Summary
F5, INC. reported financial results for the quarter and six months ended March 31, 2020. Total net revenues showed growth, with a 7.1% increase for the quarter and 5.9% for the six-month period, driven by increased software and service revenues. The company completed the significant acquisition of Shape Security, Inc. in January 2020 for approximately $1 billion in cash, which is reflected in a substantial increase in goodwill and intangible assets on the balance sheet, as well as higher financing activities due to associated debt. Despite increased operating expenses, particularly in sales and marketing and R&D, the company maintained profitability. The company also noted the emerging impact of the COVID-19 pandemic, stating it had a net-neutral impact on results for the quarter ended March 31, 2020, but acknowledged the ongoing uncertainty. Key financial metrics indicate a shift in the company's asset base, with a significant increase in goodwill due to the Shape acquisition. While cash reserves decreased due to the acquisition, the company secured a new $400 million term loan and has a $350 million revolving credit facility, indicating a strong liquidity position. The adoption of new lease accounting standards (ASC 842) resulted in the recognition of significant operating lease right-of-use assets and liabilities on the balance sheet. The company's outlook remains cautiously optimistic, with ongoing monitoring of the COVID-19 pandemic's potential impacts.
Financial Highlights
55 data points| Revenue | $583.45M |
| Cost of Revenue | $101.24M |
| Gross Profit | $482.21M |
| R&D Expenses | $109.03M |
| Operating Expenses | $398.51M |
| Operating Income | $83.70M |
| Net Income | $61.38M |
| EPS (Basic) | $1.01 |
| EPS (Diluted) | $1.00 |
| Shares Outstanding (Basic) | 60.87M |
| Shares Outstanding (Diluted) | 61.08M |
Key Highlights
- 1Total net revenues increased 7.1% year-over-year for the three months ended March 31, 2020, reaching $583.4 million.
- 2The company completed the acquisition of Shape Security, Inc. for approximately $1.0 billion in cash on January 24, 2020, significantly increasing Goodwill and Intangible Assets.
- 3Operating expenses increased significantly, with Sales and Marketing up 26.0% and R&D up 13.2% for the quarter, partly due to increased personnel costs and the Shape acquisition.
- 4Net income decreased to $61.4 million for the quarter ended March 31, 2020, compared to $116.1 million in the prior year, impacted by higher operating expenses and a significant increase in income tax provision.
- 5The company took on a new $400 million Term Loan Facility and established a $350 million Revolving Credit Facility to finance the Shape acquisition and for general corporate purposes.
- 6Adoption of new lease accounting standards (ASC 842) resulted in the recognition of $327.4 million in operating lease right-of-use assets and $404.5 million in total operating lease liabilities as of March 31, 2020.
- 7The company stated that COVID-19 had a net-neutral impact on its results for the quarter ended March 31, 2020, but acknowledged the situation remains uncertain and is monitoring potential impacts.