10-QPeriod: Q3 FY2003

F5, INC. Quarterly Report for Q3 Ended Jun 30, 2003

Filed August 13, 2003For Securities:FFIV

Summary

F5 Networks, Inc. (FFIV) reported a return to profitability in the nine months ended June 30, 2003, with net income of $2.7 million, a significant improvement from a net loss of $8.2 million in the same period last year. This turnaround was driven by increased service revenues and improved cost management, particularly in product costs and operating expenses. Total net revenues grew to $84.3 million for the nine months, up from $81.2 million in the prior year, with services revenue showing strong growth of 21.6%.

Key Highlights

  • 1Return to profitability with a net income of $2.7 million for the nine months ended June 30, 2003, compared to a net loss of $8.2 million in the prior year.
  • 2Total net revenues increased by 3.8% to $84.3 million for the nine months ended June 30, 2003, compared to $81.2 million in the prior year.
  • 3Service revenues demonstrated strong growth, increasing by 21.6% to $23.1 million for the nine months ended June 30, 2003.
  • 4Gross profit margin improved significantly to 76.9% for the nine months ended June 30, 2003, from 70.4% in the prior year, driven by better cost of revenue management.
  • 5Operating expenses as a percentage of revenue decreased to 74.3% for the nine months ended June 30, 2003, down from 81.2% in the prior year, reflecting improved operational efficiencies.
  • 6Acquisition of uRoam, Inc. for $25.0 million in cash on July 23, 2003, to enter the SSL VPN market.
  • 7Cash flow from operations remained positive at $9.0 million for the nine months ended June 30, 2003.

Frequently Asked Questions

F5 Networks reported a net income of $2.7 million for the nine months ended June 30, 2003, a substantial improvement from a net loss of $8.2 million in the same period of the previous year. This positive shift was supported by total net revenues of $84.3 million and a gross profit margin of 76.9%.

Service revenues continued to grow significantly, increasing by 21.6% to $23.1 million for the nine months ended June 30, 2003, and represented 27.4% of total net revenues. Product revenues saw a slight decrease of 1.7% to $61.2 million for the same period, primarily due to lower sales in Japan, though international product revenues showed growth in other regions.

A significant event was the acquisition of uRoam, Inc. for $25.0 million in cash on July 23, 2003. This acquisition aims to enable F5 to quickly enter the SSL VPN market, broaden its customer base, and augment its existing product line with uRoam's FirePass™ SSL VPN technology.

The company has demonstrated improved expense management. Operating expenses as a percentage of revenue decreased to 74.3% for the nine months ended June 30, 2003, down from 81.2% in the prior year. Specific areas of improvement include reduced cost of product revenues due to engineering improvements and lower service revenue costs due to operational efficiencies.