F5(US:FFIV)2021-10-27 03:31Financial Data and Key Metrics Changes - Fourth quarter revenue reached $682 million, an 11% year-over-year increase, exceeding guidance [10] - Product revenue for Q4 was $340 million, up 21% year-over-year, a significant acceleration from 6% in the same period last year [10] - Software revenue grew 35% to $152 million, representing 45% of product revenue, up from 40% in the previous year [10][11] - GAAP net income for Q4 was $111 million or $1.80 per share, while non-GAAP net income was $185 million or $3.01 per share [16] - For the fiscal year 2021, total revenue grew 10% to $2.6 billion, with product revenue of $1.25 billion growing 21% [18][19] Business Line Data and Key Metrics Changes - Software growth was 35%, systems growth was 12%, and global services growth was 2% in Q4 [8] - Subscription-based revenue represented 80% of total software revenue in Q4, up from 76% in the previous year [11] - The deal volume of multi-year subscriptions more than doubled year-over-year, approaching 500 in total [12] Market Data and Key Metrics Changes - In Q4, the Americas delivered 11% revenue growth, representing 59% of total revenue, while EMEA and APAC delivered 11% and 9% growth, accounting for 24% and 17% of revenue, respectively [15] - Enterprise customers represented 69% of product bookings in Q4, with service providers at 13% and government customers at 18% [15] Company Strategy and Development Direction - The company is focused on application security, anticipating it to be a significant area of investment over the next decade [38] - F5 aims to achieve the Rule of 40, combining revenue growth and non-GAAP operating margins totaling 40, which was achieved in FY '21 [29][30] - The integration of Volterra is a priority, enhancing security offerings and enabling critical application services at the edge [57] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing pressures related to global supply chain challenges, which may increase costs [28] - The company expects revenue growth of 8% to 9% for FY '22, with software growth projected between 35% and 40% [25] - Management expressed confidence in the demand for BIG-IP, citing both transient and secular factors driving growth [78][89] Other Important Information - The company ended FY '21 with approximately $125 million in backlog, primarily system-based [23] - The acquisition of Threat Stack is expected to enhance F5's cloud security capabilities [59] Q&A Session Summary Question: Can you provide more details on the backlog composition? - The backlog primarily consists of system-based orders, with a significant portion from service provider customers [62] Question: Are you expecting elevated levels of U.S. federal activity in the upcoming quarters? - No significant changes are expected in the federal business, which follows regular seasonality [63] Question: What is the impact of supply chain challenges on gross margins? - Supply chain challenges have impacted gross margins due to increased prices and expedite fees, but the company is managing the situation well [68] Question: How should we think about the growth rate of NGINX? - NGINX continues to grow well, with over 50% of multi-year subscriptions including NGINX [72] Question: What gives you confidence that 2021 wasn't an anomaly for systems revenue? - Demand for BIG-IP is expected to grow due to increasing reliance on traditional applications, despite some transient factors in 2021 [78][89] Question: How is the cloud vertical performing? - The cloud vertical continues to grow faster than overall software growth, with significant traction in private offers on marketplaces [84]