Did F5 beat earnings in Q1 FY2026?

Yes, F5 delivered a double beat. Revenue of $822M exceeded consensus by 3.4%, while non-GAAP EPS of $4.45 topped estimates by 12.1%. This marks F5's sixth consecutive quarter of double-digit product revenue growth.

Did F5 raise guidance?

Yes, F5 raised FY26 guidance across all metrics: revenue growth to 5-6% (from 0-4%), operating margin to 34-35% (from 33.5-34.5%), and EPS to $15.65-$16.05 (from $14.50-$15.50).

What drove F5's strong Q1 results?

Systems revenue surged 37% YoY to $218M, driven by enterprise adoption of hybrid multicloud architectures and AI workloads. Product revenue overall grew 11%, marking the sixth straight quarter of double-digit growth.

F5 (FFIV)·Q1 2026 Earnings Summary

F5 Crushes Q1 with Double-Digit Beats, Raises Full-Year Outlook

January 27, 2026 · by Fintool AI Agent

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F5 (NASDAQ: FFIV) delivered a blowout Q1 FY2026, beating both revenue and EPS estimates while materially raising full-year guidance. Revenue of $822M topped consensus by 3.4%, and non-GAAP EPS of $4.45 crushed estimates by 12.1%. The strength was driven by a 37% surge in systems revenue as enterprises accelerate hybrid multicloud deployments and AI adoption.

Did F5 Beat Earnings?

F5 delivered a convincing double beat in Q1 FY2026:

Metric	Actual	Consensus	Surprise
Revenue	$822M	$795M	+3.4%
Non-GAAP EPS	$4.45	$3.97	+12.1%

This marks the sixth consecutive quarter of double-digit product revenue growth, a streak that underscores F5's alignment with durable demand drivers including hybrid multicloud adoption and enterprise AI.

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What Drove the Beat?

The headline story is systems revenue, which surged 37% YoY to $218M. This hardware-driven growth reflects enterprises refreshing their application delivery infrastructure to support hybrid multicloud and AI workloads.

Revenue by Segment (Q1 FY26 vs Q1 FY25):

Segment	Q1 FY26	Q1 FY25	YoY Change
Systems	$218M	$159M	+37%
Software	$192M	$209M	-8%
Global Services	$412M	$398M	+4%
Total Revenue	$822M	$766M	+7%

Software revenue was down 8% against a tough comparison from the year-ago period, but the systems strength more than offset this headwind. Product revenue overall (systems + software) grew 11% YoY.

Geographic Performance (Q1 FY26):

Region	Revenue Mix	YoY Growth
Americas	53%	+2%
EMEA	31%	+24%
APAC	16%	-1%

EMEA was the standout, driven by regulations (NIS2, GDPR, DORA) imposing greater resilience and digital sovereignty requirements, accelerating hybrid multicloud adoption.

Customer Verticals (Product Bookings):

Vertical	Q1 FY26	Q1 FY25
Enterprise	64%	71%
Government	23% (8% U.S. Fed)	16%
Service Provider	13%	13%

Government vertical showed notable strength, expanding from 16% to 23% of product bookings—driven by U.S. Federal despite the longest government shutdown in history (40+ days). Management noted strength came from "new use cases in modern applications and first AI use cases in government."

What's Driving Demand?

Management identified three durable demand drivers reshaping customer infrastructure decisions:

Hybrid Multicloud Adoption: Workloads now span on-premises, private cloud, and multiple public clouds. Organizations are modernizing infrastructures to enhance security, performance, and efficiency while avoiding vendor lock-in.
Enterprise AI Investment: Shifting from general-purpose systems to AI-centric data centers with higher levels of data movement and compute.
Converged Platforms: Consolidating fragmented point products to improve performance, reduce risk, and lower costs.

AI-Specific Use Cases

F5 added nearly as many AI customers in Q1 as in all of FY25 , signaling an inflection point in enterprise AI adoption. CEO François Locoh-Donou noted that AI revenue grew from "single-digit $ millions every quarter" in FY25 to "healthily in the double-digit $ millions" in Q1 FY26 . Importantly, the use case mix is shifting—FY25 was heavily oriented toward data delivery, but Q1 FY26 was "almost balanced between data delivery and security."

