F5, Inc. (FFIV) AI Stock Analysis

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F5, Inc.

(NASDAQ:FFIV)

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Outperform 79 (OpenAI - 5.2)

Rating:79Outperform

Price Target:

$335.00

▲(19.34% Upside)

FFIV scores well due to strong underlying fundamentals (high margins, strong free cash flow, low leverage) and a notably positive earnings update with raised FY-2026 guidance and strong systems/AI momentum. Technicals support the trend but are somewhat stretched (RSI > 70), while valuation is only moderate with no dividend yield data to add support.

Positive Factors

High profitability & low leverage

F5’s very high gross and net margins combined with minimal leverage and strong free cash conversion create durable financial flexibility. This supports R&D, security investments, and buybacks without stressing the balance sheet, sustaining competitiveness over multiple quarters.

Raised FY‑26 guidance and systems momentum

Management’s upward guidance and outsized systems growth reflect durable end-market demand (hybrid multi‑cloud, AI workloads). Sustained systems momentum drives higher‑margin product mix and indicates structural adoption trends, improving multi‑quarter revenue quality and predictability.

High recurring revenue and growing deferred revenue

A large recurring revenue base and rising deferred revenue provide multimonth visibility into cash receipts and churn resilience. This stabilizes topline and supports long‑term ARR‑like economics, enabling predictable investment in product and customer success over 2–6 months.

Negative Factors

Software revenue weakness

An 8% decline in software, driven by waning perpetual sales and weak subscription comps, signals execution or transition issues in a high‑margin segment. If subscription momentum stalls, durable margin and ARR growth could be pressured over upcoming quarters until product mix or go‑to‑market is corrected.

Rising memory costs and supply risk

Higher memory prices and component supply uncertainty pose a structural headwind to gross margins and product availability. Even with mitigation steps, persistent input cost inflation or supply disruption can compress margins and slow systems delivery over multiple quarters.

Security incident operational burden

Significant remediation efforts diverted engineering and customer‑facing teams, raising recurring operational costs and execution risk. Extended remediation and slower upgrades could dampen new sales and increase service costs, affecting growth and margins across several quarters.

F5, Inc. (FFIV) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$15.66B

Dividend YieldN/A

Average Volume (3M)1.03M

Price to Earnings (P/E)23.2

Beta (1Y)0.80

Revenue Growth9.66%

EPS Growth23.87%

CountryUS

Employees6,114

SectorTechnology

Sector Strength88

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)4.45

Shares Outstanding56,811,090

10 Day Avg. Volume1,202,910

30 Day Avg. Volume1,026,338

Financial Highlights & Ratios

PEG Ratio1.13

Price to Book (P/B)5.19

Price to Sales (P/S)6.03

P/FCF Ratio20.56

Enterprise Value/Market Cap0.95

Enterprise Value/Revenue4.74

Enterprise Value/Gross Profit5.80

Enterprise Value/Ebitda16.78

Forecast

1Y Price Target

$320.43

Price Target Upside14.15% Upside

Rating ConsensusHold

Number of Analyst Covering10

EPS Forecast (FY)15.13

Revenue Forecast (FY)$3.16B

F5, Inc. Business Overview & Revenue Model

Company DescriptionF5, Inc. provides multi-cloud application security and delivery solutions for the security, performance, and availability of network applications, servers, and storage systems. The company's multi-cloud application security and delivery solutions enable its customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud. It offers application security and delivery products, including BIG-IP appliances and VIPRION chassis and related software modules and software-only Virtual Editions; Local Traffic Manager and DNS Services; Advanced Firewall Manager and Policy Enforcement Manager that leverage the unique performance characteristics of its hardware and software architecture; Application Security Manager and Access Policy Manager; NGINX Plus and NGINX Controller; Shape Defense and Enterprise Defense; Secure Web Gateway, and Silverline DDoS and Application security offerings; and online fraud and abuse prevention solutions. The company also provides a range of professional services, including consulting, training, installation, maintenance, and other technical support services. F5, Inc. sells its products to large enterprise businesses, public sector institutions, governments, and service providers through distributors, value-added resellers, managed service providers, and systems integrators in the Americas, Europe, the Middle East, Africa, and the Asia Pacific region. It has partnerships with public cloud providers, such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform. The company was formerly known as F5 Networks, Inc. and changed its name to F5, Inc. in November 2021. F5, Inc. was incorporated in 1996 and is headquartered in Seattle, Washington.

How the Company Makes MoneyF5 Networks generates revenue primarily through the sale of its software and hardware products, licensing fees, and subscription services. The company operates a hybrid revenue model that includes both on-premises solutions and cloud-based services, allowing it to cater to a diverse range of customer needs. Key revenue streams include software licensing for its application delivery and security solutions, subscription fees for cloud services, and professional services for implementation and support. Additionally, F5 has formed strategic partnerships with major cloud providers and technology firms, enhancing its market presence and driving revenue growth through integrated solutions and co-marketing initiatives.

F5, Inc. Key Performance Indicators (KPIs)

Any

Gross Profit by Segment

Gross Profit by Segment
Shows the profitability of each business unit, indicating which segments are most efficient and contribute most to the bottom line.

