| Metric (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|-----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Americas              | $402,158 **[0001048695-23-000011_ffiv-20221231.htm:20]**  | $383,103 **[0001048695-23-000018_ffiv-20230331.htm:20]**  | $398,280 **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A     | $376,390 **[0001048695-24-000012_ffiv-20231231.htm:16]**  | $385,565 **[0001048695-24-000079_ffiv-20240331.htm:17]**  | $382,846 **[0001048695-24-000125_ffiv-20240630.htm:18]**  | $1,581,272 **[0001048695-24-000185_ffiv-20240930.htm:110]**  |
| United States         | $375,748 **[0001048695-23-000011_ffiv-20221231.htm:20]**  | $359,906 **[0001048695-23-000018_ffiv-20230331.htm:20]**  | $374,023 **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A     | $350,075 **[0001048695-24-000012_ffiv-20231231.htm:16]**  | $363,847 **[0001048695-24-000079_ffiv-20240331.htm:17]**  | $361,820 **[0001048695-24-000125_ffiv-20240630.htm:18]**  | $1,488,413 **[0001048695-24-000185_ffiv-20240930.htm:110]**  |
| Other (Americas)      | $26,410 **[0001048695-23-000011_ffiv-20221231.htm:20]**   | $23,197 **[0001048695-23-000018_ffiv-20230331.htm:20]**   | $24,257 **[0001048695-23-000030_ffiv-20230630.htm:22]**   | N/A     | $26,315 **[0001048695-24-000012_ffiv-20231231.htm:16]**   | $21,718 **[0001048695-24-000079_ffiv-20240331.htm:17]**   | $21,026 **[0001048695-24-000125_ffiv-20240630.htm:18]**   | $92,859 **[0001048695-24-000185_ffiv-20240930.htm:110]**    |
| EMEA                  | $184,115 **[0001048695-23-000011_ffiv-20221231.htm:20]**  | $190,439 **[0001048695-23-000018_ffiv-20230331.htm:20]**  | $181,147 **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A     | $193,363 **[0001048695-24-000012_ffiv-20231231.htm:16]**  | $178,386 **[0001048695-24-000079_ffiv-20240331.htm:17]**  | $190,661 **[0001048695-24-000125_ffiv-20240630.htm:18]**  | $755,934 **[0001048695-24-000185_ffiv-20240930.htm:110]**   |
| APAC                  | $114,105 **[0001048695-23-000011_ffiv-20221231.htm:20]**  | $129,633 **[0001048695-23-000018_ffiv-20230331.htm:20]**  | $123,215 **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A     | $122,844 **[0001048695-24-000012_ffiv-20231231.htm:16]**  | $117,403 **[0001048695-24-000079_ffiv-20240331.htm:17]**  | $121,988 **[0001048695-24-000125_ffiv-20240630.htm:18]**  | $478,914 **[0001048695-24-000185_ffiv-20240930.htm:110]**   |
| Total Revenue         | $700,378 **[0001048695-23-000011_ffiv-20221231.htm:20]**  | $703,175 **[0001048695-23-000018_ffiv-20230331.htm:20]**  | $702,642 **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A     | $692,597 **[0001048695-24-000012_ffiv-20231231.htm:16]**  | $681,354 **[0001048695-24-000079_ffiv-20240331.htm:17]**  | $695,495 **[0001048695-24-000125_ffiv-20240630.htm:18]**  | $2,816,120 **[0001048695-24-000185_ffiv-20240930.htm:110]**  |

2d60865427b62ccfaf8da60985538b3152baabd38903f1c7caed598a9baf8a53

F5, Inc. is a leading provider of multi-cloud application security and delivery solutions, enabling customers to develop, deploy, operate, secure, and govern applications across various architectures, from on-premises to the public cloud **[0001048695-24-000079_ffiv-20240331.htm:5]** **[0001048695-24-000079_ffiv-20240331.htm:20]** **[0001048695-24-000012_ffiv-20231231.htm:19]** **[0001048695-24-000185_ffiv-20240930.htm:57]**. The company's enterprise-grade application services are available as cloud-based, software-as-a-service (SaaS), and software-only solutions optimized for multi-cloud environments, with modules that can run independently or as part of an integrated solution on high-performance appliances **[0001048695-24-000079_ffiv-20240331.htm:20]** **[0001048695-24-000012_ffiv-20231231.htm:19]** **[0001048695-24-000185_ffiv-20240930.htm:57]**. F5 markets and sells its products primarily through indirect sales channels across the Americas, Europe, the Middle East, and Africa (EMEA), and the Asia Pacific region (APAC) **[0001048695-24-000079_ffiv-20240331.htm:20]** **[0001048695-24-000012_ffiv-20231231.htm:19]** **[0001048695-24-000185_ffiv-20240930.htm:57]**.

1. **Application Security and Delivery Solutions** - Provides comprehensive solutions for securing and delivering applications, including BIG-IP software and systems, which are available on both a perpetual license and subscription basis.
   - **BIG-IP Software** - Offers a range of application services that enhance security, performance, and availability.
2. **F5 NGINX Software** - Delivers high-performance application delivery and API management solutions, sold on a subscription basis.
3. **F5 Distributed Cloud Services** - Offers security, multi-cloud networking, and edge-based computing solutions under a unified SaaS platform, available on a subscription basis.
4. **Global Services** - Includes annual maintenance contracts, training, and consulting services to support and enhance the use of F5 products.

