10-QPeriod: Q2 FY2019

F5, INC. Quarterly Report for Q2 Ended Mar 31, 2019

Filed May 3, 2019For Securities:FFIV

Summary

F5, Inc. (FFIV) reported solid financial results for the six months ended March 31, 2019, demonstrating steady revenue growth and improved profitability. Total net revenues increased by 3.0% year-over-year, driven by robust growth in service revenues, which offset a slight decline in product revenues for the quarter. The company maintained healthy gross margins and managed operating expenses effectively, leading to a significant increase in net income of 24.7% for the six-month period. Key financial strengths include a strong balance sheet with substantial cash and investments, and no long-term debt, providing significant financial flexibility. The company also announced a definitive agreement to acquire Nginx, Inc. for approximately $670 million, signaling a strategic move to enhance its application services portfolio. While the acquisition is expected to be funded by cash and potentially debt, F5's current financial position appears robust enough to support such a transaction.

Financial Highlights

51 data points
Beta

Revenue

$544.89M

83.8% Gross Margin

Net Income

$116.09M

21.3% Net Margin

EPS (Diluted)

$1.93

Total Assets

$2.99B

Cash & Equivalents

$727.85M

Free Cash Flow

$164.54M

Financial Statements
Beta
Revenue$544.89M
Cost of Revenue$88.18M
Gross Profit$456.72M
R&D Expenses$96.31M
Operating Expenses$313.92M
Operating Income$142.79M
Net Income$116.09M
EPS (Basic)$1.94
EPS (Diluted)$1.93
Shares Outstanding (Basic)59.69M
Shares Outstanding (Diluted)60.03M

Key Highlights

  • 1Total net revenues grew 3.0% to $1.09 billion for the six months ended March 31, 2019, compared to the prior year, with service revenues being the primary driver of growth.
  • 2Net income increased significantly by 24.7% to $247.0 million for the six months ended March 31, 2019, reflecting improved operational efficiency and profitability.
  • 3Gross profit margin remained strong at 83.9% for the six months ended March 31, 2019, indicating effective cost management in relation to revenues.
  • 4The company's cash, cash equivalents, and investments totaled $1.62 billion as of March 31, 2019, with no long-term debt, showcasing a healthy liquidity position.
  • 5F5 announced a definitive agreement to acquire Nginx, Inc. for approximately $670 million, a strategic move to bolster its application services offerings.
  • 6Operating expenses, while increasing in absolute terms, remained a stable percentage of net revenue (56.3%) for the six months ended March 31, 2019, indicating controlled cost management.
  • 7The effective tax rate decreased to 21.7% for the six months ended March 31, 2019, down from 31.8% in the prior year, largely due to tax reforms.

Frequently Asked Questions

For the six months ended March 31, 2019, F5, Inc. demonstrated positive financial performance. Total net revenues increased by 3.0% year-over-year to $1.09 billion, primarily driven by growth in service revenues. Net income saw a significant increase of 24.7% to $247.0 million, indicating improved profitability. The company maintained strong gross margins and managed its operating expenses effectively.

The most significant strategic event announced was the definitive agreement to acquire Nginx, Inc. for approximately $670 million. This acquisition is expected to enhance F5's application services capabilities and expand its market reach. The company also adopted the new revenue recognition standard (ASC 606) effective October 1, 2018.

F5's balance sheet remains strong. As of March 31, 2019, the company had cash, cash equivalents, and investments totaling $1.62 billion. Notably, F5 has no long-term debt, indicating a robust financial position and flexibility to fund operations and strategic initiatives like the Nginx acquisition.

The Nginx acquisition was announced on March 9, 2019, for approximately $670 million. While the filing does not provide detailed pro-forma financial impacts, it notes the transaction is expected to close in the second calendar quarter of 2019. The company's strong cash reserves and lack of long-term debt suggest it has the capacity to fund this acquisition, though the exact funding mix (cash, debt, or other) is not fully detailed in this excerpt. The acquisition is a strategic move to expand F5's application services portfolio.