By Sam Boughedda
Fortinet (NASDAQ:FTNT) shares plummeted on Thursday in reaction to its latest earnings release, which saw it top analyst expectations for most metrics but provide lower-than-expected billings guidance.
Fortinet shares are down over 13% at the time of writing, trading around the $46.44 mark. Earlier in the session, they hit a low of $42.61 per share. In 2022, the stock is down over 36%.
The cybersecurity company reported third-quarter earnings of $0.33 per share, $0.06 better than the analyst estimate of $0.27. Revenue for the quarter came in at $1.15 billion versus the consensus estimate of $1.12 billion.
Billings came in at $1.41 billion, up 33% year over year, while deferred revenue was $4.19 billion, up 35% year over year.
Despite the earnings and revenue beat, investors were disappointed with the company's billings guidance which missed expectations. The company said fourth-quarter billings are expected to be in the range of $1.665 billion to $1.720 billion, below the Street estimate of $1.74 billion.
Fourth quarter EPS is expected to be in a range of $0.38 to $0.40, versus the consensus of $0.35, while revenue for the quarter is seen between $1.275 billion and 1.315 billion, versus the consensus of $1.273 billion.
Full-year earnings are seen between $1.13 and $1.15, versus the consensus of $1.05, with revenue between $4.41 billion and 4.45 billion, versus the $4.383 billion consensus.
Commenting on the release, BTIG analysts cut their price target on the stock to $62 from $80, saying, "FTNT posted solid Q3 results but a Q4 billings guide down was pretty disappointing, and transparency over metrics like backlog and bookings could have been better."
In addition, Citi analysts stated: "Despite a healthy +7pt beat on product growing 39% YoY, second consecutive Q of acceleration in services revs to 28% YoY, and OPM 28% ahead by ~3pts (FX helped), inline billings sequentially decelerating (33% YoY, against 7pt tougher comp) and 4Q billings guide ~3pts below consensus' 33% likely pressures shares, intensifying bearish arguments of peak demand / refresh."
Finally, UBS analysts cut the firm's price target on the stock to $54 from $65, telling investors they are "sympathetic to the decision to remove bookings disclosure, but the combination of discontinuing the metric while guiding 4Q billings down was not what we were expecting."
"Billings guidance and color on backlog levels implies 3Q saw bookings growth of 33%, paired with an expectation for 4Q growth of 22% (UBSe), a sharp deceleration from the 40-50% bookings observed 3Q21-2Q22," added the analysts.