Fortinet (FTNT) Shares Plunge After It Cuts Its Service Revenue Forecast

What happened

Shares of cybersecurity company Fortinet (FTNT) plunged 20.1% on Thursday after it cut its full-year forecast for service revenue, the subscriptions and support contracts that make up most of its sales. The company now expects $5.15 billion to $5.17 billion of service revenue in 2026, down from $5.18 billion to $5.22 billion, and below the $5.2 billion analysts expected, according to Bloomberg data cited by Yahoo Finance.

The quarter itself beat estimates, Yahoo Finance and SSBCrack reported. Revenue rose 20% to $2.08 billion and adjusted earnings were 91 cents a share, the results release showed. Billings, the value of invoices sent to customers, rose 29% to $2.34 billion.

But service revenue grew only about 13%, to $1.31 billion, while product revenue jumped 37%, the release showed and the Motley Fool noted. The forecast cut is small, less than 1% at the midpoint, and it came alongside higher forecasts for revenue, billings, and adjusted earnings.

The shares were down nearly 23% on Thursday morning and 22% at 2:30 p.m. ET, Proactive and the Motley Fool reported, and closed at $139.10, down 20.1% from the previous close.

Why it matters

Services are the steadier, recurring part of Fortinet’s business: $1.31 billion of the $2.08 billion it took in last quarter, or about 63%. Investors pay more for that kind of revenue, so a lower forecast for it outweighed the jump in product sales. Bank of America downgraded the stock to Neutral with a $140 price target, Yahoo Finance and SSBCrack reported.

The drop weighed on other cybersecurity stocks, including Palo Alto Networks and CrowdStrike, Yahoo Finance and SSBCrack reported. By our price files, Palo Alto Networks (PANW) closed down 3.5% and CrowdStrike (CRWD) 2.1% on Thursday. Fortinet had also fallen 5.9% on Wednesday, before its report came out.

What the market is telling us

Fortinet’s shares moved 5% or more on 13 of the last 252 sessions. The last move at least this big in the same direction was on 7 August 2025, when the stock fell 22.0%. The stock is up 75.2% this year, and at $139.10 it sits 28.6% below its 52-week closing high of $194.75 from 9 October 2026. $1,000 invested in Fortinet five years ago would be worth $2,068 today.

Fortinet raised its full-year billings forecast to $9.57 billion to $9.72 billion and its adjusted earnings forecast to $3.54 to $3.58 a share, so the business is not breaking. But the stock is still up 75% this year even after this drop, so it was priced for services to keep pace with product sales, and we’d wait for next quarter’s services number before calling the drop overdone.