Fortinet, Inc. (FTNT): Business Model Canvas [Dec-2025 Updated]

Honestly, you're looking for the real engine behind Fortinet, Inc.'s success right now, and after two decades analyzing these plays, the answer is clear: it's the platform, not just the firewall. The data from late 2025 shows they are aggressively pushing the unified Security Fabric, which is why services revenue is soaring and they project total revenue between $6.72 billion and $6.78 billion for the year. So, if you want to see exactly how their $3.12 billion cash pile supports that massive R&D spend and high gross margin, dive into the full Business Model Canvas breakdown below; it shows the whole picture.

Fortinet, Inc. (FTNT) - Canvas Business Model: Key Partnerships

You're looking at how Fortinet, Inc. (FTNT) builds its ecosystem, which is crucial for platform adoption. The strength here isn't just in selling boxes; it's in the breadth of integration across other technologies. This is where the rubber meets the road for the Fortinet Security Fabric.

The Technology Alliance Partner Program, known as Fabric-Ready, has seen significant scaling. As of July 2025, this program has surpassed 3,000 integrations across more than 400 technology partners. Since its start in 2015, the program has grown 36-fold. This massive set of pre-validated integrations helps customers simplify security across complex, multivendor environments.

Fortinet, Inc. (FTNT) continues to solidify its strategic cloud relationships. For instance, in April 2025, Fortinet, Inc. (FTNT) won the 2025 Google Cloud Infrastructure Modernization Partner of the Year Award for Networking. This marks the fifth time Fortinet, Inc. (FTNT) has received a Google Cloud Technology Partner of the Year Award. This deep integration is vital, especially considering Fortinet, Inc. (FTNT)'s 2025 report showed 35% of IT security budgets are now dedicated to cloud protection.

The global network of Value-Added Resellers (VARs) and distributors is the engine for sales and local support. Take Infinigate, for example. In November 2025, The Infinigate Group was honored as the OT Value Distributor Germany 2025 by Fortinet, Inc. (FTNT). Infinigate's sales for its fiscal year ending March 31, 2025, reached €2.7bn, and they are working toward a long-term revenue target of €5bn for fiscal 2027-28. As of February 2025, Infinigate was the only distributor in Germany holding Fortinet, Inc. (FTNT)'s specialized OT certification.

Here's a quick look at the scale of the Fabric-Ready Partner Program as of mid-2025:

Metric	Value	Date Reference
Technology Partners	Over 400	July/August 2025
Total Integrations	Surpassed 3,000	July/August 2025
Program Growth Since 2015	36x	August 2025
Google Cloud Award Won	2025 Infrastructure Modernization Partner of the Year for Networking	April 2025
Infinigate FY2025 Revenue	€2.7bn	March 31, 2025

Collaboration with specialized hardware leaders is key for product innovation. Fortinet, Inc. (FTNT)'s work with Qualcomm Technologies, Inc. is evident in secure wireless networking. Specifically, the FortiAP 441K, Fortinet, Inc. (FTNT)'s Wi-Fi 7 access point, leverages the Qualcomm Networking Pro 1220 platform. This pairing aims to deliver speeds up to 2x faster than previous configurations.

Managed Security Service Providers (MSSPs) are a growing channel. Fortinet, Inc. (FTNT) enables these partners to build new revenue streams and improve margins by delivering solutions like Secure SD-WAN and FortiSASE as a service. The 2024 Americas Partner of the Year Awards recognized MSSP excellence in partners such as Axtel, Comcast Business, and Bell for increased service adoption across the Security Fabric platform.

You should track the growth of these service-led partnerships. The MSSP space is where many enterprises look to bridge the internal skills gap. Here are some areas where MSSPs are building services:

• Secure SD-WAN adoption
• FortiSASE service delivery
• Zero-trust network access solutions
• FortiEDR integration

Finance: review Q4 2025 channel revenue contribution breakdown by Friday.

Fortinet, Inc. (FTNT) - Canvas Business Model: Key Activities

You're looking at the core engine room of Fortinet, Inc. (FTNT) as of late 2025. These are the things the company absolutely must do well to keep the revenue flowing and the platform relevant.

