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F5 Networks (FFIV)
:FFIV
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F5 Networks
(NASDAQ:FFIV)79Outperform
Positive Factors
Earnings
F5 posted an impressive FY1Q beat, guided 2Q Revenues ahead, and raised full-year guidance as new opportunities are opening up across hybrid/multi-cloud and GenAI.
Product Revenue
Revenue grew 11% yr-yr to $766.5M and beat consensus by 7% driven by accelerating Product Revenue growth.
Negative Factors
Valuation
The stock is trading at its historical high P/E multiple, which raises concerns about valuation.
F5 Networks (FFIV) vs. S&P 500 (SPY)
Market Cap
$16.15B
Dividend YieldN/A
Average Volume (3M)682.75K
Price to Earnings (P/E)28.1
Beta (1Y)0.73
Revenue Growth3.02%
EPS Growth31.36%
CountryUS
Employees6,557
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)10.05
Shares Outstanding57,652,256
10 Day Avg. Volume586,194
30 Day Avg. Volume682,745
Financial Highlights & Ratios
PEG Ratio0.90
Price to Book (P/B)N/A
Price to Sales (P/S)5.59
Price to Cash Flow (P/CF)19.90
P/FCF Ratio19.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$304.56Price Target Upside7.72% Upside
Rating ConsensusHold
Number of Analyst Covering10
F5 Networks Business Overview & Revenue Model
Company DescriptionF5 Networks, Inc. (FFIV) is a multinational company specializing in application services and security. It operates in the technology sector, providing solutions that ensure the security, performance, and availability of applications, whether on-premises or in the cloud. The company's core products include software and hardware solutions designed to optimize application delivery, enhance security measures, and improve network traffic management.
How the Company Makes MoneyF5 Networks generates revenue primarily through the sale of its software and hardware products, as well as associated services. The company's revenue streams include product sales, which encompass both application services and security solutions, and service revenue, which includes maintenance and support contracts. F5 also offers cloud-based solutions, contributing to its subscription-based revenue. Strategic partnerships with cloud service providers, technology integrators, and enterprise customers play a significant role in expanding its market reach and enhancing its revenue generation capabilities.
F5 Networks Financial Statement Overview
Summary
F5 Networks presents a strong financial profile with high profitability and effective cash management. The balance sheet supports growth with low leverage, reducing financial risk. While revenue growth is steady, continued focus on innovation and market expansion could enhance future growth prospects. The company's financial health is solid, providing a stable foundation for sustained performance.Income Statement
F5 Networks demonstrates strong profitability with a consistent increase in gross and net profit margins over the years. The TTM (Trailing-Twelve-Months) gross profit margin is robust, suggesting effective cost management, while the net profit margin indicates solid bottom-line performance. Revenue growth is steady, although not extraordinary, reflecting a stable business model.85
Very Positive
Balance Sheet
The company's balance sheet shows a solid equity base with a healthy equity ratio, indicating financial stability. The debt-to-equity ratio is low, suggesting conservative leverage usage, which minimizes financial risk. Return on equity is improving, reflecting efficient use of shareholder funds, though room for improvement exists.78
Positive
Cash Flow
Cash flow analysis reveals strong free cash flow generation and positive growth, indicating good cash management. Operating cash flow to net income ratio is robust, showcasing efficient cash conversion. Free cash flow to net income ratio further underscores the company's ability to generate cash relative to net earnings.82
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.89B | 2.82B | 2.81B | 2.70B | 2.60B | 2.35B | Gross Profit |
| 2.33B | 2.26B | 2.22B | 2.16B | 2.11B | 1.94B | EBIT |
| 699.34M | 675.48M | 537.96M | 417.88M | 445.92M | 415.37M | EBITDA |
| 819.75M | 774.24M | 636.40M | 539.51M | 394.02M | 564.00M | Net Income Common Stockholders |
| 594.84M | 566.78M | 394.95M | 322.16M | 331.24M | 307.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.37B | 1.07B | 803.32M | 884.57M | 910.61M | 1.21B | Total Assets |
| 4.90B | 5.61B | 5.25B | 5.28B | 5.00B | 4.68B | Total Debt |
| 711.97M | 249.56M | 239.56M | 622.15M | 665.99M | 727.04M | Net Debt |
| -314.86M | -825.04M | -557.60M | -135.86M | 85.02M | -122.52M | Total Liabilities |
| 2.50B | 2.48B | 2.45B | 2.81B | 2.64B | 2.45B | Stockholders Equity |
| 2.40B | 3.13B | 2.80B | 2.47B | 2.36B | 2.23B |
| Cash Flow | Free Cash Flow | ||||
| 845.11M | 762.01M | 599.23M | 409.01M | 614.54M | 600.96M | Operating Cash Flow |
| 874.55M | 792.42M | 653.41M | 442.63M | 645.20M | 660.90M | Investing Cash Flow |
| -62.05M | -59.21M | 36.39M | 218.12M | -445.33M | -747.00M | Financing Cash Flow |
| -436.71M | -457.00M | -653.30M | -476.51M | -468.28M | 337.24M |
F5 Networks Technical Analysis
Positive
282.73
Price Trends
279.54
Positive
259.34
Positive
223.67
Positive
Market Momentum
0.41
Positive
41.29
Neutral
18.74
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FFIV, the sentiment is Positive. The current price of 282.73 is below the 20-day moving average (MA) of 299.73, above the 50-day MA of 279.54, and above the 200-day MA of 223.67, indicating a neutral trend. The MACD of 0.41 indicates Positive momentum. The RSI at 41.29 is Neutral, neither overbought nor oversold. The STOCH value of 18.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FFIV.
