01—Abstract
Summary
Summary of the 10-K filed November 19, 2020. Cited figures are marked; the original filing is the authoritative source.
F5, Inc. (FFIV) presented its fiscal year 2020 10-K filing, highlighting its position as a multi-cloud application security and delivery company.
The company emphasized its strategic focus on developing adaptive applications and transforming customer experience through new consumption models, with a particular emphasis on software and SaaS offerings. The acquisition of Shape Security in January 2020 significantly expanded F5's capabilities in online fraud and abuse prevention, complementing its existing portfolio. Financially, F5 reported total net revenues of $2.35 billiona for fiscal year 2020, an increase of 4.8% from the prior year.
This growth was driven by both product and service revenues, with software revenue showing notable strength, representing 34.9%b of product revenue. The company's investment in research and development remained substantial, reflecting its commitment to innovation. F5's financial health appears solid, with significant cash and investments, though the acquisition of Shape Security led to a decrease in cash and cash equivalents due to the purchase price.
The company continues its share repurchase program, demonstrating a commitment to returning value to shareholders. Looking ahead, F5 is focused on capturing growth in security and software, leveraging its expanded portfolio to address complex application challenges across diverse environments. Key risks highlighted include dependence on IT market conditions, cloud computing trends, intense competition, and the successful integration of recent acquisitions.
02—Key points
Key Highlights
- F5 reported total net revenues of $2.35 billion for fiscal year 2020, an increase of 4.8% compared to fiscal year 2019.
- Software revenue significantly increased, comprising 34.9% of net product revenues in fiscal year 2020, up from 24.3% in fiscal year 2019.
- The acquisition of Shape Security in January 2020 for approximately $1.0 billion strengthened F5's application security offerings, particularly in fraud and abuse prevention.
- Operating expenses, including sales & marketing and research & development, increased year-over-year, reflecting investments in growth and integration of acquisitions.
- The company maintained a strong liquidity position with $1.31 billion in cash, cash equivalents, and investments as of September 30, 2020.
- F5 continues its share repurchase program, with approximately $1.3 billion remaining authorization as of September 30, 2020.
- The company is transitioning towards a software and SaaS-driven business model, with software revenue growing 52% in fiscal year 2020.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, F5, Inc. kept $0.13.
- Revenue$2.35B100.0%
- Cost of revenue−$407.9M17.4%
- Gross profit$1.94B82.6%
- Operating costs−$1.55B66.0%
- Operating income$392.3M16.7%
- Interest, other & tax−$84.8M3.6%
- Net income$307.4M13.1%
Where FY2020 revenue went
$2.35B- Other operating costs: $1.11B, 47% of revenue
- R&D: $441.3M, 19% of revenue
- Cost of revenue: $407.9M, 17% of revenue
- Net income: $307.4M, 13% of revenue
- Interest, other & tax: $84.8M, 3.6% of revenue
Kept 13% as net incomeNet income $307.4M · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed November 19, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $2.35B$2.24B | +4.8% |
| Cost of Revenue | $407.89M$356.58M | +14.4% |
| Gross Profit | $1.94B$1.89B | +3.0% |
| R&D Expenses | $441.32M$408.06M | +8.2% |
| Operating Expenses | $1.55B$1.37B | +13.4% |
| Operating Income | $392.27M$518.46M | −24.3% |
| Net Income | $307.44M$427.73M | −28.1% |
| EPS (Basic) | $5.05$7.12 | −29.1% |
| EPS (Diluted) | $5.01$7.08 | −29.2% |
| Shares Outstanding (Basic) | 60.91M60.04M | +1.4% |
| Shares Outstanding (Diluted) | 61.38M60.46M | +1.5% |
05—Questions
Frequently Asked Questions
What was F5's revenue performance in fiscal year 2020?
F5 reported total net revenues of $2.35 billion in fiscal year 2020, an increase of 4.8% from fiscal year 2019. Product revenue grew by 4.1% to $1.03 billion, while service revenue increased by 5.4% to $1.32 billion.
How did the Shape Security acquisition impact F5?
The acquisition of Shape Security, completed in January 2020 for approximately $1.0 billion, significantly enhanced F5's application security and delivery portfolio by adding advanced capabilities in online fraud and abuse prevention. This move aligns with F5's strategy to offer end-to-end application security solutions.
What is F5's strategy for future growth?
F5's strategy focuses on delivering adaptive applications and transforming customer experience. Key components include leveraging its expanded portfolio (including NGINX and Shape Security), driving software and SaaS adoption, enhancing digital customer experiences, and capturing growth in the critical area of application security, which is seeing increased investment due to rising application attacks.
What is F5's financial health and capital allocation strategy?
F5 maintains a strong liquidity position with over $1.3 billion in cash and investments as of September 30, 2020. The company continues to fund its operations through cash generated from operations and has a significant share repurchase program in place. The company also has a $400 million term loan facility to help finance acquisitions like Shape Security.
06—Continue