Management believes "runtime security in AI is going to be a multi-billion dollar market" and F5 is positioned to capture share as enterprises move AI applications into production.

F5 is capturing AI demand across three distinct use cases:

Use Case	F5 Solution	Customer Example
AI Data Delivery	BIG-IP for high-throughput data pipelines	Technology OEM repatriating IoT data for AI workloads
AI Runtime Security	AI Guardrails, Calypso AI acquisition	Global financial services leader securing generative AI with programmable risk-based controls
AI Factory Load Balancing	Traffic optimization across GPU clusters	Energy/chemicals company hosting private AI models with improved time-to-first-token

Q1 Customer Wins

F5 highlighted several strategic wins across its demand drivers:

Hybrid Multicloud:

Regional banking leader: Building AI-ready infrastructure with BIG-IP for automated operations, NGINX for cloud-native performance, and Distributed Cloud Services for bot defense and DDoS mitigation
Media and internet provider: Standardized application delivery across on-prem and cloud with consistent ingress and security approach
Veterinary services operator: Leveraging F5 to strengthen resilience and reduce cloud concentration risk

Converged Platform (ADSP):

Banking customer: Modernizing digital banking with BIG-IP, NGINX, and Distributed Cloud Services for traffic management, WAF, and DDoS protection
Global consumer products company: Consolidated application delivery and security controls
Foreign law enforcement agency: Selected F5 for national open data initiative, consolidating load balancing, API protection, authentication, and threat mitigation

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How Did Margins Perform?

F5 expanded non-GAAP operating margin by 80 basis points YoY to 38.2%, demonstrating strong operating leverage as revenue scales.

Margin Metric	Q1 FY26	Q1 FY25	Change
GAAP Gross Margin	81.5%	81.7%	-20 bps
Non-GAAP Gross Margin	83.8%	83.9%	-10 bps
GAAP Operating Margin	26.0%	26.8%	-80 bps
Non-GAAP Operating Margin	38.2%	37.4%	+80 bps

The GAAP operating margin decline reflects higher acquisition-related charges ($9.8M vs $0.7M) and cyber incident costs ($17.5M), while restructuring charges swung to a credit. On a non-GAAP basis, the company delivered strong margin expansion.

What Did Management Guide?

F5 raised guidance across all metrics for FY2026, signaling confidence in sustained demand:

Guidance Bridge

Full-Year FY2026 Guidance:

Metric	Prior Guidance	New Guidance	Change
Revenue Growth	0-4%	5-6%	+4-6pp
Non-GAAP Op Margin	33.5-34.5%	34-35%	+50 bps
Non-GAAP EPS	$14.50-$15.50	$15.65-$16.05	+8% at midpoint

Q2 FY2026 Guidance:

Metric	Guidance
Revenue	$770-790M
Non-GAAP EPS	$3.34-$3.46

The Q2 revenue guidance midpoint of $780M compares to consensus of $758M, implying another potential beat. The full-year EPS raise of ~8% at the midpoint is substantial given it came after just one quarter.

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What Changed From Last Quarter?

Several notable shifts from Q4 FY25:

Systems acceleration: Systems revenue growth accelerated from +28% in Q4 to +37% in Q1, the strongest growth rate in recent memory
Guidance materially raised: The FY26 revenue growth outlook improved by 4-6 percentage points in a single quarter
Product momentum sustained: This is now the 6th consecutive quarter of double-digit product revenue growth
Non-GAAP operating margin expansion: Q1's 38.2% non-GAAP op margin was the highest in recent quarters

How Did the Stock React?

FFIV shares closed at $270.43 (+1.1%) during the regular session, but the real action came after hours. Following the earnings release and guidance raise, the stock surged to $303.50 in aftermarket trading, up 12.2% from the closing price. This represents a significant validation of the strong results and raised outlook.

Price Metric	Value
Regular Close	$270.43 (+1.1%)
Aftermarket	$303.50 (+12.2%)
Day Range	$264.34 - $272.91
52-Week Range	$223.76 - $346.00
Market Cap (close)	$15.7B

The aftermarket surge reflects investor enthusiasm for the combination of: (1) strong beat on both revenue and EPS, (2) material guidance raise across all metrics, and (3) continued momentum in systems demand driven by hybrid multicloud and AI adoption.

