Financial Data and Key Metrics Changes - The company reported Q2 revenue of $703 million, reflecting an 11% year-over-year growth, with non-GAAP EPS of $2.53 per share, exceeding the top end of guidance [23][57] - GAAP operating margin was 15.1%, while non-GAAP operating margin was 27.2% [27] - Cash flow from operations was $141 million, with capital expenditures of $11 million [28] Business Line Data and Key Metrics Changes - Global Services revenue grew 8% to $363 million, driven by strong maintenance renewals [23] - Systems revenue reached $209 million, representing a significant growth of 43% year-over-year [24] - Software revenue declined by 13% year-over-year to $132 million, primarily due to delays in new term-based subscriptions [24][44] Market Data and Key Metrics Changes - Revenue from the Americas grew 7% year-over-year, representing 54% of total revenue; EMEA grew 22%, accounting for 27% of revenue; APAC grew 9%, making up 18% of revenue [55] - Enterprise customers represented 67% of product bookings, while service providers and government customers accounted for 13% and 20%, respectively [26] Company Strategy and Development Direction - The company is focused on controlling costs and preparing for a potential recovery in customer spending, including a reduction of approximately 620 employees, or 9% of the workforce [19] - The strategy includes intensifying investments in software and hybrid multi-cloud solutions to drive long-term growth [34][52] - The company expects low-to-mid single-digit revenue growth for FY 2023, down from previous forecasts of 9% to 11% [15][61] Management's Comments on Operating Environment and Future Outlook - Management believes the current demand environment is temporary, with customer spending delays attributed to budget scrutiny rather than competitive pressures [10][16] - The company anticipates that as customers resume normal investment levels, it will be well-positioned to capture growth opportunities [62] - Management noted that the majority of software revenue comes from term subscriptions, which have seen a decline, impacting overall software revenue [14][44] Other Important Information - Deferred revenue increased by 12% year-over-year to $1.8 billion, driven by higher maintenance renewals [59] - The company plans to repurchase at least $250 million worth of shares during Q3, committing to return cash to shareholders [85] Q&A Session Summary Question: What should be assumed for services growth now? - The company did not update the mid-single-digit outlook for services but expects strong contributions as customers continue to sweat assets [36] Question: Which customer industry group caused the majority of the drag on guidance? - The pullback in spending has been broad across all verticals, with service providers particularly affected due to budget reductions [66][92] Question: How has new business declined from last quarter? - New business sales saw a slight acceleration in decline, with some renewals performing below expectations [70][95] Question: What were the expectations for software renewals? - Software renewals performed largely as expected, but there were some underperforming true forwards [71][80] Question: How is the company addressing the cost structure? - The company is reducing costs while focusing on high-return projects, ensuring a leaner operation to capture future growth opportunities [112][125]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-26041 F5, INC. (Exact name of registrant as specified in its charter) Washington 91-1714307 (State or other jurisdicti ...

F5, Inc. (NASDAQ:FFIV) Q1 2023 Earnings Conference Call January 24, 2023 4:30 PM ET Company Participants Suzanne DuLong - Head of IR François Locoh-Donou - President and CEO Frank Pelzer - Executive Vice President and CFO Conference Call Participants Sami Badri - Credit Suisse Tim Long - Barclays Alex Henderson - Needham & Company Samik Chatterjee - JPMorgan Amit Daryanani - Evercore ISI Meta Marshall - Morgan Stanley James Fish - Piper Sandler Victor Chiu - Raymond James Thomas Blakey - KeyBanc Capita ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 000-26041 F5, Inc. (Exact name of Registrant as specified in its charter) Washington 91-1714307 (State or other juri ...

F5, Inc. (NASDAQ:FFIV) Q4 2022 Results Conference Call October 25, 2022 4:30 PM ET Company Participants Suzanne DuLong - Head of IR Francois Locoh-Donou - President and CEO Frank Pelzer - Executive Vice President and CFO Conference Call Participants Tim Long - Barclays Sami Badri - Credit Suisse Alex Henderson - Needham Samik Chatterjee - JPMorgan Paul Silverstein - Cowen Meta Marshall - Morgan Stanley James Fish - Piper Sandler Victor Chiu - Raymond James Jim Suva - Citigroup Operator Good afternoon ladies ...

