F5 Networks, Inc. (NASDAQ: FFIV) today announced revenue of $395.3 million for the fourth quarter of fiscal year 2013, up 7 percent from $370.3 million in the prior quarter and 9 percent from $362.6 million in the fourth quarter of fiscal year 2012. For fiscal year 2013, revenue was $1.48 billion, up 8 percent from $1.38 billion in fiscal year 2012.
GAAP net income for the fourth quarter was $76.2 million ($0.97 per diluted share) compared to $68.2 million ($0.86 per diluted share) in the third quarter of 2013 and $67.7 million ($0.85 per diluted share) in the fourth quarter a year ago. GAAP net income for fiscal year 2013 was $277.3 million ($3.50 per diluted share) versus $275.2 million ($3.45 per diluted share) in fiscal year 2012.
Excluding the impact of stock-based compensation, amortization of purchased intangible assets and a loss on a facility sublease, non-GAAP net income for the fourth quarter was $99.2 million ($1.26 per diluted share), compared to $88.4 million ($1.12 per diluted share) in the prior quarter and $88.7 million ($1.12 per diluted share) in the fourth quarter of fiscal 2012. For fiscal year 2013, non-GAAP net income was $362.9 million ($4.59 per diluted share) versus $348.6 million ($4.37 per diluted share) in fiscal year 2012.
A reconciliation of GAAP net income to non-GAAP net income is included on the attached Consolidated Statements of Operations.
"The fourth quarter of fiscal 2013 was a positive finish to the year, characterized by strong demand for our new products and increasing traction in new and emerging market opportunities," said John McAdam, F5 president and chief executive officer.
"Following the release of the BIG-IP 5000 and 7000 series at the end of the third quarter, our entire refreshed family of BIG-IP appliances was shipping in Q4, contributing to strong sales in the quarter and continuing momentum as we enter fiscal 2014. We also won several large deals driven by new and enhanced software modules, including Advanced Firewall Manager (AFM), Application Security Manager (ASM), Access Policy Manager (APM), and Policy Enforcement Manager (PEM). In addition, our Virtual Edition (software-only) products continued to gain traction, with revenue up 21 percent sequentially across a broad base of diverse customers.
"As reflected in the number of large deals involving AFM, ASM and APM, security was a key business driver in Q4, and we continued to expand our integrated security offerings with the acquisition of Versafe, a provider of fraud detection and prevention solutions, in early September. In the service provider segment, we further strengthened our pipeline of Diameter signaling and routing opportunities with a number of Traffix design wins at major carriers.
"While the global economy shows no signs of improvement in the near term, we are confident that the company-specific drivers that contributed to our growth in Q4 will continue into fiscal 2014. As we look ahead to Q1, we expect to see continued strength in our new product offerings against the backdrop of our typical Q1 seasonality," McAdam said.
For the first quarter of fiscal 2014, ending December 31, the company has set a revenue target of $390 million to $400 million with a GAAP earnings target of $0.81 to $0.84 per diluted share. Excluding stock-based compensation expense and amortization of purchased intangible assets, the company's non-GAAP earnings target is $1.17 to $1.20 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, 2013
|Reconciliation of Expected Non-GAAP First Quarter Earnings
|Stock-based compensation expense
|Amortization of purchased intangible assets
|Tax effects related to above items
|Non-GAAP net income excluding stock-based compensation expense and amortization of purchased intangible assets
|Net income per share - diluted
|Non-GAAP net income per share - diluted
F5 will hold a meeting for analysts and investors at The Sofitel New York, from 8:00 a.m. to 12:30 p.m. Eastern Time on Thursday, November 14, 2013. To register online, please visit: http://interact.f5.com/2013Q3SAIMInvestorRelations_2-Registration2.html.
For more information email the registration team at F5AIM@f5.com.
The meeting will also be webcast live and an archived version will be available through January 22, 2014. The link for the live webcast and the archived version is http://www.f5.com/about/investor-relations/events-calendar.html.
About F5 Networks
F5 Networks (NASDAQ: FFIV) makes the connected world run better. F5 helps organizations meet the demands and embrace the opportunities that come with the relentless growth of voice, data, and video traffic, mobile workers, and applications—in the data center, the network, and the cloud. The world's largest businesses, service providers, government entities, and consumer brands rely on F5's intelligent services framework to deliver and protect their applications and services while ensuring people stay connected. Learn more at www.f5.com. You can also follow @f5networks on Twitter or visit us on Facebook for more information about F5, its partners, and technology. For a complete listing of F5 community sites, please visit www.f5.com/news-press-events/web-media/community.html.
Forward Looking Statements
Statements in this press release concerning the continuing strength of F5's business, sequential growth, the target revenue and earnings range, share amount and share price assumptions, demand for application delivery networking and storage virtualization products and other statements that are not historical facts are forward-looking statements. 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, WAN optimization and storage virtualization offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; 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; 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; the 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. 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. In addition, a loss on a facility sublease has been excluded from GAAP net income for the purpose of measuring non-GAAP earnings and earnings per share in the fourth fiscal quarter of 2013.
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 Condensed Consolidated Statement of Operations entitled "GAAP to Non-GAAP Reconciliation."
F5 and F5 Networks are trademarks or service marks of F5 Networks, Inc., in the U.S. and other countries. All other product and company names herein may be trademarks of their respective owners.
F5 (NASDAQ: FFIV) provides solutions for an application world. F5 helps organizations seamlessly scale cloud, data center, and software defined networking (SDN) deployments to successfully deliver applications 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 data center 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 Facebook for more information about F5, its partners, and technologies.
F5, BIG-IP, Access Policy Manager, Global Traffic Manager, and Software Defined Application Services are trademarks or service marks of F5 Networks, Inc., in the U.S. and other countries. All other product and company names herein may be trademarks of their respective owners.