Investors with an interest in Internet - Software stocks have likely encountered both Five9 (FIVN) and F5 Networks (FFIV) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revisio ...

Core Viewpoint - F5 Inc. (FFIV) is expected to exceed earnings expectations for the second quarter of fiscal 2025, with projected non-GAAP EPS in the range of $3.02-$3.14, and a consensus estimate of $3.10 indicating a year-over-year increase of 6.5% [1][2]. Financial Projections - F5 anticipates non-GAAP revenues between $705 million and $725 million, with a consensus estimate of $716.9 million, reflecting a year-over-year growth of 5.2% [2]. Performance Drivers - The Product segment is likely to benefit from recovering demand for software solutions, despite IT budget cuts due to macroeconomic uncertainties, with estimated Software revenues at $173.1 million [3]. - Technology refresh activities are expected to enhance Systems segment sales, with estimated revenues of $151.2 million, contributing to an overall Product revenue estimate of $324.3 million, indicating an 8% year-over-year increase [4]. - The growth in BIG-IP and NGINX subscription software deals is anticipated to be a significant driver, with strong demand from large enterprises for cloud and Kubernetes workloads [5]. Cost Management - Cost-saving initiatives, including headcount reduction and facility footprint elimination, are likely to positively impact the bottom line [6]. Earnings Prediction - The combination of a positive Earnings ESP of +0.69% and a Zacks Rank of 3 suggests a strong likelihood of an earnings beat for F5 [7][8].

Core Insights - F5 Networks (FFIV) is expected to report quarterly earnings of $3.10 per share, reflecting a year-over-year increase of 6.5% [1] - Anticipated revenues for the quarter are projected to be $716.85 million, indicating a 5.2% increase compared to the same quarter last year [1] Earnings Projections - The consensus EPS estimate has been revised 0.2% lower over the last 30 days, indicating a reevaluation by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3] Revenue Breakdown - Analysts estimate 'Net revenues- Services' at $390.56 million, representing a 2.5% increase year-over-year [4] - 'Net revenues- Products' are forecasted to reach $326.29 million, suggesting an 8.7% year-over-year change [5] - 'Net product revenues- Software' are expected to be $178.08 million, indicating a 12.4% increase year-over-year [5] - 'Net product revenues- Systems' are projected at $148.45 million, reflecting a 4.8% increase from the prior-year quarter [5] Stock Performance - F5 shares have decreased by 7.4% over the past month, compared to a 6.6% decline in the Zacks S&P 500 composite [6] - F5 holds a Zacks Rank 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [6]

Core Viewpoint - F5 Networks (FFIV) is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended March 2025, with a consensus EPS estimate of $3.10, reflecting a 6.5% increase, and revenues expected to reach $716.85 million, up 5.2% from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is scheduled for April 28, and the stock may rise if the actual results exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised down by 0.06% over the last 30 days, indicating a slight reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates a positive Earnings ESP of +1.71% for F5, suggesting analysts have recently become more optimistic about the company's earnings prospects [10]. - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. Historical Performance - F5 has a history of exceeding consensus EPS estimates, having beaten expectations in the last four quarters, including a surprise of +13.95% in the most recent quarter [12][13]. Industry Comparison - AppFolio (APPF), another player in the Zacks Internet - Software industry, is expected to report earnings of $1.22 per share, reflecting a year-over-year increase of 16.2%, with revenues projected at $221.56 million, up 18.2% [17]. - AppFolio's consensus EPS estimate has remained unchanged, but its Earnings ESP of 0.61% combined with a Zacks Rank of 4 (Sell) complicates predictions for an earnings beat [18].

Core Viewpoint - F5 Networks (FFIV) is positioned well to continue its trend of beating earnings estimates in the upcoming quarterly report [1]. Earnings Performance - F5 Networks has a strong history of surpassing earnings estimates, averaging a 10.16% beat over the last two quarters [2]. - In the most recent quarter, F5 reported earnings of $3.84 per share, exceeding the expected $3.37 per share by 13.95% [2]. - For the previous quarter, the company reported $3.67 per share against an estimate of $3.45 per share, resulting in a surprise of 6.38% [2]. Earnings Estimates and Predictions - Recent estimates for F5 have been increasing, indicating a positive outlook for future earnings [5]. - The Zacks Earnings ESP for F5 is currently +1.71%, suggesting analysts are optimistic about the company's near-term earnings potential [8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a high likelihood of another earnings beat [5][8]. Statistical Insights - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [7]. Upcoming Earnings Report - F5's next earnings report is anticipated to be released on April 28, 2025 [8].

