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F5, INC. (FFIV)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered 8% YoY revenue growth to $810M and non-GAAP EPS of $4.39, both above consensus; strength was driven by 16% product growth and 42% systems revenue growth . Wall Street consensus had expected ~$795.5M revenue and $3.97 EPS; F5 beat on both metrics (see Estimates Context)*
  • Management guided FY26 revenue growth down to 0–4% (from mid-single-digit demand drivers) and non-GAAP operating margin to 33.5–34.5% due to anticipated near‑term sales cycle disruption from the recent security incident; Q1 FY26 revenue guided to $730–$780M and EPS to $3.35–$3.85 .
  • On 10/28/25, shares fell ~7.8% following Q4 results and the tempered FY26 outlook tied to incident-related disruption, highlighting sensitivity to decelerating growth guidance .
  • Strategic actions: deepened security posture, launched ADSP/XOPS adoption, announced free CrowdStrike Falcon/OverWatch for BIG‑IP through Oct 14, 2026, and advanced AI workload delivery/security (NVIDIA BlueField-4, CalypsoAI guardrails/red team) .

What Went Well and What Went Wrong

What Went Well

  • Strong product/system momentum: product revenue up 16% YoY to $414M, systems up 42% to $186M; EMEA/APAC growth and AI/hybrid multicloud refresh drove demand .
  • Profitability and cash generation: non‑GAAP gross margin 84.3% (+138 bps YoY), non‑GAAP operating margin 37.0% (+255 bps YoY), Q4 cash from operations $208M; FY25 free cash flow $906M .
  • Platform adoption: “By the end of Q4, nearly 900 customers were leveraging F5 XOPS capabilities, up from just 20 in 2024,” and “26% of our top 1,000 customers are now using F5 Distributed Cloud Services” .

What Went Wrong

  • Guidance reset: FY26 revenue growth guide cut to 0–4% with first‑half disruption expected; Q1 FY26 software expected down YoY given strong prior year comp .
  • Incident overhang: management detailed near‑term sales cycle/approval delays and resource diversion at customers and F5; potential deferrals of some new projects .
  • Legal/investor scrutiny: multiple law firms announced investigations into incident disclosure/materiality timelines, contributing to negative sentiment post‑earnings .

Financial Results

Quarterly P&L vs prior periods

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Revenue ($USD Millions)$731.1 $780.4 $810.1
GAAP EPS ($)$2.48 $3.25 $3.26
Non-GAAP EPS ($)$3.42 $4.16 $4.39
GAAP Gross Margin (%)80.7% 81.0% 82.2%
Non-GAAP Operating Margin (%)31.9% 34.3% 37.0%

Q4 FY25 Segment and mix

SegmentRevenue ($USD Millions)YoY GrowthMix of Total Revenue
Products (Total)$414.1 +16% 51%
Systems$186.0 +42% 23%
Software$229.0 +0.3% 28%
Global Services$396.0 +2% 49%

KPIs and balance sheet (Q4 FY25)

KPIQ4 FY25
Cash from Operations ($M)$208
CapEx ($M)$16
DSO (days)46
Cash & Investments ($B)~$1.36
Deferred Revenue ($B)$2.0 (+11% YoY)
Share Repurchases ($M; avg price)$125 @ $297
Employees~6,580

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (YoY)FY2026Mid‑single‑digit supported by demand drivers 0%–4% Lowered
Non-GAAP Operating MarginFY2026N/A33.5%–34.5% New
Non-GAAP EPS ($)FY2026N/A$14.50–$15.50 New
Non-GAAP Gross MarginFY2026N/A83%–83.5% New
Non-GAAP Effective Tax RateFY2026N/A21%–22% New
Revenue ($M)Q1 FY2026N/A$730–$780 New
Non-GAAP EPS ($)Q1 FY2026N/A$3.35–$3.85 New
Non-GAAP Gross MarginQ1 FY2026N/A82.5%–83.5% New
Non-GAAP OpEx ($M)Q1 FY2026N/A$360–$376 New
Q4 FY2025 Non-GAAP EPS ($)Q4 FY2025$3.87–$3.99 (guided 7/30) $4.39 (actual) Raised vs prior guide
Q4 FY2025 Revenue ($M)Q4 FY2025$780–$800 (guided 7/30) $810 (actual) Above prior guide

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY25)Previous Mentions (Q3 FY25)Current Period (Q4 FY25)Trend
AI/technology initiativesIntroduced ADSP; hybrid multicloud positioning; systems +27% YoY 12% rev growth; systems +39%; AI/data center modernization themes AI wins across data delivery, runtime security, factory load balancing; CalypsoAI guardrails/red team; NVIDIA BlueField-4 integration Accelerating platform-led AI positioning
Security posture/incidentN/AN/ADetailed incident response; customer upgrades; raising security bar; Falcon/OverWatch on BIG-IP free thru Oct 14, 2026 Transitory disruption; structural hardening
SaaS/Managed services transitionFlat software; strong subscriptions; platform narrative Software +16% in Q3; term subscriptions +18% FY25; SaaS/MS down 9% FY25 SaaS/MS transitions largely complete; expect return to growth in FY26 Improving post-transition
Systems refresh cycleEarly cycle; refresh opportunity signaled Strong refresh; capacity expansion tied to AI ~2/3 systems from refresh; early in cycle; AI capacity expansion new vector Multi‑year runway
Macro/FederalN/AN/AU.S. Federal assumed disruption in Q1 guide due to shutdown; H1 demand disruption likely Temporary headwind (H1)
Regional trendsN/AN/AAmericas +7% (57% mix), EMEA +7% (26%), APAC +19% (17%) Broad-based growth, APAC strongest

