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A month has gone by since the last earnings report for F5 Networks (FFIV). Shares have lost about 1.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is F5 due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
F5 Q1 Earnings and Revenues Surpass Expectations
F5 delivered outstanding first-quarter fiscal 2025 results with non-GAAP earnings of $3.84 per share. F5’s first-quarter fiscal 2025 earnings surpassed the Zacks Consensus Estimate by 14% and came ahead of management’s guidance of $3.29-$3.41 (midpoint of $3.35). The bottom line grew 12% annually, illustrating the combined effects of strong top-line growth, disciplined operating expense management and improved gross margin.
F5’s revenues of $766.5 million for the first quarter of fiscal 2025 surpassed the consensus mark by 7.1%. The top line increased 11% on a year-over-year basis. Revenues also surpassed management’s guidance of $705-$725 million (midpoint of $715 million). Strong growth across all segments, together with FFIV's excellent execution and conformity to secular trends, have driven the robust top line.
FFIV’s Q1 Top-Line Details
Product revenues (48% of total revenues), which comprise the Software and Systems sub-divisions, increased 21% year over year to $368.5 million. The increase in Product revenues was mainly due to strong growth in Software and Systems sales. The company’s non-GAAP Product revenues were higher than our estimate of $308.8 million.
Systems revenues increased 18% year over year to $160 million, accounting for approximately 20.9% of the total Product revenues. The company revealed that it is experiencing an improvement in the Systems division, driven by increased demand for systems upgrades among customers. Our estimate for Systems revenues was pegged at $136.5 million.
Software revenues increased 22% year over year to $209 million in the first quarter of fiscal 2025. Software revenues grew on the back of subscriptions. Our estimate was pegged at $172.3 million.
Global Service revenues (51.9% of the total revenues) grew 3% to $398 million. The growth was mainly driven by price increases introduced in fiscal 2022. Our estimate for Global Services revenues was pegged at $405.8 million.
F5 registered sales growth across the Americas, APAC and EMEA regions, witnessing a year-over-year increase of 15%, 6% and 6%, respectively. Revenue contributions from the Americas, EMEA and APAC regions were 56%, 27% and 17%, respectively. Customer-wise, Enterprises, Government and Service providers represented 71%, 16% and 13% of product bookings, respectively.