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F5 Networks' (FFIV) Q1 Earnings & Revenues Beat Estimates

F5 Networks FFIV delivered robust first-quarter fiscal 2022 results wherein both earnings and revenues not only surpassed the Zacks Consensus Estimate but also registered double-digit year-over-year growth.

The company’s fiscal first-quarter non-GAAP earnings per share of $2.89 beat the Zacks Consensus Estimate of $2.79. The figure increased 11.6% from the year-ago quarter and was well above management’s guidance of $2.71-$2.83 per share.

During the fiscal first quarter, non-GAAP revenues climbed 10% year on year to $687 million surpassing the Zacks Consensus Estimate of $679 million. The top line was slightly higher than F5 Networks’ guided range of $665-$685 million.

Top Line Details

Product revenues (49.9% of total revenues), which comprise Software and Systems sub-divisions, surged 19% year on year to $343 million. Software sales jumped 47% year over year to $163 million, accounting for approximately 47.5% of the total Product revenues. System revenues inched up 1% to $180 million, making up the remaining 52.5% of the total Product revenues.

Global Service revenues (50.1% of total revenues) increased 2% to $344 million.

F5 Networks registered sales growth across the Americas and APAC witnessing year-over-year increase of 17% and 2%, respectively. Meanwhile, it registered no growth in the EMEA region. Revenue contributions from the Americas, EMEA and APAC regions were 59%, 24% and 18%, respectively.

Customer wise, Enterprises, Service providers and Government represented 71%, 15% and 14% of product bookings, respectively.

F5, Inc. Price, Consensus and EPS Surprise

F5, Inc. price-consensus-eps-surprise-chart | F5, Inc. Quote

Margins

The GAAP gross margin contracted 130 basis points (bps) to 80.3%. The non-GAAP gross margin shrunk 140 bps to 83%.

The GAAP operating expenses flared up 11.7% year over year to $437.9 million, while the non-GAAP operating expenses rose 7.4% to $345.2 million. F5 Networks’ GAAP and non-GAAP operating margins contracted 230 bps to 16.6% and 30 bps to 32.7%, respectively.

Balance Sheet & Cash Flow

F5 Networks exited the October-December quarter with cash and short-term investments of $859 million compared with the previous quarter’s $911 million.

During the fiscal first quarter, the company generated $90.4 million of operating cash flow compared with $197 million reported in the previous quarter. This downside was mainly due to solid multi-year subscription sales and significant prepayments to contract manufacturers.

F5 Networks repurchased shares worth $125 million during the quarter reported.

Guidance

F5 Networks anticipates that supply-chain disruptions caused by the pandemic might restrict its ability to meet high demand for its solutions across on-premise and cloud environments. Hence, the company issued a downbeat business outlook for the second quarter of fiscal 2022.

F5 Networks projects non-GAAP revenues to be $610-$650 million (mid-point of $630 million) for the second quarter of fiscal 2022, reflecting a $60-80 million shortfall in its ability to ship. The Zacks Consensus Estimate for revenues is pegged at $694.2 million.

The company anticipates non-GAAP earnings per share in the $1.75-$2.15 band (mid-point of $1.95). The Zacks Consensus Estimate for the same stands at $2.79.

For fiscal 2022, F5 Networks now expects revenues to grow 4.5-8% on a year-over-year basis compared with the previous range of 8-9% year-over-year growth. However, it expects increase in software sales to remain in-line with its prior guidance of 35-40%.

Zacks Rank & Other Stocks to Consider

F5 Networks currently flaunts a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader computer and technology sector include the largest global Customer Relationship Management vendor Salesforce CRM flaunting a Zacks Rank #1 (Strong Buy), the graphic processing unit maker NVIDIA Corporation NVDA and Advanced Micro Devices AMD, both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s fourth-quarter fiscal 2022 earnings has been revised downward by 7.6% to 73 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 0.43% to $4.68 per share in the last 60 days.

Salesforce’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 44.2%. CRM stock has depreciated 5.8% in the past year.

The Zacks Consensus Estimate for NVIDIA’s fourth-quarter fiscal 2022 earnings has been revised upward by 13 cents to $1.22 per share over the past 90 days. For fiscal 2022, earnings estimates have moved north by 19 cents to $4.33 per share in the past 90 days.

NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of NVDA have soared 68.2% in the past year.

The Zacks Consensus Estimate for Advanced Micro Devices’ fourth-quarter 2021 earnings has been revised upward by 7 cents to 75 cents per share over the past 90 days. For 2021, earnings estimates have moved north by 0.38% to $2.65 per share in the last 60 days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14%. Shares of AMD have rallied 22.2% in the past year.


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