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July 19, 2012

F5 Q3 Earnings Up 16 Percent, Projects Downbeat Outlook

Application delivery networking (ADN) experts at F5 Networks (News - Alert) have reported the company’s third quarter earnings of $72.3 million in net income – up 16 percent from $68.6 million from the previous quarter.

For the Q3 2012, F5 Networks reported revenue of $352.6 million – up 3.8 percent from $339.6 million in the prior quarter and 21.3 percent from $290.7 million in the third quarter of fiscal 2011.

F5’s stock was described by Reuters (News - Alert) this week as “a volatile, momentum-driven stock with a good track record beating market expectations, but trading after its post-close earnings report may be less dizzying than usual.”

The Seattle-based company’s stock is down 29 percent from its 52-week high on April 3 and reported earnings on April 18 above market expectations, Reuters said. However, F5 shares rose 7.5 percent to $98.61 a share on Wednesday.

While revenue growth slowed overall in the last quarter, regional earnings were historically consistent, according to John McAdam, president and CEO at F5.

“During the third quarter, F5’s revenue and earnings continued to grow sequentially and year over year despite a more cautious spending environment,” McAdam said in a company statement.  “Overall, revenue growth slowed in Q3, but revenue by region was generally consistent with historical patterns.”

Revenue growth was 57 percent for the Americas (primarily the U.S.) and 43 percent for EMEA and APJ, with EMEA contributing 21 percent of the total, McAdam said. During an earnings call this week, he declined to specify which regions were lagging most in sales, according to published reports.

F5’s security services were a key driver of product sales, according to McAdam. The company also saw continued uptake of its VIPRION 2400 Application Delivery Controller (ADC (News - Alert)) product, along with increased adoption of its TMOS 11 traffic management product.

Looking ahead, McAdam said F5 will roll out new products in the next six to nine months, including an updated version of its BIG-IP appliance segment, new policy enforcement capability for service providers and an eight-blade VIPRION chassis.

F5 said it added 100 employees in the third quarter of 2012 and increased deferred revenue to $434 million and generated $113 million in cash from operations.

“After repurchasing 425,088 shares of our outstanding common stock we ended the quarter with $1.1 billion in cash and investments,” McAdam said.

Due to a “cautious spending environment” in the current global economy, McAdam said F5 executives have set a revenue goal of $360 million to $370 million with a GAAP earnings target of $0.90 to $0.93 per diluted share for the fourth quarter of fiscal 2012, ending Sept. 30.

In related news, F5 recently announced that is has migrated its global online community, DevCentral, to a cloud environment, TMCnet reported.

DevCentral runs F5’s cloud-based ADN solution in the Bluelock cloud, while simultaneously incorporating the best IT practices for added scale, control, and security. Previously, DevCentral was deployed in a basic, one-size-fits all enterprise IT environment, and needed a new business plan to strengthen its global community and accelerate and optimize their DevOps initiative.

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Edited by Braden Becker

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