F5 Networks, Inc. (NASDAQ: FFIV) today announced revenue of
$501.3 million for the fourth quarter of fiscal year 2015, up 4
percent from $483.6 million in the prior quarter and 8 percent from
$465.3 million in the fourth quarter of fiscal year 2014. For
fiscal year 2015, revenue was $1.92 billion, up 11 percent from
$1.73 billion last year.
GAAP net income for the fourth quarter was $97.0 million ($1.36
per diluted share) compared to $93.2 million ($1.29 per diluted
share) in the third quarter of 2015 and $94.0 million ($1.26 per
diluted share) in the fourth quarter a year ago. GAAP net income
for the year was $365.0 million ($5.03 per diluted share) versus
$311.2 million ($4.09 per diluted share) in fiscal year 2014.
Excluding the impact of stock-based compensation and
amortization of purchased intangible assets, non-GAAP net income
for the fourth quarter was $130.7 million ($1.84 per diluted
share), compared to $120.2 million ($1.67 per diluted share) in the
prior quarter and $116.7 million ($1.57 per diluted share) in the
fourth quarter of fiscal 2014. For fiscal year 2015, non-GAAP net
income was $480.3 million ($6.62 per diluted share) versus $413.0
million ($5.43 per diluted share) in fiscal year 2014.
A reconciliation of GAAP net income to non-GAAP net income is
included on the attached Consolidated Statements of Operations.
“Against the backdrop of a volatile macro-economy, F5 achieved a
year of solid growth and profitability,” said Manny Rivelo, F5
president and chief executive officer. “With a Q4 revenue run-rate
above two billion dollars, record annual revenue and gross margins
contributed to a 17 percent increase in GAAP net income for the
year. From a regional perspective, the United States and EMEA were
the strongest performers, with solid year over year revenue growth
in Q4, offset by weakness in Latin America, Canada and Japan.
“During the quarter, software sales continued to grow as a
percentage of our product mix, reflecting incremental demand for
our Virtual Editions and Good-Better-Best bundles and a steady ramp
in sales of our Cloud-based Silverline SaaS offerings and our other
subscription services. These trends validate our success in meeting
the growing need for hybrid solutions that can be deployed and
centrally managed on-premise and in the Cloud, and we expect to see
them continue throughout fiscal 2016.
“In addition, we believe our planned product rollouts and new
sales initiatives, combined with the strength of partner
relationships such as our recently announced partnership with
FireEye will continue to expand our addressable market and drive
products sales over the course of the year. However, we expect
their combined effect to be gradual and weighted toward the back
half of the year.
“For the past several years, we have experienced a seasonally
slower first quarter, followed by a steady ramp in sales through
the end of the fiscal year. In addition, we are factoring in a
measure of continued uncertainty in the macro environment in
shaping our outlook for Q1 of fiscal 2016.”
For the first quarter of fiscal 2016, ending December 31, the
company has set a revenue target of $480 million to $490 million
with a GAAP earnings target of $1.13 to $1.16 per diluted share.
Excluding stock-based compensation expense and amortization of
purchased intangible assets, the company’s non-GAAP earnings target
is $1.58 to $1.61 per diluted share.
A reconciliation of the company’s expected GAAP and non-GAAP
earnings is provided in the following table:
Three months ended December 31, 2015
Reconciliation of Expected Non-GAAP First Quarter Earnings
Low High Net income $ 79.8 $ 82.0 Stock-based
compensation expense $ 39.0 $ 39.0 Amortization of purchased
intangible assets $ 3.4 $ 3.4 Tax effects related to above items $
(10.7 ) $ (10.7 ) Non-GAAP net income excluding stock-based
compensation expense and amortization of purchased intangible
assets $ 111.5 $ 113.7 Net income per share - diluted
$ 1.13 $ 1.16 Non-GAAP net income per share - diluted
$ 1.58 $ 1.61
Analyst/Investor Meeting
F5 will hold a meeting for analysts and investors at the New
York Hilton Midtown, from 8:00 a.m. to 12:30 p.m. Eastern Time on
Thursday, November 12, 2015.
For more information and to register online, please visit:
https://f5.com/about-us/events/f5-networks-analyst-and-investor-meeting-2015
The meeting will also be webcast live, beginning November 12th
at 8:00 a.m. ET, and an archived version will be available through
January 20, 2016. The link for the live webcast and the archived
version is https://f5.com/about-us/investor-relations.