Continuous R&D focused on AI-driven security and FortiOS platform development

Fortinet, Inc. commits substantial capital to keeping its FortiOS operating system ahead of the curve. Research and Development Expenses for the twelve months ending September 30, 2025, hit $0.802B. That represented a year-over-year increase of 18.2%.

This investment fuels the platform's convergence strategy, which is clearly showing up in their subscription growth metrics.

Manufacturing and supply chain management for custom-built FortiASIC hardware

While specific manufacturing cost figures aren't public, the output of this activity directly impacts product revenue, which saw an 18% year-over-year growth in the third quarter of 2025, reaching $559.3 million.

Managing the global channel partner ecosystem and enablement programs

The channel is massive for Fortinet, Inc. The Fabric-Ready Technology Alliance Partner Program now boasts over 3,000 integrations. This ecosystem is built upon more than 400 technology partners. Fortinet, Inc. serves over 800,000 customers worldwide, a base heavily reliant on this channel for sales and support.

The focus here is on interoperability, with research showing 68 percent of organizations operate between 10 and 49 security tools, making the 3,000 pre-validated integrations a key selling point.

Threat intelligence gathering and analysis via FortiGuard Labs

FortiGuard Labs provides the intelligence that powers the AI-driven security approach. Data from 2024 showed active scanning in cyberspace surged by 16.7% globally, with FortiGuard Labs recording billions of monthly scan attempts, equating to 36,000 scans per second.

The underground market for access is also tracked: FortiGuard Labs observed a 500% increase in credential logs from infostealer malware, totaling 1.7 billion stolen credential records shared in underground forums in 2024. Also, over 40,000 new vulnerabilities were added to the National Vulnerability Database in 2024, a 39% increase from 2023.

Executing the land-and-expand sales motion across the customer base

The success of the land-and-expand motion is visible in the growth of recurring revenue streams and customer adoption across the portfolio. Unified SASE Annual Recurring Revenue (ARR) was up 30% year-over-year in the third quarter of 2025, and Security Operations ARR grew 35% year-over-year in the same period.

Enterprise adoption rates show where the expansion is happening:

• 70% adoption of SD-WAN functionality.
• 60% deployment of hybrid virtual machines.
• 8% addition of Security Service Edge (SSE) solutions.
• Over 70% integration of firewalls, switches, and access points.

Here's a look at the revenue split based on the first quarter of 2025 results, showing the shift to services:

Revenue Segment	Q1 2025 Actual Amount	Q1 2025 % of Total Revenue
Service Revenue	$1.08 billion	70%
Product Revenue	$459.1 million	30%

For the full fiscal year 2025, Fortinet, Inc. projects total revenue between $6.720 billion and $6.780 billion, with Service revenue expected to be between $4.575 billion and $4.595 billion.

The projected Non-GAAP operating margin for fiscal year 2025 is between 34.5% and 35.0%.

Fortinet, Inc. (FTNT) - Canvas Business Model: Key Resources

You're looking at the core assets that power Fortinet's platform strategy. These aren't just line items on a balance sheet; they're the proprietary engines driving performance and differentiation in a tough market. Honestly, this resource moat is what separates them from many competitors.

The foundation is the proprietary FortiOS operating system. It unifies the entire product portfolio, which is a huge deal for customers looking to consolidate security vendors. It helps them manage security and networking across the board, from the edge to the cloud, using one consistent operating system.

Next up are the custom-built FortiASIC chips. This is where Fortinet gets its performance edge. They've been investing in this for over 20 years. The latest generation, the Security Processing Unit 5 (SP5), consolidates network and content processing onto a single chip. For example, in earlier generations, this custom silicon delivered performance metrics like up to 17x faster firewall performance compared to leading standard CPUs, and up to 32x faster encryption. That kind of specialized hardware offloading is defintely a key resource.

The company's commitment to innovation shows up directly in its intellectual property portfolio. You want hard numbers here, so let's look at what they've secured:

• Intellectual property includes over 1,400 issued patents worldwide.
• This IP portfolio specifically includes over 500 issued and pending AI patents as of Q2 2025.
• Fortinet claims its patent count is over 1,300 higher than any other cybersecurity vendor.