fb5d505f94516ec53d1d3957c5f22b1b4fccced3c466abf666f7af880928d72f

| Metric (USD Thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Total Net Revenue      | 700,400  **[0001048695-23-000011_ffiv-20221231.htm:20]**  | 703,200  **[0001048695-23-000018_ffiv-20230331.htm:20]** **[0001048695-23-000018_ffiv-20230331.htm:26]**  | 702,642  **[0001048695-23-000030_ffiv-20230630.htm:28]** **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A | 692,600  **[0001048695-24-000012_ffiv-20231231.htm:16]** **[0001048695-24-000012_ffiv-20231231.htm:22]**  | 681,354  **[0001048695-24-000079_ffiv-20240331.htm:17]** **[0001048695-24-000079_ffiv-20240331.htm:23]**  | 695,495  **[0001048695-24-000125_ffiv-20240630.htm:24]**  | N/A |
| Products Revenue       | 340,600  **[0001048695-23-000011_ffiv-20221231.htm:20]**  | 340,600  **[0001048695-23-000018_ffiv-20230331.htm:20]** **[0001048695-23-000018_ffiv-20230331.htm:26]**  | 328,175  **[0001048695-23-000030_ffiv-20230630.htm:28]** **[0001048695-23-000030_ffiv-20230630.htm:22]**  | 305,859  **[0001048695-24-000012_ffiv-20231231.htm:16]**  | 305,900  **[0001048695-24-000012_ffiv-20231231.htm:16]** **[0001048695-24-000012_ffiv-20231231.htm:22]**  | 300,162  **[0001048695-24-000079_ffiv-20240331.htm:17]** **[0001048695-24-000079_ffiv-20240331.htm:23]**  | 308,489  **[0001048695-24-000125_ffiv-20240630.htm:18]**  | 358,285  **[0001048695-24-000154_ex991-q424earningsreleasef.htm:9]**  |
| Systems Revenue        | 173,000  **[0001048695-23-000011_ffiv-20221231.htm:20]**  | 208,700  **[0001048695-23-000018_ffiv-20230331.htm:20]** **[0001048695-23-000018_ffiv-20230331.htm:26]**  | 154,659  **[0001048695-23-000030_ffiv-20230630.htm:28]** **[0001048695-23-000030_ffiv-20230630.htm:22]**  | 135,373  **[0001048695-24-000012_ffiv-20231231.htm:16]**  | 135,400  **[0001048695-24-000012_ffiv-20231231.htm:16]** **[0001048695-24-000012_ffiv-20231231.htm:22]**  | 141,654  **[0001048695-24-000079_ffiv-20240331.htm:17]** **[0001048695-24-000079_ffiv-20240331.htm:23]**  | 129,845  **[0001048695-24-000125_ffiv-20240630.htm:18]**  | N/A |
| Software Revenue       | 167,500  **[0001048695-23-000011_ffiv-20221231.htm:20]**  | 131,900  **[0001048695-23-000018_ffiv-20230331.htm:20]** **[0001048695-23-000018_ffiv-20230331.htm:26]**  | 173,516  **[0001048695-23-000030_ffiv-20230630.htm:28]** **[0001048695-23-000030_ffiv-20230630.htm:22]**  | 170,486  **[0001048695-24-000012_ffiv-20231231.htm:16]**  | 170,500  **[0001048695-24-000012_ffiv-20231231.htm:16]** **[0001048695-24-000012_ffiv-20231231.htm:22]**  | 158,508  **[0001048695-24-000079_ffiv-20240331.htm:17]** **[0001048695-24-000079_ffiv-20240331.htm:23]**  | 178,644  **[0001048695-24-000125_ffiv-20240630.htm:18]**  | N/A |
| Services Revenue       | 359,800  **[0001048695-23-000011_ffiv-20221231.htm:20]**  | 362,600  **[0001048695-23-000018_ffiv-20230331.htm:20]** **[0001048695-23-000018_ffiv-20230331.htm:26]**  | 374,467  **[0001048695-23-000030_ffiv-20230630.htm:28]** **[0001048695-23-000030_ffiv-20230630.htm:22]**  | N/A | 386,700  **[0001048695-24-000012_ffiv-20231231.htm:16]** **[0001048695-24-000012_ffiv-20231231.htm:22]**  | 381,192  **[0001048695-24-000079_ffiv-20240331.htm:17]** **[0001048695-24-000079_ffiv-20240331.htm:23]**  | 387,006  **[0001048695-24-000125_ffiv-20240630.htm:24]**  | 388,389  **[0001048695-24-000154_ex991-q424earningsreleasef.htm:9]**  |

1da6426ac4a1ea6731743427b9034086c31016a4d66a8de0b83440de4f10e64a

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

0c383e3236919cb175f54d6678c13c9502f1cc20d570655469ba9fc9ee10c0f3

efbef67ad6d105e41ee47af465059ea4a7ad6cb3008a298f45cb98bb2219fb9c

f5435d0bf6fc0c4f70563db422fbef23e12b4315f842d6ee92d6952dd4159fa2

1. Are you experiencing increased attrition in your sales team due to competitors poaching your staff, and how is this affecting your go-to-market strategy?  **[FFIV_3394877_15]** 

2. The shift from hardware to software seems slower than expected, with customers preferring hardware solutions; do you anticipate a more rapid shift to software in the upcoming upgrade cycle, or will hardware continue to be a significant part of your revenue mix?  **[FFIV_3394877_18]** 

3. With the $65 million headwind from retiring legacy SaaS businesses and migrating Silverline to Distributed Cloud Services, are you on track with this transition, and how are you mitigating the associated revenue impact?  **[FFIV_3394877_14]** 

4. Given the challenges in your bot manager business, including customer churn due to preference for lower-cost or platform-based solutions, what strategies are you implementing to improve its performance and address competitive pressures?  **[FFIV_3394877_12]** 

5. While you expect hardware demand to stabilize or grow next year due to tech refresh cycles and AI opportunities, how confident are you in this outlook considering industry trends toward software and cloud solutions, and what risks could affect this hardware demand?  **[FFIV_3394877_10]** 

923aac352cf19192da9d84edd2c0d3e9f5ccbfa67365f847b40eef8c49153c20

Products

- Systems

- Software

Services

Total Revenue

5b77dd747401c8b22eb391f6da281196e0fcb912332bce471d3148d815092ca7

- Citrix and Broadcom: Compete against F5's BIG-IP offerings in application delivery  **[0001048695-24-000185_ffiv-20240930.htm:10]** .
- Amazon Web Services (AWS), Google Cloud Platform, Envoy, and HAProxy: Compete against F5's NGINX offerings in optimizing Kubernetes traffic management and load balancing cloud-native and hybrid cloud applications  **[0001048695-24-000185_ffiv-20240930.htm:10]** .
- Akamai, Cisco, Cloudflare, Fortinet, Juniper Networks, Palo Alto, Radware, and Thales: Compete in application security, offering web application firewall, bot detection and mitigation, API protection, carrier-grade firewall, carrier-grade network address translation (NAT), SSL orchestration, access policy management, and DDoS mitigation  **[0001048695-24-000185_ffiv-20240930.htm:10]** .
- Akamai, Cloudflare, Fastly: Traditional edge players competing with F5 Distributed Cloud Services in application and API security delivered as SaaS, as well as multicloud networking  **[0001048695-24-000185_ffiv-20240930.htm:10]** .
- Broadcom and Cisco: Networking vendors competing with F5 Distributed Cloud Services  **[0001048695-24-000185_ffiv-20240930.htm:10]** .
- Aviatrix: Pure-play vendor competing with F5 Distributed Cloud Services  **[0001048695-24-000185_ffiv-20240930.htm:10]** .

3cdccc63f712ff1f213cab1fa94c7e5c47fc4be933163b7f39147f8b5638ce65

Americas

- United States

- Other Americas

EMEA

APAC

- Japan

- Asia Pacific

762f1f9c6e4b694f0a83632fc00325103cae1a932610ae3cb4040907c56a5499

**Quarterly guidance for Q4 2024:**
- **Revenue**: $720 million to $740 million  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP Gross Margins**: Approximately 83%  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP Operating Expenses**: $350 million to $362 million  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP EPS**: $3.38 to $3.50 per share  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Share-Based Compensation Expense**: $54 million to $56 million  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  

**Annual guidance for FY 2024:**
- **Revenue**: Approximately $2.8 billion  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP Effective Tax Rate**: 19.5% to 20%  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP EPS Growth**: Approximately 12%  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP Gross Margins**: 82% to 83%  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  
- **Non-GAAP Operating Margin**: 33% to 34%  **[FFIV_3394877_7]**  (no change from prior guidance  **[FFIV_3394877_1]** )  

