01—Abstract
Summary
Summary of the 10-K filed November 14, 2023. Cited figures are marked; the original filing is the authoritative source.
F5, Inc. (FFIV) reported its annual results for the fiscal year ending September 30, 2023, showcasing a 4.4% increase in total net revenues to $2.81 billiona, driven by growth in both product and service segments.
Despite a challenging macroeconomic environment impacting customer spending, the company managed to increase its product revenue by 1.3% to $1.33 billionb, with a notable shift towards software subscriptions comprising 83.7% of software revenue. Service revenues saw a stronger growth of 7.2% to $1.48 billion, largely due to maintenance contract renewals. The company continued its strategic focus on expanding its multi-cloud application security and delivery solutions, leveraging AI and machine learning to address complex hybrid IT environments.
F5 also addressed macroeconomic headwinds by implementing restructuring plans in fiscal year 2023, which included a workforce reduction aimed at achieving significant annualized savings. While net income saw a healthy increase to $395 millionc, investors should note the company's ongoing commitment to share repurchases and the absence of dividend payouts, prioritizing reinvestment in the business and shareholder returns through buybacks. Key financial and operational highlights include a solid gross margin of 78.9%, improved operating income, and significant cash flow from operations.
The company maintains a strong liquidity position with substantial cash reserves and an undrawn revolving credit facility. However, F5 faces ongoing competitive pressures and risks associated with the evolving technology landscape, including cybersecurity threats and the integration of AI, all of which are detailed in the risk factors section.
02—Key points
Key Highlights
- Total net revenues increased by 4.4% to $2.81 billion for fiscal year 2023.
- Product revenue grew 1.3% to $1.33 billion, with software subscriptions making up 83.7% of software revenue.
- Service revenue increased by 7.2% to $1.48 billion, primarily driven by maintenance contract renewals.
- Gross margin remained strong at 78.9%.
- The company initiated a restructuring plan in fiscal year 2023, resulting in a workforce reduction and estimated annualized savings of approximately $130 million.
- Net income increased by 22.6% to $394.9 million.
- F5 had $922 million remaining under its authorized share repurchase program as of September 30, 2023, and did not pay dividends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, F5, Inc. kept $0.14.
- Revenue$2.81B100.0%
- Cost of revenue−$593.3M21.1%
- Gross profit$2.22B78.9%
- Operating costs−$1.75B62.1%
- Operating income$472.6M16.8%
- Interest, other & tax−$77.6M2.8%
- Net income$394.9M14.0%
Where FY2023 revenue went
$2.81B- Other operating costs: $1.21B, 43% of revenue
- Cost of revenue: $593.3M, 21% of revenue
- R&D: $540.3M, 19% of revenue
- Net income: $394.9M, 14% of revenue
- Interest, other & tax: $77.6M, 2.8% of revenue
Kept 14% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed November 14, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $2.81B$2.70B | +4.4% |
| Cost of Revenue | $593.31M$539.63M | +9.9% |
| Gross Profit | $2.22B$2.16B | +3.0% |
| R&D Expenses | $540.28M$543.37M | −0.6% |
| Operating Expenses | $1.75B$1.75B | −0.3% |
| Operating Income | $472.57M$403.79M | +17.0% |
| Net Income | $394.95M$322.16M | +22.6% |
| EPS (Basic) | $6.59$5.34 | +23.4% |
| EPS (Diluted) | $6.55$5.27 | +24.3% |
| Shares Outstanding (Basic) | 59.91M60.27M | −0.6% |
| Shares Outstanding (Diluted) | 60.27M61.10M | −1.4% |
05—Questions
Frequently Asked Questions
What is F5's overall financial performance for fiscal year 2023?
F5 reported a 4.4% increase in total net revenues to $2.81 billion in fiscal year 2023. This growth was fueled by both product and service revenue increases. Net income rose by 22.6% to $395 million, indicating improved profitability despite a challenging macroeconomic environment.
How is F5 transitioning its product offerings?
F5 is actively shifting towards software and SaaS-based offerings, with software subscriptions now representing 83.7% of its software revenue. This aligns with market trends and the company's strategy to provide multi-cloud application security and delivery solutions across various deployment models.
What is F5's approach to managing costs and driving efficiency?
In response to macroeconomic conditions, F5 initiated a restructuring plan in fiscal year 2023 that included a reduction in workforce. This plan is expected to yield annualized savings of approximately $130 million, demonstrating a focus on operational efficiency and long-term profitability.
What is F5's capital allocation strategy?
F5 continues to prioritize returning capital to shareholders through its share repurchase program, with $922 million remaining authorized as of September 30, 2023. The company does not currently pay dividends, indicating a strategy of reinvesting earnings back into the business.
06—Continue