10-QPeriod: Q2 FY2014

F5, INC. Quarterly Report for Q2 Ended Mar 31, 2014

Filed May 8, 2014For Securities:FFIV

Summary

F5 Networks, Inc. (FFIV) reported solid financial results for the fiscal second quarter ended March 31, 2014. The company demonstrated strong revenue growth, driven by increases in both product and service revenues. This growth reflects continued demand for F5's core Application Delivery Networking (ADN) products and an expanding installed base of products, leading to higher service renewals. The company maintained healthy gross margins and demonstrated effective expense management, particularly in sales and marketing, despite increased investments in research and development to fuel future innovation. Financially, F5 Networks maintained a robust balance sheet with significant cash and investments. The company actively returned capital to shareholders through a substantial stock repurchase program, indicating confidence in its financial position and future prospects. While the company faces various industry and economic risks, its operational performance and financial strength provide a positive outlook for investors.

Financial Highlights

50 data points
Beta

Revenue

$420.04M

82.0% Gross Margin

Net Income

$69.64M

16.6% Net Margin

EPS (Diluted)

$0.91

Total Assets

$2.17B

Cash & Equivalents

$239.84M

Free Cash Flow

$76.83M

Financial Statements
Beta
Revenue$420.04M
Cost of Revenue$75.66M
Gross Profit$344.38M
R&D Expenses$67.23M
Operating Expenses$233.52M
Operating Income$110.86M
Net Income$69.64M
EPS (Basic)$0.92
EPS (Diluted)$0.91
Shares Outstanding (Basic)75.51M
Shares Outstanding (Diluted)76.24M

Key Highlights

  • 1Total net revenues increased by 19.9% year-over-year for the three months ended March 31, 2014, reaching $420.0 million.
  • 2Product revenues grew by 21.6% to $225.1 million, and service revenues increased by 18.0% to $194.9 million for the quarter.
  • 3Gross profit increased to $344.4 million, with a gross margin of 82.0% for the three months ended March 31, 2014.
  • 4Operating income grew to $110.9 million, a 20.0% increase year-over-year, reflecting operational efficiency.
  • 5Net income rose to $69.6 million, or $0.91 per diluted share, an improvement from $63.4 million, or $0.80 per diluted share, in the prior year's quarter.
  • 6The company repurchased $350.0 million of its common stock during the six months ended March 31, 2014, signaling a strong commitment to returning value to shareholders.
  • 7The company ended the quarter with a strong liquidity position, holding $239.8 million in cash and cash equivalents and $383.9 million in short-term investments.

Frequently Asked Questions

F5 Networks is a leading provider of software and hardware solutions for application delivery networking (ADN). Its revenue is generated from the sale of ADN products (including hardware appliances and software modules) and related services, such as annual maintenance contracts, training, and consulting services.

Total net revenues increased by 19.9% to $420.0 million for the three months ended March 31, 2014, compared to the same period in the prior year. This growth was driven by increases in both product revenues (up 21.6%) and service revenues (up 18.0%).

F5 Networks maintains a strong financial position with significant cash and investments. As of March 31, 2014, the company had $239.8 million in cash and cash equivalents and $383.9 million in short-term investments. The company also reported no long-term debt.

F5 Networks actively repurchased its common stock, investing $350.0 million in share repurchases during the six months ended March 31, 2014. The company also announced an additional $500 million authorization for its stock repurchase program, indicating a continued focus on shareholder returns.