Revenue and Performance Obligations - As of March 31, 2025, the total non-cancelable remaining performance obligations under the Company's contracts with customers was $1.9 billion, with an expected revenue recognition of 62.4% over the next 12 months[38]. - The Company recognized revenues of $726.1 million related to the opening balance of deferred revenue during the six months ended March 31, 2025[37]. - The Company expects to recognize 22.9% of the remaining performance obligations in year two following the reporting date[38]. - The Company’s total revenues for the six months ended March 31, 2025, were $1,497.6 million, up from $1,373.9 million in the same period of 2024[89]. Deferred Revenue and Cash Flow - The balance of deferred revenue increased to $1.92 billion as of March 31, 2025, up from $1.81 billion at the end of the previous period[37]. - As of March 31, 2025, the Company reported total cash, cash equivalents, and restricted cash of $1,261,257,000, an increase from $1,078,340,000 as of September 30, 2024, representing a growth of approximately 16.9%[56]. Investments and Financial Instruments - Interest income from cash, cash equivalents, and investments was $9.3 million for the three months ended March 31, 2025, compared to $8.3 million for the same period in 2024[50]. - The fair value of total investments as of March 31, 2025, was $636.6 million, including $624.1 million in debt investments[47]. - The Company reported no credit losses on any investments within its portfolio as of March 31, 2025[51]. - The Company has updated its accounting policies for investments and fair value of financial instruments to include equity investments with no readily determinable fair value[28]. Acquisitions and Goodwill - The Company recorded $7.5 million of goodwill from an acquisition completed in the second quarter of fiscal 2025, which did not materially impact operating results[54]. - For the second quarter of fiscal 2024, the Company completed two acquisitions, resulting in $23.6 million of goodwill, with no material impact on operating results[55]. Inventory and Assets - Total inventories decreased from $76,378,000 as of September 30, 2024, to $67,880,000 as of March 31, 2025, reflecting a reduction of approximately 11.2%[57]. - Other current assets increased from $569,467,000 as of September 30, 2024, to $629,394,000 as of March 31, 2025, marking an increase of approximately 10.5%[58]. - The Company’s intangible assets decreased from $111,576,000 as of September 30, 2024, to $92,651,000 as of March 31, 2025, reflecting a decline of approximately 17%[59]. Liabilities and Lease Obligations - The Company’s total operating lease liabilities as of March 31, 2025, were $266,818,000, compared to $249,564,000 as of September 30, 2024, indicating an increase of approximately 6.9%[66]. - The Company’s accrued liabilities decreased from $300,076,000 as of September 30, 2024, to $279,910,000 as of March 31, 2025, a reduction of approximately 6.7%[60]. - Operating lease expenses for the three months ended March 31, 2025, were $16,656,000, slightly down from $16,779,000 for the same period in 2024[65]. - The Company expects to receive sublease income of $9.5 million, with $1.9 million expected for the remainder of fiscal 2025 and $7.6 million over the following eight fiscal years[67]. Tax and Audit - The effective tax rate for the three and six months ended March 31, 2025, was 15.0% and 18.0%, respectively, compared to 18.4% and 19.6% for the same periods in 2024, primarily due to non-recurring benefits related to foreign operations and stock-based compensation[80]. - As of March 31, 2025, the Company had $90.9 million of unrecognized tax benefits that could affect the effective tax rate if recognized[81]. - The Company is currently under audit by the Internal Revenue Service for fiscal year 2019 and various states for fiscal years 2018 through 2023, which may impact its financial condition[82]. Net Income and Share Repurchase - For the three months ended March 31, 2025, the Company reported net income of $145.5 million, resulting in a basic net income per share of $2.51 and diluted net income per share of $2.48[86]. - The Company repurchased 481,000 shares for $125.0 million at an average price of $259.46 per share during the three months ended March 31, 2025, with a total of $1,172.4 million remaining authorized for share repurchases[84]. Revenue by Region - Revenues from the Americas for the three months ended March 31, 2025, totaled $396.1 million, compared to $385.6 million in the same period of 2024, with the U.S. contributing $373.8 million[89]. Restructuring Charges - The Company recorded restructuring charges of $11.3 million for the three months ended December 31, 2024, compared to $9.8 million for the same period in 2023[90]. Major Customers - Major customers Ingram Micro, Inc. and Synnex Corporation accounted for 16.9% and 17.4% of total net revenue for the three months ended March 31, 2025, respectively[89].