About F5 Networks
F5 (NASDAQ: FFIV) provides solutions for an application world.
F5 helps organizations seamlessly scale cloud, data center,
telecommunications, and software defined networking (SDN)
deployments to successfully deliver applications and services to
anyone, anywhere, at any time. F5 solutions broaden the reach of IT
through an open, extensible framework and a rich partner ecosystem
of leading technology and orchestration vendors. This approach lets
customers pursue the infrastructure model that best fits their
needs over time. The world’s largest businesses, service providers,
government entities, and consumer brands rely on F5 to stay ahead
of cloud, security, and mobility trends. For more information, go
to f5.com.
You can also follow @f5networks on Twitter or visit us on
LinkedIn and Facebook for more information about F5, its partners,
and technologies.
Forward-Looking Statements
This press release contains forward-looking statements
including, among other things, statements regarding the continuing
strength and momentum of F5’s business, future financial
performance, sequential growth, projected revenues including target
revenue and earnings ranges, income, earnings per share, share
amount and share price assumptions, demand for application delivery
networking, application delivery services, security, virtualization
and diameter products, expectations regarding future services and
products, expectations regarding future customers, markets and the
benefits of products, and other statements that are not historical
facts and which are forward-looking statements. These
forward-looking statements are subject to the safe harbor
provisions created by the Private Securities Litigation Reform Act
of 1995. Actual results could differ materially from those
projected in the forward-looking statements as a result of certain
risk factors. Such forward-looking statements involve risks and
uncertainties, as well as assumptions and other factors that, if
they do not fully materialize or prove correct, could cause the
actual results, performance or achievements of the company, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to: customer acceptance of our new traffic management,
security, application delivery, optimization, diameter and
virtualization offerings; the timely development, introduction and
acceptance of additional new products and features by F5 or its
competitors; competitive factors, including but not limited to
pricing pressures, industry consolidation, entry of new competitors
into F5’s markets, and new product and marketing initiatives by our
competitors; increased sales discounts; uncertain global economic
conditions which may result in reduced customer demand for our
products and services and changes in customer payment patterns;
global economic conditions and uncertainties in the geopolitical
environment; overall information technology spending; litigation
involving patents, intellectual property, shareholder and other
matters, and governmental investigations; natural catastrophic
events; a pandemic or epidemic; F5’s ability to sustain, develop
and effectively utilize distribution relationships; F5’s ability to
attract, train and retain qualified product development, marketing,
sales, professional services and customer support personnel; F5’s
ability to expand in international markets; the unpredictability of
F5’s sales cycle; F5’s share repurchase program; future prices of
F5’s common stock; and other risks and uncertainties described more
fully in our documents filed with or furnished to the Securities
and Exchange Commission, including our most recent reports on Form
10-K and Form 10-Q and current reports on Form 8-K that we may file
from time to time, which could cause actual results to vary from
expectations. The financial information contained in this release
should be read in conjunction with the consolidated financial
statements and notes thereto included in F5’s most recent reports
on Forms 10-Q and 10-K as each may be amended from time to time.
All forward-looking statements in this press release are based on
information available as of the date hereof and qualified in their
entirety by this cautionary statement. F5 assumes no obligation to
revise or update these forward-looking statements.
GAAP to non-GAAP Reconciliation
F5’s management evaluates and makes operating decisions using
various operating measures. These measures are generally based on
the revenues of its products, services operations and certain costs
of those operations, such as cost of revenues, research and
development, sales and marketing and general and administrative
expenses. One such measure is net income excluding stock-based
compensation, amortization of purchased intangible assets and
acquisition-related charges, net of taxes, which is a non-GAAP
financial measure under Section 101 of Regulation G under the
Securities Exchange Act of 1934, as amended. This measure consists
of GAAP net income excluding, as applicable, stock-based
compensation, amortization of purchased intangible assets and
acquisition-related charges. This measure of non-GAAP net income is
adjusted by the amount of additional taxes or tax benefit that the
company would accrue if it used non-GAAP results instead of GAAP
results to calculate the company’s tax liability. Stock-based
compensation is a non-cash expense that F5 has accounted for since
July 1, 2005 in accordance with the fair value recognition
provisions of Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 718
Compensation—Stock Compensation (“FASB ASC Topic 718”).