Product Innovation

F5 continues to enhance its product portfolio for AI-era demands:

BIG-IP version 21.0 launched in November 2025 with significant control plane enhancements and native support for MCP and S3 for AI Data Delivery, optimized for high-throughput storage and retrieval workloads critical to AI architectures
On-Prem API Security: Enabled F5 API discovery engines to run locally in customer environments, delivering the same discovery and security capabilities on-premises as in F5 Distributed Cloud Services

Security Incident Response

Management addressed the cyber incident that occurred earlier, noting minimal Q1 demand disruption. The company highlighted unexpected positives from the response:

Customers gained deeper understanding of F5's critical role in their infrastructure
Opportunities to strengthen relationships, including deeper engagement with CISOs
Over 50% of customers now on latest software release (vs just 15% a year ago)

CEO François Locoh-Donou noted: "In every single one of these conversations [with dozens of CISOs], they have expressed their appreciation for F5's response. I'm immensely proud of the way that all F5ers have rallied together, with our partners and our customers on this incident."

F5 is now hyper-focused on: (1) further investing in security of operations including automation, (2) enhancing security of products and development environments, and (3) supporting the broader security community by sharing learnings.

Capital Return & Balance Sheet

F5 remains committed to returning cash to shareholders:

Metric	Q1 FY26
Share Repurchases	$300M
Free Cash Flow	$149M
FCF Returned to Shareholders	201%
Cash from Operations	$159M
Cash & Investments	$1,218M
Deferred Revenue	$2,062M (+6% YoY)
Remaining Buyback Authorization	$622M

The company is committed to using at least 50% of annual free cash flow for share repurchases. Q1's 201% of FCF reflects opportunistic buyback activity.

Recurring Revenue: $570M or 69% of total Q1 revenue, providing strong visibility. Recurring revenue includes term subscriptions, SaaS & managed services, utility-based revenue, and maintenance.

Q&A Highlights

Key themes from the analyst Q&A session:

On AI Durability (Matt Hedberg, RBC): CEO François Locoh-Donou: "We absolutely are very early in the cycle... We won as many new customers in AI just in the last 90 days as we had for all of FY25... We think runtime security in AI is going to be a multi-billion dollar market. We're just scratching the surface of the very early innings of this market."

On Government Strength (Meta Marshall, Morgan Stanley): "We had a very strong quarter with the Fed here in the U.S. Frankly, I'm very proud of the execution of our federal team... despite [the 40+ day] shutdown... The strength in government came from new use cases, specifically on modern applications, and also we started to see our first AI use cases in government."

On Memory Costs (Samik Chatterjee, JPMorgan): CEO Locoh-Donou detailed F5's proactive supply chain management: "We went through that in 2022... We raised our forecast and volume request with our suppliers several months ago... qualified additional suppliers... started executing on broker buys... We have not been seeing decommits from these suppliers, but we have seen substantial price increases."

On Second Half Outlook (Michael Ng, Goldman Sachs): CFO Cooper Werner: "I don't think there's anything that we're seeing today... that there will be a deceleration. It's really just that it's early in the year... we've seen tremendous strength in the first quarter... Just based on the strength that we're seeing and some of these trends that we think are pretty sustainable beyond FY2026, we're making some targeted investments."

What's the Investment Thesis?

Bull Case:

Sustained product demand driven by enterprise hybrid multicloud modernization
AI workloads creating new infrastructure requirements
Operating leverage driving margin expansion
Consistent execution and guidance raises building credibility

Bear Case:

Software revenue declining (-8% YoY) against tough comps
Stock trades at premium to historical multiples after recent rally
Hardware refresh cycles can be lumpy
Competitive pressure from cloud-native alternatives

Key Takeaways

Double beat with substance: 3.4% revenue beat and 12.1% EPS beat driven by real demand, not one-time items
Guidance raise is material: FY26 outlook improved across revenue (+4-6pp), margins (+50bps), and EPS (+8%)
Systems demand is real: 37% systems growth reflects enterprise infrastructure modernization for hybrid multicloud and AI
Margin expansion continues: Non-GAAP operating margin hit 38.2%, up 80bps YoY
Execution streak intact: Sixth consecutive quarter of double-digit product growth

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Analysis based on F5's Q1 FY2026 8-K filing, earnings call transcript, earnings presentation slides, and earnings press release published January 27, 2026.