|By Business Wire||
|July 23, 2014 04:09 PM EDT||
For the third quarter of fiscal 2014, F5 Networks, Inc. (NASDAQ: FFIV) announced revenue of $440.3 million, up 5 percent from $420.0 million in the prior quarter and 19 percent from $370.3 million in the third quarter of fiscal 2013.
GAAP net income was $79.5 million ($1.05 per diluted share), compared to $69.6 million ($0.91 per diluted share) in the prior quarter and $68.2 million ($0.86 per diluted share) in the third quarter a year ago.
Excluding the impact of stock-based compensation and amortization of purchased intangible assets, non-GAAP net income was $104.6 million ($1.39 per diluted share), compared to $96.9 million ($1.27 per diluted share) in the prior quarter and $88.4 million ($1.12 per diluted share) in the third quarter of last year.
A reconciliation of GAAP net income to non-GAAP net income is included on the attached Consolidated Statements of Operations.
"F5’s solid gains in Q3 were driven by strong growth in product revenue, up 5 percent sequentially and 20 percent year-over-year," said John McAdam, F5 president and chief executive officer. "Growing demand for our expanding array of systems and application services was fueled by increasing awareness and uptake of our security offerings and the appeal of our Good, Better, Best pricing options. During the quarter, sales of Good, Better, Best bundles grew 49 percent from the prior quarter and contributed to a significant increase in sales of software products and of security solutions in particular.
“Sales were generally solid across all geographic regions and vertical market segments, with the exception of Japan. EMEA continued to show signs of strengthening with an increase in year-over-year revenue growth for the fourth consecutive quarter.
"As we move toward the close of our fiscal year, ending September 30, we believe all of the company-specific drivers that propelled our business through the first three quarters will continue to generate solid sequential and year-over-year growth in the current quarter," McAdam said.
For the fourth quarter of fiscal 2014, the company has set a revenue goal of $453 million to $463 million with a GAAP earnings target of $1.15 to $1.18 per diluted share and a non-GAAP earnings target of $1.46 to $1.49 per diluted share.
A reconciliation of the company's expected GAAP and non-GAAP earnings is provided in the following table:
|Three months ended|
|September 30, 2014|
|Reconciliation of Expected Non-GAAP Fourth Quarter Earnings||Low||High|
|Stock-based compensation expense||$||27.0||$||27.0|
|Amortization of purchased intangible assets||$||3.2||$||3.2|
|Tax effects related to above items||$||(7.2||)||$||(7.1||)|
|Non-GAAP net income excluding stock-based compensation expense and amortization of purchased intangible assets||$||109.4||$||111.8|
|Net income per share - diluted||$||1.15||$||1.18|
|Non-GAAP net income per share - diluted||$||1.46||$||1.49|
About F5 Networks
F5 (NASDAQ: FFIV) provides solutions for an application world. F5 helps organizations seamlessly scale cloud, data center, and software defined networking (SDN) deployments to successfully deliver applications to anyone, anywhere, at any time. F5 solutions broaden the reach of IT through an open, extensible framework and a rich partner ecosystem of leading technology and data center orchestration vendors. This approach lets customers pursue the infrastructure model that best fits their needs over time. The world’s largest businesses, service providers, government entities, and consumer brands rely on F5 to stay ahead of cloud, security, and mobility trends. For more information, go to f5.com.
You can also follow @f5networks on Twitter or visit us on Facebook for more information about F5, its partners, and technology.
Forward Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding the continuing strength and momentum of F5's business, future financial performance, sequential growth, projected revenues including target revenue and earnings ranges, income, earnings per share, share amount and share price assumptions, demand for application delivery networking, application delivery services, security, virtualization and diameter products, expectations regarding future services and products, expectations regarding future customers, markets and the benefits of products, and other statements that are not historical facts and which are forward-looking statements. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. Such forward-looking statements involve risks and uncertainties, as well as assumptions and other factors that, if they do not fully materialize or prove correct, could cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: customer acceptance of our new traffic management, security, application delivery, optimization, diameter and virtualization offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into F5’s markets, and new product and marketing initiatives by our competitors; increased sales discounts; uncertain global economic conditions which may result in reduced customer demand for our products and services and changes in customer payment patterns; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; litigation involving patents, intellectual property, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic; F5's ability to sustain, develop and effectively utilize distribution relationships; F5's ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel; F5's ability to expand in international markets; the unpredictability of F5's sales cycle; F5’s share repurchase program; future prices of F5's common stock; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in F5’s most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. All forward-looking statements in this press release are based on information available as of the date hereof and qualified in their entirety by this cautionary statement. F5 assumes no obligation to revise or update these forward-looking statements.
