Cybersecurity Firm Fortinet’s Billings Drag Stock Despite Revenue and Earnings Beat

Fortinet (FTNT) shares tumbled as the cybersecurity firm’s billings and product revenue declined, outweighing higher-than-forecast results for the first quarter.

Billings, a measure that includes unrealized revenue which the company uses to help indicate future business, dropped 6.4% to $1.41 billion. However, overall revenue advanced 7.2% to $1.35 billion, with adjusted earnings per share (EPS) of $0.43. Both exceeded estimates. 

Founder and CEO Ken Xie said Fortinet capitalized on the “fast-growing” Secure Access Service Edge (SASE) which is VPN and cloud security-related. However, analysts at Mizuho said competition in the cybersecurity space is fierce and the new initiatives may not be enough to set them apart.

Despite the droll billings reading, the company raised full-year guidance of adjusted EPS to a range of $1.73 to $1.79, and revenue at $5.75 billion to $5.85 billion.

Competition in Cybersecurity Pushes Down Rivals Too

Fortinet wasn’t the only cybersecurity firm that posted lower results as companies grapple with enterprise customers tightening their budgets amid an uncertain macroeconomic outlook and intense competition.

Shares in global cloud services provider Cloudflare (NET) also plunged Friday after the company issued a soft current-quarter sales outlook.

Fortinet shares were down 8.5% at $59.68 each as of about 12:07 p.m. ET, while those of Cloudflare were 18% lower at $73.36.