01—Abstract
Summary
Summary of the 10-K filed November 21, 2018. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Total net revenues increased by 3.4% to $2.16 billion in fiscal year 2018, driven by a 6.7% increase in service revenues.
- Product revenues experienced a slight decrease of 0.5% to $960.1 million, attributed to lower systems revenue, partially offset by increased software revenue.
- Research and development expenses increased by 4.5% to $366.1 million, highlighting continued investment in product innovation.
- The company repurchased 4,074,170 shares of common stock for approximately $600.1 million during fiscal year 2018.
- F5 operates with a strong financial position, reporting $1.45 billion in cash, cash equivalents, and investments, with no long-term debt.
- International sales represented 49.6% of net revenues, indicating a significant global presence.
- The company continues to expand its service offerings, including its Silverline SaaS platform for DDoS protection and web application firewall services.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, F5, Inc. kept $0.21.
- Revenue$2.16B100.0%
- Cost of revenue−$361.5M16.7%
- Gross profit$1.80B83.3%
- Operating costs−$1.21B55.9%
- Operating income$590.9M27.3%
- Interest, other & tax−$137.2M6.3%
- Net income$453.7M21.0%
Where FY2018 revenue went
$2.16B- Other operating costs: $842.9M, 39% of revenue
- Net income: $453.7M, 21% of revenue
- R&D: $366.1M, 17% of revenue
- Cost of revenue: $361.5M, 17% of revenue
- Interest, other & tax: $137.2M, 6.3% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed November 21, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $2.16B$2.09B | +3.4% |
| Cost of Revenue | $361.48M$353.49M | +2.3% |
| Gross Profit | $1.80B$1.74B | +3.6% |
| R&D Expenses | $366.08M$350.37M | +4.5% |
| Operating Expenses | $1.21B$1.17B | +3.1% |
| Operating Income | $590.90M$563.96M | +4.8% |
| Net Income | $453.69M$420.76M | +7.8% |
| EPS (Basic) | $7.41$6.56 | +13.0% |
| EPS (Diluted) | $7.32$6.50 | +12.6% |
| Shares Outstanding (Basic) | 61.26M64.17M | −4.5% |
| Shares Outstanding (Diluted) | 62.01M64.78M | −4.3% |
05—Questions
Frequently Asked Questions
What is F5 Networks' primary business and strategy?
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.
How did F5 Networks perform financially in fiscal year 2018?
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.
What are F5's key product offerings and how are they positioned in the market?
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.
What are the main risks identified by F5 Networks in its 10-K filing?
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.
06—Continue