Amortization of intangible assets is a non-cash expense. Investors
should note that the use of intangible assets contribute to
revenues earned during the periods presented and will contribute to
revenues in future periods. Acquisition-related expenses consist of
professional services fees incurred in connection with
acquisitions.
Management believes that non-GAAP net income per share provides
useful supplemental information to management and investors
regarding the performance of the company’s core business operations
and facilitates comparisons to the company’s historical operating
results. Although F5’s management finds this non-GAAP measure to be
useful in evaluating the performance of the core business,
management’s reliance on this measure is limited because items
excluded from such measures could have a material effect on F5’s
earnings and earnings per share calculated in accordance with GAAP.
Therefore, F5’s management will use its non-GAAP earnings and
earnings per share measures, in conjunction with GAAP earnings and
earnings per share measures, to address these limitations when
evaluating the performance of the company’s core business.
Investors should consider these non-GAAP measures in addition to,
and not as a substitute for, financial performance measures in
accordance with GAAP.
F5 believes that presenting its non-GAAP measure of earnings and
earnings per share provides investors with an additional tool for
evaluating the performance of the company’s core business and which
management uses in its own evaluation of the company’s performance.
Investors are encouraged to look at GAAP results as the best
measure of financial performance. However, while the GAAP results
are more complete, the company provides investors this supplemental
measure since, with reconciliation to GAAP, it may provide
additional insight into the company’s operational performance and
financial results.
For reconciliation of this non-GAAP financial measure to the
most directly comparable GAAP financial measure, please see the
section in our Consolidated Statements of Operations entitled
“Non-GAAP Financial Measures.”
F5 Networks, Inc. Consolidated
Balance Sheets
(unaudited, in thousands)
September 30, September 30, 2015
2014 Assets Current assets Cash and cash
equivalents $ 390,460 $ 281,502 Short-term investments 383,882
363,877 Accounts receivable, net of allowances of $1,979 and $4,958
279,434 242,242 Inventories 33,717 24,471 Deferred tax assets
50,128 42,290 Other current assets 50,519 44,466
Total current assets 1,188,140 998,848
Property and equipment, net 95,909 66,791 Long-term investments
397,656 482,917 Deferred tax assets 6,492 4,434 Goodwill 555,965
556,957 Other assets, net 68,128 75,003 Total assets
$ 2,312,290 $ 2,184,950
Liabilities and Shareholders’
Equity Current liabilities Accounts payable $ 50,814 $ 43,772
Accrued liabilities 130,401 108,772 Deferred revenue 573,908
484,437 Total current liabilities 755,123
636,981 Other long-term liabilities 30,136 22,718 Deferred
revenue, long-term 209,402 152,312 Deferred tax liabilities
901 3,629 Total long-term liabilities 240,439
178,659 Commitments and contingencies Shareholders’
equity Preferred stock, no par value; 10,000 shares authorized, no
shares outstanding - -
Common stock, no par value; 200,000 shares
authorized, 70,138 and 73,390 shares issued and outstanding
10,159 15,753 Accumulated other comprehensive loss (15,288) (9,584)
Retained earnings 1,321,857 1,363,141 Total
shareholders' equity 1,316,728 1,369,310 Total
liabilities and shareholders' equity $ 2,312,290 $ 2,184,950
F5 Networks, Inc.