8f606bcdf4992746be291b38d168c332a8aee5239c444ec94e8964fdf9240d83

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: Q4 2024 and FY 2024
- **Guidance**:
  - **Q4 2024 Revenue**: $720 million to $740 million  **[FFIV_3394877_7]** .
  - **Q4 2024 Non-GAAP Gross Margins**: Approximately 83%  **[FFIV_3394877_7]** .
  - **Q4 2024 Non-GAAP Operating Expenses**: $350 million to $362 million  **[FFIV_3394877_7]** .
  - **Q4 2024 Non-GAAP EPS**: $3.38 to $3.50 per share  **[FFIV_3394877_7]** .
  - **Q4 2024 Share-Based Compensation Expense**: $54 million to $56 million  **[FFIV_3394877_7]** .
  - **FY 2024 Revenue**: Approximately $2.8 billion  **[FFIV_3394877_7]** .
  - **FY 2024 Non-GAAP Effective Tax Rate**: 19.5% to 20%  **[FFIV_3394877_7]** .
  - **FY 2024 Non-GAAP EPS Growth**: Approximately 12%  **[FFIV_3394877_7]** .
  - **FY 2024 Non-GAAP Gross Margins**: 82% to 83%  **[FFIV_3394877_7]** .
  - **FY 2024 Non-GAAP Operating Margin**: 33% to 34%  **[FFIV_3394877_7]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024 and FY 2024
- **Guidance**:
  - **Q4 2024 Revenue**: $720 million to $740 million  **[FFIV_3394877_7]** .
  - **Q4 2024 Non-GAAP Gross Margins**: Approximately 83%  **[FFIV_3394877_7]** .
  - **Q4 2024 Non-GAAP Operating Expenses**: $350 million to $362 million  **[FFIV_3394877_7]** .
  - **Q4 2024 Non-GAAP EPS**: $3.38 to $3.50 per share  **[FFIV_3394877_7]** .
  - **Q4 2024 Share-Based Compensation Expense**: $54 million to $56 million  **[FFIV_3394877_7]** .
  - **FY 2024 Revenue**: Approximately $2.8 billion  **[FFIV_3394877_1]** .
  - **FY 2024 Software Revenue Growth**: Mid- to high single-digit growth  **[FFIV_3394877_1]** .
  - **FY 2024 Non-GAAP EPS Growth**: Approximately 12%  **[FFIV_3394877_1]** .
  - **FY 2024 Non-GAAP Effective Tax Rate**: 19.5% to 20%  **[FFIV_3394877_7]** .
  - **FY 2024 Non-GAAP Gross Margins**: 82% to 83%  **[FFIV_3394877_7]** .
  - **FY 2024 Non-GAAP Operating Margin**: 33% to 34%  **[FFIV_3394877_7]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024 and FY 2024
- **Guidance**:
  - **Q3 2024 Revenue**: $675 million to $695 million  **[FFIV_3381356_6]** .
  - **Q3 2024 Non-GAAP Gross Margins**: 82% to 83%  **[FFIV_3381356_6]** .
  - **Q3 2024 Non-GAAP Operating Expenses**: $340 million to $352 million  **[FFIV_3381356_6]** .
  - **Q3 2024 Non-GAAP EPS**: $2.89 to $3.01 per share  **[FFIV_3381356_6]** .
  - **Q3 2024 Share-Based Compensation Expense**: $55 million to $57 million  **[FFIV_3381356_6]** .
  - **FY 2024 Revenue Growth**: Flat to down 2% from FY '23  **[FFIV_3381356_6]** .
  - **FY 2024 Non-GAAP Gross Margins**: 82% to 83%  **[FFIV_3381356_6]** .
  - **FY 2024 Non-GAAP Operating Margin**: 33% to 34%  **[FFIV_3381356_6]** .
  - **FY 2024 Tax Rate**: 20% to 22%  **[FFIV_3381356_6]** .
  - **FY 2024 Non-GAAP EPS Growth**: 7% to 9%  **[FFIV_3381356_6]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: Q2 2024 and FY 2024
- **Guidance**:
  - **Q2 2024 Revenue**: $675 million to $695 million  **[FFIV_3371057_5]** .
  - **Q2 2024 Gross Margins**: 82% to 83%  **[FFIV_3371057_5]** .
  - **Q2 2024 Operating Expenses**: $347 million to $359 million  **[FFIV_3371057_5]** .
  - **Q2 2024 Non-GAAP EPS**: $2.79 to $2.91 per share  **[FFIV_3371057_5]** .
  - **Q2 2024 Share-Based Compensation Expense**: $56 million to $58 million  **[FFIV_3371057_5]** .
  - **FY 2024 Operating Margin Target**: 33% to 34%  **[FFIV_3371057_5]** .
  - **FY 2024 Tax Rate**: 21% to 22%  **[FFIV_3371057_5]** .
  - **FY 2024 Non-GAAP EPS Growth**: 6% to 8%  **[FFIV_3371057_5]** .

d1d25b9ff144fbceba1ca44eb97af266a7421455b864a0f3d6ecf77aeaf3f6a1

| Name                  | Position                                      | Start Date         | Short Bio                                                                                                                                                                                                                                                                                                                                 |
|-----------------------|-----------------------------------------------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| François Locoh-Donou  | President, CEO, and Director                  | April 2017         | François Locoh-Donou has been leading F5, Inc. since April 2017. He previously served as COO at Ciena Corporation and has a strong background in enterprise technology, particularly in security, networking, and telecommunications. Under his leadership, F5 has shifted to a software-first approach with over 70% recurring revenues  **[0001048695-24-000185_ffiv-20240930.htm:17]** **[0001140361-24-004097_ny20010228x1_def14a.htm:24]** . |
| Tom Fountain          | Executive Vice President and COO              | August 30, 2024    | Tom Fountain became COO on August 30, 2024. He joined F5 in January 2018 as EVP and Chief Strategy Officer, later serving as EVP of Global Services and Chief Strategy Officer from June 2020. He has held senior roles at McAfee, Intel, and Juniper Networks  **[0001048695-24-000185_ffiv-20240930.htm:17]** **[0001048695-24-000136_ffiv-20240827.htm:1]** **[0001048695-24-000136_ex991-pressrelease8272024.htm:0]** .                                                                 |
| Frank Pelzer          | Executive Vice President and CFO              | May 2018           | Frank Pelzer oversees F5's financial operations since May 2018. He was previously President and COO of the Cloud Business Group at SAP and CFO of Concur Technologies. He has also worked at Deutsche Bank and Credit Suisse Group  **[0001048695-23-000039_ffiv-20230930.htm:19]** **[0001048695-24-000185_ffiv-20240930.htm:18]** .                                                                                                 |
| Scot Rogers           | Executive Vice President and General Counsel  | January 2014       | Scot Rogers has been with F5 since 2005, becoming EVP and General Counsel in January 2014. He was previously General Counsel for Xpediate Consulting and spent eight years in private practice as a commercial litigator  **[0001048695-23-000039_ffiv-20230930.htm:19]** **[0001048695-22-000033_ffiv-20220930.htm:19]** .                                                                                                          |
| Chad Whalen           | Executive Vice President and Chief Revenue Officer | September 2024 | Chad Whalen has been CRO since September 2024. He joined F5 in 2017, leading the Cloud Sales team, and served as EVP of Worldwide Sales from July 2018 to August 2024. He has held leadership roles at Fortinet, Jasper, Ciena, and World Wide Packets  **[0001048695-24-000185_ffiv-20240930.htm:18]** **[0001048695-24-000136_ffiv-20240827.htm:1]** **[0001048695-24-000136_ex991-pressrelease8272024.htm:0]** .                                                                         |
| Lyra Schramm          | Executive Vice President and Chief People Officer | April 2024       | Lyra Schramm joined F5 in April 2024. She previously spent nine years at Google in various leadership roles, including VP of Strategy & Innovation, where she led Google's enterprise-wide people strategy  **[0001048695-24-000185_ffiv-20240930.htm:18]** .                                                                                                                            |
| Kunal Anand           | Executive Vice President and Chief Innovation Officer | September 2024 | Kunal Anand joined F5 in April 2024 as CTO and became Chief Innovation Officer in September 2024. He was previously CTO and CISO at Imperva and co-founded Prevoty. He has worked at BBC Worldwide, Gravity, MySpace, and NASA Jet Propulsion Lab  **[0001048695-24-000185_ffiv-20240930.htm:19]** **[0001048695-24-000136_ex991-pressrelease8272024.htm:0]** .                                                                                  |
| Edward Cooper Werner  | Executive Vice President and CFO (upcoming)   | Future Date        | Edward Cooper Werner is set to become CFO following the filing of F5's Form 10-K for the 2024 fiscal year, expected in mid-November 2024. He has been with F5 since 2001, serving as SVP of Finance for 12 years  **[0001048695-24-000154_ffiv-20241025.htm:2]** **[FFIV_3401406_0]** **[FFIV_3394877_7]** .                                                                                                               |

