Investors have been closely observing the performance of various stocks in the market. Among them, one cybersecurity stock has been making significant waves. Fortinet (FTNT -0.28%) has seen a remarkable bull run since August 2024, with its shares jumping nearly 70% as of now. This surge comes on the back of a series of solid quarterly results that have transformed the company's fortunes on the stock market.

Uncover the Potential of Fortinet's Cybersecurity Stock

Fortinet's Q3 Revenue Performance

In the third quarter of 2024, Fortinet delivered revenue of $1.51 billion, showing an 13% increase compared to the same period last year. This was slightly higher than the analysts' expectations of $1.48 billion. The company's non-GAAP (adjusted) earnings, on the other hand, witnessed a remarkable nearly 54% year-over-year jump to $0.63 per share. This was significantly higher than the guidance of $0.51 per share. The solid growth in earnings can be attributed to a sharp increase in margins. The non-GAAP operating margin rose from 27.8% in the previous year to 36.1% last quarter. The growth in margins was driven by an increase in services revenue, which has a superior margin compared to product revenue. Fortinet's services business now accounts for 68% of the company's top line, up from 65% in the same quarter last year. This business is benefiting from the adoption of its fast-growing products in the security operations (SecOps) and unified secure access service edge (SASE) verticals.SecOps refers to the collaboration between an organization's security and operations teams to enhance cyber defenses and resolve incidents quickly. Fortinet is leveraging this opportunity by integrating artificial intelligence (AI) tools into its SecOps offerings. On the latest earnings conference call, the management pointed out that AI-focused SecOps was the fastest-growing product, with 32% billings growth and accounting for 10.5% of overall billings.

Fortinet's Unified SASE Bookings and Revenue

Fortinet witnessed a 14% jump in its unified SASE bookings last quarter, while revenue from this segment increased by 27%. The strong performance in the SecOps and unified SASE segments led to a 15% year-over-year increase in the company's remaining performance obligations (RPO) to $6.1 billion. This metric represents the total value of unfulfilled contracts, indicating that Fortinet's future revenue pipeline is improving.Fortinet's management is optimistic about the growth prospects of these segments. The demand for AI-driven SecOps offerings is expected to reach $163 billion in 2028, growing at an annual rate of 13%. Similarly, the demand for unified SASE offerings is forecast to grow at a healthy annual rate of 16% through 2028, generating an estimated $46 billion in annual revenue.

Full-Year Forecast and Future Outlook

All these factors led Fortinet to raise its full-year forecast. It now expects revenue of $5.89 billion at the midpoint of its guidance range, up from the earlier estimate of $5.85 billion. Non-GAAP earnings for the full year are expected to reach $2.24 per share compared to $2.02 per share last year, representing a 37% jump.Although Fortinet has been experiencing healthy earnings growth, the stock has seen a significant increase in a short period. Currently, it is trading at almost 49 times trailing earnings, which is a premium to the tech-laden Nasdaq-100 index's earnings multiple of 33. However, consensus estimates project a 20% annual increase in Fortinet's earnings over the next five years. Based on its estimated earnings for 2024, the bottom line could reach $5.57 after five years. Assuming the company achieves this and trades at 30 times earnings at that time (in line with the Nasdaq-100 index's forward earnings multiple), its stock price could jump to $167, representing a 72% increase from the current levels.So, for investors looking for a growth stock, Fortinet still holds potential. It seems to have room for more upside in the long run even after the recent impressive gains.