The global threat intelligence network, FortiGuard Labs, is another critical, non-physical resource. This team provides the real-time defense intelligence feeding into the platform. They publish reports, like the 2025 Global Threat Landscape Report, which details threats fueled by AI and automation, showing the continuous, active nature of this resource.

Finally, you need to look at the financial strength supporting all this R&D and market expansion. A strong balance sheet allows for aggressive investment and strategic flexibility, like the buybacks we've seen recently. Here's the quick math on their liquidity as of the end of Q3 2025:

Financial Metric	Amount (as of Q3 2025)
Total Cash and Short-Term Investments	$3.12 billion
Cash and Cash Equivalents (September 30, 2025)	$1,995.7 million
Short-Term Investments (September 30, 2025)	$1,127.7 million
Q3 2025 Cash Flow from Operations	$655.2 million

That cash position, combined with a non-GAAP operating margin hitting 36.9% in Q3 2025, shows they are generating significant cash from operations to fund these key resources internally.

Fortinet, Inc. (FTNT) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose Fortinet, Inc. over the competition as of late 2025. It really boils down to consolidation, speed, and comprehensive reach across your entire digital estate.

Security Fabric: unified, integrated platform reducing complexity and vendor sprawl.

The Security Fabric is the architecture that ties everything together, which is why over 800,000 clients trust Fortinet solutions and services to protect their businesses. This integration is key when you consider the market landscape; for instance, 72% of organizations report they can't see how users interact with sensitive data across endpoints and cloud services, a gap the Fabric aims to close. The platform's strength is in its breadth, unifying different security functions into a cohesive whole.

Here's a look at the growth in key integrated pillars as of the first half of 2025:

Metric	Q1 2025 Value	Year-over-Year Growth
Unified SASE Annual Recurring Revenue (ARR)	$1.15 billion	26%
Security Operations (SecOps) ARR	$434.5 million	30%
Unified SASE Billings Contribution (Q3 2025)	26% of total billings	N/A

High performance and low latency via custom FortiASIC hardware acceleration.

Performance isn't just a marketing term here; it's tied directly to the proprietary FortiASIC hardware. This custom silicon is what allows Fortinet to claim industry-leading Security Compute Ratings across benchmarks like Stateful Firewall Throughput and SSL Inspection, effectively leapfrogging competitors built on general-purpose CPUs. This hardware focus is critical for demanding workloads, such as the new Secure AI Data Center solution, which boasts up to 69% lower energy consumption than alternative solutions.

Convergence of networking and security (e.g., native SD-WAN and SASE capabilities).

The convergence story is playing out strongly in the Secure Access Service Edge (SASE) market. Fortinet is the only vendor to natively integrate Next-Generation Firewall, SD-WAN, and SASE on a single operating system, FortiOS. This native integration is driving significant adoption:

• 73% of large enterprises had adopted Fortinet's SD-WAN by Q1 2025.
• FortiSASE billings growth in Q3 2025 was over 100% year-over-year.
• FortiSASE penetration among large enterprises reached 13% by Q2 2025.
• Security service edge billings growth exceeded 110% in Q1 2025.

Lower Total Cost of Ownership (TCO) by consolidating multiple security functions.

Consolidation directly impacts your bottom line by reducing the number of vendors and operational overhead. In the Operational Technology (OT) space, for example, organizations using unified networking and security at remote OT sites saw a 93% reduction in cyber incidents compared to a flat network. Furthermore, the simplified Fortinet solutions led to a seven times improvement in performance due to reductions in triage and setup time. A third-party Forrester study quantified the return on investment for their Secure LAN Edge solution at 308% ROI.

Comprehensive protection from the data center to the cloud and remote edges.

Fortinet's platform is designed to cover the entire digital attack surface, from devices to data centers and the cloud. This comprehensive approach is reflected in their financial outlook for the full fiscal year 2025, projecting total revenue between $6.720 billion and $6.780 billion. The service revenue component, which underpins ongoing protection and updates, is guided to be between $4.575 billion and $4.595 billion for the full year.