a9e991b04a5a6f821c2545dd5be604ed2450d497dc88a4cd70391d44e1dc2e96

| Program Details          | Program 1          | Program 2          | Program 3          |
|--------------------------|--------------------|--------------------|--------------------|
| Approval Date            | October 2010  **[0001048695-24-000185_ffiv-20240930.htm:102]** **[0001048695-24-000185_ffiv-20240930.htm:54]** | July 25, 2022  **[0001048695-24-000185_ffiv-20240930.htm:102]** **[0001048695-24-000185_ffiv-20240930.htm:54]** | October 25, 2024  **[0001048695-24-000185_ffiv-20240930.htm:110]** |
| End Date/Duration        | N/A                | N/A                | N/A                |
| Total Additional Amount  | **$5.4 billion**  **[0001048695-24-000185_ffiv-20240930.htm:102]** **[0001048695-24-000185_ffiv-20240930.htm:54]** | **$1.0 billion**  **[0001048695-24-000185_ffiv-20240930.htm:102]** **[0001048695-24-000185_ffiv-20240930.htm:54]** | **$1.0 billion**  **[0001048695-24-000185_ffiv-20240930.htm:110]** |
| Remaining Authorization  | **$0**             | **$0**             | **$422.4 million**  **[0001048695-24-000185_ffiv-20240930.htm:110]** |
| Details                  | Can be terminated at any time  **[0001048695-24-000185_ffiv-20240930.htm:102]** **[0001048695-24-000185_ffiv-20240930.htm:54]** **[0001048695-24-000185_ffiv-20240930.htm:110]** | Can be terminated at any time  **[0001048695-24-000185_ffiv-20240930.htm:102]** **[0001048695-24-000185_ffiv-20240930.htm:54]** **[0001048695-24-000185_ffiv-20240930.htm:110]** | Incremental to existing unused amount  **[0001048695-24-000185_ffiv-20240930.htm:110]** |

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| Name                        | Start Date | End Date | Reason for Change |
|-----------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP  | 1996  **[0001048695-24-000185_ffiv-20240930.htm:75]**  | Present  | Current auditor   |

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23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- **F5 expects double-digit growth in hardware this year**, driven by a **strong pipeline on refresh activity** and **significant competitive displacements**, indicating robust revenue growth prospects.  **[FFIV_3413403_11]**
- **F5 is seeing significant opportunities in AI** across multiple areas, including **moving data securely and at speed**, **security in inferencing**, and **load balancing for AI factories**, with **early customer wins** and a **partnership with NVIDIA**, which could drive future growth.  **[FFIV_3413403_11]**
- The company's investments in **next-generation software and hardware** for **hybrid multi-cloud environments** are yielding **competitive advantages**, leading to **sustainable growth** across their software, hardware, and services businesses, as customers recognize the need to invest in solutions that address hybrid multi-cloud complexity.  **[FFIV_3413403_26]** **[FFIV_3413403_21]**

a21ee57739ca8d66182a346d6b865f8b24ad46a531ece0cc7d8317355782fa18

- The **exceptional software revenue growth** in Q1 was significantly driven by **large subscription renewals** leading to upfront revenue recognition, which may not be sustainable and could result in **lumpy software revenue** in future quarters. The company acknowledged that it would be premature to assume the same level of expansion in the second half of the year.  **[FFIV_3413403_16]**
- The strong **18% year-over-year growth** in systems revenue was partially due to **pull-in of orders** ahead of a mid-single-digit price increase effective January 1. This pull-in might temper systems demand in future quarters, potentially impacting revenue growth.  **[FFIV_3413403_17]**
- The company maintains that over time, customers will move towards adopting more software solutions, and the trajectory of the hardware business is expected to decline. Without sufficient software revenue growth to offset this decline, overall growth may be negatively impacted.  **[FFIV_3413403_24]**

02cf2c79f3f7a53f216745ef61321bd2d8874e0fc3290e15662ec319a5d6afbc

1. **Sustainability of Hardware Growth**
   
   **Q:** Can you discuss the sustainability of hardware systems growth?

   **A:** Management expects a **strong year for hardware**, projecting **double-digit growth** driven by a robust pipeline of refresh activity. Customers who had been **sweating assets** are now upgrading due to application capacity growth and deployments in **hybrid multi-cloud environments**. Significant competitive displacements and investments in next-generation hardware are also contributing to this growth.  **[FFIV_3413403_11]** 

2. **AI Business Opportunities**

   **Q:** What are the key opportunities for F5 in AI?

   **A:** F5 sees three main AI opportunities:

   1. **High-performance data delivery** to and from data stores during training and inferencing, which is where the **majority of deals** have been won, particularly with **large enterprises** building AI factories across Europe, Asia, and North America.  **[FFIV_3413403_11]** **[FFIV_3413403_13]** 

   2. **Security in inferencing** using API security and discovery solutions, currently in the **early stages**.  **[FFIV_3413403_11]** 

   3. **Load balancing traffic** for AI factories, including partnerships like the one with **NVIDIA** for intra-cluster traffic management. This opportunity is expected to develop **longer term**.  **[FFIV_3413403_11]** **[FFIV_3413403_13]** 

   F5's immediate opportunity is largely in **inferencing for large enterprises**, unaffected by concerns about AI compute intensity for training models.  **[FFIV_3413403_13]** 

3. **Software Expansion and Second Half Outlook**

   **Q:** How are software expansion rates affecting the outlook for the second half?

   **A:** A **strong Q1** featured **exceptional expansion rates**, including a **large eight-figure deal** where a customer converged multiple security solutions onto F5's platform. While this trend is positive, management remains **cautious** about assuming similar expansion rates in the second half due to the concentration among a few large customers and the early stage of the fiscal year.  **[FFIV_3413403_12]** 

4. **Distributed Cloud Business Growth**

   **Q:** Can you provide an update on the distributed cloud business?

   **A:** The distributed cloud business, part of F5's SaaS and managed services portfolio with approximately **$180 million** in ARR at the end of fiscal **2024**, surpassed **1,000 customers** this quarter. The majority are **large enterprises**, with **two-thirds** being existing F5 customers and **one-third** net new. Over **20%** of F5's top 1,000 customers now use distributed cloud services, reflecting the trend of embracing **hybrid multi-cloud environments**.  **[FFIV_3413403_12]** 

