F5(FFIV) - 2024 Q3 - Quarterly Results

Financial Performance - Third quarter fiscal year 2024 revenue totaled $695 million, a decrease of 1.1% compared to $703 million in the third quarter of fiscal year 2023[1] - Software revenue was $179 million, reflecting a 3% increase year-over-year, while systems revenue declined by 16% to $130 million[1] - Global services revenue grew by 3% to $387 million compared to the prior year[1] - GAAP gross profit was $559 million with a gross margin of 80.4%, up from 79.8% in the same period last year[1] - Non-GAAP gross profit was $578 million, resulting in a non-GAAP gross margin of 83.1%, compared to 82.5% in the prior year[1] - GAAP operating profit increased to $163 million, representing a GAAP operating margin of 23.4%, compared to 14.7% in the year-ago period[1] - Non-GAAP operating profit remained stable at $233 million, with a slight increase in non-GAAP operating margin to 33.4% from 33.2%[1] - GAAP net income for the third quarter was $144 million, or $2.44 per diluted share, compared to $89 million, or $1.48 per diluted share, in the same quarter last year[1] - Non-GAAP net income was $199 million, or $3.36 per diluted share, up from $194 million, or $3.21 per diluted share, in the prior year[1] - Total net revenues for the three months ended June 30, 2024, were $695.5 million, a slight decrease from $702.6 million in the same period of 2023[14] - Net income for the three months ended June 30, 2024, was $144.1 million, compared to $89.0 million for the same period in 2023, representing a 62% increase[14] - Earnings per share (EPS) for the three months ended June 30, 2024, were $2.46 (basic) and $2.44 (diluted), up from $1.48 (basic) for the same period in 2023[14] - Gross profit for the three months ended June 30, 2024, was $559.1 million, slightly down from $561.0 million in the same period of 2023[14] - Operating expenses for the three months ended June 30, 2024, totaled $396.0 million, down from $457.4 million in the same period of 2023[14] Cash Flow and Assets - Cash provided by operating activities for the nine months ended June 30, 2024, was $545.9 million, compared to $463.6 million for the same period in 2023[15] - Cash, cash equivalents, and restricted cash at the end of the period were $938.5 million, up from $681.6 million at the end of the same period in 2023[15] - The company reported stock-based compensation expense of $165.3 million for the nine months ended June 30, 2024, compared to $183.4 million for the same period in 2023[15] Future Outlook - The company expects fiscal year 2024 revenue to be approximately $2.8 billion, driven by software strength and raised earnings growth outlook[4] - For Q4 FY 2024, F5 expects revenue between $720 million and $740 million, with non-GAAP earnings per diluted share ranging from $3.38 to $3.50[19] - F5 anticipates FY 2024 revenue to be approximately $2.8 billion, which is roughly flat compared to the previous year[19] - The company is raising its earnings growth expectations for FY 2024 to approximately 12% non-GAAP earnings per share growth compared to FY 2023[19] - F5's forward-looking statements indicate strong visibility to software demand in Q4[20] Management Insights - F5's President and CEO highlighted that revenue growth was driven by software and global services offerings, indicating strong demand for IT infrastructure modernization[16] - The company is focusing on enhancing automation and operational efficiencies in hybrid and multicloud environments, as well as preparing IT infrastructure for AI integration[16] Non-GAAP Measures - Non-GAAP measures exclude various items such as amortization of intangible assets and acquisition-related charges, which can significantly affect guidance and future GAAP results[19][22] - The company emphasizes that non-GAAP net income per share provides useful supplemental information for evaluating core business performance[22] - F5's management uses both GAAP and non-GAAP measures to assess business performance, acknowledging that non-GAAP measures may not fully capture financial performance[22] - Investors are encouraged to consider GAAP results as the best measure of financial performance while also reviewing non-GAAP measures for additional insights[22] Costs and Charges - F5 incurred $1,264 million in facility-exit costs across various categories, including cost of net revenues and sales and marketing[25] - Acquisition-related charges totaled $656 million, impacting cost of net revenues, sales and marketing, and general and administrative expenses[25]