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F5 Networks (FFIV) Q2 Earnings & Revenues Top Estimates

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F5 Networks (FFIV - Free Report) delivered second-quarter fiscal 2022 non-GAAP earnings per share of $2.13 beating the Zacks Consensus Estimate of $2.01. The figure decreased 14.8% from the year-ago quarter but came within management’s guidance of $1.75-$2.15 per share.

During the fiscal second quarter, non-GAAP revenues dipped 1.7% year on year to $634.2 million but surpassed the Zacks Consensus Estimate of $633.6 million. The top line came in higher than the mid-point $630 million of the guided range $610-$650 million.

Top Line in Detail

Product revenues (47% of total revenues), which comprise Software and Systems sub-divisions, decreased 3.8% year on year to $297.5 million. Software sales jumped 40% year over year to $152 million, accounting for approximately 51% of the total Product revenues. System revenues slumped 27% to $146 million, making up the remaining 49% of the total Product revenues.

F5, Inc. Price, Consensus and EPS Surprise

F5, Inc. Price, Consensus and EPS Surprise

F5, Inc. price-consensus-eps-surprise-chart | F5, Inc. Quote

Global Service revenues (53.2% of total revenues) remained flat at $337 million.

F5 Networks registered sales growth across the Americas, witnessing year-over-year increase of 4%. Meanwhile, it registered a 6% and 9% decrease in sales growth from the APAC and EMEA regions, respectively. Revenue contributions from the Americas, EMEA and APAC regions were 57%, 25% and 19%, respectively.

Customer wise, Enterprises, Service providers and Government represented 65%, 15% and 20% of product bookings, respectively.

Margins

GAAP gross margin remained flat year over year at 80.1%, while the non-GAAP margin shrunk 50 basis points (“bps”) to 82.9%.

The GAAP operating expenses fell 6.5% year over year to $433.2 million, while the non-GAAP operating expenses rose 4.5% to $357.8 million. F5 Networks’ GAAP operating margin expanded 350 bps to 11.8%, while non-GAAP operating margin contracted 380 bps to 26.5%.

Balance Sheet & Cash Flow

F5 Networks exited the March-ended quarter with cash and short-term investments of $887.1 million compared with the previous quarter’s $859 million.

During the fiscal second quarter, the company generated $127 million of operating cash flow compared with $90.4 million reported in the previous quarter.

F5 Networks repurchased shares worth $125 million during the quarter reported.

Guidance

F5 Networks projects non-GAAP revenues to be $660-$680 million (mid-point of $670 million) for the third quarter of fiscal 2022. The Zacks Consensus Estimate for revenues is pegged at $686.5 million.

The company anticipates non-GAAP earnings per share in the $2.18-$2.30 band (mid-point of $2.24). The Zacks Consensus Estimate for the same stands at $2.54.

F5 Networks anticipates that supply-chain disruptions caused by the pandemic might restrict its ability to meet high demand for its solutions across on-premise and cloud environments. Hence, the company revised its revenue growth outlook for the fiscal 2022.

For fiscal 2022, F5 Networks now expects revenues to grow 1.5-4% on a year-over-year basis compared with the previous range of 4.5-8% year-over-year growth. However, it expects increase in software sales to remain in-line with its prior guidance of 35-40%.

Zacks Rank & Key Picks

F5 Networks currently carries a Zacks Rank #3 (Hold). Shares of FFIV have surged 3.8% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Yelp (YELP - Free Report) sporting a Zacks Rank #1 (Strong Buy), Gogo (GOGO - Free Report) and Analog Devices (ADI - Free Report) , both carrying a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Yelp's first-quarter 2022 loss has been revised a couple of cents southward to 11 cents per share over the past 60 days. For 2022, earnings estimates have moved north by 53.6% to $1.06 per share in the past 60 days.

Yelp's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 632.9%. Shares of YELP have fallen 18.8% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised downward by a penny to 13 cents per share over the past 30 days. For 2022, Gogo's earnings estimates have moved north by 25% to 65 cents per share in the past 60 days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have soared 71.8% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have decreased 2.1% in the past year.


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