Core Insights - Definitive Healthcare Corp. (DH) is currently viewed as a better value opportunity compared to F5 Networks (FFIV) based on various financial metrics and analyst outlooks [1][7]. Valuation Metrics - DH has a forward P/E ratio of 17.28, while FFIV has a forward P/E of 21.59, indicating that DH is potentially undervalued [5]. - The PEG ratio for DH is 1.89, compared to FFIV's PEG ratio of 3.05, suggesting that DH has a more favorable earnings growth outlook relative to its price [5]. - DH's P/B ratio stands at 0.89, significantly lower than FFIV's P/B of 5.52, further indicating DH's relative undervaluation [6]. Analyst Ratings - DH holds a Zacks Rank of 2 (Buy), reflecting stronger earnings estimate revision activity, while FFIV has a Zacks Rank of 3 (Hold) [3]. - The superior analyst outlook for DH suggests a more positive sentiment among analysts compared to FFIV [3][7]. Value Grades - DH has been assigned a Value grade of B, whereas FFIV has received a Value grade of D, highlighting DH's more attractive valuation metrics [6].

Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information should not be interpreted as recommendations or advice for any financial actions [1]. - The content is not tailored to individual financial situations or needs, highlighting the necessity for users to apply their own discretion [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - Users are encouraged to perform their own research and understand the risks involved before investing in any financial instruments [1].

Core Insights - F5 Networks' international operations are crucial for understanding its financial resilience and growth potential [1][2] - The company's total revenue for the quarter was $766.49 million, reflecting a 10.7% increase [4] International Revenue Breakdown - Asia Pacific contributed $130.13 million, or 16.98% of total revenue, exceeding analyst expectations by +6.92% [5] - The "Other" category generated $24.59 million, accounting for 3.21% of total revenue, also surpassing estimates by +4.09% [6] - Europe, Middle East and Africa brought in $204.39 million, making up 26.67% of total revenue, with a surprise of +6.5% compared to projections [7] Future Revenue Predictions - Analysts project F5 will achieve revenues of $716.46 million for the ongoing fiscal quarter, a 5.2% increase year-over-year [8] - For the full year, total revenue is expected to reach $2.99 billion, up 6.3% from the previous year [9] Market Performance - F5's stock has increased by 20.6% over the past month, outperforming the Zacks S&P 500 composite, which rose by 2.1% [12] - Over the past three months, F5 shares gained 28.6%, compared to a 1.2% increase in the S&P 500 [12]

