10-QPeriod: Q3 FY2013

F5, INC. Quarterly Report for Q3 Ended Jun 30, 2013

Filed August 8, 2013For Securities:FFIV

Summary

F5 Networks, Inc. (FFIV) reported its third-quarter fiscal year 2013 results, showing a 5.0% year-over-year increase in total net revenues to $370.3 million. While product revenues saw a slight decline of 5.0%, service revenues experienced robust growth of 19.3%, indicating a strong contribution from their expanding installed base and maintenance contracts. Despite the revenue growth, net income for the quarter decreased to $68.2 million from $72.3 million in the prior year, primarily due to an increase in operating expenses, particularly in sales and marketing, and research and development. The company continues to invest in growth initiatives, as evidenced by increased headcount in these areas. F5 Networks maintained a strong liquidity position with $1.27 billion in cash and investments, and continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

50 data points
Beta

Revenue

$370.30M

82.5% Gross Margin

Net Income

$68.18M

18.4% Net Margin

EPS (Diluted)

$0.86

Total Assets

$2.15B

Cash & Equivalents

$198.28M

Free Cash Flow

$119.56M

Financial Statements
Beta
Revenue$370.30M
Cost of Revenue$64.92M
Gross Profit$305.38M
R&D Expenses$54.08M
Operating Expenses$201.31M
Operating Income$104.08M
Net Income$68.18M
EPS (Basic)$0.87
EPS (Diluted)$0.86
Shares Outstanding (Basic)78.52M
Shares Outstanding (Diluted)78.86M

Key Highlights

  • 1Total net revenues increased by 5.0% year-over-year to $370.3 million for the three months ended June 30, 2013.
  • 2Service revenues grew significantly by 19.3%, offsetting a 5.0% decline in product revenues.
  • 3Net income decreased to $68.2 million for the quarter, down from $72.3 million in the prior year, impacted by increased operating expenses.
  • 4Operating expenses (Sales & Marketing, R&D, G&A) increased by 10.2% to $201.3 million, driven by investments in personnel and growth initiatives.
  • 5The company's cash and investments position remained strong, totaling $1.27 billion as of June 30, 2013.
  • 6F5 Networks continued its share repurchase program, spending $150 million in the nine months ended June 30, 2013.
  • 7Acquisition of LineRate Systems, Inc. completed in February 2013 for $125.3 million, adding software-defined networking capabilities.

Frequently Asked Questions

F5 Networks reported a 5.0% increase in total net revenues to $370.3 million for the three months ended June 30, 2013, compared to the same period in the prior year. This growth was primarily driven by a significant increase in service revenues.

While product revenues decreased by 5.0% to $196.7 million, service revenues saw substantial growth of 19.3% to $173.6 million. This indicates a strategic shift or growing reliance on recurring revenue streams from maintenance contracts and support services, likely fueled by an expanding installed base.

Operating expenses increased by 10.2% to $201.3 million, driven by higher sales and marketing expenses (up 8.8%) and research and development expenses (up 15.1%). This increased investment in growth and innovation led to a decrease in net income to $68.2 million from $72.3 million year-over-year.

F5 Networks maintains a strong liquidity position with $1.27 billion in cash and investments as of June 30, 2013. The company continues to actively engage in its share repurchase program, repurchasing $150 million worth of stock in the first nine months of fiscal year 2013, indicating a focus on returning capital to shareholders while investing in strategic acquisitions like LineRate Systems.