Chart InsightsF5 Networks' gross profit from Products has surged recently, driven by data center modernization and AI initiatives, reflecting a strategic pivot towards high-demand areas. Despite a previous dip, the Services segment has shown consistent growth, supported by global services expansion. However, a recent security incident poses a short-term risk, potentially affecting sales cycles and revenue growth. The company remains optimistic about long-term prospects, but FY '26 guidance is cautious, anticipating 0% to 4% growth due to the incident's impact and federal sector uncertainties.

Data provided by:

The Fly

F5, Inc. Earnings Call Summary

Earnings Call Date:Jan 27, 2026

(Q1-2026)

% Change Since: |

Next Earnings Date:May 04, 2026

Earnings Call Sentiment Positive

The call conveyed a strongly constructive picture: solid top-line growth (+7% revenue), robust systems momentum (+37%), improved profitability and a raised FY '26 outlook (revenue growth guide raised to 5%–6% and EPS guidance increased). Management emphasized meaningful AI traction and durable hybrid multi‑cloud demand, and highlighted effective remediation and strengthened security posture after a prior incident. Key negatives include an 8% decline in software revenue (driven by tough comps and lower perpetual sales), rising memory costs that trimmed gross margin guidance, supply-component risk, and a slight APAC decline. Overall, the positives—strong product and systems performance, improved margins, raised guidance, cash generation and demonstrated AI and regional wins—outweigh the cited lowlights.

Q1-2026 Updates

Positive Updates

Overall Revenue and Mix

Total revenue $822M, up 7% year-over-year; balanced mix with product revenue $410M (+11% YoY) and services revenue $412M (+4% YoY). Recurring revenue represented 69% of Q1 revenue.

Systems and Product Momentum

Systems revenue $218M, up 37% YoY; company reported its sixth consecutive quarter of double-digit product revenue growth and expects double-digit systems revenue growth for FY '26.

AI Traction and New Customer Wins

Added nearly as many AI customers in Q1 as in all of FY '25; quarter saw a balanced mix of AI data delivery and AI runtime security use cases. Management highlighted multiple large AI-related wins (OEM, financial services, energy) and said AI is materially accelerating demand across the portfolio.

Regional and Vertical Strength

EMEA delivered exceptional growth of 24% and accounted for 31% of revenue; The Americas grew 2% and represented 53% of revenue; APAC declined 1% and represented 16% of revenue. Enterprise customers made up 64% of product bookings and government was a strong 23% of product bookings.

Profitability, Cash Flow and Capital Returns

GAAP gross margin 81.5%, non-GAAP gross margin 83.8%. Non-GAAP operating margin 38.2% (up 80 bps YoY). Non-GAAP net income $259M, $4.45 per share (16% EPS growth YoY). Cash flow from operations $159M; cash & investments ~$1.22B; deferred revenue $2.1B (+6% YoY). Repurchased $300M of shares in Q1 at an average price of $249.

Raised FY '26 Guidance

Raised FY 2026 revenue growth outlook to 5%–6% (from 0%–4%). Expect mid-single-digit software growth, double-digit systems growth, low single-digit services growth. Non-GAAP EPS guidance raised to $15.65–$16.05; non-GAAP operating margin guide 34%–35%.

Effective Response to Security Incident

Following the security incident, F5 handled more than 9,000 additional support cases with minimal demand disruption. Over 50% of customers are now on the latest software release (versus ~15% a year ago). Company committed to enhanced operational and product security measures and introduced EDR capabilities to perimeter devices.

Negative Updates

Software Revenue Pressure

Total software revenue $192M, down 8% YoY (perpetual licenses down materially to $27M vs an exceptionally strong prior-year quarter); subscription-based software modestly up only 1% ($164M), reflecting tough comps and timing.

Rising Memory Costs and Margin Pressure

Management trimmed FY '26 gross margin expectations (guidance to 82.5%–83.5%) citing anticipated product COGS pressure in H2 due to rising memory prices; this is a headwind to margins and informed the modest reduction to gross margin guidance.

Supply and Component Risk

Memory price increases and industry supply concerns persist. F5 has taken mitigation steps (extended forecasts, qualified suppliers, broker buys) and is confident near term, but acknowledges potential longer-term supply risks.

APAC Revenue Softness

APAC revenue declined 1% year-over-year and represented 16% of total revenue, indicating regional softness versus strong EMEA performance.

Operational Burden from Security Remediation

The security incident required significant mobilization of development, support and sales teams (handling over 9,000 additional support cases). While demand impact was minimal, the event consumed resources and required extensive remediation and customer engagement.

Company Guidance

F5 raised its FY‑2026 outlook and provided detailed targets: revenue growth of 5–6% (up from 0–4%), with mid‑single‑digit software growth, double‑digit systems growth, and low‑single‑digit services growth; FY gross margin of 82.5–83.5% (noting modest pressure from rising memory costs), non‑GAAP operating margin of 34–35% (up from 33.5–34.5%), a non‑GAAP effective tax rate of 21–22%, and non‑GAAP EPS of $15.65–$16.05 (raised from $14.50–$15.50); the company expects to repurchase at least 50% of free cash flow (having bought $300M in Q1). For Q2 it guided revenue of $770M–$790M (~7% growth at the midpoint), non‑GAAP gross margin of 82.5–83%, non‑GAAP operating expenses of $390M–$408M, share‑based compensation of ~$70M–$72M, and non‑GAAP EPS of $3.34–$3.46.

