Shares in Fortinet Inc. fell by as much as 17% in late trading today after it came up short on revenue and outlook and announced a company restructuring to sharpen its focus on core growth areas.

For its fiscal third quarter that ended Sept. 30, Fortinet reported adjusted earnings per share of 41 cents, up 24% year-over-year, on revenue of $1.33 billion, up 16%. The figures were a beat and a miss, as analysts had expected earnings per share of 37 cents and revenue of $1.35 billion.

Product revenue in the quarter rose 16%, to $465.9 million, and service revenue rose almost 28%, to $868.7 million. However, Fortinet’s customers are not spending as much as expected, with billings coming in at $1.49 billion, up only 6% year-over-year and below an expected $1.59 billion.

For its fiscal fourth quarter, Fortinet expects adjusted earnings of 42 to 44 cents per share on revenue of $1.38 billion to $1.44 billion.

Although the outlook was a beat at the midpoint — analysts were expecting 42 cents — the revenue outlook was below an expected $1.5 billion. Fortinet also said it expects billings of between $1.56 billion and $1.7 billion, below the $1.91 billion forecast by analysts.

“While the Secure Networking market is experiencing slower growth as product demand returns to normal levels following two years of elevated growth, we are leveraging our scale, go-to-market capabilities and engineering expertise to focus our attention on the faster growing SASE and Security Operations markets, in addition to continuing our focus on Secure Networking,” Ken Xie, founder, chairman and chief executive officer of Fortinet, said in the company’s earnings release.

The focus Xie mentions is part of what Fortinet describes as a sharpening of its business focus to prioritize high-growth, differentiated markets. As of today, the company’s research and development and go-to-market strategy will be organized around three markets: Secure Networking, Universal SASE, which stands for secure access service edge, and Security Operations.

According to Fortinet, the Secure Networking, Universal SASE and Security Operations markets are projected to grow annually at 9%, 20% and 14%, reaching $86 billion, $36 billion and $78 billion, respectively, by 2027.

The Secure Networking segment includes components such as network firewalls, secure switches and 5G gateways. The growth in Fortinet’s firewall business is also being driven by increased growth in its AI-powered FortiGuard Security Services revenue. The Universal SASE market covers technologies such as software-defined wide area networks, zero-trust network access or ZTNA, and SASE that aid in the streamlined application of zero-trust strategies. Fortinet offers a SASE solution that functions entirely in the cloud or through an appliance, backed by a unified operating system and security stack.

The last segment, Security Operations, includes Fortinet’s SecOps platform and the integration of enterprise-grade cybersecurity technologies such as endpoint detection and response, security information and event management, and security orchestration, automation and response to help organizations gain control and insight into their distributed operations.

In prepared remarks to investors, Fortinet executives also discussed other initiatives to drive growth, including a recently announced partnership with Google Cloud, continuing efforts to integrate single-vendor SASE features into FortiOS, expansion of security operations capabilities with artificial intelligence technology, and additional functions and enhanced integration. It’s also finalizing co-development agreements with its large enterprise customers to accelerate the continuous improvement of its integrated enterprise-level SASE solution.

Image: Fortinet