Financial Data and Key Metrics Changes - F5 reported a total revenue growth of 12% year-over-year, reaching $780 million in Q3 2025, with product revenue growing by 26%, marking the strongest growth in 14 years [6][25] - The company achieved a GAAP net income of $190 million, or $3.25 per share, and a non-GAAP net income of $243 million, or $4.16 per share, reflecting a 24% growth in EPS year-over-year [30][34] - Cash flow from operations reached a record $282 million in Q3, with total cash and investments at approximately $1.44 billion [30][31] Business Line Data and Key Metrics Changes - Global services revenue grew by 1% to $392 million, while product revenue increased by 26% to $389 million [25] - Software revenue grew by 16% year-over-year to $208 million, with subscription-based software revenue increasing by 19% to $185 million, representing 89% of total software revenue [26] - Systems revenue totaled $181 million, up 39% year-over-year, driven by tech refresh and data center modernization [26] Market Data and Key Metrics Changes - Revenue from the Americas grew by 13%, accounting for 55% of total revenue, while EMEA and APAC regions grew by 6% and 21%, representing 26% and 19% of revenue, respectively [27] - Enterprise customers represented 70% of Q3 product bookings, while government and service providers each accounted for 15% [27] Company Strategy and Development Direction - F5 is focusing on modernizing data centers and adopting hybrid multi-cloud architectures, which are driving demand for both hardware and software solutions [6][9] - The company is leveraging its unique application delivery and security platform to simplify operations and enhance security for customers, particularly in AI workloads [9][10] - F5 anticipates continued strong demand in Q4, with revenue guidance between $780 million and $800 million, implying approximately 9% growth for FY 2025 [8][34] Management's Comments on Operating Environment and Future Outlook - Management highlighted the ongoing structural shift in data center modernization and the increasing complexity of managing applications and APIs as key challenges for IT teams [9][10] - The company expects to see durable growth in hardware driven by tech refresh, hybrid cloud investments, and AI readiness [46][48] - Management expressed confidence in the long-term potential of their application delivery and security platform, particularly in supporting AI-driven applications [19][20] Other Important Information - F5's GAAP gross margin was 81%, with non-GAAP gross margin at 83.1%, reflecting strong operating discipline [28] - The company repurchased $125 million worth of shares in Q3, with $1 billion remaining on its authorized stock repurchase program [31] Q&A Session Summary Question: Can you discuss the strength in hardware and its sustainability? - Management noted a 39% year-over-year growth in hardware, driven by tech refresh and secular trends in hybrid cloud and AI readiness, with expectations for continued growth but at a more modest rate next year [42][48] Question: What is the outlook for software renewals and new deal activity? - Management indicated a healthy renewal base and strong expansion in software, with increased consumption driving higher contract values at renewal [50][52] Question: Why did gross margins come in at the lower end despite revenue upside? - The lower gross margins were attributed to high-performance use cases with compliance demands and the strength in the systems business, which has a lower margin than software [56][57] Question: What is the status of the NVIDIA DPU product and AI gateway platform? - The NVIDIA DPU solution is generally available, with positive early feedback from customers, while the AI gateway platform is in the early stages with several proof of concepts underway [81][87] Question: How is the federal business performing? - The federal business is on plan, with a healthy pipeline despite some softness in Q3 due to project delays related to government efficiency initiatives [90][91]