Financial Data and Key Metrics Changes - F5 reported a total revenue growth of 12% year-over-year, reaching $780 million, with product revenue growing by 26%, marking the strongest growth in 14 years [8][27] - The company achieved a GAAP net income of $190 million, translating to $3.25 per share, while non-GAAP net income was $243 million or $4.16 per share, reflecting a 24% EPS growth year-over-year [32][38] - Cash flow from operations reached a record $282 million, with cash and investments totaling approximately $1.44 billion at the end of the quarter [32][33] 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 [27] - 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 [28] - Systems revenue totaled $181 million, up 39% year-over-year, driven by tech refresh and data center modernization [28] Market Data and Key Metrics Changes - Revenue from the Americas grew by 13%, accounting for 55% of total revenue, while EMEA delivered 6% growth (26% of revenue) and APAC grew by 21% (19% of revenue) [29] - Enterprise customers represented 70% of product bookings, with government customers at 15% and service providers also at 15% [29] Company Strategy and Development Direction - F5 is focusing on modernizing data centers and adopting hybrid multi-cloud architectures, which are seen as significant growth drivers [7][11] - The company is leveraging its application delivery and security platform to simplify operations and enhance security for customers, particularly in the context of AI workloads [11][12] - F5 aims to continue innovating and expanding its offerings in AI-driven applications and infrastructure [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for data center modernization and hybrid multi-cloud solutions, expecting continued strong demand in Q4 [10][36] - The company anticipates Q4 revenue in the range of $780 million to $800 million, implying approximately 9% revenue growth for FY '25 [10][36] - Management noted that the long-term structural shift towards data center modernization will persist, creating ongoing investment opportunities [11][37] Other Important Information - F5 repurchased $125 million worth of shares during the quarter, with $1 billion remaining on the authorized stock repurchase program [34] - The company ended the quarter with approximately 6,540 employees [35] Q&A Session Summary Question: Can you discuss the strength in hardware and its sustainability? - Management noted strong tech refresh dynamics and secular trends in hybrid cloud and AI driving hardware growth, with expectations for continued growth next year but at a more modest rate [45][50] Question: What is the outlook for software renewals and new deal activity? - Management highlighted a healthy renewal base and strong expansion trends, with new use cases contributing to software growth [52][55] Question: What factors affected gross margins this quarter? - Gross margins were slightly lower due to high-performance use cases with compliance demands and the strength in the systems business, which has a lower margin than software [58][60] Question: How significant is the AI-related business for F5? - Management indicated that direct AI use cases are currently small but growing, with indirect AI-related spending also increasing as customers invest in data capacity for AI [98][99] Question: What is the expected growth for hardware and software in FY '26? - Management expects hardware to grow modestly next year, while software growth is anticipated in the mid-single digits, with potential for reacceleration in FY '27 [67][70]