What Makes FortiGate the Core Driver of Fortinet's Product Growth?

Fortinet’s FTNT FortiGate platform remains central to its secure networking strategy. As the first product for most customers, FortiGate firewalls help drive hardware adoption and make it easy to expand into other solutions. Powered by Fortinet’s FortiASIC chips and unified FortiOS software, FortiGate delivers strong performance, simpler management and lower energy use. These strengths have supported wide adoption and helped Fortinet grow its market share.

Customers often begin with FortiGate and later integrate Fortinet’s switches, access points or software offerings through FortiLink and FortiOS. Large enterprise wins, such as an eight-figure deal with a Fortune 500 company in the first quarter of 2025, highlight the increasing stickiness of FortiGate-driven customer relationships.

Fortinet launched the FortiGate 700G series in May, a high-performance firewall designed for mid-sized businesses and distributed enterprises. This new model delivers a 5-10 times performance boost over competitors and strengthens Fortinet’s value proposition by combining performance with energy efficiency and low total cost of ownership. The company believes continued product innovation and deeper enterprise penetration will fuel near-term top-line growth.

In the first quarter of 2025, product revenues, which accounted for 30% of total revenues, grew 12% year over year to $459 million. FortiGate hardware outpaced overall product growth, expanding in the mid-teens and remaining Fortinet’s primary product driver. Our model estimate for 2025 product revenues is pegged at $2.14 billion, indicating 12.3% growth year over year.

FTNT Faces Stiff Competition in the Firewall Space

Fortinet faces increasing competition from Palo Alto Networks PANW and Check Point Software CHKP, both of which are seeing strong adoption of their firewall capabilities.

In the third quarter of fiscal 2025, Palo Alto Networks saw 20% year-over-year growth in its Software Firewall ARR, driven by public cloud deployments. As AI accelerates cloud adoption, Palo Alto Networks’ long-term demand for software firewalls is likely to expand. It is also seeing stable demand for its firewall appliances.

In the first quarter of 2025, Check Point Software saw strong demand for its Quantum Force firewall appliances, which drove a 14% year-over-year rise in product and license revenues. Check Point Software expects this firewall momentum to continue through 2026, as customers increasingly adopt its next-generation appliances amid broader infrastructure refresh cycles.

FTNT’s Share Price Performance, Valuation and Estimates

FTNT shares have risen 11.1% in the year-to-date (YTD) period, underperforming the Zacks Security industry’s growth of 23.4%. FTNT has outperformed the Zacks Computer and Technology sector’s return of 6.1%.

FTNT’s YTD Price Performance

From a valuation standpoint, Fortinet stock is currently trading at a  Price/Book ratio of 40.17X compared with the industry’s 24.88X. FTNT has a Value Score of F.

FTNT Valuation

The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at 59 cents per share, unchanged over the past 30 days, indicating 3.51% year-over-year growth.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote

Fortinet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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