5. **Triggers for Hardware Refreshes**

   **Q:** What is triggering the current wave of hardware refreshes?

   **A:** The refresh activity is driven by enterprises **revitalizing data center capacity** in preparation for AI and embracing hybrid multi-cloud as their long-term operating environment. Additionally, F5-specific factors include customers who were cautious in recent years now upgrading due to **application and capacity growth**, and upcoming **end-of-support dates in 2026** prompting proactive refreshes.  **[FFIV_3413403_13]** 

6. **Supply Chain and Fulfillment**

   **Q:** Are there any constraints in fulfilling hardware demand?

   **A:** Management feels **confident** about fulfilling near-term hardware demand, with **no real constraints** currently seen. F5 has largely moved to **newer generation platforms** and developed a more **resilient supply chain** during the supply chain crisis.  **[FFIV_3413403_11]** 

7. **Seasonality and Back-Half Loaded Year**

   **Q:** How are you thinking about seasonality and the back-half loaded year?

   **A:** Despite a **strong Q1** driven by tech refresh and hybrid multi-cloud demand, the large renewal base for the second half remains **unchanged**. Expansion rates have been exceptional, but management is not assuming these rates will continue to increase in the second half due to early concentration in a few large customers. They will continue to monitor expansion and engage closely with customers.  **[FFIV_3413403_12]** 

3f2991d61e457336a5cb8fbcb4e5c8009b2484cce591fe49180dd22992d38992

F5’s Q1 hardware revenue jumped 18% YoY on refresh demand, validating management’s double-digit growth outlook. Meanwhile, AI opportunities (secure data movement, security in inferencing) could drive further upside, but software revenue may turn lumpy after large renewals.

97aa320af39fee66cc7800353885db9fc99c5bfa6c6bc6ebbbe0ed7846e83fd8

**Quarterly guidance for Q2 2025:**
- **Revenue**: $705 million to $725 million  **[FFIV_3413403_9]** **[FFIV_3413403_2]**  (lowered from $720 million to $740 million  **[FFIV_3394877_7]** )  
- **Revenue growth**: 5%  **[FFIV_3413403_9]** **[FFIV_3413403_2]**  (no prior guidance)  
- **Non-GAAP Gross Margin**: 82.5% to 83%  **[FFIV_3413403_9]**  (lowered from approximately 83%  **[FFIV_3394877_7]** )  
- **Non-GAAP Operating Expenses**: $362 million to $374 million  **[FFIV_3413403_9]**  (raised from $350 million to $362 million  **[FFIV_3394877_7]** )  
- **Share-Based Compensation Expense**: $58 million to $60 million  **[FFIV_3413403_9]**  (raised from $54 million to $56 million  **[FFIV_3394877_7]** )  
- **Non-GAAP EPS**: $3.02 to $3.14  **[FFIV_3413403_9]**  (lowered from $3.38 to $3.50  **[FFIV_3394877_7]** )  

**Annual guidance for FY 2025:**
- **Revenue Growth**: 6% to 7%  **[FFIV_3413403_9]** **[FFIV_3413403_2]**  (no prior guidance)  
- **Software Revenue Growth**: at least 10%  **[FFIV_3413403_9]**  (no prior guidance)  
- **Non-GAAP Gross Margin**: 83% to 84%  **[FFIV_3413403_9]**  (raised from 82% to 83%  **[FFIV_3394877_7]** )  
- **Non-GAAP Operating Margin**: approximately 35%  **[FFIV_3413403_9]**  (raised from 33% to 34%  **[FFIV_3394877_7]** )  
- **Non-GAAP Effective Tax Rate**: 21% to 23%  **[FFIV_3413403_9]**  (raised from 19.5% to 20%  **[FFIV_3394877_7]** )  
- **Non-GAAP EPS Growth**: 6.5% to 8.5%  **[FFIV_3413403_9]**  (lowered from approximately 12%  **[FFIV_3394877_7]** )  
- **Share Repurchases**: at least 50% of annual free cash flow  **[FFIV_3413403_9]**  (no prior guidance)  

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- Total Revenue: $766.0 million (+11% YoY)  **[0001048695-25-000002_ex991-q125earningsreleasef.htm:1]** **[0001048695-25-000002_ex991-q125earningsreleasef.htm:0]**   
- Products: $368.5 million (+20% YoY)  **[0001048695-25-000002_ex991-q125earningsreleasef.htm:9]**   
- Systems: $160.0 million (+18% YoY)  **[0001048695-25-000002_ex991-q125earningsreleasef.htm:0]**   
- Software: $209.0 million (**+23% YoY**)  **[0001048695-25-000002_ex991-q125earningsreleasef.htm:0]**   

902c7d8bc7154a83b8caf9fd01e057ec4b7294e6b18261b198da928ff1a5b856

Professional services headcount (employees)

Sales and marketing headcount (employees)

Research and development headcount (employees)

General and administrative headcount (employees)

073a20b8d4346840e095d79b1699e06c0cb3ad3ba846e4e492b2de5ca587f34c

- F5 Networks reports **net revenue retention rates above 120%**, surpassing industry norms, indicating strong customer retention and expansion within their term subscription business.  **[FFIV_3361688_21]**
- The company anticipates **double-digit software growth returning in FY25**, driven by robust renewals and expansions in their term subscription business.  **[FFIV_3361688_12]**
- F5 is **gaining market share in Application Delivery Controllers (ADCs)** by displacing competitors, thanks to investments in next-generation hardware and software platforms like **BIG-IP**, and expects this trend to continue with upcoming differentiated offerings.  **[FFIV_3361688_18]**

cc20e459bdd4bd971cbe04becbe644ef9c7fe0fc5eb3efef8f87642f64c27482

- **Systems revenue declined 32% year-over-year**, indicating significant weakness in hardware sales and potential challenges in the product segment.  **[FFIV_3381356_5]**
- **Customers remain cautious due to lingering macroeconomic concerns and flat IT budgets**, leading to spending caution on new projects, particularly affecting hardware and CapEx spending.  **[FFIV_3381356_1]** **[FFIV_3381356_12]**
- Despite strong first-half software performance, the company **did not raise its software revenue outlook**, expecting only flat to modest growth, and is heavily reliant on subscription renewals to meet second-half targets, suggesting limited new business growth.  **[FFIV_3381356_14]** **[FFIV_3381356_9]** **[FFIV_3381356_16]**

7af24494fb8bb2e45e46dbce2ca038701da449621adc7039ab182cc49d269824

b0debabd7cde0a53e3dc71cc9b681744a1f0c0fd89829eedab180b402cd54400

1. **Demand Trends and Revenue Outlook**  
   **Q:** How are revenue trends excluding backlog headwinds?  
   **A:** Management noted that excluding backlog headwinds from a year ago, they saw **mid-single-digit growth**.  **[FFIV_3371057_7]**  Demand is **meaningfully up** in the first half of '24 compared to the first half of '23.  **[FFIV_3371057_7]**  This increase is **broad-based across all major theaters and industry verticals**.  **[FFIV_3371057_7]** 

