F5(US:FFIV)2021-04-28 03:10Financial Data and Key Metrics Changes - Q2 revenue reached $645 million, a 10% year-over-year increase, at the top end of guidance range [10] - Non-GAAP net income was $155 million or $2.50 per share, while GAAP net income was $43 million or $0.70 per share [19] - GAAP gross margin was 80.1%, and non-GAAP gross margin was 83.4% [18] Business Line Data and Key Metrics Changes - Product revenue was $309 million, up 18% year-over-year, accounting for approximately 48% of total revenue [11] - Systems revenue increased by 17% to $201 million, while software revenue grew by 20% to $108 million [13][14] - Global services revenue was $336 million, up 4% year-over-year, representing 52% of total revenue [15] Market Data and Key Metrics Changes - Americas revenue grew by 6%, EMEA by 16%, and APAC by 15% [16] - Enterprise customers represented 68% of product bookings, with service providers and government customers each at 16% [17] Company Strategy and Development Direction - The company is focused on a multi-cloud approach and is benefiting from strong macro growth drivers powered by application growth [8][9] - There is a strong emphasis on application security and delivery solutions, with a notable shift towards subscription-based models [14][42] - The integration of F5 and Volterra aims to enhance application security offerings in a SaaS model [53][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth driven by increasing application traffic and demand for application security [27][52] - There are concerns about supply chain tightening, but the company has mitigation efforts in place [22][24] - The guidance for Q3 revenue is projected between $620 million to $650 million, reflecting a cautious outlook due to supply chain challenges [23] Other Important Information - The company generated $128.5 million in cash flow from operations in Q2 [20] - Deferred revenue increased by 7% year-over-year to $1.4 billion [21] - The company is experiencing a notable shift in customer preferences towards hardware solutions due to urgent capacity needs [39][40] Q&A Session Summary Question: Near-term benefits on systems and software bookings - Management confirmed a strong pipeline of software deals for NGINX and BIG-IP expected to materialize in the second half of the year [59] Question: Impact of security breaches on WAF pipeline - There is good traction in web application firewalls, with demand seen in both hardware and modern application environments [66] Question: Organic software growth excluding Volterra - Management stated that Volterra's impact is immaterial for the current quarter, but it is a critical asset for future growth [71] Question: Update on US federal demand - Demand trends for US federal business remain strong and are expected to follow normal patterns [85] Question: Growth trends in the cloud vertical - The cloud vertical continues to be a growth driver, but there was a moderation in growth rates due to customers delaying migration to the public cloud [91]