Fortinet Drops 18%: Q3 in Line, Q4 View Light

Shares of enterprise security technology vendor Fortinet (FTNT) are down $3.80, or 15%, at $21, after the company this afternoon reported Q3 revenue and profit per share in line with analysts’ expectations.

Revenue in the three months ended in September rose 17%, year over year, to $136.3 million, roughly in line with consensus of $136.4 million, yielding EPS of 14 cents, also in line.

Deferred revenue in the quarter rose 24%, year over year, to $340 million, and up slightly from the prior quarter.

CEO Ken Xie remarked that the results “highlight the underlying strength of our technology,” while chief financial officer Ken Goldman, who is leaving Fortinet to become CFO at Yahoo! (YHOO), said the company was “pleased” with the quarter, which was “consistent with expectations.”

Fortinet will host a conference call with analysts at 4:30 pm, Eastern time, and you can catch the webcast of it here.

Shares of enterprise security vendor Sourcefire (FIRE) seemed to show some weakness right after the announcement but are now unchanged at $47.63.

Update: During the conference call with analysts, the company projected Q4 revenue in a range of $142 million to $146 million, below the consensus $146 million, and EPS of 15 cents, below the consensus of 16 cents.

During a follow-up conversation by phone, Xie and Goldman expressed the view that their view on the quarter is more or less in line with comments last quarter, and that the economic outlook is “neutral” in terms of its impact on their business this quarter. Goldman expressed satisfaction that the company is now at an annual billings “run rate” of about $600 million or a little less.

The company expects to soon overtake Juniper Networks (JNPR) to become number three in security networking behind Check Point Software Technologies (CHKP) and Cisco Systems (CSCO), the executives said.

Xie said new features coming in the 5.0 version of the company’s operating system should improve the suitability of Fortinet’s products for cloud computing, where it partners with service providers to offer managed security services.

Comptroller Nancy Bush will be filling in for Goldman on an interim basis while his replacement is recruited.

Fortinet shares are now down $4.37, or 17.6%, at $20.43 in late trading.