F5(US:FFIV)2020-07-28 03:45Financial Data and Key Metrics Changes - Q3 GAAP revenue was $583 million, while non-GAAP revenue was $586 million, reflecting a 4% year-over-year increase and exceeding guidance of $555 million to $585 million [17][22] - Non-GAAP net income was $134 million or $2.18 per share, above the top end of guidance due to strong revenue performance and disciplined expense management [22] - GAAP gross margin was 81.8%, and non-GAAP gross margin was 84.4% [21] Business Line Data and Key Metrics Changes - Software revenue grew 43% year-over-year to $97 million, representing approximately 38% of product revenue, up from 27% in the prior year [18] - Services revenue increased by 5% year-over-year to $330 million, accounting for 56% of total revenue [19] - Systems revenue decreased by 12% year-over-year to $159 million [20] Market Data and Key Metrics Changes - Americas revenue grew by 11% year-over-year, representing 57% of total revenue, while EMEA grew by 6%, accounting for 24% of revenue [20] - APAC revenue declined by 15% year-over-year, making up 19% of total revenue [20] Company Strategy and Development Direction - The company is focusing on a "human first" approach, emphasizing support for customers during the pandemic and social issues [8][9] - F5 aims to leverage its incumbency and broad solutions portfolio to support customers' digital transformation efforts [15][36] - The vision includes creating adaptive applications that can evolve based on environmental needs, enhancing customer engagement and operational efficiency [49][79] Management's Comments on Operating Environment and Future Outlook - Management noted that demand has proven more resilient than initially expected, with customers accelerating digital transformation initiatives [32][35] - The company anticipates longer purchasing cycles due to economic uncertainty but expects to benefit from being a trusted partner for large enterprises [26][27] - Guidance for Q4 FY '20 non-GAAP revenue is projected to be between $595 million and $615 million [26] Other Important Information - Deferred revenue increased by 9% year-over-year to $1.3 billion, driven by maintenance contracts and acquired Shape deferred revenue [24] - The company raised over $124,000 for social justice initiatives in one month, reflecting its commitment to diversity and inclusion [13] Q&A Session Summary Question: Performance in the cloud or hyperscale space - Management noted continued growth in public cloud, driven by partnerships with AWS and NGINX deployments [82][84] Question: Positioning in the 5G world - The company is seeing a ramp-up in 5G opportunities, leveraging its software-driven solutions for cloud-native environments [87] Question: NGINX integrated architecture - The combined architecture is leading to more multi-product deals, indicating strong traction in the market [91][92] Question: Interest in ELAs - Demand for ELAs remains strong, with more transactions than ever before, often combining multiple F5 products [122] Question: AWS partnership update - Progress is being made with AWS, with expectations for further acceleration in 2021 due to joint solution integration [123] Question: Timeline for various phases of application services - The company is positioned in Phase 2 with expectations for significant growth in Kubernetes deployments and software contributions [125]