Consolidated Statements of Operations (unaudited, in
thousands, except per share amounts) Three
Months Ended Twelve Months Ended September 30,
September 30, 2015 2014
2015 2014
Net revenues Products $ 257,719 $ 255,461 $ 991,539 $ 936,130
Services 243,582 209,805 928,284
795,916 Total 501,301 465,266 1,919,823
1,732,046 Cost of net revenues (1)(2) Products 44,505 43,351
174,225 158,788 Services 40,153 38,601
158,036 151,171 Total 84,658
81,952 332,261 309,959
Gross Profit 416,643 383,314 1,587,562 1,422,087
Operating expenses (1)(2) Sales and marketing 151,653 143,284
602,540 558,284 Research and development 77,665 65,401 296,583
263,792 General and administrative 39,726
27,148 135,540 106,454 Total
269,044 235,833 1,034,663
928,530 Income from operations 147,599 147,481
552,899 493,557 Other income, net 1,865 2,323
8,445 3,785 Income before income
taxes 149,464 149,804 561,344 497,342 Provision for income taxes
52,427 55,783 196,330
186,159 Net Income $ 97,037 $ 94,021 $
365,014 $ 311,183 Net income per share
- basic $ 1.37 $ 1.27 $ 5.07 $ 4.13
Weighted average shares - basic 70,679 73,817
71,944 75,395 Net income
per share - diluted $ 1.36 $ 1.26 $ 5.03 $
4.09 Weighted average shares - diluted 71,098
74,366 72,547 76,092
Non-GAAP Financial Measures Net income
as reported $ 97,037 $ 94,021 $ 365,014 $ 311,183 Stock-based
compensation expense (3) 41,634 25,159 145,553 127,156 Amortization
of purchased intangible assets 3,409 3,147 13,231 9,488 Tax effects
related to above items (11,414 ) (5,585 ) (43,461 ) (34,859 )
Net income excluding stock-based
compensation and amortization of purchased intangible assets
(non-GAAP) - diluted
$ 130,666 $ 116,742 $
480,337 $ 412,968 Net income per share
excluding stock-based compensation and amortization of purchased
intangible assets (non-GAAP) - diluted $ 1.84 $ 1.57
$ 6.62 $ 5.43 Weighted average shares -
diluted 71,098 74,366 72,547
76,092 (1) Includes stock-based
compensation as follows: Cost of net revenues $ 3,723 $ 2,591 $
14,220 $ 13,985 Sales and marketing 13,992 9,521 56,754 50,091
Research and development 11,629 9,029 46,129 43,633 General and
administrative 12,290 4,018
28,450 19,447 $ 41,634 $ 25,159
$ 145,553 $ 127,156 (2) Includes amortization
of purchased intangible assets as follows: Cost of net revenues $
2,682 $ 2,651 $ 10,650 $ 7,890 Sales and marketing 487 496 1,946
1,598 General and administrative 240 -
635 - $ 3,409 $ 3,147 $
13,231 $ 9,488 (3) Stock-based compensation is
accounted for in accordance with the fair value recognition
provisions of Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 718, Compensation –
Stock Compensation (“FASB ASC Topic 718”)
F5 Networks, Inc. Consolidated Statements of Cash
Flows (unaudited, in thousands) Years
Ended September 30, 2015
2014 Operating activities Net income $
365,014 $ 311,183 Adjustments to reconcile net income to net cash
provided by operating activities: Realized loss (gain) on
disposition of assets and investments 282 (195 ) Stock-based
compensation 145,553 127,156 Provisions for doubtful accounts and
sales returns 1,488 2,870 Depreciation and amortization 52,583
46,121 Deferred income taxes (12,571 ) (3,090 ) Changes in
operating assets and liabilities, net of amounts acquired:
Accounts receivable
(38,680 ) (40,895 ) Inventories (9,246 ) (5,445 ) Other current
assets (6,533 ) (9,828 ) Other assets 569 (2,502 ) Accounts payable
and accrued liabilities 39,521 18,339 Deferred revenue
146,561 105,278 Net cash provided by operating
activities 684,541 548,992
Investing activities Purchases of investments (609,875 )
(515,737 ) Maturities of investments 461,327 523,983 Sales of
investments 205,292 214,493 (Increase) decrease in restricted cash
(357 ) 59 Acquisition of intangible assets (6,779 ) - Acquisition
of businesses, net of cash acquired - (49,439 ) Purchases of
property and equipment (60,307 ) (22,718 ) Net cash
(used in) provided by investing activities (10,699 )
150,641
Financing activities Excess tax
benefit from stock-based compensation 9,517 10,283
Proceeds from the exercise of stock
options and purchases of stock under employee stock purchase
plan
40,439 35,299 Repurchase of common stock (606,858 )
(650,542 ) Net cash used in financing activities (556,902 )
(604,960 ) Net increase in cash and cash equivalents
116,940 94,673 Effect of exchange rate changes on cash and cash
equivalents (7,982 ) (2,864 ) Cash and cash equivalents, beginning
of period 281,502 189,693 Cash and cash
equivalents, end of period $ 390,460 $ 281,502
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151028006637/en/
F5 Networks, Inc.Investor RelationsJohn Eldridge,
206-272-6571j.eldridge@f5.comorPublic
RelationsNathan Misner,
206-272-7494n.misner@f5.com
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