You can see the scale of their business and the focus on recurring revenue streams:

As of Q3 2025, the billings breakdown shows the reliance on services and integrated pillars:

• Service revenue for Q3 2025 was $1.17 billion, up 13% year-over-year.
• Total billings for Q3 2025 reached $1.81 billion, up 14% year-over-year.
• The combined contribution of Unified SASE (26%) and SecOps (11%) accounted for 37% of Q3 2025 total billings.

Finance: draft 13-week cash view by Friday.

Fortinet, Inc. (FTNT) - Canvas Business Model: Customer Relationships

You're looking at how Fortinet, Inc. (FTNT) keeps its well over half a million customers engaged and growing their spend. It's a tiered approach, moving from broad, automated support up to dedicated, high-touch engagement for the biggest accounts.

Automated, Self-Service Support via the Fortinet Community and Online Resources

For the vast majority of its installed base, support starts with self-service. This is quantified by the scale of the digital ecosystem they support. As of late 2025, the Fortinet Community boasts 190,206 Community Members and hosts 69,613 Discussions. Furthermore, the Fortinet Training Institute is positioned as one of the largest and broadest training programs in the industry, dedicated to making cybersecurity training accessible. This infrastructure handles initial queries and product education, keeping operational costs down for routine issues.

Dedicated Account Management and Professional Services for Large Enterprise Customers

The focus shifts significantly for the largest customers. In the second quarter of 2025, deals valued at greater than $1 million saw a 29% increase in volume and a 51% increase in total value. These accounts receive dedicated account management. Professional Services and Cloud Consulting Services are explicitly offered alongside FortiCare, indicating a high-touch relationship track for complex deployments.

Land-and-Expand Strategy: Initial FortiGate Sale Leads to Adoption of SASE and SecOps Solutions

The core of the relationship growth is the land-and-expand motion, typically starting with the FortiGate firewall. This is clearly reflected in the growth of the attached services. For instance, in the second quarter of 2025, Unified Secure Access Service Edge (SASE) Annual Recurring Revenue (ARR) grew 22% year-over-year, and Security Operations (SecOps) ARR increased 35%. The data shows that most customers began with FortiGate firewalls and expanded into SD-WAN and FortiSASE. This expansion is validated by FortiSASE customer base expansion of 65% in Q2 2025.

FortiCare Subscription Services Providing 24x7 Support and Advanced Threat Intelligence Updates

The recurring revenue stream, which includes FortiCare technical support services, is a critical component of the customer relationship, recognized ratably over contractual terms typically ranging from one to five years. For the full fiscal year 2025, Fortinet expects service revenue to be in the range of $4.575 billion to $4.595 billion. In the first quarter of 2025 alone, service revenue hit $1.08 billion, marking a 14.4% increase compared to the same quarter in 2024. This revenue underpins the 24x7 support and the continuous updates from FortiGuard Labs, which publishes reports like the 2025 Global Threat Landscape Report.

Partner-Led Relationships for SMB and Mid-Market Segments

The channel is essential for reaching the smaller and mid-sized businesses. In the first quarter of 2025, new logos (new customers) increased 14%, which was explicitly driven by worldwide investments in channel partners. Partner incentive programs are structured to encourage this expansion, with offers like earning up to 5% rebate on growth target achievement within the VIP Program. Furthermore, specific promotions target the lower end of the portfolio, focusing on Small Business SKUs.

Here's a quick look at the financial weight of the service relationship:

Metric	Value (Late 2025 Data)	Context/Period
FY 2025 Expected Service Revenue (Midpoint)	Approx. $4.58 billion	Fiscal Year 2025 Guidance
Q1 2025 Service Revenue	$1.08 billion	Q1 2025 Actual
Q1 2025 Service Revenue YoY Growth	14.4%	Q1 2025 vs Q1 2024
Unified SASE ARR Growth	22%	Year-over-Year (Q2 2025)
SecOps ARR Growth	35%	Year-over-Year (Q2 2025)
FortiSASE Customer Base Expansion	65%	Year-over-Year (Q2 2025)

The customer relationship is clearly segmented by the value of the account, using digital scale for the broad base and direct/partner engagement for expansion and high-value sales. Finance: draft 13-week cash view by Friday.