F5 Networks Risk Analysis
F5 Networks disclosed 39 risk factors in its most recent earnings report. F5 Networks reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
F5 Networks Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.89T | 31.30 | 34.29% | 0.81% | 15.04% | 12.38% | |
79 Outperform | $16.15B | 28.13 | 19.51% | ― | 3.02% | 31.36% | |
75 Outperform | $107.85B | 39.45 | 33.14% | ― | 19.50% | 34.64% | |
74 Outperform | $251.67B | 27.72 | 20.02% | 2.53% | -5.34% | -30.57% | |
67 Neutral | $48.63B | ― | -8.71% | ― | 28.76% | 58.13% | |
60 Neutral | $11.97B | 41.77 | 6.21% | 2.45% | -8.82% | -10.01% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
FFIV
F5 Networks
282.73
92.13
48.34%
CSCO
Cisco Systems
63.96
16.30
34.20%
JNPR
Juniper Networks
36.01
-0.54
-1.48%
MSFT
Microsoft
401.02
1.98
0.50%
ANET
Arista Networks
87.82
16.70
23.48%
NET
Cloudflare
143.75
46.26
47.45%
F5 Networks Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: 4.82% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance in Q1 with significant revenue growth across product lines, driven by robust software subscription growth and competitive displacements. The company is optimistic about AI opportunities and has raised its full-year guidance. However, there is some caution regarding potential revenue pull-forward and future expansion rates.Highlights
Record Revenue Growth
F5 delivered 11% total revenue growth, with product revenue growing by 20%. Software revenue increased by 22% and systems revenue by 18%, exceeding initial expectations.
Strong Software Subscription Growth
Software subscriptions exceeded expansion forecasts, contributing to a 22% software revenue growth, with 30% year-over-year increase in subscription-based software revenue.
Raised FY '25 Revenue Expectations
F5 raised FY '25 revenue growth expectations to 6% to 7%, up from 4% to 5%, reflecting Q1 outperformance and a strong pipeline for Q2.
Competitive Displacement Success
Achieved a record number of competitive displacements in Q1, including significant wins with a home improvement retailer and an American insurance provider.
AI Opportunities and Wins
F5 is witnessing growing momentum with AI opportunities, with notable wins in high-performance data delivery and AI application security, leveraging partnerships with companies like Nvidia.
Lowlights
Potential Revenue Pull-Forward
A modest amount of systems orders were potentially pulled into Q1 due to price increases, which might impact future quarters.
Uncertainty in Expansion Rates
While Q1 saw exceptional expansion rates, F5 is cautious about assuming similar rates in the second half of FY '25, indicating potential variability.
Company Guidance
During F5, Inc.'s first-quarter fiscal 2025 earnings call, the company reported impressive financial results with 11% total revenue growth, including a remarkable 20% increase in product revenue. The company's software revenue grew by 22%, driven by strong expansion in software subscriptions, while systems revenue saw an 18% uptick. Notably, F5 reported a non-GAAP EPS of $3.84, surpassing the high end of their guidance by $0.43. The quarter's success was attributed to a stable IT spending environment, increased technology refresh activity, and competitive displacements. Looking ahead, F5 anticipates Q2 revenue to range between $705 million and $725 million, implying a 5% growth at the midpoint. The company also raised its full-year FY2025 revenue growth expectations to 6%-7%, up from the initial 4%-5% guidance. Additionally, F5 forecasts a non-GAAP gross margin between 83% and 84%, and an EPS growth of 6.5%-8.5% for the fiscal year, reflecting strong expansion trends and a robust pipeline.F5 Networks Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
F5 Networks CFO Frank Pelzer to Retire in 2024
Neutral
Nov 5, 2024
F5, Inc.’s CFO, Frank Pelzer, is set to retire following the filing of the company’s 2024 Form 10-K, around November 18, 2024. A Transition Agreement allows Pelzer to continue as CFO until then, with a subsequent Consulting Agreement for advisory services until May 2025. As an incentive, he will receive a lump sum, monthly payments, and accelerated stock vesting. These developments highlight F5’s strategic management transitions and their impact on stockholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.