F5, Inc. Financial Statement Overview

Summary

Strong profitability and earnings quality (gross margin ~82%, operating margin ~25%, net margin ~22%; FCF closely tracks net income) supported by a conservative balance sheet (debt-to-equity ~0.06) and healthy ROE (~19–20%). Main offsets are the recent TTM revenue decline (-24.8%) and slightly negative TTM free cash flow growth (~-5%), which signal near-term momentum risk despite solid absolute cash generation.

Income Statement

Positive

Profitability is a clear strength: the latest period shows very high gross margin (~82%) and solid operating and net profitability (operating margin ~25%, net margin ~22%), with multi-year margin expansion versus 2022–2023 levels. Annual results also show steady top-line improvement from 2021 through 2025. The main concern is the TTM (Trailing-Twelve-Months) revenue decline (-24.8%), which signals a recent growth setback despite continued strong earnings.

Balance Sheet

Very Positive

The balance sheet looks conservative with low leverage: debt-to-equity is ~0.06 in the most recent annual period (down materially from ~0.25–0.28 in 2021–2022), and total debt is modest relative to the equity base. Returns are healthy, with return on equity around ~19–20% recently, indicating efficient use of capital. A watch item is that total assets and equity are fairly stable rather than rapidly compounding, so future value creation relies more on sustained profitability and growth re-acceleration than on balance-sheet expansion.

Cash Flow

Positive

Cash generation is strong and consistent: free cash flow is high (roughly $0.86–$0.91B recently) and closely tracks net income (free cash flow to net income ~0.95), which supports earnings quality. The weaker spot is momentum—TTM (Trailing-Twelve-Months) free cash flow growth is slightly negative (~-5%) after strong growth in prior years, suggesting some recent pressure. Operating cash flow remains solid in absolute dollars, but the provided coverage indicator is lower than ideal, tempering the score.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.09B	2.82B	2.81B	2.70B	2.60B
Gross Profit	2.52B	2.26B	2.22B	2.16B	2.11B
EBITDA	900.74M	774.24M	650.66M	527.31M	509.45M
Net Income	692.38M	566.78M	394.95M	322.16M	331.24M
Balance Sheet
Total Assets	6.32B	5.61B	5.25B	5.28B	5.00B
Cash, Cash Equivalents and Short-Term Investments	1.34B	1.07B	803.32M	884.57M	910.61M
Total Debt	261.79M	249.56M	280.99M	664.67M	715.28M
Total Liabilities	2.73B	2.48B	2.45B	2.81B	2.64B
Stockholders Equity	3.59B	3.13B	2.80B	2.47B	2.36B
Cash Flow
Free Cash Flow	906.41M	762.01M	599.23M	409.01M	614.54M
Operating Cash Flow	949.67M	792.42M	653.41M	442.63M	645.20M
Investing Cash Flow	-219.49M	-59.21M	36.39M	218.12M	-445.33M
Financing Cash Flow	-464.81M	-457.00M	-653.30M	-476.51M	-468.28M

F5, Inc. Technical Analysis

Technical Analysis Sentiment

Positive

Last Price280.72

Price Trends

50DMA

258.39

Positive

100DMA

277.74

Positive

200DMA

286.12

Negative

Market Momentum

MACD

4.92

Negative

RSI

58.96

Neutral

STOCH

47.95

Neutral

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 280.72 is above the 20-day moving average (MA) of 270.55, above the 50-day MA of 258.39, and below the 200-day MA of 286.12, indicating a neutral trend. The MACD of 4.92 indicates Negative momentum. The RSI at 58.96 is Neutral, neither overbought nor oversold. The STOCH value of 47.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FFIV.

F5, Inc. Risk Analysis

F5, Inc. disclosed 39 risk factors in its most recent earnings report. F5, Inc. 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, Inc. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FFIV	79 Outperform	$15.66B	23.23	20.84%	―	9.66%	23.87%
PANW	75 Outperform	$123.35B	111.26	15.33%	―	15.30%	-60.71%
FTNT	71 Outperform	$60.43B	33.46	228.04%	―	14.78%	22.52%
CRWD	66 Neutral	$111.28B	-347.36	-8.88%	―	22.05%	-341.24%
ZS	62 Neutral	$31.90B	-764.52	-2.41%	―	23.24%	-8.83%
NET	62 Neutral	$62.12B	-613.38	-8.88%	―	28.06%	-7.44%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

FFIV

F5, Inc.

280.72

-14.47

-4.90%

FTNT

Fortinet

81.29

-19.61

-19.44%

PANW

Palo Alto Networks

175.42

-7.37

-4.03%

Zscaler

200.61

0.61

0.31%

CRWD

CrowdStrike Holdings

438.85

41.28

10.38%

NET

Cloudflare

182.42

45.58

33.31%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jan 29, 2026