Fortinet, Inc. (FTNT) - Canvas Business Model: Channels

You're looking at how Fortinet, Inc. gets its security solutions into the hands of customers as of late 2025. It's a layered approach, heavy on partners but with a significant direct component for the biggest deals.

The foundation of their go-to-market is definitely the channel. Fortinet, Inc. has built one of the largest ecosystems in cybersecurity through its Fabric-Ready Technology Alliance Partner Program. This program has seen massive growth, surpassing 3,000 integrations across more than 400 technology partners as of the third quarter of 2025. To put that growth in perspective, that's a 36-fold expansion since the program started in 2015. This network is key for delivering the two-tier distribution model.

Here's a snapshot of the partner ecosystem metrics:

Metric	Value (as of late 2025)	Source Reference
Fabric-Ready Integrations	3,000+	cite: 1, 2, 4
Technology Alliance Partners	400+	cite: 1, 2, 4
Partner Program Growth (since 2015)	36-fold	cite: 4

Still, Fortinet, Inc. maintains a strong direct sales force, particularly for the largest accounts. This direct touch is critical for landing major strategic wins and securing government business, like through Fortinet Federal. We see the impact of this focus on large enterprises in the Q3 2025 results, where deals valued above $1 million rose by 29% in volume and by 51% in total value year-over-year. Furthermore, 13% of large enterprise customers now use FortiSASE, which is a 60% increase in adoption within that segment. The company added over 6,900 new customers in Q3 2025 alone, showing strong direct acquisition alongside channel efforts.

For virtual appliances and cloud-native solutions, the cloud marketplaces are an increasingly important route. This aligns with the shift toward recurring revenue, which was evident in Q1 2025 when service revenue made up 70% of total revenue at $1.08 billion. The momentum in cloud-delivered services is strong; for instance, Unified SASE Annual Recurring Revenue (ARR) grew 22% year-over-year in Q2 2025, reaching $1.15 billion, and FortiSASE billings increased by over 100% year-over-year in Q3 2025. In Q4 2024, combined revenues from software licenses and software services, which includes cloud offerings, already represented an annual revenue run rate of more than $1 billion.

The Managed Security Service Provider (MSSP) channel is served through the broader partner ecosystem, driving the high service revenue numbers. The overall financial performance reflects this service-heavy model:

• FY 2025 Revenue Guidance Range: $6.720 billion to $6.780 billion
• Q3 2025 Total Revenue: $1.72 billion
• Q3 2025 Product Revenue: $559.3 million
• Q3 2025 Total Billings: $1.81 billion
• Q2 2025 Billings: $1.78 billion
• Security Operations ARR (Q2 2025): $463 million (up 35% Y/Y)

Finally, Fortinet, Inc.'s own website and sales team serve as the primary source for initial product information and lead qualification, feeding into the tiered partner structure or the direct enterprise team. The company's focus on an open ecosystem, with over 400 technology partners, helps ensure that customers can integrate the Fortinet Security Fabric with their existing and future technologies, regardless of vendor.

Finance: finalize the Q3 2025 revenue breakdown by channel type by Monday.

Fortinet, Inc. (FTNT) - Canvas Business Model: Customer Segments

You're looking at the core customer base for Fortinet, Inc. as of late 2025. The strategy clearly centers on platform consolidation, which is driving significant growth in the top-tier segments.

Large Enterprises

This is the engine room right now. Large enterprise was the top performing customer segment for Fortinet, Inc. during the first quarter of 2025, showing growth of around 30%. These customers are focused on consolidating their security stack onto the unified FortiOS platform. A key metric showing this consolidation is the Secure Service Edge (SSE) penetration among this group, which reached 11% in Q1 2025, representing an increase of nearly 10% quarter over quarter. Furthermore, 73% of these larger enterprise customers have adopted the company's SD-WAN solution.

