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Shares of Fortinet (NASDAQ:FTNT) are down 9% in premarket trading Thursday after the company slashed its service revenue guidance for the full year.
Fortinet reported in-line revenue of $1.03 billion and adjusted EPS of $0.24. Billings came in higher than expected after rising 36% YoY.
For this quarter, Fortinet expects revenue between $1.11 billion and $1.14 billion, somewhere in-line with the expectations. Adjusted EPS outlook also met the consensus.
However, Fortinet slashed the service revenue to now expect $2.62 billion to $2.67 billion, slightly below the consensus of $2.67 billion and lower than the prior outlook that was calling for $2.64 billion and $2.7 billion.
An adjusted EPS is seen between $1.01 and $1.06, higher than the consensus of $1.02. Overall, the cybersecurity company expects full-year revenue of between $4.35 billion and $4.4 billion.
Despite soft guidance, Street analysts defend Fortinet amid robust demand for cybersecurity offerings.
“With FTNT shares trading at 19.5X EV/CY23FCFfor ~30% fwd FCF growth,a material slowdown is already priced into the stock, and a Q2 ‘expectations miss’ should reignite concerns/debate around ‘peak firewall’ demand, magnitude of early/double ordering and ability to sustain growth against tougher 2H comps/macro backdrop,” a Morgan Stanley analyst said in a note.
A Bank of America analyst noted “solid” results.
“We believe Fortinet is executing well but starts to see signs of economy headwinds, as reflected in management’s commentary. This together with forthcoming tough comps and possible reversal of early ordering seen in prior quarters, could result in moderating trends in future quarters,” the analyst added.
