01—Abstract
Summary
Summary of the 10-K filed November 15, 2022. Cited figures are marked; the original filing is the authoritative source.
F5, Inc. (FFIV) reported strong revenue growth of 3.6% to $2.696 billiona for the fiscal year ended September 30, 2022.
This growth was driven by a robust increase in software revenue, which now constitutes over 50%b of product revenue, and a modest rise in service revenue. However, the company faced challenges in its hardware systems business due to global semiconductor shortages, leading to a 13% decline in systems revenue. F5 continues its strategic transformation towards a software and SaaS-centric model, highlighted by the launch of its F5 Distributed Cloud Services platform, aimed at simplifying and unifying application security and delivery across multi-cloud environments.
Financially, the company demonstrated solid operational performance with income from operations increasing slightly, though net income saw a modest decrease year-over-year due to various factors including increased R&D spending and other expenses. F5 actively returned capital to shareholders through share repurchases totaling $500 millionc in fiscal year 2022, demonstrating a commitment to shareholder value. The company maintains a strong balance sheet with significant cash reserves, providing flexibility for future investments and operations.
02—Key points
Key Highlights
- Total net revenues increased by 3.6% to $2.70 billion in fiscal year 2022, driven by growth in both product and service revenues.
- Software revenue saw a significant increase of 33% year-over-year, reaching $665 million and now representing 50.5% of total product revenue, indicating a successful shift towards software solutions.
- Hardware systems revenue declined by 13% to $652 million, primarily due to global semiconductor shortages impacting supply and ability to meet demand.
- The company actively repurchased $500 million of its common stock during fiscal year 2022, underscoring a focus on returning capital to shareholders.
- F5 launched its F5 Distributed Cloud Services platform, aiming to unify application security and delivery across hybrid and multi-cloud environments, signaling a strategic focus on SaaS and cloud-native solutions.
- Research and development expenses increased by 6.0% to $543.4 million, reflecting continued investment in innovation, particularly in software and cloud capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, F5, Inc. kept $0.12.
- Revenue$2.70B100.0%
- Cost of revenue−$539.6M20.0%
- Gross profit$2.16B80.0%
- Operating costs−$1.75B65.0%
- Operating income$403.8M15.0%
- Interest, other & tax−$81.6M3.0%
- Net income$322.2M12.0%
Where FY2022 revenue went
$2.70B- Other operating costs: $1.21B, 45% of revenue
- R&D: $543.4M, 20% of revenue
- Cost of revenue: $539.6M, 20% of revenue
- Net income: $322.2M, 12% of revenue
- Interest, other & tax: $81.6M, 3.0% of revenue
Kept 12% as net incomeNet income $322.2M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed November 15, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.70B$2.60B | +3.6% |
| Cost of Revenue | $539.63M$493.15M | +9.4% |
| Gross Profit | $2.16B$2.11B | +2.2% |
| R&D Expenses | $543.37M$512.63M | +6.0% |
| Operating Expenses | $1.75B$1.72B | +2.1% |
| Operating Income | $403.79M$394.02M | +2.5% |
| Net Income | $322.16M$331.24M | −2.7% |
| EPS (Basic) | $5.34$5.46 | −2.2% |
| EPS (Diluted) | $5.27$5.34 | −1.3% |
| Shares Outstanding (Basic) | 60.27M60.71M | −0.7% |
| Shares Outstanding (Diluted) | 61.10M62.06M | −1.5% |
05—Questions
Frequently Asked Questions
What is F5's primary business and strategy?
F5 is a leading provider of multi-cloud application services and security solutions. Its strategy focuses on transforming its business to a more balanced revenue composition with a greater percentage from software and SaaS solutions. Key initiatives include bringing its adaptive application vision to life, transforming the customer experience, and capturing growth in security and software offerings, notably through its F5 Distributed Cloud Services platform.
How did F5's revenue perform in fiscal year 2022?
F5's total net revenues increased by 3.6% to $2.70 billion in fiscal year 2022. Product revenue grew by 5.6% to $1.32 billion, largely driven by a 33% increase in software revenue to $665 million. Services revenue saw a modest increase of 1.7% to $1.38 billion. The growth in software revenue signifies a successful transition away from traditional hardware systems, which experienced a 13% decline due to supply chain issues.
What are the main risks F5 highlighted in its filing?
F5 highlighted several risks, including dependence on the overall economic health of its customers and the IT market, competitive pressures from cloud-based and SaaS solutions, potential disruption from industry consolidation, and the need for continuous innovation and market acceptance of new products. Specific operational risks mentioned include global semiconductor shortages impacting hardware supply and cybersecurity vulnerabilities.
How is F5 managing its capital and returning value to shareholders?
F5 maintains a strong financial position with $894.1 million in cash and investments as of September 30, 2022. The company actively repurchased $500 million of its common stock in fiscal year 2022 and has $1.3 billion remaining under its share repurchase program. F5 has not historically paid dividends and does not anticipate doing so in the foreseeable future, preferring to reinvest in the business and return capital via buybacks.
06—Continue