10-QPeriod: Q1 FY2013

F5, INC. Quarterly Report for Q1 Ended Dec 31, 2012

Filed February 7, 2013For Securities:FFIV

Summary

F5 Networks, Inc. (FFIV) reported solid financial results for the quarter ended December 31, 2012. Total net revenues increased by 13.3% year-over-year, driven by strong growth in services revenue, which surged by 27.7%, alongside a more modest 4.2% increase in product revenue. This shift in revenue mix, with services becoming a larger proportion, indicates a growing recurring revenue base for the company. Profitability also saw an uptick, with net income rising to $69.5 million from $66.5 million in the prior year period, translating to diluted EPS of $0.88, an improvement from $0.83. The company maintained a strong balance sheet with over $1.2 billion in cash and investments, and no long-term debt. F5 also actively returned capital to shareholders through share repurchases, demonstrating confidence in its financial position and future prospects.

Financial Highlights

49 data points
Beta

Revenue

$365.45M

83.3% Gross Margin

Net Income

$69.49M

19.0% Net Margin

EPS (Diluted)

$0.88

Total Assets

$2.04B

Cash & Equivalents

$184.56M

Free Cash Flow

$137.02M

Financial Statements
Beta
Revenue$365.45M
Cost of Revenue$60.88M
Gross Profit$304.57M
R&D Expenses$48.54M
Operating Expenses$195.48M
Operating Income$109.08M
Net Income$69.49M
EPS (Basic)$0.88
EPS (Diluted)$0.88
Shares Outstanding (Basic)78.79M
Shares Outstanding (Diluted)79.28M

Key Highlights

  • 1Total net revenues grew 13.3% year-over-year to $365.45 million.
  • 2Services revenue experienced significant growth, increasing by 27.7% to $160.74 million.
  • 3Net income increased to $69.49 million, or $0.88 per diluted share, up from $66.49 million, or $0.83 per diluted share, in the prior year.
  • 4The company maintained a robust liquidity position with $1.29 billion in cash and investments and no long-term debt.
  • 5Sales and marketing expenses increased by 15.1% to support sales growth, while R&D expenses grew by 24.1% to drive innovation.
  • 6F5 Networks continued its share repurchase program, spending $50 million during the quarter.
  • 7International sales represented 46.7% of total net revenues, showing continued global reach.

Frequently Asked Questions

The primary driver of revenue growth was a significant increase in services revenue, up 27.7% year-over-year, complemented by a 4.2% increase in product revenue. The growth in services is largely attributed to increased purchases and renewals of maintenance contracts, reflecting a growing installed base of F5 products.

F5 Networks increased its operating expenses to support growth. Sales and marketing expenses rose by 15.1% and R&D expenses by 24.1%, indicating investments in sales efforts and product innovation. Despite these increases, net income grew to $69.5 million, and the company maintained strong operating margins, suggesting effective cost management relative to revenue growth.

The company's financial health is strong. As of December 31, 2012, F5 Networks held $1.29 billion in cash and investments, with no long-term debt. Operating activities generated $144.8 million in cash during the quarter. This solid liquidity and strong cash flow position provide the company with financial flexibility.

F5 Networks is actively engaged in returning value to shareholders through its stock repurchase program. In the quarter ended December 31, 2012, the company repurchased $50 million of its common stock, demonstrating its commitment to enhancing shareholder value.