Press Releases Archive   Search Press Releases
Press Release

F5 Networks Announces Results for Second Quarter of Fiscal 2011

For the second quarter of fiscal 2011, F5 Networks, Inc. (NASDAQ: FFIV) announced revenue of $277.6 million, up 3.2 percent from $268.9 million in the prior quarter and 34.7 percent from $206.1 million in the second quarter of fiscal 2010.

GAAP net income was $55.6 million ($0.68 per diluted share), compared to $55.7 million ($0.68 per diluted share) in the prior quarter and $33.1 million ($0.41 per diluted share) in the second quarter a year ago.

Excluding the impact of stock-based compensation net of tax, non-GAAP net income was $71.5 million ($0.88 per diluted share), compared to $72.2 million ($0.88 per diluted share) in the prior quarter and $45.2 million ($0.56 per diluted share) in the second quarter of fiscal 2010.

"F5's solid sequential and year-over-year revenue growth in the second quarter was driven by continuing strength in the Americas and APAC," said John McAdam, president and chief executive officer. Revenue from the Americas grew 4 percent from the prior quarter and 38 percent from the second quarter of fiscal 2010. APAC revenue increased 10 percent from the prior quarter and 68 percent year-over-year. Japan revenue was down 6 percent sequentially and flat with revenue in the second quarter of last year. In EMEA, revenue grew 22 percent year-over-year but was essentially flat with the prior quarter.

"Overall revenue growth and stable gross margins enabled us to add 125 employees in the second quarter and maintain our non-GAAP operating margin at just under 38 percent," McAdam said.

During the quarter F5 generated $91 million in cash from operations, and after repurchasing 404,933 shares of our outstanding common stock the company ended the quarter with $997 million in cash and investments.

For the current quarter, ending June 30, management has set a revenue goal of $287 million to $292 million with a GAAP earnings target of $0.69 to $0.71 per diluted share. Excluding stock-based compensation expense, the company's non-GAAP earnings target is $0.89 to $0.91 per diluted share.

A reconciliation of the company's expected GAAP and non-GAAP earnings is provided in the following table:

Three months ended June 30, 2011
Reconciliation of Expected Non-GAAP Third Quarter Earnings Low High

Net income $56.4 $58.2
Stock-based compensation expense, net of tax $16.4 $16.4
Non-GAAP net income excluding stock-based compensation expense
$72.8 $74.6
Net income per share - diluted $0.69 $0.71
Non-GAAP net income per share - diluted $0.89 $0.91

About F5 Networks

F5 Networks is the global leader in Application Delivery Networking (ADN), focused on ensuring the secure, reliable, and fast delivery of applications. F5's flexible architectural framework enables community-driven innovation that helps organizations enhance IT agility and dynamically deliver services that generate true business value. F5's vision of unified application and data delivery offers customers an unprecedented level of choice in how they deploy ADN solutions. It redefines the management of application, server, storage, and network resources, streamlining application delivery and reducing costs. Global enterprise organizations, service and cloud providers, and Web 2.0 content providers trust F5 to keep their business moving forward. For more information, go to

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

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, 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. Net income excluding stock-based compensation (non-GAAP) 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").

Management believes that net income excluding stock-based compensation (non-GAAP) provides useful supplemental information to management and investors regarding the performance of the company's 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 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 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 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. For example, stock-based compensation is an obligation of the company that should be considered and each line item is important to financial performance generally. 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 its operational performance and financial results.

# # #

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.