F5(US:FFIV)2022-05-05 16:00Financial 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].