Q2FY25 Financial Performance - F5's Q2FY25 revenue reached $731 million, a 7% increase year-over-year[8] - Product revenue grew by 12% year-over-year[12] - Systems revenue increased significantly by 27% year-over-year[13] - Non-GAAP EPS grew by 18% year-over-year[14] - Q2FY25 GAAP EPS was $2.48, compared to $2.00 in Q2FY24[8] - Q2FY25 Non-GAAP EPS was $3.42, compared to $2.91 in Q2FY24[9] Revenue Breakdown - Software revenue accounted for 27% of total revenue in Q2FY25[51] - Subscription software constituted 87% of the total software revenue in Q2FY25[54, 55] - Recurring revenue (subscription, SaaS & managed services, and maintenance) accounted for 72% of total revenue, amounting to $525 million[60] Geographic Performance - The Americas contributed 54% of the revenue, with a 3% year-over-year growth[62] - EMEA accounted for 29% of the revenue, showing a 20% year-over-year growth[62] - APAC contributed 17% of the revenue, with a 3% year-over-year growth[62] FY25 Outlook - F5 is raising its FY25 total revenue growth outlook to 6.5% to 7.5% year-over-year[16] - The company is also raising its FY25 Non-GAAP EPS growth outlook to 8% to 10% year-over-year[16]

Group 1 - The core thesis on F5, Inc. (NASDAQ: FFIV) is neutral, highlighting strong systems growth in 2Q25 and an optimistic outlook for FY25, but concerns about reliance on 2H25 performance [1] - Management's positive sentiment regarding FY25 suggests potential for continued growth, yet the dependency on the latter half of the year raises caution [1] Group 2 - The analysis emphasizes a blend of value investing principles with a focus on long-term growth, indicating a strategy of purchasing quality companies at a discount to their intrinsic value [1]

Group 1 - The ongoing earnings season has seen only a third of S&P 500 companies report their Q1 2025 results, with 73% of those exceeding Wall Street's expectations according to FactSet [1] - The analysis covers various sectors, including Technology, Commodities, and Energy, reflecting the industry's adaptation to the energy transition [1] Group 2 - No specific stock positions or plans to initiate positions in the mentioned companies are disclosed, indicating an unbiased analysis [2] - The article emphasizes that past performance does not guarantee future results, highlighting the importance of independent evaluation for investors [3]

Core Insights - F5, Inc. reported strong second-quarter fiscal 2025 results, with non-GAAP earnings of $3.42 per share, exceeding estimates by 10.3% and management's guidance [1] - Revenues for the quarter reached $731 million, surpassing the consensus mark by 2% and increasing 7.3% year-over-year [2] Financial Performance - Product revenues, accounting for 46.1% of total revenues, grew 12% year-over-year to $337.2 million, driven by a 27% increase in Systems revenues to $179 million [3] - Software revenues remained flat at $158 million compared to the previous year [4] - Global Services revenues, making up 53.9% of total revenues, increased 3% year-over-year to $393.9 million [4] - Non-GAAP gross margin expanded by 100 basis points to 83.1% from 82.1% a year ago [5] Balance Sheet & Cash Flow - F5 ended the quarter with cash and short-term investments of $1.26 billion, up from $1.16 billion in the previous quarter [6] - The company generated operating cash flow of $257 million, an increase from $203 million in the prior quarter [6] - F5 repurchased shares worth $252.1 million during the quarter [6] Guidance - F5 raised its fiscal 2025 revenue growth forecast to 6.5-7.5%, up from the previous 6-7% estimate [7] - Non-GAAP earnings per share growth is now projected at 8-10%, compared to the earlier estimate of 6.5-8.5% [8] - For the third quarter of fiscal 2025, F5 expects revenues between $740 million and $760 million [8] - The projected non-GAAP EPS for the third quarter is in the range of $3.41-$3.53 [9]

