FTNT · 10-Q · 2026Q3 · Full report
Gross Margin Drivers
Fortinet, Inc. · 2026-10-30 · Importance 31 · Surprise 32 · No source text
Total gross margin declined 1.8 percentage points to 79.0% in the third quarter of 2026 and declined 1.0 percentage point to 79.8% for the first nine months, primarily because revenue mix shifted toward lower-margin product revenue. Product gross margin fell 3.3 percentage points to 64.4% in the quarter, reflecting higher memory-chip costs and inventory-related reserve expense, partly offset by pricing actions. Service gross margin increased 0.4 percentage points to 87.4% as service revenue growth outpaced labor-cost increases.
Key facts
- Fortinet total gross profit was $1.64 billion and $4.77 billion during the three and nine months ended September 30, 2026, up 18% and 21%, respectively. source
- Fortinet product gross margin declined 3.3 percentage points in the three months ended September 30, 2026, primarily because of higher memory-chip costs and inventory-related reserve expense, partly offset by pricing actions. source
- Fortinet total gross margin was 79.0% for the three months and 79.8% for the nine months ended September 30, 2026, down 1.8 and 1.0 percentage points, respectively. source
- Fortinet total gross margin declined 1.8 and 1.0 percentage points in the three and nine months ended September 30, 2026, primarily because revenue mix shifted toward lower-margin product revenue. source
- Fortinet service gross margin increased 0.4 percentage points in the three months ended September 30, 2026, primarily because service revenue growth outpaced labor-cost increases. source
- Fortinet total gross margin decreased 1.0 percentage point in the nine months ended September 30, 2026 compared with the same period in 2025, primarily because revenue mix shifted to lower-margin product revenue. source
- Fortinet product gross margin remained relatively flat in the nine months ended September 30, 2026 as the company balanced increased memory chip costs with pricing actions. source
- Fortinet service gross margin remained relatively flat in the nine months ended September 30, 2026 compared with the same period in 2025. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| margin | negative | realized | -3.3% | Fortinet product gross margin declined 3.3 percentage points in the three months ended September 30, 2026, primarily because of higher… |
| margin | negative | realized | -1.8% | Fortinet total gross profit was $1.64 billion and $4.77 billion during the three and nine months ended September 30, 2026, up 18% and 21%,… |
| margin | negative | realized | -1.0% | Fortinet total gross profit was $1.64 billion and $4.77 billion during the three and nine months ended September 30, 2026, up 18% and 21%,… |