F5, Inc. · NASDAQ:FFIV
F5 — Q1 2022 Earnings Presentation
31 slides from F5's earnings presentation, Jan 25, 2022
Slide 1: Q1FY22 Results
Q1FY22 Results PERIOD ENDING DECEMBER 31, 2021 Published January 25, 2022
Slide 2: Forward-looking statements
Forward-looking statements This presentation and associated commentary contains forward-looking statements including, among other things, statements regarding the continuing strength and momentum of F5’s business, future financial performance including revenue, revenue growth and earnings growth; de
Slide 3: GAAP to non-GAAP presentation
GAAP to non-GAAP presentation In addition to financial information prepared in accordance with U.S. GAAP, this presentation also contains adjusted financial measures that we believe provide investors and management with supplemental information relating to operating performance and trends that facil
Slide 4: Introduction
Introduction François Locoh-Donou, CEO & President 4 © 2022 F5
Slide 5: GAAP results
GAAP results Q121 Q122 Revenue $624.6M $687.1M Gross margin 81.6% 80.3% Operating margin 18.9% 16.6% Net income $87.7M $93.6M EPS $1.41 $1.51 5 © 2022 F5
Slide 6: Five consecutive quarters of double-digit revenue growth
We have delivered five consecutive quarters of double-digit revenue growth Total Revenue Growth (% growth y/y) 11% 11% 10% 10% 10% Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 *Q1FY21 IS NON-GAAP REVENUE. SEE APPENDIX FOR GAAP TO NON-GAAP RECONCILIATION 6 © 2022 F5
Slide 7: Escalating demand for applications is driving strong F5 demand
Escalating demand for applications and application growth is driving strong F5 demand Q1FY22 Growth Drivers +19% +2% Product Global Services Growth Growth +47% +1% Software Systems Growth Growth 7 © 2022 F5
Slide 8: Supply chain constraints are restricting our ability to meet demand
Supply chain constraints are restricting our ability to meet customers’ continued strong demand for systems Supply chain conditions are worsening • Over the last year, stronger than expected systems demand coupled with ongoing supply chain constraints have gated our systems revenue growth. • Over th
Slide 9: Supply chain constraints: implications for Q2 and FY22
Supply chain constraints are restricting our ability to meet customers’ continued strong demand for systems Supply chain conditions Implications for are worsening our Q2 & FY22 • Over the last year, stronger than • We expect a Q2 revenue range expected systems demand of $610 to $650 million reflecti
Slide 10: Supply chain constraints: mitigating efforts
Supply chain constraints are restricting our ability to meet customers’ continued strong demand for systems Supply chain conditions Implications for We are taking are worsening our Q2 & FY22 mitigating efforts • Over the last year, stronger than • We expect a Q2 revenue range • Ongoing work with sup
Slide 11: We are more confident than ever in our position, strategy, and opportunity
We are more confident than ever in our position, strategy, and opportunity Demand Drivers Software Transition Operating Discipline Our demand drivers are stronger Our software transition continues We will continue to invest than they have ever been to gain momentum responsibly and with confidence 11
Slide 12: Q1FY22 Results
Q1FY22 Results Frank Pelzer, CFO & EVP 12 © 2022 F5
Slide 13: Q1FY22 revenue mix
Q1FY22 revenue mix $800 $687 +10% $700 Total revenue $626 growth $600 $163 $111 $289M $343M Revenue $ in millions $500 product product $400 revenue $179 revenue $180 +19% +2% Product Global Services $300 revenue revenue growth growth $200 $337 $344 $100 +47% +1% $0 Software Systems revenue revenue Q
Slide 14: Growing software revenue from subscriptions
Growing software revenue from subscriptions 23% 19% $111M $163M total total software software revenue revenue 77% 81% Subscription Perpetual Q1FY21 Q1FY22 SUBSCRIPTION REVENUE INCLUDES TERM SUBSCRIPTIONS, BOTH MULTI-YEAR AND ANNUAL, AS WELL AS SAAS-BASED REVENUE. 14 © 2022 F5
Slide 15: Growing revenue from recurring sources
Growing revenue from recurring sources 34% 32% 66% 68% Recurring Non-recurring Q1FY21 Q1FY22 SUBSCRIPTION REVENUE INCLUDES TERM SUBSCRIPTIONS, BOTH MULTI-YEAR AND ANNUAL, AS WELL AS SAAS-BASED REVENUE. 15 © 2022 F5
