Fortinet Inc at Nasdaq London Investor Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Meta Marshall - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Got it. Fortinet is growing faster than the market on all three pillars, kind of network security, unified chassis, and tech Ops. What are the most significant innovations that have enabled this broad-based outperformance other than, what you just spoke to, which is this kind of consolidation onto a platform.

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Christiane, you delivered solid Q3 results with 14% billings and revenue growth and a record 37% operating margins. Can you just walk us through kind of the drivers of this performance and how you're thinking of maintaining that momentum in the 2026?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. We've seen cyber kind of remain a key priority within IT budgets, but IT budgets have maybe been kind of underwhelming overall. Just how would you characterize the demand environment today versus a year ago, and are you seeing any change in the environment?

Question: Meta Marshall - Morgan Stanley - Analyst : Just where do you see markets where you think you might be underrepresented today and just kind of what investments are you making to go after those opportunities?

Question: Meta Marshall - Morgan Stanley - Analyst : Robert, maybe kind of turning back to you. Fortinet is positioned as the only vendor to natively integrate kind of next gen firewall, SD-WAN, SASE onto a single OS. Can you just elaborate on the technical advantage this provides versus competitors, and just kind of that combined [40 OS and ASIC] advantage.

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. Maybe kind of diving into 40 SASE, just kind of what has customer feedback been there, just in terms of, you talked about kind of ease of use, but just where do they see kind of the advantages for 40 Sassy?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay, on. SecOps, which includes the XDR, the SIM, and the EDR business that was growing 33% year over year in Q3 and reached 11% of billings. What do you see as kind of the main, technological advantage there?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay, on the pops for the SASE kind of build out, you recently disclosed that you have kind of over 170 pops. Just how more do you expect to kind of have to build this out and what is kind of the strategy on building those out versus kind of partnering on the public cloud side?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. There's been maybe turning back to you, Christiane. There's been a couple of pockets of weakness since the analyst day where Fortinet kind of talked about, this support refresh that maybe not didn't materialize exactly how you guys or investors were expecting, with that in mind, just how do you think about kind of the targets that you laid out at the analyst day and with a few quarters under your belt as CFO just any comfort with those prior targets.

Question: Meta Marshall - Morgan Stanley - Analyst : And just how do you think about kind of this upcoming refresh opportunity with the post COVID kind of cohort?

Question: Meta Marshall - Morgan Stanley - Analyst : Maybe just in terms of kind of that service revenue attached, just how do you think about kind of the service attached rates going forward and some of the kind of the improvements that you expect to make there?

Question: Meta Marshall - Morgan Stanley - Analyst : And then just in terms of kind of confidence on that greater than 30% EBIT margins and--mid to high 30% growth for adjusted free cash flow over the next three to five years, how do you balance kind of a lot of these growth initiatives that you have against kind of the existing margin structure?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay, maybe turning back to you just on OT security that's been a major growth driver for you. Can you just talk about how you differentiate in that space and maybe why some of these network-based approaches are superior.

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. And then you know you spoke about kind of AI being an opportunity, but I'd be remiss to not ask an AI question. So just how are you thinking about kind of Gen AI adoption driving more traffic growth and just how does that impact firewall demand and just where do you see the team as being kind of most focused on AI security right now?

Question: Meta Marshall - Morgan Stanley - Analyst : Are you guys seeing, I think we viewed it as initially kind of customers are investing in AI for security, just to make sure that they have, kind of everything to protect against the increased threat environment but maybe our. Still very early days in terms of security for AI. Is that kind of what you're observing in the environment as well?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Maybe just in terms of this best of breed versus platform discussion that goes on within security, customers typically want to consolidate, but they also want best of breed. Where do you think kind of the right balance is for customers and you know just what are your conversations like on the ground?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. And then maybe just on kind of this networking and security convergence, not just with my coverage but with networking and security overall, Fortinet has always been kind of referring to this convergence of networking and security. Just how do you see that evolving and the prevalence of kind of customers looking for that kind of combination?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. And then Christiane, we kind of referred to that you feel like you have the scale to invest kind of in different portions of the business, but just what is your kind of strategy? Is it, investing more in the US to gain share? Just how are you thinking about kind of growing those, helping out the growth of the faster growing areas like SASE and tech ops and balancing that with kind of the base of the business.

Question: Meta Marshall - Morgan Stanley - Analyst : Okay, got it. And just in terms of what do you feel like is most misunderstood kind of about the Fortinet story today?

Question: Meta Marshall - Morgan Stanley - Analyst : Yeah, got it. And then Robert, maybe kind of ending with you just as you think about kind of what we'll be hearing more about within cyber over the next year just, other than, just more about AI, but just what do you feel like is not being talked about necessarily enough maybe that highlights kind of Fortinet's strengths.