2. **Software Performance and Guidance**  
   **Q:** Is software growth outlook still flat to modestly up?  
   **A:** Management reaffirmed that software growth is expected to be **flat to modestly up** for fiscal year '24.  **[FFIV_3371057_9]**  They are encouraged by Q1 performance but are **not changing the outlook**.  **[FFIV_3371057_9]**  The strong perpetual sales in Q1 were due to **specific customer preferences** and may not repeat next quarter.  **[FFIV_3371057_9]** 

3. **Competitive Position and Market Share**  
   **Q:** How is F5's competitive position and opportunity to gain share?  
   **A:** F5 feels they are in a **strong and growing competitive position**, seeing **increased inbound interest** from customers and partners.  **[FFIV_3371057_8]**  They note that **three competitors** have undergone change of control, leading to customer interest shifting to F5.  **[FFIV_3371057_8]**  Their investments in **rSeries and next-generation hardware and software** are creating an exciting roadmap for customers.  **[FFIV_3371057_8]** 

4. **Operating Margin and One-offs**  
   **Q:** Were there any one-off items affecting operating margins in Q1?  
   **A:** Operating margin outperformance in Q1 was partly due to **expenses pushed into Q2 or beyond**.  **[FFIV_3371057_10]**  They also benefited from **tax impacts** in the quarter.  **[FFIV_3371057_10]**  They expect **seasonal declines** in Q2 due to tax resets and marketing event expenses.  **[FFIV_3371057_10]** 

5. **AI Contribution to Growth**  
   **Q:** What is the expected impact of AI on future growth?  
   **A:** Management is starting to see initial AI use cases but believes **enterprise AI deployments are 12–24 months away**.  **[FFIV_3371057_13]**  F5 is well-positioned as AI workloads heavily use **APIs**, presenting significant opportunity in **API security**.  **[FFIV_3371057_13]**  The **distributed nature** of AI workloads aligns with F5's ability to serve applications anywhere.  **[FFIV_3371057_13]** 

6. **Customer Migration Feedback**  
   **Q:** How is customer feedback on migrating to Distributed Cloud Services?  
   **A:** Early migrations from Silverline to Distributed Cloud Services have gone **very well**, with customers being **very happy** with the outcome.  **[FFIV_3371057_12]**  It is still **early days** in the process.  **[FFIV_3371057_12]** 

7. **Service Provider Demand and Wins**  
   **Q:** What are the trends in service provider spending?  
   **A:** Service providers are generally continuing to **sweat their assets** and suppress CAPEX.  **[FFIV_3371057_11]**  However, F5 secured a **significant win** with a North American service provider for their **5G architecture**, reflecting benefits from investments made over the past **four years**.  **[FFIV_3371057_11]** 

8. **Global Services Revenue Growth**  
   **Q:** What drove the strong growth in global services revenue?  
   **A:** Global services revenue grew **7%**, driven by **high maintenance attach** and effects from a prior **price increase**.  **[FFIV_3371057_14]**  They are not changing their outlook for low single-digit growth for the full year.  **[FFIV_3371057_14]** 

9. **Enterprise Behavior and Application Growth**  
   **Q:** Are enterprises increasing application development spending?  
   **A:** Enterprises are focusing on **application portfolio rationalization**, reducing non-critical apps while traffic on important apps continues to **grow**.  **[FFIV_3371057_16]**  F5 benefits as applications are **distributed across multiple environments**.  **[FFIV_3371057_16]** 

10. **rSeries Upgrade Cycle**  
    **Q:** How is the upgrade cycle from iSeries to rSeries progressing?  
    **A:** Adoption of **rSeries** is strong, with **over 50%** of appliances shipped now being rSeries.  **[FFIV_3371057_17]**  Majority of use cases are now covered, and the pipeline of tech refresh is **increasing**.  **[FFIV_3371057_17]** 

609699baed16c4145d700b9848a5b378c58048583c9c9f784d7e198902da5a06

1. **Software Growth Deceleration**  
   **Q:** Why guide high single-digit software growth after strong FY'24?  
   **A:** Despite strong software growth in FY'24, we are forecasting **high single-digit growth** for FY'25 due to prudence and the early stage of AI deployments. While hybrid and multi-cloud adoption continues to drive tailwinds, we anticipate meaningful AI-related revenue contributions more in FY'26 and beyond.  **[FFIV_3404208_13]** 

2. **Systems Revenue Outlook**  
   **Q:** Is systems growth due to share gains or accelerated refresh?  
   **A:** Both. We see strength in systems from **competitive replacements** and customers **reinvesting in hardware**, leading to a **mid-single-digit growth** outlook for our hardware business. This trend is likely to continue over the next several quarters.  **[FFIV_3404208_14]** 

3. **AI Opportunities Timing**  
   **Q:** When will AI tailwinds impact revenues?  
   **A:** AI opportunities are developing but are in early days. Hardware opportunities with **BIG-IP in AI deployments** are starting now but won't significantly contribute to FY'25 revenue. Software opportunities, like our partnership with **NVIDIA** for improved GPU utilization, are expected to contribute meaningfully in **FY'26 and beyond**.  **[FFIV_3404208_17]** 

4. **Raised First Half Guidance**  
   **Q:** Have first half FY'25 growth expectations changed?  
   **A:** Yes, we updated our expectation for the first half to **low single-digit growth**, up from prior flat expectations, due to strength in **subscription renewals** and **systems**.  **[FFIV_3404208_21]** 

5. **Subscription Revenue Dynamics**  
   **Q:** Why might subscription revenue decline sequentially next quarter?  
   **A:** The sequential fluctuation is due to **timing of the renewal base** and strong Q4 performance. Our larger renewal base in FY'25 is more weighted to the second half, causing variability in reported revenue due to **ASC 606** recognition.  **[FFIV_3404208_15]** 

6. **Hardware Price Increases**  
   **Q:** Are you implementing hardware price increases?  
   **A:** Yes, we've announced modest **single-digit percentage** price increases for hardware, effective at the **beginning of the calendar year**, considering the competitive environment and delivering value to customers.  **[FFIV_3404208_17]** 

7. **Enterprise Sector Strength**  
   **Q:** How did verticals perform relative to expectations?  
   **A:** **Enterprise** was the strong sector, exceeding expectations and leading to outperformance. **U.S. Federal** performed as expected, while the **service provider** sector remained weak due to constrained demand.  **[FFIV_3404208_18]** 

8. **New vs. Existing Customer Growth**  
   **Q:** How much growth comes from new customers?  
   **A:** The majority of growth comes from **existing customers** through expansion and cross-selling, although we continue to win **new customers** each quarter across our portfolio. In FY'24, our distributed cloud services grew to over **800 customers** from about **500**.  **[FFIV_3404208_19]** 

9. **Sales Incentives and Partner Program**  
   **Q:** Any changes in sales incentives or partner program for FY'25?  
   **A:** We will continue to incentivize our sales force to **cross-sell our portfolio**, focusing on hybrid multi-cloud architectures. Our strong partner program remains the same, with over **2,000 partners** embracing our growing portfolio.  **[FFIV_3404208_24]** 

97437486179762725ad4e77850a10541b2d9699cdb7370e3abb768686384b25b

1. **Software Growth and Outlook**  
   **Q:** What drove the strong software growth this quarter?  
   **A:** Our software growth was stronger than expected due to robust new business activity, which lifted us to the top end of our guidance.  **[FFIV_3394877_9]**  While we typically update ARR metrics at the end of Q4, we can say that subscription renewals remain strong with some expansion, and our Net Revenue Retention (NRR) remains world-class.  **[FFIV_3394877_9]** 