Financial Position - The balance of capitalized contract acquisition costs at the end of June 30, 2022, was $76.674 million, a slight decrease from $75.604 million at the end of June 30, 2021[45]. - The balance of deferred revenue at the end of June 30, 2022, was $1.637 billion, compared to $1.441 billion at the end of June 30, 2021, reflecting an increase of 13.6%[47]. - Cash and cash equivalents as of June 30, 2022, were $541.88 million, down from $580.98 million as of September 30, 2021[85]. - Unbilled receivables increased to $277.77 million as of June 30, 2022, from $215.40 million as of September 30, 2021[87]. - Intangible assets decreased to $211.67 million as of June 30, 2022, from $237.18 million as of September 30, 2021[88]. - Accrued liabilities decreased to $291.61 million as of June 30, 2022, from $341.49 million as of September 30, 2021[90]. - The company reported total debt investments of $296.396 million as of June 30, 2022, with unrealized losses of $2.252 million[58]. - As of June 30, 2022, the outstanding principal amount under the Term Loan Facility was $355.0 million, with a weighted average interest rate of 2.092% for the three months ended June 30, 2022[97]. - The Company had no outstanding borrowings under the Revolving Credit Facility as of June 30, 2022, maintaining an available borrowing capacity of $350.0 million[99]. Revenue and Performance - The total non-cancelable remaining performance obligations under contracts with customers as of June 30, 2022, was approximately $1.6 billion, with an expected revenue recognition of 64.1% over the next 12 months[48]. - The company expects to recognize revenues on approximately 22.0% of remaining performance obligations in year two and the remaining balance thereafter[48]. - Total net product revenue for the three months ended June 30, 2022, was $326.5 million, compared to $309.9 million for the same period in 2021, representing a 5.1% increase[132]. - Revenue from the Americas for the three months ended June 30, 2022, was $387.1 million, an increase from $369.4 million in the same period of 2021[131]. Acquisitions - The Company acquired Threat Stack for approximately $68.9 million in cash, enhancing its cloud security capabilities[69]. - The total assets acquired from Threat Stack amounted to $79.5 million, with goodwill of $43.96 million[71]. - The Company acquired Volterra for approximately $427.2 million in cash, creating an edge platform for enterprises[77]. - The total assets acquired from Volterra amounted to $432.37 million, with goodwill of $350.86 million[80]. Debt and Financing - The Term Loan Facility matures on January 24, 2023, with quarterly installments of 1.25% of the original principal amount[94]. - The Company incurred $2.2 million in debt issuance costs related to the Term Loan Facility, reducing the carrying value of the debt[92]. - The margin for LIBOR-based loans was 1.125% as of June 30, 2022[93]. - The Term Loan Facility requires a leverage ratio financial covenant, which may affect future interest rates on outstanding borrowings based on company performance[181]. Tax and Compliance - The effective tax rate for the three months ended June 30, 2022, was 18.0%, up from 4.9% for the same period in 2021[117]. - The Company had $69.5 million of unrecognized tax benefits as of June 30, 2022, which could affect the effective tax rate if recognized[118]. - The Company anticipates changes in its existing liabilities for unrecognized tax benefits within the next twelve months, but does not expect these changes to be material[118]. - The Company is currently under audit by various states and foreign jurisdictions for multiple fiscal years, which may impact its financial condition[119]. - As of June 30, 2022, the Company was in compliance with all financial covenants related to its debt facilities[95]. Shareholder Activities - The Company repurchased a total of 2.5 million shares of common stock at an average price of $199.90 per share through Accelerated Share Repurchase agreements[121]. - The Company has $272 million remaining authorized for share repurchases under its current program as of June 30, 2022[129]. - The company maintains a share repurchase program that allows for acquisitions in private transactions or open market purchases, with no minimum purchase requirement[137]. Operational Insights - The Company recorded a restructuring charge of $7.9 million in the first quarter of fiscal 2022 due to a reduction in force affecting approximately 70 positions[133]. - The total lease expense for the three months ended June 30, 2022, was $17.7 million, compared to $19.1 million for the same period in 2021[101]. - The Company expects to receive approximately $14.3 million in sublease income, with $1.9 million to be received for the remainder of fiscal 2022[103]. - The future operating lease payments total $354.6 million, with the largest payment of $48.3 million due in 2023[103]. - The weighted average remaining lease term was 9.5 years as of June 30, 2022[103]. Risk Management - The company is actively monitoring inflation but does not believe it has had a material effect on its business or financial condition[182]. - The company is subject to interest rate risk, with potential adverse impacts on the fair value of its fixed income portfolio due to market interest rate fluctuations[179]. - The company has not noted any adverse impacts to interest rates that would materially affect interest owed on principal borrowings as of June 30, 2022[181]. - The company has not experienced significant foreign currency transaction gains or losses, as most sales and expenses are in U.S. dollars[183]. Internal Controls - There were no changes in internal control over financial reporting during the quarter ended June 30, 2022, that materially affected the company's reporting[187]. - The company’s disclosure controls and procedures were evaluated as effective as of June 30, 2022, ensuring timely decision-making regarding required disclosures[186].

