Summary
F5, Inc. (FFIV) reported financial results for the quarter and nine months ended June 30, 2020. Total net revenues saw a modest increase of 3.5% for the quarter and 5.1% for the nine months, driven by growth in software product and service revenues. The company successfully integrated the acquisition of Shape Security, Inc., which closed in January 2020, contributing to an increase in goodwill and operating expenses, particularly in sales and marketing and general and administrative costs. Despite increased operating expenses, net income saw a decline for both the three and nine-month periods compared to the prior year, largely due to higher costs associated with acquisitions and a decrease in other income. Financially, F5 strengthened its balance sheet with increased cash and equivalents, though overall investments decreased due to acquisition-related cash outflows. The company also secured a new $400 million term loan facility to finance the Shape acquisition, with no outstanding borrowings under its $350 million revolving credit facility as of June 30, 2020. Management noted the uncertainty surrounding the ongoing COVID-19 pandemic and its potential impact on future operations and financial performance, though no significant impact was observed in the current quarter's results.
Financial Highlights
55 data points| Revenue | $583.25M |
| Cost of Revenue | $106.04M |
| Gross Profit | $477.21M |
| R&D Expenses | $115.99M |
| Operating Expenses | $389.59M |
| Operating Income | $87.62M |
| Net Income | $69.87M |
| EPS (Basic) | $1.15 |
| EPS (Diluted) | $1.14 |
| Shares Outstanding (Basic) | 60.98M |
| Shares Outstanding (Diluted) | 61.41M |
Key Highlights
- 1Total net revenues increased by 3.5% to $583.3 million for the three months ended June 30, 2020, and by 5.1% to $1.74 billion for the nine months ended June 30, 2020.
- 2Net income for the three months ended June 30, 2020, decreased by 18.7% to $69.9 million, and for the nine months ended June 30, 2020, decreased by 30.9% to $229.8 million, compared to the prior year.
- 3The acquisition of Shape Security, Inc. closed in January 2020, adding $799.6 million in goodwill and significantly increasing intangible assets and total assets.
- 4Sales and marketing expenses increased by 8.1% for the quarter and 17.3% for the nine months, largely due to increased personnel costs associated with acquisitions and sales growth.
- 5Research and development expenses saw a slight decrease of 0.8% for the quarter but increased by 5.2% for the nine months, reflecting continued investment in product development.
- 6The company secured a $400 million term loan facility in January 2020 to finance the Shape acquisition, with $395.0 million outstanding as of June 30, 2020.
- 7Cash and cash equivalents increased to $714.3 million, but total cash, cash equivalents, and investments decreased to $1.21 billion as of June 30, 2020, primarily due to acquisition-related outflows.