01—Abstract
Summary
Summary of the 10-K filed November 15, 2019. Cited figures are marked; the original filing is the authoritative source.
F5, Inc. (FFIV) reported fiscal year 2019 revenues of $2,242 milliona, a 4% increase over the prior year, driven by a 4.6% rise in services revenue and a 2.7% increase in product revenue.
A significant strategic move during the year was the acquisition of NGINX for $643.2 millionb, which is expected to enhance F5's multi-cloud application services capabilities by expanding its reach to cloud-native and microservices environments. The company continues its transformation towards a software and SaaS-driven business, with software revenue growing an impressive 60% in fiscal year 2019. F5 is investing heavily in technology and expanding its portfolio to meet evolving customer needs in hybrid and multi-cloud environments.
The company emphasizes partnerships with leading technology providers and engagement with open-source communities. While reporting a strong revenue increase, the company's operating expenses also grew, notably in sales and marketing and research and development, partly due to integration costs related to the NGINX acquisition and increased headcount. F5 remains committed to returning capital to shareholders through share repurchases, with $1.4 billionc remaining authorization at the end of fiscal year 2019.
02—Key points
Key Highlights
- Total revenue for fiscal year 2019 reached $2,242 million, a 4% increase year-over-year.
- Completed the strategic acquisition of NGINX for $643.2 million to enhance multi-cloud application services.
- Software revenue experienced significant growth of 60% in fiscal year 2019, indicating a successful shift towards a software and SaaS-centric model.
- Services revenue represented 56% of total revenue, highlighting the growing importance of recurring revenue streams.
- Operating expenses increased, with Sales and Marketing up 12.7% and R&D up 11.5%, reflecting investments in growth and the NGINX acquisition.
- The company continued its share repurchase program, repurchasing 1,185,881 shares for $201.0 million and had $1.4 billion remaining authorization.
- F5's business is geographically diversified, with 44.5% of net revenues generated outside the Americas.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, F5, Inc. kept $0.19.
- Revenue$2.24B100.0%
- Cost of revenue−$356.6M15.9%
- Gross profit$1.89B84.1%
- Operating costs−$1.37B61.0%
- Operating income$518.5M23.1%
- Interest, other & tax−$90.7M4.0%
- Net income$427.7M19.1%
Where FY2019 revenue went
$2.24B- Other operating costs: $959.3M, 43% of revenue
- Net income: $427.7M, 19% of revenue
- R&D: $408.1M, 18% of revenue
- Cost of revenue: $356.6M, 16% of revenue
- Interest, other & tax: $90.7M, 4.0% of revenue
Kept 19% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed November 15, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.24B$2.16B | +3.7% |
| Cost of Revenue | $356.58M$361.48M | −1.4% |
| Gross Profit | $1.89B$1.80B | +4.8% |
| R&D Expenses | $408.06M$366.08M | +11.5% |
| Operating Expenses | $1.37B$1.21B | +13.1% |
| Operating Income | $518.46M$590.90M | −12.3% |
| Net Income | $427.73M$453.69M | −5.7% |
| EPS (Basic) | $7.12$7.41 | −3.9% |
| EPS (Diluted) | $7.08$7.32 | −3.3% |
| Shares Outstanding (Basic) | 60.04M61.26M | −2.0% |
| Shares Outstanding (Diluted) | 60.46M62.01M | −2.5% |
05—Questions
Frequently Asked Questions
What was F5's overall financial performance in fiscal year 2019?
F5 reported total revenues of $2,242 million in fiscal year 2019, a 4% increase from the prior year. Services revenue comprised 56% of total revenue ($1,257 million), while product revenue was $986 million. The company saw strong growth in software revenue (60%), indicating progress in its strategic shift towards software and SaaS offerings.
What is the significance of the NGINX acquisition?
The acquisition of NGINX for $643.2 million is a key strategic move for F5. NGINX is a leader in application delivery for modern applications, particularly in the open-source space. This acquisition is expected to expand F5's multi-cloud application services capabilities, offering greater flexibility for developers and catering to modern, distributed application architectures.
How is F5 managing its transition to a software and SaaS-based business?
F5 is actively transforming its business model, with software revenue growing by 60% in fiscal year 2019. This is supported by investments in R&D, the expansion of its software and SaaS offerings (like F5 Cloud Services and NGINX Plus), and a focus on enabling modern DevOps practices through integrations with automation tools and cloud platforms. The company aims to provide application services across various deployment models, including cloud-based, software-only, and SaaS.
What is F5's approach to returning capital to shareholders?
F5's policy is to retain cash for business investment and acquisitions, and also to repurchase shares of its common stock. In fiscal year 2019, the company repurchased approximately 1.19 million shares for $201 million. As of September 30, 2019, F5 had $1.4 billion remaining under its share repurchase authorization, though it had suspended the automatic component of the program in connection with the NGINX acquisition.
06—Continue