2. **Hardware Outlook and AI Catalysts**  
   **Q:** Is hardware demand stabilizing, and what is the outlook?  
   **A:** Hardware has stabilized over the past several quarters as customers have digested inventory, and we expect hardware next year will certainly not decline and could possibly be up relative to this year.  **[FFIV_3394877_10]**  This is driven by a strong pipeline of tech refresh activity and new demand from service providers and enterprises building large AI factories, where our BIG-IP solutions improve efficiencies.  **[FFIV_3394877_10]** 

3. **Fiscal 2025 Guidance and Margins**  
   **Q:** Should we expect the same growth rates for fiscal '25?  
   **A:** We are still planning for mid-single-digit growth off a flat to low single-digit fiscal '24, and we will deliver **35% operating margin** off that revenue number.  **[FFIV_3394877_13]**  We expect more of the growth to come in the back half of fiscal '25, driven by subscription renewals and new business activity.  **[FFIV_3394877_13]** 

4. **Return to Double-Digit Software Growth**  
   **Q:** Will software growth accelerate in the next upgrade cycle?  
   **A:** We anticipate returning to double-digit software growth next year and see catalysts in both hardware and software.  **[FFIV_3394877_18]**  We don't force customers to adopt one delivery model over another; we meet them where they are to modernize their environments.  **[FFIV_3394877_18]** 

5. **Bot Manager Challenges and Platform Transition**  
   **Q:** How are you addressing challenges with Bot Manager?  
   **A:** We've been challenged with our high-end Bot Manager point solution, as some customers seek lower-end solutions or platform bundles.  **[FFIV_3394877_12]**  We're integrating our sophisticated bot technology into our F5 Distributed Cloud platform and now offer bot protection as part of a bundle, leading to the number of WAAP-as-a-service customers doubling over the last year.  **[FFIV_3394877_12]** 

6. **AI Opportunities and API Security**  
   **Q:** How does enterprise AI adoption present opportunities for F5?  
   **A:** AI presents opportunities in cost and security. Our high-capacity load balancing solutions increase efficiency in AI factories, reducing the cost per query.  **[FFIV_3394877_17]**  In the long term, securing AI models is key, and we believe securing APIs is essential. We've invested significantly in API security, seeing a **tripling** of API security customers year-over-year.  **[FFIV_3394877_17]** 

7. **Customer Incentives on Multiyear Maintenance**  
   **Q:** Why are you no longer incentivizing multiyear maintenance agreements?  
   **A:** Given our very high attach rates and quality of service, we don't need to offer higher discounts to lock in customers for multiyear maintenance.  **[FFIV_3394877_14]**  We are a cash-generative company, and the service and products themselves retain customers without the need for upfront cash incentives.  **[FFIV_3394877_14]** 

8. **Impact of Competitor Poaching and Sales Attrition**  
   **Q:** Are competitors poaching your sales staff, affecting staffing levels?  
   **A:** Our attrition in sales is well below industry norms.  **[FFIV_3394877_15]**  We have an extraordinary sales team, and while competitors may try to poach individuals, it would take much more to replicate our 20-plus years of enterprise go-to-market experience.  **[FFIV_3394877_15]** 

9. **Impact of Broadcom’s VMware Pricing Adjustments**  
   **Q:** Is Broadcom's VMware pricing affecting your business?  
   **A:** Anecdotally, a few customers have reallocated budgets due to VMware's price increases, but we haven't seen it as a significant trend across our customer base.  **[FFIV_3394877_16]** 

10. **Cross-Selling Distributed Cloud Solutions**  
    **Q:** Are you displacing other vendors with your Distributed Cloud solutions?  
    **A:** It's both. About two-thirds of our Distributed Cloud customers are existing F5 customers, and one-third are new logos.  **[FFIV_3394877_19]**  Sometimes we displace SaaS players as customers consolidate to our platform for consistent security across environments; other times, we address greenfield opportunities where customers lacked a dedicated solution.  **[FFIV_3394877_19]** 

f3bc450411bc47a9f0e89025ecf34f7ebd916cdfd20ca38ecc0e61cfe6623599

- **Strong Software Growth and Visibility into Renewals:** F5 reported strong software growth in Q2, with software subscription revenue reaching an all-time high of **88% of total software revenue**.  **[FFIV_3381356_9]**  They expect to be at the higher end or better by the end of the year, with **strong visibility into subscription renewals**, particularly in Q4, providing confidence in future revenue growth  **[FFIV_3381356_14]** ,.  **[FFIV_3381356_16]**
- **Competitive Advantages Leading to Market Share Gains:** F5 is **displacing competitors in both hardware and software** due to significant investments in new generation hardware that brings cloud benefits to on-premises implementations, and a software footprint easy to consume in public clouds  **[FFIV_3381356_19]** ,.  **[FFIV_3381356_8]**  They have **accelerated momentum** in the ADC space and are consolidating multiple capabilities onto F5, including replacing competitors in large enterprises worldwide.  **[FFIV_3381356_8]**
- **Leading in AI-Driven Security Solutions and Addressing Emerging AI Use Cases:** F5 leverages AI to block significant attacks, having **blocked several billion API attacks** in their distributed cloud capability this quarter.  **[FFIV_3381356_19]**  They are investing in AI and generative AI to stay ahead of attackers and enhance customer interaction with their solutions.  **[FFIV_3381356_19]**  Additionally, they are seeing emerging AI-related use cases in **high-capacity load balancing for data ingestion, API security, and multi-cloud networking**, positioning them well for future growth in AI workloads.  **[FFIV_3381356_8]**

de7c526624fa4b787d12018bd1ff82773929025372130cd2fb79f30bf43b4f45

- **F5 Networks expects flat to down low single-digit revenue growth in FY '24**, signaling potential challenges in maintaining growth momentum.  **[FFIV_3361688_13]**
- The company anticipates a planned **revenue churn of approximately $65 million** in its SaaS and managed services business due to retiring legacy offerings and transitioning customers, which may impact short-term revenue.  **[FFIV_3361688_10]**
- **Software revenue growth is expected to be flat to modest in FY '24**, with no expected growth from perpetual or SaaS and managed services segments, raising concerns about near-term software growth.  **[FFIV_3361688_13]** **[FFIV_3361688_10]**

d396d3a413d98d2bbaafafd5d27e2a922cda37f96ae30cafe44d1d7e72c625a8

- F5 has faced increased competition leading to **poaching of key sales staff by competitors**, as acknowledged in their earnings call.  **[FFIV_3394877_15]**
- The **shift from hardware to software has been slower than expected**, with many customers still preferring hardware solutions, potentially impacting software growth.  **[FFIV_3394877_18]**
- The company's **Bot Manager product has faced challenges**, with customers seeking **lower-cost alternatives and integrated platform solutions**, indicating pressure on this segment.  **[FFIV_3394877_12]**

6f59063dafe8c568e1406f09953bec96808f6bea1de646b6f4966866621ce17d

- **F5 is gaining market share due to a strong competitive position and disruptions among competitors**, leading to increased customer wins and migrations from competitors to F5.  **[FFIV_3371057_8]**
- **F5 is well-positioned to benefit from the upcoming enterprise AI adoption**, as AI workloads rely heavily on APIs, and F5 excels in API security and distributed architectures, making it an enabler for AI deployment.  **[FFIV_3371057_14]**
- **Demand is meaningfully up compared to last year across geographies and verticals**, with improving predictability and stability in customer spending, along with an uptick in pipeline and tech refresh activities, indicating a positive outlook for F5.  **[FFIV_3371057_7]** **[FFIV_3371057_11]**

