10-QPeriod: Q3 FY2011

F5, INC. Quarterly Report for Q3 Ended Jun 30, 2011

Filed August 5, 2011For Securities:FFIV

Summary

F5 Networks, Inc. reported strong financial performance for the quarter ended June 30, 2011, showcasing significant year-over-year growth in both revenue and net income. Total net revenues surged by 26.1% to $290.7 million, driven by robust performance in both product and service segments. The company's core Application Delivery Networking (ADN) products continue to be a primary revenue driver, supported by increasing demand for its security and WAN optimization solutions. Profitability also saw a substantial improvement, with net income rising by over 54% to $62.5 million. This growth was fueled by increased revenues and improved operating efficiencies, as evidenced by the widening operating margin. The company maintained a strong balance sheet with ample cash and investments, despite continued investment in stock repurchases and operational growth. F5 Networks demonstrates a healthy financial position with continued expansion in key markets, particularly internationally.

Financial Highlights

49 data points
Beta

Revenue

$290.71M

82.0% Gross Margin

Net Income

$62.55M

21.5% Net Margin

EPS (Diluted)

$0.77

Total Assets

$1.60B

Cash & Equivalents

$299.80M

Free Cash Flow

$92.24M

Financial Statements
Beta
Revenue$290.71M
Cost of Revenue$52.45M
Gross Profit$238.26M
R&D Expenses$35.24M
Operating Expenses$150.00M
Operating Income$88.26M
Net Income$62.55M
EPS (Basic)$0.77
EPS (Diluted)$0.77
Shares Outstanding (Basic)80.87M
Shares Outstanding (Diluted)81.50M

Key Highlights

  • 1Total net revenues increased by 26.1% to $290.7 million for the three months ended June 30, 2011, compared to the prior year period.
  • 2Net income grew significantly by 54.4% to $62.5 million for the three months ended June 30, 2011, compared to $40.5 million in the prior year.
  • 3Product revenues increased by 21.7% to $179.3 million, while service revenues grew by 34.1% to $111.4 million, indicating broad-based demand.
  • 4Gross profit margin improved to 82.0% from 80.7% in the prior year, reflecting strong pricing power and operational efficiency.
  • 5Operating expenses as a percentage of net revenue decreased to 51.6% from 54.6% in the prior year, indicating effective cost management.
  • 6The company reported a strong cash position with $299.8 million in cash and cash equivalents and $285.5 million in short-term investments as of June 30, 2011.
  • 7International revenues represented a significant portion of total revenue (43.2% for the quarter), highlighting the company's global reach.

Frequently Asked Questions

F5 Networks experienced a 26.1% increase in total net revenues, reaching $290.7 million for the quarter ended June 30, 2011. This growth was primarily driven by increased demand for its Application Delivery Networking (ADN) products, including application security and WAN optimization solutions, as well as growth in its installed product base leading to higher service revenues from maintenance contracts.

Profitability showed significant improvement. Net income rose by 54.4% to $62.5 million, with diluted EPS increasing to $0.77 from $0.50 in the prior year. This was supported by a higher gross profit margin of 82.0% and a reduction in operating expenses as a percentage of revenue.

F5 Networks maintained a strong financial position, with cash and cash equivalents totaling $299.8 million and short-term investments at $285.5 million as of June 30, 2011. The company also held $471.6 million in long-term investments. Despite using $121.5 million for stock repurchases, cash generated from operations funded this activity and contributed to an overall increase in liquid assets.

The filing mentions that two worldwide distributors accounted for 27.0% of total net revenue for the quarter. Geographically, international sales contributed significantly, making up 43.2% of total net revenues for the quarter, indicating a strong global presence.