Financial Performance - Net income for the three months ended December 31, 2024, was $166.4 million, compared to $138.4 million for the same period in 2023, resulting in a basic net income per share of $2.85[83] - Total revenues for the three months ended December 31, 2024, were $766.5 million, an increase from $692.6 million in the same period of 2023[86] - Total net revenues increased by 10.7% to $766.5 million for the three months ended December 31, 2024, compared to $692.6 million in the same period of the prior year[102] - Net product revenues rose by 20.5% to $368.5 million, driven by a 22.5% increase in software revenues and a growth in systems sales[103][104] - Net service revenues increased by 2.9% to $398.0 million, primarily due to higher maintenance contract renewals[105] - Gross profit for the three months ended December 31, 2024, was $626.0 million, with a gross margin of 81.7%, up from 80.3% in the prior year[106] - Operating expenses totaled $420.9 million, representing 54.9% of net revenues, a decrease from 56.6% in the prior year[109] - Net income for the period was $166.4 million, reflecting a net income margin of 21.7%, compared to 20.0% in the same period last year[113] Revenue Recognition and Deferred Revenue - Deferred revenue balance rose to $1.95 billion at the end of December 2024, compared to $1.83 billion in December 2023, with $556.9 million added but not recognized as revenue during the period[35] - The total non-cancelable remaining performance obligations amounted to $1.9 billion, with an expectation to recognize 62.6% of these revenues over the next 12 months[36] - Deferred revenues increased in the first quarter of fiscal year 2025, primarily due to an increase in maintenance renewal contracts and subscription offerings[97] Cash and Investments - As of December 31, 2024, total cash, cash equivalents, and restricted cash amounted to $1,152.9 million, an increase from $1,078.3 million as of September 30, 2024[53] - Cash provided by operating activities for Q1 fiscal 2025 was $166.4 million, an increase from the prior year due to higher net income and cash received from customers[118] - Cash used in investing activities was $10.0 million for the three months ended December 31, 2024, compared to $7.1 million in the same period last year, primarily due to $8.1 million in capital expenditures[120] - Cash used in financing activities was $114.7 million for the three months ended December 31, 2024, a decrease from $135.0 million in the prior year, mainly due to $125.0 million used for share repurchases[121] - Cash and cash equivalents, along with investments, increased to $1,162.1 million as of December 31, 2024, up from $1,083.2 million at the end of September 2024[117] Share Repurchase and Equity - The Company repurchased 490,000 shares at an average price of $255.31 per share for a total of $125.0 million during the three months ended December 31, 2024[81] - The Company had $1.3 billion remaining authorized for share repurchases as of December 31, 2024[81] Taxation - The effective tax rate for the three months ended December 31, 2024, was 20.4%, a decrease from 20.7% in the same period of 2023, primarily due to the tax impact of stock-based compensation[77] - The Company had $88.9 million of unrecognized tax benefits as of December 31, 2024, which could affect the effective tax rate if recognized[78] - The effective tax rate decreased to 20.4% for the three months ended December 31, 2024, from 20.7% in the prior year[114] Operating Expenses and Restructuring - The Company recorded restructuring charges of $11.3 million for the three months ended December 31, 2024, compared to $9.8 million in the same period of 2023[88] - Restructuring charges amounted to $11.3 million for the three months ended December 31, 2024, compared to $8.5 million in the same period of the prior year[112] Inventory and Receivables - Inventories decreased from $76.4 million as of September 30, 2024, to $73.2 million as of December 31, 2024[54] - Unbilled receivables increased to $433.9 million as of December 31, 2024, compared to $401.1 million as of September 30, 2024[55] Debt and Credit Facilities - The Company had no outstanding borrowings under its $350.0 million Revolving Credit Facility as of December 31, 2024, with available borrowing capacity of $350.0 million[60] - As of December 31, 2024, the Company was in compliance with all covenants related to its Revolving Credit Agreement[60] - The Company had no outstanding borrowings under its $350.0 million Revolving Credit Facility as of December 31, 2024, which expired on January 31, 2025[92] Capitalized Costs and Goodwill - The balance of capitalized contract acquisition costs increased to $70.3 million as of December 31, 2024, from $66.5 million at the beginning of the period, with additional costs of $13.2 million capitalized during the quarter[33] - The amortization of capitalized contract acquisition costs was consistent at $9.1 million for both the three months ended December 31, 2024, and 2023[33] - The Company recorded $23.6 million of goodwill from two acquisitions completed in the second quarter of fiscal 2024, which did not materially impact operating results[52] Market and Economic Conditions - The company does not anticipate a material effect on its financial condition from a 10% change in interest rates due to its current investment portfolio[128] - The company is actively monitoring inflation but does not believe it has materially affected its business or financial condition[129] - The majority of the company's sales and expenses are in U.S. dollars, minimizing foreign currency transaction risks[130] - There have been no material changes to the company's market risk disclosures during the three months ended December 31, 2024[131] Accounting Standards and Disclosures - The company is currently evaluating the impact of new accounting standards on its disclosures, including ASU 2023-07 and ASU 2023-09, which will enhance segment and income tax disclosures respectively[30][31]

Group 1 - The article recommends a buy rating for F5, Inc. (NASDAQ: FFIV) based on expectations of achieving FY25 guidance due to a favorable macro environment and increased demand [1] - The investment is considered ideal if it operates in a sector projected to experience structural organic growth exceeding GDP growth over the next 5-10 years, has sustainable competitive advantages, and is managed by competent and ethical long-term thinkers [1] - The company is expected to have attractive unit economics and a fair valuation, which are critical factors for investment consideration [1]