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F5 Networks' (FFIV) Q2 Earnings and Sales Top Estimates
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F5 Networks (FFIV - Free Report) reported second-quarter fiscal 2023 results, wherein the top and the bottom lines surpassed the Zacks Consensus Estimate.
This Seattle-based company’s non-GAAP earnings of $2.53 per share beat the Zacks Consensus Estimate of $2.42. The bottom line increased 18.8% from the year-ago quarter’s $2.13 per share and was way higher than management’s guided range of $2.36-$2.48 per share.
During the reported quarter, F5 Networks witnessed a 11% increase in its revenues amid a global chip shortage scenario in the semiconductor industry. The company’s non-GAAP revenues were $703.2 million, which beat the Zacks Consensus Estimate of $700.7 million. The top line was above the mid-point of the guided range of $690-$710 million.
Product revenues (48.4% of total revenues), which comprise Software and Systems sub-divisions, increased 14% year over year to $340.6 million. System sales jumped 43% year over year to $209 million, accounting for approximately 61.3% of the total Product revenues. However, Software revenues slumped 13% to $132 million, making up the remaining 38.7% of the total Product revenues. This downside was due to the ongoing global chip shortage.
Global Service revenues (51.6% of total revenues) grew 8% to $362.6 million.
F5 Networks registered sales growth across the Americas, EMEA and APAC regions, witnessing a year-over-year increase of 7%, 22% and 9%, respectively. Revenue contributions from the Americas, EMEA and APAC regions were 54%, 27% and 18%, respectively.
Customer-wise, Enterprises, Service providers and Government represented 67%, 13% and 20% of product bookings, respectively.
Margins
GAAP and non-GAAP gross margins contracted 220 basis points (bps) and 250 bps to 77.9% and 80.4%, respectively.
GAAP and non-GAAP operating expenses went up 1.9% and 4.6%, respectively, to $441.5 million and $374.1 million. F5 Networks’ GAAP and non-GAAP operating margins expanded 330 bps and 70 bps to 15.1% and 27.2%, respectively.
Balance Sheet & Cash Flow
F5 Networks exited the March-ended quarter with cash and short-term investments of $755.3 million compared with the previous quarter’s $660 million.
During the fiscal second quarter, the company generated $141 million of operating cash flow compared with the $158 million reported in the previous quarter. The operating cash flow remained under pressure due to strong multi-year subscription sales, which impacted the cash collection process.
Guidance
F5 Networks projects non-GAAP revenues in the $690-$710 million (mid-point of $700 million) and non-GAAP earnings per share in the $2.78-$2.90 band (mid-point of $2.84) for third-quarter fiscal 2023. Non-GAAP gross margin is forecast to be around 82%.
For fiscal 2023, F5 Networks expects low-to-mid-single digit revenue growth.
The company anticipates non-GAAP earnings to grow in 7-11% band. Non-GAAP operating margin is forecasted to be roughly 30%.
Zacks Rank & Stocks to Consider
F5 Networks currently has a Zacks Rank #3 (Hold). Shares of FFIV have declined 33% in the past year.
The Zacks Consensus Estimate for Meta Platforms' first-quarter 2023 earnings has been revised a penny upward to $1.97 per share over the past seven days. For fiscal 2023, earnings estimates have moved north by a penny to $10.23 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 8.6%. Shares of the company have gained 14.5% in the past year.
The Zacks Consensus Estimate for Salesforce’s first-quarter fiscal 2024 earnings has been revised northward from $1.30 to $1.61 per share over the past 60 days. For fiscal 2024, earnings estimates have moved up by 21.3% to $7.11 in the past 60 days.
CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.6%. Shares of the company have increased 6.9% in the past year.
The Zacks Consensus Estimate for ServiceNow’s first-quarter 2023 earnings has been revised southward from $2.04 to $2.02 per share over the past 90 days. For 2023, earnings estimates have moved up by a penny to $9.16 in the past seven days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.9%. Shares of the company have declined 3.2% in the past year.
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F5 Networks' (FFIV) Q2 Earnings and Sales Top Estimates
F5 Networks (FFIV - Free Report) reported second-quarter fiscal 2023 results, wherein the top and the bottom lines surpassed the Zacks Consensus Estimate.