8e60c58feacf807e21aae3743650290476b2c9146cf2fc3c88b6db6ab1d9e4fe

- **F5 expects its SaaS and managed services Annual Recurring Revenue (ARR) to remain flat over FY'24 and FY'25, limiting growth in this area.**  **[FFIV_3371057_18]**
- **F5 faces strong competition from more mature CDN companies like Akamai and Cloudflare in the SaaS market, where F5 is a newer, less established player.**  **[FFIV_3371057_18]**
- **F5 is retiring products worth $65 million, posing risks if customers do not migrate successfully to new platforms, potentially impacting future revenue.**  **[FFIV_3371057_13]** **[FFIV_3371057_12]**

c28661ed12bb1e06a11b204d4f0349f1e243d2cb55d99d763fb7026d321fae78

- **F5 is uniquely positioned to benefit from the increasing complexity of application environments**, as customers deploy applications across multiple infrastructure environments, leading to massive complexity that F5's platform can address. This trend is expected to accelerate with AI, which further distributes applications and components, playing to F5's strengths in securing and optimizing applications regardless of location.  **[FFIV_3394877_15]**
- **F5's unmatched flexibility and choice in offering both hardware and software solutions** allows them to meet customers where they are, differentiating them from competitors. This approach is expected to drive continued growth, with expectations of a return to double-digit software growth next year.  **[FFIV_3394877_18]**
- **F5 is successfully cross-selling its Distributed Cloud security solutions**, both displacing competitors and capturing greenfield opportunities. With their SaaS solution, customers can consolidate vendors, reduce complexity, and achieve consistent security across all environments, leading to increased traction and new customer acquisitions.  **[FFIV_3394877_19]**

be186e0382a8bccf6fbbae7e8a4d16d712c22cca59f3af134a9c08e10b3091b3

1. **Software Subscription Momentum**  
   **Q:** Can you discuss the sustainability of strong software subscription revenue growth?  
   **A:** Software subscription revenue showed strong growth, with **subscription revenue at 88% of total software revenue**, an all-time high.  **[FFIV_3381356_9]**  While there will be quarterly fluctuations, we expect subscription revenue to remain strong, especially with upcoming renewals in the second half. We anticipate software revenue growth to be at the higher end or better than our original outlook of flat to modest growth for the year.  **[FFIV_3381356_14]** 

2. **Competitive Landscape and Displacement**  
   **Q:** How is F5 performing against competitors in the ADC space?  
   **A:** We continue to see **accelerated momentum** in the ADC space, with numerous wins including consolidations onto F5 and replacements of competitors, both in North America and globally.  **[FFIV_3381356_8]**  Our **F5 Distributed Cloud Services**, which offer a comprehensive platform for application security, have been appealing to customers and allowed us to displace competitors who have not invested to the same degree.  **[FFIV_3381356_8]** 

3. **AI Use Cases and Impact**  
   **Q:** What role does F5 play in enterprise AI deployments, and how does this impact your business?  
   **A:** AI implementations are inherently **hybrid and multi-cloud**, requiring capabilities like high-capacity load balancing for data ingestion, API security, and multi-cloud networking.  **[FFIV_3381356_8]** **[FFIV_3381356_10]**  We are seeing early adoption among enterprises running their own large language models, but **significant revenue impact from AI is expected in 1 to 2 years**.  **[FFIV_3381356_10]**  Our solutions uniquely address the complexities of AI workloads across multiple environments.  **[FFIV_3381356_10]** 

4. **"Ball of Fire" and Multi-Cloud Complexity**  
   **Q:** How does F5 address the complexities of customers' multi-cloud environments, or the "ball of fire"?  
   **A:** We offer a comprehensive set of application services—including load balancing, authentication, API security, DDoS protection, and multi-cloud networking—that few, if any, competitors can match.  **[FFIV_3381356_15]**  Our ability to provide these services across any public cloud or on-premises location makes **multi-cloud management significantly easier for customers**, a capability we believe is unique in the market.  **[FFIV_3381356_15]** **[FFIV_3381356_14]** 

5. **Software Revenue Outlook**  
   **Q:** Given strong performance, how does the back half of the year look for software revenue?  
   **A:** Software revenue in the first half has been **ahead of expectations**, and while we maintain our outlook of flat to modest growth, we would be disappointed not to achieve the higher end or better by year-end.  **[FFIV_3381356_14]**  We have strong visibility into the second half, particularly due to **renewals in our flexible consumption programs**, especially in Q4.  **[FFIV_3381356_14]** **[FFIV_3381356_15]** 

6. **Cash Flow Dynamics and Services Growth**  
   **Q:** Should we expect cash flow margins to trend upward given subscription renewals and product availability?  
   **A:** While the dynamics of cash flow are shifting, with maintenance revenues still outweighing subscription revenues, we anticipate fluctuations—lower in Q3 and higher in Q4.  **[FFIV_3381356_16]**  Services revenue growth is expected to slow down as we lap prior price increases, with growth trailing down in Q3 and Q4.  **[FFIV_3381356_13]** 

7. **Impact of HashiCorp Acquisition**  
   **Q:** Does the HashiCorp acquisition by IBM affect F5 positively or negatively?  
   **A:** We do not compete directly with HashiCorp; rather, we are complementary and often work together to meet customer needs.  **[FFIV_3381356_11]**  We expect the acquisition to be **net neutral** for F5, and we plan to continue our collaborative approach in the market.  **[FFIV_3381356_11]** 

8. **Macro Environment and Customer Spending**  
   **Q:** How is the macroeconomic environment affecting customer spending and budgets?  
   **A:** The macro environment remains stable, with customers maintaining a cautious approach.  **[FFIV_3381356_12]**  We have not seen a fundamental change in spending appetite, but there is **more caution on CapEx spending, specifically on hardware**.  **[FFIV_3381356_12]**  We do not believe this is related to FX or a shift towards AI investments at this time.  **[FFIV_3381356_12]** 

9. **Addressing AI-Powered Cyber Attacks**  
   **Q:** How is F5 prepared to address new types of AI-powered cyber attacks?  
   **A:** We are actively **leveraging AI and machine learning** in our security solutions to block sophisticated attacks, including automated and API attacks.  **[FFIV_3381356_17]**  We blocked several billion API attacks this quarter using our distributed cloud capabilities.  **[FFIV_3381356_17]**  We continue to invest to stay ahead of attackers, including implementing generative AI to enhance our solutions.  **[FFIV_3381356_17]** 

10. **Customer Adoption of Distributed Cloud Console**  
    **Q:** What is the customer response to the Distributed Cloud Console announced at AppWorld?  
    **A:** The response has been **very positive**, with over two-thirds of Distributed Cloud customers being existing F5 customers and the remaining one-third being new.  **[FFIV_3381356_16]**  Customers appreciate the ability to manage hybrid and multi-cloud environments more effectively, reducing operational headaches and risks.  **[FFIV_3381356_16]** 

1ccc959dc587acb1bbf32733e17e007a73ac5f8307be1bb37f5fb1dca933e650

F5 Inc (FFIV)

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