 2024 2025 totaled $591.1 $810.6 million, a decrease an increase of $46.2 $219.5 million compared to $637.3 $591.1 million as of December 31, 2023 due to fulfillment of customer demand 2024, as our supply availability improved and our we continued efforts to work with contract manufacturers and suppliers to optimize our inventory and purchase commitments position. position based on growth trends in customer demand.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Service gross margin increased 1.5 decreased 0.7 percentage points in 2024 2025 compared to 2023, 2024, primarily driven due to an increase in cloud service costs, partially offset by service revenue growth outpacing labor labor, replacement, and replacement repair costs increase, partially offset by an increase in cloud service costs. increase.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
The increase in our operating margin primarily benefits from 3.9 percentage points increase in gross margin and 3.5 0.6 percentage points decrease in sales general and marketing expense administrative expenses as a percentage of revenue, partially offset by 0.5 0.2 percentage points increase in research sales and development expense marketing expenses as a percentage of revenue. revenue and 0.1 percentage points decrease in gross margin.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Cost of service revenue was comprised primarily of personnel-related costs, replacement cost, and repair costs, cloud services costs from owned data center infrastructure, centers, colocation providers and cloud service providers, infrastructure depreciation and related operating costs, software and delivery costs, colocation costs and cloud provider fees, as well as facility-related costs.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
General and administrative expense increased $26.5 expenses decreased $4.4 million, or 13%, 2%, in 2024 2025 compared to 2023, 2024, primarily due to an increase a decrease of $21.7 $4.5 million in legal related fees and other professional service fees and an increase of $6.6 million in personnel-related costs. services fees.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Liquidity and capital resources are primarily impacted by our operating activities, as well as repurchases of our common stock, real estate purchases, purchases and other capital expenditures, and business acquisitions, payment investment grade debt balance, payments of taxes in connection with the net settlement of equity awards and awards, proceeds from the issuance of common stock and investment grade debt and repurchases of our common stock. business combinations.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
During 2024, 2025, cash used in financing activities was $50.1 million, primarily $2.37 billion, driven by $37.8 $2.29 billion used to repurchase shares of our common stock and $81.6 million used to pay tax withholding, withholding related to net share settlement of equity awards, net of proceeds from the issuance of common stock.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
This minimizes the need for manual intervention and provides faster remediation of threats across all environments.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
The Fortinet Training Institute has issued over one approximately two million certifications to date.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
In certain cases, Historically, we have elected to own a facility if we believe that purchasing or developing buildings rather than leasing is more closely aligned with our long-term strategy.
Read it in 10-K 2026-02-25 at sec.gov ↗