This Seattle-based company’s non-GAAP earnings of $2.53 per share beat the Zacks Consensus Estimate of $2.42. The bottom line increased 18.8% from the year-ago quarter’s $2.13 per share and was way higher than management’s guided range of $2.36-$2.48 per share.
During the reported quarter, F5 Networks witnessed a 11% increase in its revenues amid a global chip shortage scenario in the semiconductor industry. The company’s non-GAAP revenues were $703.2 million, which beat the Zacks Consensus Estimate of $700.7 million. The top line was above the mid-point of the guided range of $690-$710 million.
F5, Inc. Price, Consensus and EPS Surprise
F5, Inc. price-consensus-eps-surprise-chart | F5, Inc. Quote
Top Line in Detail
Product revenues (48.4% of total revenues), which comprise Software and Systems sub-divisions, increased 14% year over year to $340.6 million. System sales jumped 43% year over year to $209 million, accounting for approximately 61.3% of the total Product revenues. However, Software revenues slumped 13% to $132 million, making up the remaining 38.7% of the total Product revenues. This downside was due to the ongoing global chip shortage.
Global Service revenues (51.6% of total revenues) grew 8% to $362.6 million.
F5 Networks registered sales growth across the Americas, EMEA and APAC regions, witnessing a year-over-year increase of 7%, 22% and 9%, respectively. Revenue contributions from the Americas, EMEA and APAC regions were 54%, 27% and 18%, respectively.
Customer-wise, Enterprises, Service providers and Government represented 67%, 13% and 20% of product bookings, respectively.
Margins
GAAP and non-GAAP gross margins contracted 220 basis points (bps) and 250 bps to 77.9% and 80.4%, respectively.
GAAP and non-GAAP operating expenses went up 1.9% and 4.6%, respectively, to $441.5 million and $374.1 million. F5 Networks’ GAAP and non-GAAP operating margins expanded 330 bps and 70 bps to 15.1% and 27.2%, respectively.
Balance Sheet & Cash Flow
F5 Networks exited the March-ended quarter with cash and short-term investments of $755.3 million compared with the previous quarter’s $660 million.
During the fiscal second quarter, the company generated $141 million of operating cash flow compared with the $158 million reported in the previous quarter. The operating cash flow remained under pressure due to strong multi-year subscription sales, which impacted the cash collection process.
Guidance
F5 Networks projects non-GAAP revenues in the $690-$710 million (mid-point of $700 million) and non-GAAP earnings per share in the $2.78-$2.90 band (mid-point of $2.84) for third-quarter fiscal 2023. Non-GAAP gross margin is forecast to be around 82%.
For fiscal 2023, F5 Networks expects low-to-mid-single digit revenue growth.
The company anticipates non-GAAP earnings to grow in 7-11% band. Non-GAAP operating margin is forecasted to be roughly 30%.
Zacks Rank & Stocks to Consider
F5 Networks currently has a Zacks Rank #3 (Hold). Shares of FFIV have declined 33% in the past year.
Some better-ranked stocks from the broader Computer and Technology sector are Meta Platforms (META - Free Report) , Salesforce (CRM - Free Report) and ServiceNow (NOW - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta Platforms' first-quarter 2023 earnings has been revised a penny upward to $1.97 per share over the past seven days. For fiscal 2023, earnings estimates have moved north by a penny to $10.23 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 8.6%. Shares of the company have gained 14.5% in the past year.
The Zacks Consensus Estimate for Salesforce’s first-quarter fiscal 2024 earnings has been revised northward from $1.30 to $1.61 per share over the past 60 days. For fiscal 2024, earnings estimates have moved up by 21.3% to $7.11 in the past 60 days.
CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.6%. Shares of the company have increased 6.9% in the past year.
The Zacks Consensus Estimate for ServiceNow’s first-quarter 2023 earnings has been revised southward from $2.04 to $2.02 per share over the past 90 days. For 2023, earnings estimates have moved up by a penny to $9.16 in the past seven days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.9%. Shares of the company have declined 3.2% in the past year.