GAAP to non-GAAP Reconciliation
F5’s management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its products, services operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is net income excluding stock-based compensation, amortization of purchased intangible assets and acquisition-related charges, net of taxes, which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income excluding, as applicable, stock-based compensation, amortization of purchased intangible assets and acquisition-related charges. This measure of non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. Stock-based compensation is a non-cash expense that F5 has accounted for since July 1, 2005 in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 Compensation—Stock Compensation (“FASB ASC Topic 718”). Amortization of intangible assets is a non-cash expense. Investors should note that the use of intangible assets contribute to revenues earned during the periods presented and will contribute to revenues in future periods. Acquisition-related expenses consist of professional services fees incurred in connection with acquisitions.
Management believes that non-GAAP net income per share provides useful supplemental information to management and investors regarding the performance of the company’s core business operations and facilitates comparisons to the company’s historical operating results. Although F5’s management finds this non-GAAP measure to be useful in evaluating the performance of the core business, management’s reliance on this measure is limited because items excluded from such measures could have a material effect on F5’s earnings and earnings per share calculated in accordance with GAAP. Therefore, F5’s management will use its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations when evaluating the performance of the company’s core business. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.
F5 believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company’s core business and which management uses in its own evaluation of the company’s performance. Investors are encouraged to look at GAAP results as the best measure of financial performance. However, while the GAAP results are more complete, the company provides investors this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into the company’s operational performance and financial results.
For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, please see the section in our Consolidated Statements of Operations entitled “Non-GAAP Financial Measures.”
|F5 Networks, Inc.|
|Consolidated Balance Sheets|
|(unaudited, in thousands)|
|June 30,||September 30,|
|Cash and cash equivalents||$||241,973||$||189,693|
|Accounts receivable, net of allowances of $4,611 and $3,259||243,072||204,205|
|Deferred tax assets||22,898||16,342|
|Other current assets||44,647||34,655|
|Total current assets||945,123||816,371|
|Property and equipment, net||62,650||63,522|
|Deferred tax assets||25,285||22,389|
|Other assets, net||76,889||75,564|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Total current liabilities||611,220||551,350|
|Other long-term liabilities||22,377||25,202|
|Deferred revenue, long-term||137,062||109,944|
|Deferred tax liabilities||4,112||5,346|
|Total long-term liabilities||163,551||140,492|
|Commitments and contingencies|
|Preferred stock, no par value; 10,000 shares authorized, no shares outstanding||—||—|
|Common stock, no par value; 200,000 shares authorized, 74,415 and 78,090 shares issued and outstanding||18,712||262,505|
|Accumulated other comprehensive loss||(6,834||)||(7,414||)|
|Total shareholders’ equity||1,400,714||1,538,712|
|Total liabilities and shareholders’ equity||$||2,175,485||$||2,230,554|
|F5 Networks, Inc.|
|Consolidated Statements of Operations|
(unaudited, in thousands, except per share amounts)
|Three Months Ended||Nine Months Ended|
|June 30,||June 30,|
|Cost of net revenues (1)(2)|
|Operating expenses (1)(2)|
|Sales and marketing||139,945||121,906||415,000||363,205|
|Research and development||67,026||54,075||198,391||155,150|
|General and administrative||27,773||25,327||79,306||75,889|
|Income from operations||126,079||104,077||346,076||305,637|
|Other income, net||1,193||2,874||1,462||6,542|
|Income before income taxes||127,272||106,951||347,538||312,179|
|Provision for income taxes||47,799||38,773||130,376||111,096|
|Net income per share — basic||$||1.06||$||0.87||$||2.86||$||2.56|
|Weighted average shares — basic||74,812||78,516||75,926||78,636|
|Net income per share — diluted||$||1.05||$||0.86||$||2.84||$||2.54|
|Weighted average shares — diluted||75,369||78,864||76,581||79,207|
|Non-GAAP Financial Measures|
|Net income as reported||$||79,473||$||68,178||$||217,162||$||201,083|
|Stock-based compensation expense (3)||31,833||27,861||101,997||82,181|
|Amortization of purchased intangible assets||2,172||1,032||6,341||3,098|
|Tax effects related to above items||(8,912||)||(8,650||)||(29,274||)||(22,576||)|
|Net income excluding stock-based compensation and amortization of purchased intangible assets (non-GAAP) - diluted||$||104,566||$||88,421||$||296,226||$||263,786|
