Fortinet (FTNT) Q3 2025: SASE Billings Jump Over 100% as Platform Integration Accelerates Upsell

November 5, 2025 | By EarningsIQ Research

Fortinet’s third quarter showcased broad-based demand and a surge in SASE billings, as its unified platform strategy unlocked upsell and cross-sell across its large installed base. Operational efficiency and product innovation drove record margins and strong cash flow, even as service revenue growth remained in a trough with a clear path to acceleration in 2026. Management’s confidence in double-digit product growth and continued market share gains signals durable tailwinds, but the pace of services recovery and competitive intensity in SASE remain key watchpoints for forward returns.

Summary

• SASE Penetration Expands: Over 100% SASE billings growth highlights rapid customer migration to integrated solutions.
• Product Innovation Drives Upsell: Unified OS and ASIC differentiation fuel large enterprise wins and operational technology adoption.
• Services Recovery in Sight: Service revenue troughs set to reverse as strong product growth flows through in late 2026.

Performance Analysis

Fortinet delivered a robust quarter with 14% year-over-year billings and revenue growth, outpacing the broader cybersecurity market across all three business pillars: Secure Networking, Unified SASE, and SecOps. Unified SASE billings surged 19%, with FortiSASE, the company’s secure access service edge solution, posting over 100% billings growth. SecOps, security operations solutions including AI-driven automation, climbed 33% and now represents 11% of total billings. Operational technology (OT) and critical infrastructure demand remained a standout, with billings up over 30%.

Product revenue increased 18% year-over-year, led by multi-product deals, OT use cases, and continued hardware refreshes, while service revenue growth slowed to 13%—a function of prior-year product softness flowing through the attached services base. Gross margin reached 81.6% and operating margin hit a record 36.9%, reflecting cost discipline and mix benefits. Free cash flow was strong at $568 million, despite ongoing infrastructure investments. Large enterprise activity was notable: deals over $1 million rose 26% and their total value grew over 30%.

• Enterprise Upsell Momentum: 15% of large enterprise customers now use FortiSASE, up 55%, demonstrating rapid adoption of new platform capabilities.
• Hardware Refresh and Innovation: Strong multi-product and hardware revenue growth point to ongoing refresh cycles and new use case penetration.
• Operational Leverage: Record margins and cash flow reinforce the platform’s scalability, even as investments in FortiCloud and AI infrastructure ramp.

While services growth remains muted, management sees a clear path to acceleration as recent product strength converts to higher recurring revenue in 2026, aligning with the company’s long-term Rule of 45 target.

Executive Commentary

Strategic Positioning

1. Unified Platform as Competitive Moat

Fortinet’s core differentiation remains its native integration of security and networking functions—Next-Gen Firewall, SD-WAN, and SASE—on FortiOS, its proprietary operating system. This approach allows customers to easily expand into adjacent solutions, reducing integration friction and accelerating time-to-value. The company’s ability to deliver sovereign SASE—where customers can host the solution in their own data center—addresses privacy and regulatory needs, a key factor in recent large public sector wins.

2. ASIC Innovation and Performance Edge

Fortinet’s investment in custom ASICs, application-specific integrated circuits, underpins its ability to deliver superior throughput, lower latency, and reduced energy consumption compared to software-only peers. This hardware advantage is especially resonant in AI data center security, where a Fortune 150 e-commerce customer recently expanded its Fortinet footprint to secure high-performance AI workloads. The company’s upcoming new ASIC and FortiOS 8.0 release in early 2026 are positioned as catalysts for further product refresh and upsell.

3. SASE and SecOps Growth Engines

Unified SASE and SecOps are now 37% of total billings, up three percentage points year-over-year, reflecting successful cross-sell into the installed base and new logo wins. FortiSASE’s over 100% billings growth and rapid enterprise penetration demonstrate traction, while the AI-driven SecOps suite leverages Fortinet’s 500-plus AI patents to automate threat detection and response. Management sees SASE as a multi-year market share expansion opportunity, with both cloud-delivered and on-premises options catering to diverse customer needs.

4. OT Security and Vertical Expansion

Operational technology and critical infrastructure security remain high-growth verticals, with over 30% billings growth and limited direct competition. Fortinet’s decade-long investment in OT security positions it as a leader in protecting industrial, healthcare, and utility environments—markets with unique protocols and device types that favor network-based security architectures.

