F5(US:FFIV)2025-01-29 02:08Financial Data and Key Metrics Changes - F5 reported total revenue growth of 11% to $766 million, with product revenue growing by 20% [9][34] - Non-GAAP EPS for Q1 was $3.84, exceeding guidance by $0.43 [9][41] - Recurring revenue accounted for 72% of total revenue, reflecting a 10% year-over-year growth [39] Business Line Data and Key Metrics Changes - Software revenue grew 22% year-over-year to $209 million, with subscription-based software revenue increasing by 30% [35] - Systems revenue totaled $160 million, up 18% year-over-year, driven by technology refresh momentum [36][38] - Global services revenue grew 3% to $398 million [34] Market Data and Key Metrics Changes - Revenue from the Americas grew 15% year-over-year, representing 56% of total revenue [40] - EMEA and APAC regions both grew by 6%, accounting for 27% and 17% of revenue, respectively [40] Company Strategy and Development Direction - F5 is focusing on hybrid multi-cloud architectures and addressing complexities in IT environments [12][50] - The company aims to leverage AI opportunities, particularly in data delivery and security for AI workloads [22][52] - F5's strategy includes consolidating multiple security solutions onto a single platform to enhance customer value [15][19] Management's Comments on Operating Environment and Future Outlook - Management noted a stable IT spending environment and increasing demand for software as customers resume modernization projects [10][11] - The company raised its FY '25 revenue growth expectations to 6% to 7%, up from 4% to 5% [11][47] - Management expressed confidence in sustaining hardware growth due to strong refresh activity and competitive displacements [58] Other Important Information - F5 achieved a record number of competitive displacements in Q1, indicating strong market positioning [20] - The company repurchased $125 million worth of shares, representing 64% of free cash flow [43] Q&A Session Summary Question: Insights on AI business and customer segments - Management highlighted three categories of AI opportunities, primarily focusing on data delivery for AI model training and inference, with a majority of deals coming from large enterprises [62][63] Question: Sustainability of hardware systems business - Management expects strong hardware growth driven by refresh activity and competitive displacements, with no significant supply constraints [58][60] Question: Size of distributed cloud business - The total ARR for SaaS and managed services was around $180 million, with over 1,000 customers on distributed cloud, indicating rapid growth [75][78] Question: Seasonal trends and guidance for the year - Management noted that while Q1 was strong, they are cautious about assuming similar expansion rates in the second half of the year [72][132] Question: Perpetual revenue and federal business performance - Perpetual software revenue showed strong seasonal performance, particularly in the service provider vertical, while federal business remained solid with a healthy pipeline [101][105]