Small and Mid-sized Businesses (SMBs)

The SMB market is being served with entry-level, high-performance hardware and cloud management options. Fortinet, Inc. introduced the FortiGate 30G in early 2025, specifically targeting distributed enterprises and smaller footprints. This model offers firewall throughput of up to 1 Gbps and supports up to 100,000 concurrent sessions. This deployment strategy helps secure smaller offices and startups looking for a compact, yet capable, security foundation.

Service Providers and Telecom Carriers

This segment is a major consumer of the company's cloud-delivered and integrated offerings. The momentum in the Unified SASE market is a direct indicator of their activity, with Annual Recurring Revenue (ARR) for Unified SASE growing 26% year-over-year in Q1 2025, reaching $1.15 billion. These customers are deploying high-end firewalls and virtualized solutions to secure their own infrastructure and to offer services to their end-customers.

Government and Public Sector (U.S. Federal)

Government entities are driving demand by adhering to mandates around Zero Trust architecture and securing hybrid work environments. A significant win noted in Q1 2025 involved an international government customer securing an eight-figure deal leveraging FortiSASE and SD-WAN solutions. The public sector remains a key focus, with events like the Canadian Security Showcase in December 2025 gathering leaders to explore security strategies.

Operational Technology (OT) and Industrial Control Systems (ICS) environments

Fortinet, Inc. is solidifying its position in the specialized OT/ICS space. The company was recognized as the Overall Leader in the Westlands Advisory IT/OT Network Protection Platform Navigator 2025 report for the third consecutive time. This validates the platform's capability to secure industrial environments alongside traditional IT networks.

Here's a quick look at some of the key financial and statistical data points related to these segments and the broader business in Q1 2025:

Segment/Metric	Key Financial/Statistical Number	Reporting Period
Large Enterprise Segment Growth	~30%	Q1 2025
Unified SASE ARR	$1.15 billion	Q1 2025
Unified SASE ARR Growth	26%	Q1 2025
AI-Driven Security Operations ARR Growth	30%	Q1 2025
Total New Logos Added	Over 6,300	Q1 2025
FortiGate 30G Throughput (Max)	Up to 1 Gbps	As of Feb 2025
FortiGate 30G Concurrent Sessions	100,000 connections	As of Jul 2025
Total Revenue	$1.54 billion	Q1 2025

You should track the continued expansion of the Unified SASE and Security Operations ARR, as these are the fastest-growing revenue streams underpinning the platform strategy.

• Large Enterprise SASE Penetration: 11% (Q1 2025)
• Large Enterprise SD-WAN Adoption: 73% (Q1 2025)
• Government Deal Size: Eight-figure (Q1 2025)
• OT/ICS Leadership Recognition: 2025 Navigator Report

Finance: draft 13-week cash view by Friday.

Fortinet, Inc. (FTNT) - Canvas Business Model: Cost Structure

You're looking at the core expenses that power Fortinet's platform strategy, which is heavily weighted toward innovation and global reach. The cost structure reflects a high-touch, high-investment model, especially in software and services, which carry better margins than hardware.

The company guides for a strong non-GAAP gross margin for the full fiscal year 2025, landing in the range of 80.25% to 80.75%. This is a testament to the revenue mix heavily favoring services and subscriptions over pure product sales. For context, the Q3 2025 total gross margin was reported at 81.6%. This margin strength is crucial because it funds the significant operating expenses required to maintain market leadership.

Fortinet, Inc. maintains significant investment in Research and Development (R&D) to fuel its platform innovation, particularly around AI. For the twelve months ending September 30, 2025, R&D expenses totaled $0.802B, representing an 18.2% increase year-over-year. This investment underpins their technology advantage, evidenced by achieving rapid adoption in AI add-on solutions, supported by continued R&D investment and more than 500 issued and pending AI patents, powering over 20 AI-driven solutions.

Sales and Marketing (S&M) expenses are substantial, necessary to support the global channel and direct sales teams that drive adoption across all customer sizes. This cost center is the engine for their growth in areas like FortiSASE, which saw third-quarter billings increase by over 100% year over year. The company continues its worldwide investments in its channel partners to capture market share.

