10-KPeriod: FY2018

F5, INC. Annual Report, Year Ended Sep 30, 2018

Filed November 21, 2018For Securities:FFIV

Summary

F5 Networks, Inc. (FFIV) demonstrated consistent revenue growth in fiscal year 2018, driven primarily by its services segment, which offset a slight decline in product revenue. The company continues to invest heavily in research and development, reflecting its commitment to innovation in multi-cloud application services and security. F5's strategic focus on expanding its addressable market through comprehensive application services and technology partnerships remains a key driver for future growth. Financially, F5 maintained a strong balance sheet with substantial cash reserves and no long-term debt. The company actively engaged in its share repurchase program, returning capital to shareholders. While facing competitive pressures and evolving market dynamics, F5 appears well-positioned to capitalize on the increasing demand for secure and reliable application delivery in complex, multi-cloud environments.

Financial Highlights

53 data points
Beta

Revenue

$2.16B

83.3% Gross Margin

Net Income

$453.69M

21.0% Net Margin

EPS (Diluted)

$7.32

Total Assets

$2.61B

Cash & Equivalents

$424.71M

Free Cash Flow

$707.60M

Financial Statements
Beta
Revenue$2.16B
Cost of Revenue$361.48M
Gross Profit$1.80B
R&D Expenses$366.08M
Operating Expenses$1.21B
Operating Income$590.90M
Net Income$453.69M
EPS (Basic)$7.41
EPS (Diluted)$7.32
Shares Outstanding (Basic)61.26M
Shares Outstanding (Diluted)62.01M

Key Highlights

  • 1Total net revenues increased by 3.4% to $2.16 billion in fiscal year 2018, driven by a 6.7% increase in service revenues.
  • 2Product revenues experienced a slight decrease of 0.5% to $960.1 million, attributed to lower systems revenue, partially offset by increased software revenue.
  • 3Research and development expenses increased by 4.5% to $366.1 million, highlighting continued investment in product innovation.
  • 4The company repurchased 4,074,170 shares of common stock for approximately $600.1 million during fiscal year 2018.
  • 5F5 operates with a strong financial position, reporting $1.45 billion in cash, cash equivalents, and investments, with no long-term debt.
  • 6International sales represented 49.6% of net revenues, indicating a significant global presence.
  • 7The company continues to expand its service offerings, including its Silverline SaaS platform for DDoS protection and web application firewall services.

Frequently Asked Questions

F5 Networks is a leader in multi-cloud application services, providing software and hardware solutions that enhance the speed, intelligence, and security of applications across various environments. Its core technology is the TMOS platform. The company's strategy focuses on expanding its addressable market through comprehensive application services, investing in technology to meet evolving customer needs, building strategic partnerships, and leveraging its online developer community, DevCentral.

In fiscal year 2018, F5 Networks reported total net revenues of $2.16 billion, a 3.4% increase from the prior year. This growth was primarily driven by a 6.7% increase in service revenues, which helped offset a slight 0.5% decrease in product revenues. The company maintained strong profitability and a healthy balance sheet, with no long-term debt and significant cash reserves.

F5's primary offerings are based on its TMOS platform and include BIG-IP appliances and Virtual Editions, which provide application services such as traffic management (LTM), DNS services, advanced firewalling (AFM), and application security (ASM). They also offer Silverline, a cloud-based managed security service. F5 competes in the application delivery networking (ADC) and application security markets, positioning itself as a provider of comprehensive, integrated solutions for complex, multi-cloud environments.

Key risks highlighted by F5 include the impact of conditions affecting the IT market and overall economic health on demand for its products. The company also faces competitive and execution risks related to the transition to cloud-based computing, potential industry consolidation leading to increased competition, and the need for continuous innovation and timely product development. Security vulnerabilities in their systems or products are also noted as a significant risk.