Management Commentary

  • “Our fourth quarter revenue of $810 million reflects 8% growth year over year… Our strong fourth quarter results cap an exceptional year where we grew revenue 10% while driving 18% non-GAAP earnings growth.” — François Locoh‑Donou .
  • “We are raising the bar on security across all aspects of our business… committed to learning from this incident… and driving collaborative innovation to strengthen the protection of critical infrastructure.” — François Locoh‑Donou .
  • “Revenue from recurring sources contributed 72% of our Q4 revenue… Non‑GAAP operating margin was 37.0%… We generated $906 million in free cash flow for FY25.” — Cooper Werner .
  • “The accelerated adoption of hybrid multi‑cloud architectures and AI‑driven infrastructure is driving demand… the ADSP is the first to unify high‑performance traffic management with advanced application and API security across hybrid and multi‑cloud.” — François Locoh‑Donou .
  • “We expect FY26 EPS in a range of $14.50 to $15.50 and Q1 EPS $3.35 to $3.85… we intend to use at least 50% of our free cash flow towards share repurchases in FY26.” — Cooper Werner .

Q&A Highlights

  • Near-term disruption drivers: resource diversion to customer remediation, executive-level approvals delaying deals, potential deferral of some new projects; majority impact expected in H1 FY26 .
  • Systems mix and runway: ~2/3 of FY25 systems from tech refresh; early in cycle with capacity expansion driven by AI/data sovereignty; potential multi‑year growth .
  • Software growth drivers: flexible consumption agreements, rising Distributed Cloud adoption (customers +57% YoY), multi-product attach; SaaS/MS headwinds abating, reacceleration expected beyond FY26 given renewal timing .
  • Federal and mix: Q1 guide assumes federal shutdown impact; management not guiding software/hardware mix near term due to incident proximity .
  • Security/data exfiltration: impact limited to BIG‑IP; small percentage of customers with exfiltrated configuration data, most deemed not sensitive; no evidence of access to Distributed Cloud or NGINX .
  • Additional security actions: trust center, partner code scanning, enhanced bug bounty, EDR with CrowdStrike Falcon/OverWatch on BIG‑IP .

Estimates Context

  • Q4 FY25 vs consensus: Revenue $810.1M vs $795.5M estimate; non‑GAAP EPS $4.39 vs $3.97 estimate — both beats*.
  • Q1 FY26: Company guides revenue $730–$780M vs ~$756.0M consensus; EPS $3.35–$3.85 vs ~$3.64 consensus — midpoint roughly in line on revenue, EPS range bracketing consensus*.
  • FY26: Company guides EPS $14.50–$15.50 vs ~$15.03 consensus; operating margin guide 33.5%–34.5% (no direct consensus margin provided)*.
MetricQ4 2025 ConsensusQ4 2025 ActualQ1 2026 ConsensusCompany Q1 2026 GuideFY 2026 ConsensusCompany FY 2026 Guide
Revenue ($USD)$795,482,520*$810,090,000 $755,972,580*$730,000,000–$780,000,000 $3,143,649,710*0%–4% YoY growth
Primary EPS ($)$3.9687*$4.39 $3.6444*$3.35–$3.85 $15.0280*$14.50–$15.50

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q4 execution strong with broad‑based growth and margin expansion; systems refresh and AI‑related capacity remain durable demand drivers .
  • The FY26 guide reset is conservative and incident‑driven; management expects normalization in H2 FY26, suggesting potential setup for estimate stabilization mid‑year .
  • Security posture is being materially strengthened (trust center, partner scanning, bug bounty) and extended to network appliances via free CrowdStrike Falcon/OverWatch on BIG‑IP through Oct 2026 — an adoption catalyst for installed base confidence .
  • Distributed Cloud and XOPS adoption are inflecting, with rising multi‑product attach; SaaS/MS transition largely complete, implying improved software growth quality beyond FY26 .
  • Near-term trading: expect volatility around incident headlines and Q1 execution; watch bookings cadence, federal demand recovery, and software renewal momentum for signals of H2 normalization .
  • Medium-term thesis: platform-led ADSP across hardware/software/SaaS, AI workload delivery/security, and large refresh cycle create multi‑year revenue/cash flow compounding potential, with disciplined capital returns (50%+ FCF to buybacks) .
  • Risk monitor: legal/investor investigations and potential project deferrals; track customer upgrade completion rates and any changes to sales cycle timing post‑incident .