F5 Delivers Second Consecutive Quarter of Double-Digit Revenue Growth with 19% GAAP and 18% Non-GAAP Product Revenue Growth

Rhea-AI Summary

F5 Networks (NASDAQ: FFIV) reported Q2 fiscal 2021 results, achieving GAAP revenue of $645 million, an 11% increase from last year. Non-GAAP revenue grew 10%, driven by an 18% rise in product revenue. Net income was $43 million, down from $61 million in Q2 2020, while non-GAAP net income rose to $155 million. For Q3, F5 anticipates revenue between $620 million and $650 million. CEO François Locoh-Donou noted increased demand for application security due to heightened digital transformation. Forward-looking statements highlight potential risks and uncertainties.

Positive

• GAAP revenue of $645 million, up 11% YoY.
• Non-GAAP revenue grew by 10% YoY, driven by 18% growth in product revenue.
• Non-GAAP net income reached $155 million, a 14% increase from the previous year.
• Strong demand for application security and delivery solutions due to digital transformation.

Negative

• GAAP net income decreased to $43 million from $61 million YoY.
• Potential risks related to market competition and integration of acquisitions.

F5 Networks, Inc. (NASDAQ: FFIV) today announced financial results for its fiscal second quarter ended March 31, 2021.

“The transformation we have worked persistently to achieve has put F5 at the center of applications, both traditional and modern, with a differentiated multi-cloud approach. As a result, we are benefiting from strong and sustainable macro growth drivers, which are ultimately powered by escalating application growth,” said François Locoh-Donou, F5’s President and CEO.

“Business and consumers’ increasing reliance on applications has accelerated all prior expectations about the pace of digital transformation and our customers across the globe are scaling their digital assets faster, resulting in growing demand for F5’s application security and delivery solutions,” concluded Locoh-Donou.

Second Quarter Performance Summary

Second quarter fiscal 2021 GAAP revenue was $645 million, up 11% from GAAP revenue of $583 million and up 10% from non-GAAP revenue of $586 million in the second quarter of fiscal year 2020. Fiscal year 2021 second quarter non-GAAP revenue growth was driven by 18% product revenue growth and 4% global services revenue growth over the prior year. Non-GAAP product revenue growth was fueled by 20% software revenue growth and 17% systems revenue growth compared to the year ago period.

GAAP net income for the second quarter of fiscal year 2021 was $43 million, or $0.70 per diluted share compared to second quarter fiscal year 2020 GAAP net income of $61 million, or $1.00 per diluted share.

Non-GAAP net income for the second quarter of fiscal year 2021 was $155 million, or $2.50 per diluted share, compared to $136 million, or $2.23 per diluted share, in the second quarter of fiscal year 2020. Non-GAAP net income for the second quarter of fiscal year 2021 excludes $63 million in stock-based compensation, impairment charges of $34 million, $28 million in acquisition-related charges, $12 million in amortization of purchased intangible assets, and $5 million in facility-exit costs.

A reconciliation of revenue, net income, earnings per share, and other measures on a GAAP to non-GAAP basis is included in the attached Consolidated Income Statements. Additional information about non-GAAP financial information is included in this release.

Business Outlook

For the third quarter of fiscal year 2021 ending June 30, 2021, F5 expects to deliver revenue in the range of $620 million to $650 million, with non-GAAP earnings in the range of $2.36 to $2.54 per diluted share.

All forward-looking non-GAAP measures included in the outlook exclude estimates for amortization of intangible assets, share-based compensation expenses, significant effects of tax legislation and judicial or administrative interpretation of tax regulations (including the impact of income tax reform), non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP exclusions, and do not include the impact of any future acquisitions or divestitures, acquisition-related charges and write-downs, restructuring charges, facility exit costs, or other non-recurring charges that may occur in the period. F5 is unable to provide a reconciliation of non-GAAP earnings guidance measures to corresponding U.S. generally accepted accounting principles or GAAP measures on a forward-looking basis without unreasonable effort due to the overall high variability and low visibility of most of the foregoing items that have been excluded. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. Certain exclusions, such as amortization of intangible assets and share-based compensation expenses, are generally incurred each quarter, but the amounts have historically varied and may continue to vary significantly from quarter to quarter.

Live Webcast and Conference Call

F5 will host a live webcast and conference call to review its financial results and outlook today, April 27, 2021, at 4:30 pm ET. The live webcast can be accessed from the investor relations portion of F5.com. To participate in the live call via telephone in the U.S. and Canada, dial (833) 714-0927. Outside the U.S. and Canada, dial +1 (778) 560-2886. Reference Meeting ID 3461547. Please call at least 5 minutes prior to the call start time. The webcast replay will be archived on the investor relations portion of F5’s website.

Forward Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding the continuing strength and momentum of F5’s business, past and future financial performance including revenue, operating targets, earnings and earnings per share ranges, demand for application security and delivery services, SaaS, and software products, expectations regarding future services and products, expectations regarding future customers, markets and the benefits of products, and other statements that are not historical facts and which are forward-looking statements. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. Such forward-looking statements involve risks and uncertainties, as well as assumptions and other factors that, if they do not fully materialize or prove correct, could cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: customer acceptance of offerings; potential disruptions to F5’s business and distraction of management as F5 integrates acquired businesses’, teams and technologies; F5’s ability to successfully integrate acquired businesses’ products with F5 technologies; the ability of F5’s sales professionals and distribution partners to sell acquired businesses’ product and service offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into F5’s markets, and new product and marketing initiatives by our competitors; increased sales discounts; the business impact of the acquisition of Volterra and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of completion of the acquisition; uncertain global economic

FAQ

What were F5's Q2 2021 financial results?

F5 reported Q2 2021 GAAP revenue of $645 million, up 11% from last year, and non-GAAP net income of $155 million.

What is the revenue outlook for F5 in Q3 2021?

F5 expects Q3 2021 revenue to be between $620 million and $650 million.

How did F5's net income change in Q2 2021 compared to Q2 2020?

F5's GAAP net income for Q2 2021 was $43 million, down from $61 million in Q2 2020.

What drove F5's product revenue growth in Q2 2021?

F5's product revenue growth of 18% was fueled by a 20% increase in software revenue and a 17% increase in systems revenue.

Who is the CEO of F5, and what did he say about the company's performance?

As of the latest PR, François Locoh-Donou is the CEO, highlighting strong demand for F5’s application solutions amid accelerating digital transformation.