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to increase significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] - Michael has over 10 years of experience in analyzing companies, particularly in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] Group 2 - The Investing Group Deep Value Returns, led by Michael, offers insights through its concentrated portfolio of value stocks, timely updates on stock picks, and a weekly webinar for live advice [3] - The group provides "hand-holding" support for both new and experienced investors, fostering an active and vibrant community accessible via chat [3] - Seeking FCF is associated with Michael Wiggins De Oliveira, indicating a collaborative approach in investment strategies [3]

Financial Data and Key Metrics Changes - F5 reported a total revenue growth of 7% year-over-year, reaching $731 million, with product revenue growing by 12% [6][29] - Non-GAAP EPS for Q2 was $3.42, reflecting an 18% increase year-over-year, exceeding guidance by $0.28 [6][37] - GAAP gross margin was 80.7%, while non-GAAP gross margin improved to 83.1%, up 98 basis points year-over-year [34][35] Business Line Data and Key Metrics Changes - Systems revenue grew by 27% year-over-year, totaling $179 million, driven by hardware refresh activities [30][31] - Software revenue remained flat at $158 million, with subscription-based software revenue down 2% year-over-year [30][32] - Global services revenue increased by 3% to $394 million, representing 54% of total revenue [29][30] Market Data and Key Metrics Changes - Revenue from The Americas grew by 3%, accounting for 54% of total revenue, while EMEA saw a 20% growth, representing 29% of revenue [33] - APAC revenue also grew by 3%, making up 17% of total revenue [33] Company Strategy and Development Direction - F5 is focusing on hybrid multi-cloud solutions to address customer challenges related to high costs, complexity, and cyber risks [44] - The introduction of the F5 Application Delivery and Security Platform (ADSP) aims to consolidate delivery and security functionalities into a single platform [8][10] - The company is leveraging AI technologies to enhance customer experiences and drive business growth, with a focus on AI for application delivery and security [12][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Q3 pipeline, expecting revenue between $740 million and $760 million, implying an 8% growth at the midpoint [7][40] - The FY 2025 revenue growth guidance was raised to 6.5% to 7.5%, reflecting strong first-half performance and current business dynamics [7][42] - Management noted that there are no immediate signs of demand erosion despite macroeconomic uncertainties [70][72] Other Important Information - F5 generated a record $257 million in cash flow from operations in Q2, with cash and investments totaling approximately $1.27 billion [37][38] - The company repurchased $125 million worth of shares during the quarter, equivalent to 57% of its free cash flow [38][39] Q&A Session Summary Question: Software performance in Q2 and future growth - Management acknowledged underperformance in Q2 but highlighted a strong renewal pipeline for the second half, expecting double-digit growth [48][50] Question: Hardware revenue drivers and refresh cycle - Management confirmed that hardware growth was driven by a refresh cycle and ongoing investments in hybrid multi-cloud architectures [53][56] Question: Competitive displacement opportunities - Management indicated that significant opportunities remain in displacing competitors and consolidating functionalities within existing accounts [61][64] Question: Federal government business performance - Management reported that the federal business performed in line with expectations, but there are concerns about potential disruptions in the second half [100][102]

Market Overview - The Dow gained 114 points (+0.28%) after hitting session lows of -244 points, while the S&P 500 finished nearly flat at +0.06%. The Nasdaq decreased slightly by -0.10%, and the Russell 2000 rose by +0.41% [2] - Since the imposition of tariffs, the Dow is down -4.8%, the S&P 500 is down -2.55%, the Russell 2000 is down -2.3%, and the Nasdaq is down -1.36% [2] Earnings Reports - Cybersecurity company F5 reported earnings of $3.42 per share, exceeding the Zacks consensus of $3.10 and the previous year's $2.91. Revenues of $731 million also surpassed the anticipated $717 million. Next-quarter guidance is slightly lower on earnings but ahead on sales [4] - Cadence Design Systems reported earnings of $1.57 per share, beating the projected $1.49, while meeting revenue estimates of $1.24 billion. The company noted no changes in customer behavior and maintained revenue guidance for the next quarter [5] - NXP Semiconductors reported earnings of $2.64 per share, exceeding expectations, with quarterly sales of $2.84 billion, slightly above the anticipated $2.83 billion. CEO Kurt Sievers announced his upcoming resignation [6] - Steel producer Nucor posted earnings of 77 cents per share on revenues of $7.83 billion, surpassing estimates of 68 cents per share and $7.22 billion in sales. The company experienced gains across all three segments [7]

