FTNT
Fortinet
Recurring SaaS
★ Quality 84/100Price today
$156.29
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What this business is made of
The business
Fortinet installs its lock on your network and charges you to maintain it.
Fortinet sells network cybersecurity: physical firewalls (FortiGate) plus a growing layer of software and cloud services. The hardware hooks the customer; the recurring money comes via security subscriptions and support. Of $6.8B in 2025 revenue, most is already recurring with 80% gross margin.
Its proprietary ASIC (SPU chip) gives it firewalls that are faster and cheaper per watt than competitors relying on generic CPUs. Once installed on the network, switching firewall providers is expensive and risky, which sustains renewals. It's not a monopoly: Palo Alto and Cisco fight over the same ground.
Revenue history
From $3.3B to $6.8B in 4 years — nearly 2.1x its size. Selling more and more is the base of everything else.
Where each $100 of sales goes
Revenue $6.8B · FY2025
Of every $100 in sales, $73 goes to costs and operations; $27 is left as net profit (27% margin).
Catalysts and risks
Migration of firewalls bought in 2020-2021 reaching end of life in 2026, forcing a refresh cycle.
FCF of $2.6B on $6.8B of revenue: conversion that gives ammunition for buybacks and SASE.
Growth of unified subscriptions (SASE/SecOps) toward a target of a $50B market by 2030.
Dependence on the hardware cycle: if companies extend the life of the FortiGate, revenue becomes irregular.
Palo Alto and Cisco with broader platforms can compress prices and margins.
The model itself admits the moat is not strong; the ASIC advantage erodes if the cloud replaces the physical firewall.
Charlie's note
“Paying almost 28x for a business growing 19% with 80% gross margin and a real moat in its proprietary ASIC is reasonable, not a giveaway; the chip and the cost of switching firewalls sustain renewals, so the discipline is in waiting to pay the multiple, not the story.”
Analysis · June 2026
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