|Net income per share excluding stock-based compensation and amortization of purchased intangible assets (non-GAAP) - diluted||$||1.39||$||1.12||$||3.87||$||3.33|
|Weighted average shares - diluted||75,369||78,864||76,581||79,207|
|(1) Includes stock-based compensation as follows:|
|Cost of net revenues||$||3,522||$||2,966||$||11,394||$||8,860|
|Sales and marketing||12,350||10,259||40,570||31,533|
|Research and development||10,976||8,966||34,604||25,030|
|General and administrative||4,985||5,670||15,429||16,758|
|(2) Includes amortization of purchased intangible assets as follows:|
|Cost of net revenues||$||1,786||$||957||$||5,239||$||2,873|
|Sales and marketing||386||75||1,102||225|
|(3) Stock-based compensation is accounted for in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”)|
|F5 Networks, Inc.|
|Consolidated Statements of Cash Flows|
|(unaudited, in thousands)|
|Nine Months Ended|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Realized gain on disposition of assets and investments||(179||)||(190||)|
|Provisions for doubtful accounts and sales returns||2,109||584|
|Depreciation and amortization||34,055||29,705|
|Deferred income taxes||(4,389||)||(3,601||)|
|Changes in operating assets and liabilities, net of amounts acquired:|
|Other current assets||(9,800||)||(18,069||)|
|Accounts payable and accrued liabilities||(1,659||)||7,420|
|Net cash provided by operating activities||379,127||351,698|
|Purchases of investments||(387,147||)||(744,557||)|
|Maturities of investments||437,752||509,381|
|Sales of investments||144,790||138,171|
|Decrease (increase) in restricted cash||5||(713||)|
|Acquisition of businesses, net of cash acquired||(49,439||)||(124,918||)|
|Purchases of property and equipment||(15,636||)||(21,434||)|
|Net cash provided by (used in) investing activities||130,325||(244,070||)|
|Excess tax benefit from stock-based compensation||8,155||3,656|
|Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan||35,247||29,405|
|Repurchase of common stock||(500,542||)||(150,000||)|
|Net cash used in financing activities||(457,140||)||(116,939||)|
|Net increase (decrease) in cash and cash equivalents||52,312||(9,311||)|
|Effect of exchange rate changes on cash and cash equivalents||(32||)||(3,590||)|
|Cash and cash equivalents, beginning of year||189,693||211,181|
|Cash and cash equivalents, end of year||$||241,973||$||198,280|
CIOs and those charged with running IT Operations are challenged to deliver secure, audited, and reliable compute environments for the applications and data for the business. Behind the scenes these tasks are often accomplished by following onerous time-consuming processes and often the management of these environments and processes will be outsourced to multiple IT service providers. In addition, the division of work is often siloed into traditional "towers" that are not well integrated for cro...
Feb. 10, 2016 04:00 AM EST Reads: 478
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
Feb. 10, 2016 03:00 AM EST
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
Feb. 10, 2016 03:00 AM EST Reads: 303
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
Feb. 10, 2016 01:15 AM EST Reads: 230
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, will discuss using predictive analytics to ...
Feb. 10, 2016 12:45 AM EST Reads: 386
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Feb. 10, 2016 12:45 AM EST Reads: 185
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
Feb. 10, 2016 12:00 AM EST Reads: 373
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
Feb. 10, 2016 12:00 AM EST Reads: 193
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Feb. 9, 2016 10:15 PM EST Reads: 230
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Feb. 9, 2016 06:00 PM EST Reads: 191
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, will discuss the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filte...
Feb. 9, 2016 05:00 PM EST Reads: 161
SYS-CON Events announced today that VAI, a leading ERP software provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. VAI (Vormittag Associates, Inc.) is a leading independent mid-market ERP software developer renowned for its flexible solutions and ability to automate critical business functions for the distribution, manufacturing, specialty retail and service sectors. An IBM Premier Business Part...
Feb. 9, 2016 04:00 PM EST Reads: 598
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
Feb. 9, 2016 04:00 PM EST Reads: 206
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 9, 2016 03:45 PM EST Reads: 137
Fortunately, meaningful and tangible business cases for IoT are plentiful in a broad array of industries and vertical markets. These range from simple warranty cost reduction for capital intensive assets, to minimizing downtime for vital business tools, to creating feedback loops improving product design, to improving and enhancing enterprise customer experiences. All of these business cases, which will be briefly explored in this session, hinge on cost effectively extracting relevant data from ...
Feb. 9, 2016 03:15 PM EST