Financial Data and Key Metrics Changes - In Q3, the company reported revenue of $674 million, reflecting a 4% year-over-year growth, with product revenue growth of 5% [18] - Software revenue grew 38% to $179 million, while systems revenue declined 18% year-over-year to $148 million due to supply chain challenges [19] - GAAP net income for the quarter was $83 million or $1.37 per share, while non-GAAP net income was $155 million or $2.57 per share [24] Business Line Data and Key Metrics Changes - Software represented 55% of product revenue, marking the second consecutive quarter where the majority of product revenue came from software [18] - Subscription-based revenue contributed 82% of total software revenue, a new high, with recurring sources totaling 72% of revenue, up from 66% in the prior year [20] - Global services revenue increased by 2% year-over-year to $348 million [19] Market Data and Key Metrics Changes - The Americas region delivered 5% revenue growth year-over-year, representing 57% of total revenue, while EMEA declined 7% and APAC grew 15% [21] - Enterprise customers accounted for 70% of product bookings, with service providers at 18% and government customers at 12% [21] Company Strategy and Development Direction - The company is focused on expanding its solutions portfolio and consumption models to adapt to macroeconomic uncertainties and inflation [17] - The strategic emphasis is on software growth drivers, including BIG-IP, NGINX, and F5 distributed cloud services [17] - The company anticipates improvements in systems revenue starting in Q2 of fiscal 2023 due to supply chain enhancements [9] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in Q3 but acknowledged potential pressures on customer budgets due to macroeconomic factors [16] - The company is preparing for a cautious environment by monitoring customer signals and adjusting investments accordingly [17] - Management expressed confidence in sustained revenue and earnings growth due to successful business transformation efforts [17] Other Important Information - The company authorized an additional $1 billion for its share repurchase program, in addition to the remaining $272 million from the existing program [30] - Deferred revenue increased 14% year-over-year to $1.64 billion, driven by subscriptions and SaaS bookings growth [26] Q&A Session Summary Question: Clarification on backlog and software growth trajectory - The backlog was significantly higher in Q3 compared to Q2, with specific numbers to be released in the October call [33] - Management is optimistic about software growth drivers but will provide more guidance for fiscal 2023 in October [34][36] Question: Service provider reliance on F5 portfolio - Service providers are increasingly relying on F5 due to investments in cloud-native functions and capacity increases for 4G and 5G traffic [40][42] Question: Software metrics and deal flow - Management is tracking software metrics internally but is not ready to release them externally yet [58] - Both true-forwards and new deals contributed to software growth, but specific splits were not provided [63] Question: Customer buying behavior and pipeline activity - No concerns about order cancellations were noted, and the pipeline for Q4 is strong with large deals expected [66][70] - Management is cautious about potential impacts of macroeconomic factors on customer investment prioritization [71] Question: Internal preparations for macro changes - The company has slowed down hiring and delayed some investments in response to macroeconomic uncertainties [77] - Demand signals remain strong, and incentives for software sales will continue to be robust [78] Question: Back-end loaded quarter and DSO - The back-end loading was attributed to strong demand and some orders being pulled forward to avoid price increases [83] - DSOs are expected to normalize in the back half of FY '23 as shipping schedules improve [82]

| --- | --- | |-----------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | Q3FY22 Results | | | PERIOD ENDING June 30, 2022 | | | Published July 25, 2022 | | Forward-looking statements This presentation contains forward-looking statements including, among other things, statements regarding the continuing strength and momentum of F5's business, future financial performance including revenue, revenue growth and earnings growth; demand for application security and delivery services, and ...

