Summary
F5, INC. (FFIV) reported a solid increase in net revenues for the quarter ended December 31, 2021, driven by growth in both product and service segments. Total net revenues rose by 10.0% year-over-year to $687.1 million. Product revenue saw a significant 19.1% increase, primarily fueled by strong software sales, while service revenue grew by 2.2%. The company successfully integrated the Threat Stack acquisition, which closed in October 2021, enhancing its cloud security capabilities. Despite facing supply chain constraints that impacted hardware sales, F5 demonstrated robust financial performance, with net income increasing to $93.6 million from $87.7 million in the prior year's comparable quarter.
Financial Highlights
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Financial Statements
Beta
| Revenue | $687.10M |
| Cost of Revenue | $135.07M |
| Gross Profit | $552.03M |
| R&D Expenses | $130.27M |
| Operating Expenses | $437.88M |
| Operating Income | $114.15M |
| Net Income | $93.56M |
| EPS (Basic) | $1.54 |
| EPS (Diluted) | $1.51 |
| Shares Outstanding (Basic) | 60.81M |
| Shares Outstanding (Diluted) | 61.88M |
Key Highlights
- 1Total net revenues increased by 10.0% year-over-year to $687.1 million for the quarter ended December 31, 2021.
- 2Net product revenues grew by 19.1% to $343.1 million, driven significantly by software revenue.
- 3Net income rose to $93.6 million ($1.51 per diluted share) from $87.7 million ($1.41 per diluted share) in the prior year.
- 4The company completed the acquisition of Threat Stack, Inc. on October 1, 2021, to bolster its cloud security offerings.
- 5Operating expenses as a percentage of net revenue increased slightly to 63.7% from 62.7% in the prior year, impacted by higher R&D and S&M expenses and a restructuring charge.
- 6F5 repurchased $125.0 million of its common stock during the quarter, reflecting a continued commitment to shareholder returns.
- 7The company reported $1.6 billion in remaining performance obligations as of December 31, 2021, indicating future revenue visibility.
Frequently Asked Questions
F5's revenue growth was driven by increases in both product and service revenues. Notably, product revenue saw a significant 19.1% increase, largely due to strong software sales, including subscription-based offerings and software-as-a-service solutions. Service revenues also grew, supported by an expanding installed base of products.
The acquisition of Threat Stack, which closed on October 1, 2021, is expected to enhance F5's cloud security capabilities. While the direct financial impact on the reported quarter was not material on a pro forma basis, the company acquired $10.6 million in deferred revenue and recognized $43.9 million in goodwill related to the acquisition. Threat Stack's results have been included in F5's consolidated financial statements since the acquisition date.
F5 mentioned global supply chain constraints, particularly concerning components for hardware-based solutions, are expected to impact the ability to meet customer demand and could delay hardware sales. The company also recorded a $7.9 million restructuring charge related to a reduction in force, which contributed to the increase in operating expenses.
F5 maintains a strong liquidity position, with $935.9 million in cash, cash equivalents, and investments as of December 31, 2021. The company also has $350.0 million in available borrowing capacity under its revolving credit facility. Management anticipates that its current resources, anticipated operating cash flows, and available credit will be sufficient to meet its liquidity needs.