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F5 Networks (FFIV) to Report Q1 Earnings: What's in the Cards?

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F5 Networks (FFIV - Free Report) is set to report first-quarter fiscal 2021 results on Jan 26.

For the fiscal first quarter, F5 Networks estimates revenues of $595-$615 million (mid-point $605 million). The Zacks Consensus Estimate for revenues is pegged at $625.2 million, suggesting year-over-year growth of 9.8%.

The company anticipates non-GAAP earnings of $2.26-$2.38 per share (mid-point $2.32). The Zacks Consensus Estimate is pinned at $2.50 per share, indicating a year-over-year decline of approximately 2%.

The company’s earnings surpassed estimates in all of the trailing four quarters, the average beat being 6.4%.

Let’s see how things have shaped up prior to the upcoming announcement.

Factors at Play

F5 Networks’ fiscal first-quarter results are likely to have benefited from its focus on transitioning the business to a software-driven model. Increasing demand for multi-cloud application services is expected to have been a key growth driver.

The COVID-19 pandemic-induced work-from-home and online-learning wave globally is significantly spurring demand for secured communication networks. We anticipate this new trend to have aided F5 Networks’ quarterly performance.

Rising traction of the Enterprise License Agreement (ELA) and annual subscriptions by customers is likely to have boosted software growth. This, in turn, is anticipated to have fueled product revenue growth. The Zacks Consensus Estimate for product revenues is pinned at $261 million, suggesting more than 11% improvement from the year-ago reported figure of $235 million.

Moreover, the top line is likely to have gained from significant contributions from NGINX, which was acquired by F5 Networks in third-quarter fiscal 2019.

Furthermore, the coronavirus crisis is expected to have had a minimal impact on F5 Networks’ business during the fiscal first quarter thanks to its efficient inventory management.

However, organizations are pushing back their big and expensive technology products due to the slowdown in global economic growth, which might have hurt the company’s fiscal first-quarter revenues. Additionally, as more and more organizations continue shifting to cloud computing owing to the maintenance-free and cost-effective nature, F5 Networks’ hardware business is likely to have seen a declining trend during the quarter under review as well.

What Our Model Says

Our proven model does not predict an earnings beat for F5 Networks this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

F5 Networks currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Facebook, Inc. (FB - Free Report) has an Earnings ESP of +1.67% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet, Inc. (AVT - Free Report) has an Earnings ESP of +2.63% and carries a Zacks Rank #3, at present.

Advanced Micro Devices, Inc. (AMD - Free Report) has an Earnings ESP of +2.26% and holds a Zacks Rank of 3 currently.

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