Financial Performance - The company recorded net income of $56.236 million for the three months ended March 31, 2022, an increase from $43.241 million in the same period of 2021, resulting in a basic net income per share of $0.93[127]. - Total net revenues decreased by 1.7% to $634.2 million for the three months ended March 31, 2022, compared to $645.3 million in the prior year, while increasing by 4.0% to $1.32 billion for the six months ended March 31, 2022, compared to $1.27 billion in the prior year[146]. - Product revenues decreased by 3.8% to $297.5 million for the three months ended March 31, 2022, compared to $309.2 million in the prior year, but increased by 7.3% to $640.7 million for the six months ended March 31, 2022, compared to $597.2 million in the prior year[147]. - The effective tax rate for the three months ended March 31, 2022, was 22.7%, compared to 17.0% for the same period in 2021, primarily due to the tax impact of stock-based compensation[119]. - The effective tax rate was 22.7% for the three months ended March 31, 2022, compared to 17.0% for the same period in the prior year[161]. Revenue and Sales - Total net product revenue for the three months ended March 31, 2022, was $297.518 million, compared to $309.189 million for the same period in 2021[132]. - Revenue from the Americas for the three months ended March 31, 2022, was $358.555 million, up from $346.052 million in the same period of 2021[130]. - International revenues represented 46.5% and 45.5% of total net revenues for the three and six months ended March 31, 2022, respectively, down from 49.9% and 49.3% in the same periods of the prior year[146]. - Systems revenue for the three months ended March 31, 2022, was $145.975 million, down from $200.950 million in the same period of 2021[132]. - Systems revenue decreased to $146.0 million for the three months ended March 31, 2022, from $200.9 million in the prior year, while software revenue increased to $151.5 million from $108.2 million in the prior year[148]. Acquisitions and Investments - The Company acquired Threat Stack for approximately $68.9 million in cash, enhancing its cloud security capabilities[71]. - The total assets acquired from Threat Stack amounted to $79.5 million, with net assets acquired of $68.9 million[73]. - The Company acquired Volterra for approximately $427.2 million in cash, aimed at creating a security-first edge platform[79]. - The total assets acquired from Volterra amounted to $432.4 million, with net assets acquired of $427.1 million[82]. - The company continues to evaluate possible acquisitions or investments in strategic businesses, products, or technologies[140]. Debt and Financing - The Company entered into a Term Credit Agreement for a senior unsecured term loan facility of $400.0 million, primarily used for the acquisition of Shape[94]. - As of March 31, 2022, the outstanding principal amount under the Term Loan Facility was $360.0 million, with a weighted average interest rate of 1.282%[99]. - The Term Loan Facility matures on January 24, 2023, with quarterly installments of 1.25% of the original principal amount[96]. - The Company had no outstanding borrowings under the Revolving Credit Facility as of March 31, 2022, with available borrowing capacity of $350.0 million[101]. - The Term Loan Facility had an outstanding principal amount of $360.0 million as of March 31, 2022, with a financial covenant requiring maintenance of a leverage ratio[172]. Assets and Liabilities - Cash and cash equivalents as of March 31, 2022, were $586.5 million, an increase from $581.0 million as of September 30, 2021[87]. - Inventories as of March 31, 2022, totaled $27.9 million, up from $22.1 million as of September 30, 2021[88]. - Unbilled receivables increased to $251.1 million as of March 31, 2022, compared to $215.4 million as of September 30, 2021[89]. - Accrued liabilities decreased to $301.2 million