F5 product sales climb as operating margin narrows
F5 finished its fiscal year with strong product revenue growth, but quarterly operating profit rose much more slowly than sales. Its board approved another 1.5 billion dollars of share repurchases. Software and systems both expanded, while reported net income declined and the company set out higher revenue expectations for the new fiscal year.
Economics & Markets··Midday
Systems and software lift product sales
F5, the US application delivery and security company, ended its fiscal fourth quarter with revenue of 917 million dollars, up 13 per cent from a year earlier. The quarter ended on September 30. Product revenue climbed 23 per cent to 510 million dollars, while services added 408 million dollars, an increase of 3 per cent. Products therefore grew considerably faster than services.[1]
Within products, systems revenue rose 29 per cent to 239 million dollars and software increased 19 per cent to 271 million dollars. Adjusted earnings reached 4.42 dollars per diluted share, compared with 4.39 dollars a year earlier. The adjusted result exceeded the analyst consensus of 4.26 dollars per share tracked by MarketBeat, with earnings moving above the corresponding year-earlier level as well.[1], [2]
Higher sales accompany narrower operating margins
Under generally accepted accounting principles, operating profit increased from 206 million dollars to 212 million dollars. Its share of revenue nevertheless fell from 25.4 per cent to 23.1 per cent. Gross profit rose from 666 million dollars to 754 million dollars, with gross margin unchanged at 82.2 per cent. Net income decreased from 190 million dollars to 186 million dollars.[1]
Adjusted operating profit also increased, from 299 million dollars to 309 million dollars, while its margin fell from 37.0 per cent to 33.7 per cent. F5 excludes share-based compensation and intangible asset amortisation, among other expenses, from adjusted results. The company said certain excluded expenses recur each quarter. Reported diluted earnings declined from 3.26 dollars to 3.23 dollars per share.[1]
Board adds repurchase authority for the new fiscal year
The board authorised another 1.5 billion dollars for share repurchases, on top of 322 million dollars left in the existing programme. Over the full fiscal year, revenue grew 11 per cent to 3.417 billion dollars and net income rose from 692 million dollars to 722 million dollars. Management forecast revenue growth of 8 per cent to 9 per cent in fiscal 2027 and adjusted earnings of 18.00 dollars to 18.30 dollars per share. Its first-quarter revenue outlook was 875 million dollars to 895 million dollars.[1]
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