5. Capital Allocation and Shareholder Return

Fortinet continues to prioritize infrastructure investment (up $51 million year-over-year) to support cloud delivery and AI workloads, while also returning capital via aggressive share buybacks. The company repurchased $1.83 billion in stock during the quarter, reducing share count by 3%, and has $796 million remaining under its current authorization.

Key Considerations

This quarter’s performance underscores Fortinet’s ongoing transformation from a firewall-centric vendor to an integrated platform leader in secure networking, cloud, and AI-driven security operations. Investors should focus on the following:

Key Considerations:

• SASE Adoption Curve: Fortinet’s ability to accelerate SASE penetration beyond its installed base and capture greenfield opportunities is critical for sustaining outperformance.
• Service Revenue Inflection: The lag effect from prior-year product softness will weigh on services growth until late 2026; investors should monitor the pace of service attach and billings conversion.
• AI Data Center Opportunity: Early traction in AI-centric data center security could unlock incremental addressable market, but monetization will depend on both hardware and software pull-through.
• Competitive Dynamics: Pricing and win rates in SASE, especially in large enterprise and public sector, will test Fortinet’s cost and integration advantages against software-first and acquisition-driven peers.
• Capital Deployment: Ongoing infrastructure investments and buybacks reflect management’s confidence, but execution on new product launches and cloud scale will be key to long-term returns.

Risks

Service revenue deceleration remains a material overhang, with nine consecutive quarters of slowing growth, and recovery is contingent on sustained product momentum and attach rates. Intensifying competition in SASE, macro-driven IT budget variability, and the risk of execution missteps in new AI and OT use cases could pressure both growth and margins. Investors should also watch for potential disruptions from industry consolidation, changing customer preferences, and regulatory shifts in data sovereignty.

Forward Outlook

For Q4 2025, Fortinet guided to:

• Billings of $2.185 to $2.285 billion (midpoint 12% YoY growth)
• Revenue of $1.825 to $1.885 billion (midpoint 12% YoY growth)
• Non-GAAP operating margin of 34.5% to 35.5%

For full-year 2025, management maintained guidance:

• Billings of $7.37 to $7.47 billion (midpoint 14% YoY growth)
• Revenue of $6.72 to $6.78 billion (midpoint 13% YoY growth)
• Service revenue of $4.575 to $4.595 billion (midpoint 13% YoY growth)
• Non-GAAP operating margin of 34.5% to 35%

Management highlighted several factors that shape the forward view:

• Product revenue strength in 2025 is expected to drive a services growth inflection in the second half of 2026.
• Ongoing innovation in ASICs, OS, and AI solutions will underpin double-digit product growth and continued market share gains.

Takeaways

Fortinet’s Q3 results reinforce its platform-led growth thesis, with SASE and OT security acting as durable engines for expansion. Service revenue recovery is on the horizon as product momentum flows through, but execution on SASE adoption and competitive differentiation will be decisive for future value creation.

• SASE and Platform Integration: Over 100% SASE billings growth and rapid enterprise adoption validate Fortinet’s unified platform strategy and cross-sell opportunity.
• Margin Leadership and Innovation: Record operating margins and strong free cash flow reflect operational discipline and the monetization of hardware and software innovation.
• 2026 Watchpoints: Investors should monitor the pace of services growth recovery, competitive dynamics in SASE, and execution on new product launches, especially in AI and OT security.

Conclusion

Fortinet’s integrated security and networking platform continues to gain market share and deliver strong financial results, with SASE and OT security emerging as major growth levers. As services growth is set to reaccelerate in 2026, the company’s ability to sustain product innovation and capture new use cases will define its long-term trajectory.

Industry Read-Through

Fortinet’s quarter signals a shift in cybersecurity demand toward unified, integrated solutions that simplify operations and reduce total cost of ownership, especially as AI, OT, and data sovereignty requirements reshape customer priorities. Vendors relying on fragmented architectures or acquisition-driven integration face growing pressure, as customers increasingly favor single-platform providers for both network and security needs. The rapid growth in SASE and OT security highlights expanding addressable markets for players with deep R&D and hardware capabilities, while the lag in services growth serves as a cautionary note for all recurring revenue models dependent on prior-year product momentum. Industry peers should expect intensifying competition around cost, integration, and AI-driven automation as secular tailwinds persist.

FTNT Technology Cybersecurity SASE Operational Technology AI Security Platform Hardware