as of March 31, 2022, from $341.5 million as of September 30, 2021[92]. - As of March 31, 2022, cash and cash equivalents, short-term investments, and long-term investments totaled $922.0 million, a decrease of $121.4 million from $1,043.4 million as of September 30, 2021[164]. Operating Expenses - Operating expenses are primarily driven by personnel and related overhead expenses, with significant monitoring of marketing, travel, and professional fees[138]. - The Company’s operating lease expense for the three months ended March 31, 2022, was $18.5 million, compared to $18.0 million for the same period in 2021[103]. - Research and development expenses decreased by $4.6 million, or 3.3%, for the three months ended March 31, 2022, but increased by $11.5 million, or 4.5%, for the six months ended March 31, 2022[156]. - General and administrative expenses decreased by $9.3 million, or 11.9%, for the three months ended March 31, 2022, and by $6.8 million, or 4.8%, for the six months ended March 31, 2022[157]. - Sales and marketing expenses decreased by $16.1 million, or 6.6%, for the three months ended March 31, 2022[155]. Restructuring and Impairments - The Company initiated a restructuring plan in the first quarter of fiscal 2022, resulting in a restructuring charge of $7.9 million[133]. - The Company recorded an impairment of $6.2 million against the Shape trade name intangible asset in Q1 fiscal 2022[66]. - In Q1 fiscal 2021, the Company recorded an impairment of $23.5 million against the operating lease right-of-use asset related to the exit of six floors in its corporate headquarters[67]. - A restructuring charge of $7.9 million was recorded for the six months ended March 31, 2022, related to workforce reduction[158]. Deferred Revenue and Performance Obligations - The total deferred revenue balance at the end of March 31, 2022, was $1.6 billion, up from $1.4 billion at the end of March 31, 2021, representing a growth of about 17%[49]. - The company expects to recognize revenues on approximately 65.2% of the remaining performance obligations over the next 12 months, which amounts to approximately $1.04 billion[50]. - Deferred revenues increased in the second quarter of fiscal year 2022 due to growth in the subscriptions business[140]. Tax and Compliance - The Company had $66.2 million of unrecognized tax benefits as of March 31, 2022, which could affect the effective tax rate if recognized[120]. - The Company is currently under audit by various states and foreign jurisdictions for multiple fiscal years, which may impact future financial statements[121]. - The Company anticipates changes in its existing liabilities for unrecognized tax benefits within the next twelve months, but does not expect these changes to be material[120]. - The Company was in compliance with all financial covenants as of March 31, 2022, including maintaining a leverage ratio[97]. Market Conditions and Risks - The company expects challenging global supply chain conditions, particularly semiconductor constraints, to impact revenues from systems sales[138]. - Cash from operations may be affected by risks such as the COVID-19 pandemic, but no significant adverse impacts on interest rates have been noted as of March 31, 2022[178]. - The company is actively monitoring inflation but does not believe it has had a material effect on its business or financial condition[179].

| --- | --- | |------------------------------|-------| | | | | | | | | | | | | | | | | | | | Q2FY22 Results | | | | | | PERIOD ENDING March 31, 2022 | | | Published April 26, 2022 | | Forward-looking statements This presentation contains forward-looking statements including, among other things, statements regarding the continuing strength and momentum of F5's business, future financial performance including revenue, revenue growth and earnings growth; demand for application security and delivery services, a ...