Financial Data and Key Metrics Changes - The company achieved over $3 billion in revenue and $1 billion in operating profit for fiscal year 2025, with revenue growth of 10% and earnings per share growth of 18% [5] - Gross margins improved to 83.6%, up 80 basis points from FY 2024, and operating margins increased to 35.2%, up 160 basis points from FY 2024 [5] - Free cash flow reached a record $906 million, representing a 19% increase compared to FY 2024 [5][13] Business Line Data and Key Metrics Changes - Q4 revenue grew 8% to $810 million, with global services revenue at $396 million (up 2% year-over-year) and product revenue at $414 million (up 16% year-over-year) [10] - Systems revenue increased by 42% year-over-year to $186 million, driven by tech refresh and data center modernization [10] - Software revenue totaled $229 million, showing slight growth against a strong Q4 of FY 2024, with perpetual license software up 25% year-over-year [10][11] Market Data and Key Metrics Changes - Revenue from the Americas grew 7% year-over-year, representing 57% of total revenue, while EMEA and APAC grew 7% and 19%, representing 26% and 17% of revenue, respectively [11] - Enterprise customers accounted for 73% of Q4 product bookings, with government customers at 19% and service providers at 8% [11] Company Strategy and Development Direction - The company is focusing on incident response and enhancing security measures following a recent security incident, with significant investments planned in cybersecurity [6][8] - The strategic emphasis is on hybrid multi-cloud adoption and AI infrastructure demand, positioning the company to address complex customer challenges [21][22] - The company aims to leverage its Application Delivery and Security Platform (ADSP) to unify traffic management and security across hybrid and multi-cloud environments [21] Management's Comments on Operating Environment and Future Outlook - Management anticipates mid-single-digit revenue growth for FY 2026, with potential near-term disruptions due to the recent security incident [16][17] - The company expects FY 2026 gross margins to be in the range of 83%-83.5% and non-GAAP operating margins between 33.5%-34.5% [18][19] - Management remains optimistic about long-term growth drivers, including hybrid multi-cloud adoption and AI readiness [16][21] Other Important Information - The company has seen a significant increase in customers leveraging its XOps capabilities, growing from 20 to nearly 900 customers [22] - The total security revenue for FY 2025 grew 6% to approximately $1.2 billion, representing 39% of total revenue [15] Q&A Session Summary Question: What form of conservatism has been put into estimates? - Management noted that customer resources are focused on upgrading environments, which may delay new project considerations [38] Question: How to size the potential impact from the security breach? - Management took a granular approach to profile revenue streams, identifying which could be more impacted and which would be resilient [46] Question: What percentage of revenue comes from F5 BIG-IP? - F5 BIG-IP is the highest revenue product, but specific revenue contributions are not disclosed [56] Question: Are there additional costs as a result of the data breach? - There are costs related to incident remediation, which may be covered by cyber insurance or accounted for as one-time expenses [57]

Core Insights - The article discusses the significant impact of AI programming tools on development efficiency while highlighting new challenges such as security vulnerabilities, low-quality code, and the complexity of debugging AI-generated code [2][4]. Group 1: AI Tools and Challenges - AI programming tools have been reported to significantly enhance development efficiency, but they also introduce new security vulnerabilities and low-quality code issues [2]. - The increase in API numbers due to AI tools has led to a heavier operational burden for enterprises [2]. - The "black box" issue complicates the understanding of AI-generated code, making debugging and security checks more time-consuming [2]. Group 2: Security and Performance - Performance is crucial for user experience, and balancing security with user-friendly authentication processes is a pressing challenge [4]. - Over 91% of users have implemented WAAP (Web Application and API Protection) to secure AI and machine learning models [5]. Group 3: AI in Operations - A significant percentage of operational staff are utilizing AI to streamline processes: 57% use AI for script generation, 56% for custom policy creation, and 55% for executing scripts [7]. - Observability is key for AI-driven automation, with 65% of respondents leveraging it for this purpose [7]. Group 4: Application Trends - The proportion of modern applications is expected to surpass traditional applications by 2025, with modern applications rising from 29% in 2020 to 53% [7]. - By 2025, 54% of application and API performance analysis will be based on large models [7]. Group 5: AI Implementation Challenges - Complex IT architectures, unique security needs, and cost control are identified as major challenges for enterprises adopting AI applications [9]. - By 2028, 80% of enterprises are expected to embed AI capabilities, with 94% of AI applications deployed in hybrid cloud environments [12]. Group 6: F5's Response - F5 has transitioned to an Application Delivery and Security Platform (ADSP) to meet the growing demand for integrated performance and security solutions [11]. - The ADSP platform aims to provide seamless operation across various environments, addressing the complexities of modern application security [14]. Group 7: AI Gateway and Security - F5 has introduced the AI Gateway, which offers capabilities for routing based on large language models and provides protection against prompt injection and PII data leakage [16]. - The AI Gateway enhances GPU utilization rates by 30-60% while improving service success rates by at least 8% in specific applications [16]. Group 8: Comprehensive Services - F5 offers comprehensive application delivery and security services, including load balancing, DNS, CDN, and API gateways, adaptable to various deployment environments [17]. - The platform integrates capabilities across NetOps, SecOps, and DevOps, providing unified policy management and deep security analysis [17]. Group 9: AI Assistant - F5 has launched an AI assistant that enhances the platform's intelligence, capable of explanation, generation, and optimization across all F5 products [19].