To give you a clearer picture of the operating expense profile, here is a breakdown based on the latest available Trailing Twelve Months (TTM) data ending June 30, 2025, alongside the TTM total ending September 30, 2025. Remember, personnel costs are the most significant component across all operating expense categories.

Expense Category (TTM)	Amount (as of Jun 30, 2025)	Amount (as of Sep 30, 2025)
Sales and Marketing	$2.18B	Not explicitly broken out
Research and Development	$786.50M	$0.802B
General and Administrative	$241.50M	Calculated (See below)
Total Operating Expenses	Approximately $3.208B (Sum of above)	$4.522B

The total operating expenses for the twelve months ending September 30, 2025, were $4.522B. If we use the R&D figure from that same date ($0.802B) and the S&M figure from the June 30, 2025, TTM table ($2.18B), the implied General and Administrative expense for the September 30, 2025, TTM period would be approximately $1.540B ($4.522B - $0.802B - $2.18B). This suggests G&A is a larger component than the Jun 30, 2025, table indicated, likely due to the difference in reporting dates or the inclusion of other items in the TTM total.

Manufacturing and procurement costs are embedded within the Cost of Product Revenue. Fortinet, Inc.'s cost of product revenue is primarily comprised of:

• Third-party contract manufacturers' costs.
• The costs of materials used in production, which includes the custom FortiASIC hardware components.
• Shipping costs and personnel costs associated with logistics and quality control.

The company's strategy, powered by its proprietary FortiASIC technology, is designed to deliver a performance advantage while significantly lowering the total cost of ownership for the customer, which helps offset the underlying procurement costs.

Costs associated with maintaining and expanding the global FortiGuard Labs threat intelligence infrastructure are included within the Cost of Service Revenue, which is primarily comprised of personnel costs, data center infrastructure, and colocation/cloud provider fees. The company's ability to absorb increased costs, such as those associated with the expansion of hosted security solutions, while only slightly impacting service gross margin (down just 10 basis points in Q1 2025 to 87.8%) shows effective cost management within this critical area.

Fortinet, Inc. expects its full-year 2025 Non-GAAP operating margin to be in the range of 34.5% to 35.0%.

Fortinet, Inc. (FTNT) - Canvas Business Model: Revenue Streams

You're looking at how Fortinet, Inc. pulls in its money, which is heavily weighted toward the predictable, recurring side of the business as of late 2025. This shift is key to their valuation story.

Services Revenue (Subscriptions and Support): This stream is projected between $4.575 billion and $4.595 billion for Fiscal Year 2025. This segment represents the backbone of their committed revenue base.

Product Revenue (Hardware): This covers the initial sale of physical security gear. Think FortiGate firewalls, switches, and access points. For instance, in the third quarter of 2025, product revenue specifically grew by 18% year-over-year to $559.3 million.

The growth in the recurring segments is outpacing the hardware refresh cycle, which is a positive indicator for revenue quality.

• Annual Recurring Revenue (ARR) from Unified SASE is up 22% year-over-year, based on second quarter figures.
• Annual Recurring Revenue (ARR) from Security Operations is up 35% year-over-year, based on second quarter figures.

Here's the quick math on the top-line projections for the full fiscal year 2025:

Financial Metric	Projected Range (FY 2025)
Total Revenue	Between $6.72 billion and $6.78 billion
Billings	Between $7.37 billion and $7.47 billion
Services Revenue	Between $4.575 billion and $4.595 billion

The difference between Billings and Revenue is largely due to the deferred revenue component from those services contracts you just saw growing so fast. What this estimate hides is the exact split between Product and Service revenue within the total GAAP revenue projection, but the Services projection is quite specific.

To be fair, the company is also seeing strong momentum in its newer offerings, which feed into those ARR numbers:

• FortiSASE billings saw growth of over 100% year-over-year in the third quarter of 2025.
• AI-driven Security Operations (SecOps) billing growth was 33% in the third quarter of 2025.

Finance: draft 13-week cash view by Friday.