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F5, INC. 8-K Report, Financial Results (Apr 29, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed April 29, 2024
Period End
April 29, 2024
Security
FFIV
In the record · 2016–202610-K1010-Q338-K108

FFIV filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 108 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · May ’19May ’19
  2. Deal closed8-K · Jan ’21Jan ’21
  3. Leadership change8-K · Oct ’22Oct ’22
  4. Leadership change8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed April 29, 2024. Cited figures are marked; the original filing is the authoritative source.

F5, Inc. (FFIV) reported fiscal Q2 2024 results (quarter ended March 31, 2024) that showed a mixed picture: total revenue fell 3% year over year to $681 milliona, but profitability improved sharply.

GAAP operating margin expanded to 20.5% from 15.1%, and non-GAAP operating margin rose to 30.9% from 27.2%. GAAP diluted EPS was $2.00b versus $1.34 a year earlier, and non-GAAP diluted EPS was $2.91 versus $2.53. The top-line weakness was concentrated in Systems, which declined 32% to $142 million, while Software grew 20% to $159 million on 28% subscription growth and Global Services grew 5% to $381 million.

Management signaled a cautious demand environment, noting that customers are forecasting largely flat IT budgets for calendar 2024. Guidance for fiscal 2024 revenue is flat to down 2%c versus fiscal 2023, consistent with the prior outlook. The company raised its fiscal 2024 non-GAAP EPS growth outlook to 7% to 9%, up from 6% to 8%.

For fiscal Q3 2024, F5 expects revenue of $675 million to $695 milliond and non-GAAP EPS of $2.89 to $3.01. Capital allocation was active during the first half of fiscal 2024, with $250 million spent on share repurchases versus $40 million a year earlier. Cash and equivalents rose to $903 million, and deferred revenue, which supports future subscription revenue visibility, totaled about $1.8 billion.

Investors should weigh the strong margin and subscription trends against the shrinking hardware business and the flat top-line outlook. Non-GAAP figures exclude significant stock-based compensation, so GAAP results remain the primary benchmark.

02—Key points

Key Highlights

  1. Revenue declined 3% year over year to $681 million, with Systems down 32% to $142 million offsetting growth in Software (+20% to $159 million) and Global Services (+5% to $381 million).
  2. Software subscription revenue grew 28%, indicating continued strength in recurring renewals and supporting revenue visibility.
  3. GAAP operating margin expanded to 20.5% from 15.1%, and non-GAAP operating margin rose to 30.9% from 27.2%, reflecting lower operating expenses, particularly in sales and marketing and R&D.
  4. GAAP diluted EPS was $2.00 versus $1.34 a year ago; non-GAAP diluted EPS was $2.91 versus $2.53.
  5. Fiscal 2024 non-GAAP EPS growth outlook was raised to 7%–9% from 6%–8%, while revenue guidance of flat to down 2% was reaffirmed.
  6. Q3 FY2024 guidance calls for revenue of $675–$695 million and non-GAAP EPS of $2.89–$3.01.
  7. Share repurchases totaled $250 million in the first half of fiscal 2024, up from $40 million a year earlier, and cash and equivalents increased to $903 million.

03—Questions

Frequently Asked Questions

  1. Why did revenue decline even though software and services grew?

    The decline was driven by Systems revenue, which fell 32% to $142 million. Software (+20%) and Global Services (+5%) grew, but they did not fully offset the hardware decline. Management attributed the softness to customers being cautious and forecasting flat IT budgets for calendar 2024.

  2. How did profitability improve despite lower revenue?

    Operating expenses fell meaningfully year over year, with total operating expenses declining to $400 million from $441 million. Sales and marketing and R&D were the main drivers. Gross margin also improved, with GAAP gross margin at 79.3% versus 77.9% and non-GAAP gross margin at 82.1% versus 80.4%.

  3. What is the outlook for the rest of fiscal 2024?

    F5 expects fiscal 2024 revenue to be flat to down 2% versus fiscal 2023, unchanged from its prior outlook. It raised its non-GAAP EPS growth outlook to 7%–9%. For fiscal Q3 2024, it expects revenue of $675–$695 million and non-GAAP EPS of $2.89–$3.01.

  4. How much do the non-GAAP figures differ from GAAP results?

    The differences are substantial. For Q2 FY2024, GAAP net income was $119 million versus non-GAAP net income of $173 million. The gap is mainly stock-based compensation of $55 million, plus amortization of intangibles, acquisition-related charges, and facility-exit items, net of tax effects. Investors should consider GAAP results as the primary measure, with non-GAAP figures as a supplement.

  5. What is the company doing with its cash?

    In the first six months of fiscal 2024, F5 repurchased $250 million of common stock, compared with $40 million in the prior-year period, and cash and equivalents rose to $903 million. It also spent about $33 million on business acquisitions and $19 million on capital expenditures. Operating cash flow was $387 million, up from $299 million.

04—Continue

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