Core Insights - F5 Networks reported quarterly earnings of $3.42 per share, exceeding the Zacks Consensus Estimate of $3.10 per share, and up from $2.91 per share a year ago, representing an earnings surprise of 10.32% [1] - The company achieved revenues of $731.12 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.99% and increasing from $681.35 million year-over-year [2] - F5 has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was 13.95%, with actual earnings of $3.84 per share against an expectation of $3.37 per share [1] - The current consensus EPS estimate for the upcoming quarter is $3.55, with projected revenues of $736.61 million, and for the current fiscal year, the estimate is $14.33 on $3 billion in revenues [7] Stock Performance - F5 shares have increased by approximately 7.4% since the beginning of the year, contrasting with a decline of -6.1% in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Internet - Software industry, to which F5 belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - F5 reported a total revenue growth of 7% year-over-year, reaching $731 million, with product revenue growing by 12% [8][30] - Non-GAAP EPS for Q2 was $3.42, reflecting an 18% increase year-over-year, exceeding guidance by $0.28 [9][38] - The company raised its FY 2025 revenue growth guidance to a range of 6.5% to 7.5%, up from the previous range of 6% to 7% [10][43] Business Line Data and Key Metrics Changes - Systems revenue grew by 27% year-over-year, totaling $179 million, driven by hardware refresh activities [30][31] - Software revenue remained flat at $158 million, with subscription-based software revenue down 2% year-over-year [31][38] - Global services revenue increased by 3%, amounting to $394 million, contributing 54% of total revenue [30] Market Data and Key Metrics Changes - Revenue from the Americas grew by 3%, representing 54% of total revenue, while EMEA saw a 20% growth, accounting for 29% of revenue [35] - APAC revenue also grew by 3%, making up 17% of total revenue [35] - Enterprise customers represented 69% of product bookings, with government customers at 20% and service providers at 11% [35] Company Strategy and Development Direction - F5 is focusing on hybrid multi-cloud solutions to address customer challenges related to high costs, complexity, and cyber risks [11][45] - The introduction of the F5 Application Delivery and Security Platform (ADSP) aims to consolidate delivery and security functionalities into a single platform [12][66] - The company is leveraging AI technologies to enhance customer experiences and drive business growth, with innovations in both AI for ADC and ADC for AI [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for F5 solutions, particularly in data center modernization and AI preparation [10][41] - There are no immediate signs of demand erosion, despite macroeconomic uncertainties [41][72] - The company anticipates continued growth in both systems and software revenue, with expectations for double-digit growth in FY 2025 [43][44] Other Important Information - F5 generated a record $257 million in cash flow from operations in Q2, with cash and investments totaling approximately $1.27 billion [38][39] - The company repurchased $125 million worth of shares during the quarter, with $1.2 billion remaining on its authorized repurchase program [39] Q&A Session Summary Question: Software performance in Q2 and future growth - Management acknowledged underperformance in Q2 but highlighted a strong renewal pipeline for the second half, expecting growth to align with double-digit guidance [48][50] Question: Hardware revenue drivers and customer upgrades - Management noted that hardware growth was driven by a refresh cycle and ongoing investments in hybrid multi-cloud architectures, with expectations for continued momentum [54][56] Question: Competitive displacement opportunities - Management characterized the competitive displacement cycle as still in early stages, with significant opportunities ahead in both new accounts and consolidating existing functionalities [61][64] Question: AI use cases and growth potential - The largest current opportunity is in data delivery for AI models, with security and AI factory load balancing also seen as future growth areas [74][75] Question: Federal government performance and potential impacts - Management reported strong performance in the federal sector but noted potential nervousness among customers regarding future budget disruptions [100]