Slide 16: Q1FY22 revenue contribution by geography
Q1FY22 revenue contribution by geography Regional revenue growth 19% 18% $119M $122M +2% Revenue growth 24% APAC contribution by geo 26% $162M $162M % of revenue +0% Revenue growth EMEA 55% 59% $344M $403M +17% Revenue growth N.AMER Q1FY21 Q1FY22 North America EMEA APAC TOTALS MAY NOT ADD TO 100% DU
Slide 17: Q1FY22 customer verticals as a % of product bookings
Q1FY22 customer verticals as a % of product bookings 14% 15% 18% 14% % of total product bookings 67% 71% Q1FY21 Q1FY22 Enterprise Government Service Provider TOTALS MAY NOT ADD TO 100% DUE TO ROUNDING. 17 © 2022 F5
Slide 18: Q1FY22 non-GAAP gross and operating margin
Q1FY22 non-GAAP gross and operating margin Non-GAAP Gross Margin Non-GAAP Operating Margin 100.0% 40.0% 84.4% 83.0% 33.0% 32.7% 80.0% % of non-GAAP revenue % of non-GAAP revenue 30.0% 60.0% 20.0% 40.0% 10.0% 20.0% 0.0% 0.0% Q1FY21 Q1FY22 Q1FY21 Q1FY22 SEE APPENDIX FOR GAAP TO NON-GAAP RECONCILIATION
Slide 19: Q1FY22 non-GAAP net income and EPS
Q1FY22 non-GAAP net income and EPS Reflects 19.5% Q1FY22 non-GAAP effective tax rate Non-GAAP Net Income Non-GAAP EPS $200.0 $3.00 $2.89 $179.0 $2.59 $161.5 $150.0 $2.00 $ in millions $100.0 $1.00 $50.0 $0.0 $0.00 Q1FY21 Q1FY22 Q1FY21 Q1FY22 SEE APPENDIX FOR GAAP TO NON-GAAP RECONCILIATION 19 © 2022
Slide 20: Q1FY22 cash flow from operations
Q1FY22 cash flow from operations • Cash flows generally dip in Q1 due to $250 cash receipts and billings timing among other factors. $197 • Q1’s cash flow is below our recent range $200 $182 because of two primary factors: 1. Strong multi-year subscription sales which are invoiced annually and $150
Slide 21: Q1FY22 cash and investments
Q1FY22 cash and investments $1,462 $89 $347 $1,043 $133 $936 $863 $77 $ in millions $95 $662 $330 $184 $347 $19 $111 $1,027 $532 $584 $581 $512 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Cash and cash equivalents Short-term investments Long-term investments 21 © 2022 F5
Slide 22: Taking a balanced approach to capital deployment
Taking a balanced approach to capital deployment We are committed to returning Share Repurchases ($ in millions) $700 capital to shareholders • In FY21 we completed a $500M $600 $600 accelerated share repurchase $500 $500 • In Q1FY22 we repurchased $125M $500 in shares $400 • During FY22, we are com
Slide 23: Business Outlook
Business Outlook 23 © 2022 F5
Slide 24: Our Q2FY22 outlook
Our Q2FY22 outlook Q2FY22 Guidance Total revenue $610 to $650 Non-GAAP gross margin ~82% to 82.5% Non-GAAP operating expenses $357 to $371M Share-based compensation $65 to $67M Non-GAAP EPS $1.75 to $2.15 24 © 2022 F5
Slide 25: Our FY22 outlook
Our FY22 outlook FY22 Guidance Near top end Software growth of 35% to 40% Services growth 1% to 2% Total revenue growth 4.5% to 8% Non-GAAP operating margin 29% to 31% Non-GAAP effective tax rate 20% to 21% Shares outstanding ~62M 25 © 2022 F5
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Slide 27: Appendix
Appendix 27 © 2022 F5
Slide 28: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Gross Profit Reconciliation ($ in thousands) Q1FY21 Q1FY22 GAAP revenue $624,617 $687,100 Acquisition-related write-downs of assumed deferred revenue $1,283 $0 Non-GAAP revenue $625,900 $687,100 GAAP gross profit $509,638 $552,027 Stock-based compensation $7,342 $7,54
Slide 29: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Income from Operations Reconciliation ($ in thousands) Q1FY21 Q1FY22 GAAP operating income $117,748 $114,151 Total adjustments related to revenue $1,283 $0 Total adjustments related to gross profit $17,386 $18,073 Total adjustments related to operating expense $70,390
Slide 30: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation The non-GAAP adjustments, and F5's basis for excluding them from non-GAAP financial measures, are outlined below: Acquisition-related write-downs of assumed deferred revenue. Included in its GAAP financial statements, F5 records acquisition-related write-downs of assu
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