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F5 Networks Announces Results for Second Quarter of Fiscal 2005

Company reports 67% year-over-year revenue growth, further improvements in profitability, record cash flow from operations

F5 Networks, Inc. (NASDAQ: FFIV) - For the second quarter of fiscal 2005, F5 Networks announced revenue of $67.7 million, up 13 percent sequentially over revenue of $60.0 million in the first quarter and 67 percent over revenue of $40.7 million in the second quarter a year ago. Net income for the quarter was $12.1 million ($0.31 per diluted share), compared to $10.0 million ($0.26 per diluted share) in the prior quarter.

For the second quarter of fiscal 2004 the company reported net income of $6.0 million ($0.16 per diluted share). However, during the fourth quarter of 2004, F5 became subject to income taxes on U.S. income, and to present the results for prior periods on a tax-affected basis that is comparable to the current period, the company's financial statements include pro forma earnings for the second quarter of fiscal 2004. On a pro forma basis, net income for the second quarter of fiscal 2004 would have been $4.0 million ($0.11 per diluted share) had the company recorded a 37 percent provision for income taxes.

"During the second quarter, we continued to see solid growth across our business," said John McAdam, F5 president and chief executive officer. "Demand for our application traffic management products remained strong, and sales of BIG-IP version 9, launched last September, accounted for 47 percent of traffic management revenue. Likewise, strengthening demand for our FirePass SSL VPN products fueled the growth of security revenue to $6.5 million, up 28 percent from the prior quarter."

With gross margins remaining constant at 77 percent, McAdam said a further decline in the company's expense ratio boosted its operating margin to 26 percent, up from 14 percent in the second quarter of last year. In addition, the company's financial position continued to strengthen during the quarter, with record cash flow of $17.6 million from operations contributing to a quarter-end balance of $293 million in cash and investments.

For the third quarter of fiscal 2005, ending June 30, McAdam said the company has set a revenue target of $70 million to $72 million, with an earnings target of $0.33 to $0.34 per diluted share.

About F5 Networks

F5 enables organizations to successfully deliver business-critical applications and gives them the greatest level of agility to stay ahead of growing business demands. As the pioneer and global leader in Application Traffic Management, F5 continues to lead the industry by driving more intelligence into the network to deliver advanced application agility. F5 products ensure the secure and optimized delivery of applications to any user - anywhere. Through its flexible and cohesive architecture, F5 delivers unmatched value by dramatically improving the way organizations serve their employees, customers and constituents, while lowering operational costs. The company is headquartered in Seattle, Washington with offices worldwide. For more information go to

Forward Looking Statements

Statements in this press release concerning revenue and earnings targets for the third quarter of fiscal 2005 and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may 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, among others: customer acceptance of our new traffic management and security offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; 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 and the unpredictability of F5's sales cycle. F5 has no duty to update any guidance provided or other matters discussed in this press release. More information about potential risk factors that could affect F5's business and financial results is included in the Company's annual report on Form 10K for the fiscal year ended September 30, 2004, and other public filings with the Securities and Exchange Commission.

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This press release may contain forward looking statements relating to future events or future financial performance that involve risks and uncertainties. Such statements can be identified by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms or comparable terms. These statements are only predictions and actual results could differ materially from those anticipated in these statements based upon a number of factors including those identified in the company's filings with the SEC.