Slide 1: Q2FY24 Results
Q2FY24 Results PERIOD ENDING March 31, 2024 Published April 29, 2024
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements including, among other things, statements regarding the environment, F5’s future financial performance including revenue, revenue growth, earnings growth, future customer demand and budgets, markets, and the performance
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: Today's speakers
Today’s speakers François Locoh-Donou Frank Pelzer CEO, President Chief Financial Officer Intro & Business Overview Q2FY24 Results & Business Outlook 4 © 2024 F5
Slide 5: Business Overview
Business Overview François Locoh-Donou, President & CEO 5 © 2024 F5
Slide 6: GAAP & Non-GAAP results
GAAP & Non-GAAP results GAAP results Non-GAAP results Q2FY24 Q2FY23 Q2FY24 Q2FY23 Revenue $681M $703M Gross profit $540M $548M Gross profit $559M $565M Gross margin 79.3% 77.9% Gross margin 82.1% 80.4% Operating profit $140M $106M Operating profit $210M $191M Operating margin 20.5% 15.1% Operating m
Slide 7: Q2FY24 performance highlights
Q2FY24 performance highlights $681M Total Q2FY24 revenue 20% Total software revenue v. guide of $675 to $695 million growth Y/Y 28% Subscription revenue 15% Non-GAAP EPS growth Y/Y growth Y/Y See appendix for GAAP to non-GAAP reconciliation 7 © 2024 F5
Slide 8: This is where customers thought they would be...
This is where customers thought they would be... Data Public Center cloud and this is where 9 in 10 8 © 2024 F5 customers have ended up
Slide 9: Complexity is preventing organizations from operating at the speed their businesses demand
Complexity is preventing Expanding number of apps across distributed environments organizations from operating at the speed their businesses demand Amplified security risks Escalating API growth AI acceleration 9 © 2024 F5
Slide 10: F5 is the only solution provider that secures, delivers, and optimizes any app
F5 is the only solution provider that secures, delivers, and optimizes any app, any API, anywhere. 10 © 2024 F5
Slide 11: F5 is differentiated in addressing customers' Ball of Fire pain points
F5 is differentiated in our ability to address customers’ Ball of Fire pain points 1 2 3 App Security Simplification Standardization & Automation F5 offers the industry’s most F5 simplifies connecting disparate F5 streamlines operations with comprehensive app and API infrastructures making hybrid co
Slide 12: F5 is differentiated in addressing customers' Ball of Fire pain points
F5 is differentiated in our ability to address customers’ Ball of Fire pain points 1 2 3 F5 is embedded in the flow of application traffic App Security Simplification Standardization & Automation 12 © 2024 F5
Slide 13: F5 extinguishes the Ball of Fire
F5 extinguishes the Ball of Fire, empowering our customers to run at the speed their businesses demand API API API API App Security API API Simplification API Standardization & API API API Automation API API API 13 © 2024 F5
Slide 14: Q2FY24 customer examples: App Security
Q2FY24 customer examples App Security F5 offers the industry’s most comprehensive app and API security platform Integrated and comprehensive suite F5 empowers customers to consolidate of best-in-class capabilities solutions, addressing all of their app security needs with a single platform Networkin
Slide 15: Q2FY24 customer examples: Simplification
Q2FY24 customer examples Simplification F5 simplifies connecting disparate infrastructures making hybrid multicloud ridiculously easy Solutions extend across public cloud, F5 empowers customers with the hybrid edge, and on-premises environments multicloud flexibility their business demands and simpl
Slide 16: Q2FY24 customer examples: Standardization & Automation
Q2FY24 customer examples Standardization & Automation F5 streamlines operations with consistent policies, comprehensive automation, and rich analytics Consolidate vendors/toolsets, F5 enables more cost effective and rationalize operational silos, scalable IT operations automate lifecycle management
Slide 17: F5 is an AI enabler
F5 is an AI enabler API Security Secure Multicloud High-Speed Data Networking Ingestion 17 © 2024 F5
Slide 18: Q2FY24 Results
Q2FY24 Results Frank Pelzer, CFO & EVP 18 © 2024 F5
Slide 19: Revenue mix and year-over-year change
Revenue mix and year-over-year change Revenue mix Year/Year change $800 $700 $703 $132 $703 $707 $693 $681 -3% $600 $174 $191 $170 $159 Total revenue growth Revenue $ in millions $500 $209 $135 +5% $155 $134 $142 $400 -12% Product revenue growth Global Services $300 revenue growth $200 $363 $374 $38
Slide 20: Software revenue mix
Software revenue mix $210 $191 $180 $174 $25 $170 $22 $159 $150 $46 $18 $132 $120 $23 88% Revenue $ in millions of Q2FY24 total software $90 revenue from subscriptions $166 28% $152 $140 $60 $125 $109 Subscription software revenue growth Y/Y $30 $0 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Subscription Per
Slide 21: 75% of our Q2FY24 revenue is recurring
75% of our Q2FY24 revenue is recurring Recurring Non-recurring 25% 35% 65% 75% Q2FY23 Q2FY24 Recurring revenue includes term subscriptions, SaaS & managed services, utility-based revenue and the maintenance portion of our global services revenue. 21 © 2024 F5
Slide 22: Revenue contribution by geography
Revenue contribution by geography % of revenue contribution by geo Y/Y regional revenue growth Q2FY24 18% 18% 17% 18% 17% -9% Growth APAC 27% 26% 26% 28% 26% -6% Growth EMEA 54% 57% 57% 54% 57% 1% Growth AMER Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Totals may not add to 100% due to rounding. Americas EME
Slide 23: Customer verticals as a % of product bookings
Customer verticals as a % of product bookings % of total product bookings 13% 13% 9% 13% 17% 19% 20% 21% 19% 19% 67% 72% 69% 66% 64% Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Totals may not add to 100% due to rounding. Enterprise Government Service Provider 23 © 2024 F5
Slide 24: Non-GAAP gross and operating margins
Non-GAAP gross and operating margins Non-GAAP Gross Margin Non-GAAP Operating Margin 90.0% 40.0% 35.5% 33.2% 33.9% 82.5% 82.7% 83.1% 82.1% 80.4% 30.9% % of non-GAAP revenue % of non-GAAP revenue 80.0% 30.0% 27.2% 70.0% 20.0% 60.0% 10.0% Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24
Slide 25: Non-GAAP net income and EPS
Non-GAAP net income and EPS Reflects 20.0% Q2FY24 and 20.8% Q2FY23 non-GAAP effective tax rate Non-GAAP Net Income Non-GAAP EPS $250 $4.00 $3.50 $3.43 $209 $205 $3.21 $200 $194 $3.00 $2.91 $173 $154 $2.53 $150 $ in millions $2.00 $100 $1.00 $50 $0 $0.00 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY
Slide 26: Cash flow from operations
Cash flow from operations $250 $222 $200 $190 $165 $165 $150 $141 $ in millions $100 $50 $0 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 26 © 2024 F5
Slide 27: Cash and investments
Cash and investments $1,000 $910 $6 $808 $832 $1 $760 $6 $5 $3 $750 $5 $696 $6 $21 $6 $13 $ in millions $500 $903 $797 $823 $735 $677 $250 $0 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Cash and cash equivalents Short-term investments Long-term investments 27 © 2024 F5
Slide 28: Deferred revenue
Deferred revenue $2,000 $1,796 $1,791 $1,830 $1,812 $1,775 $1,500 $ in millions $1,000 $500 $0 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 28 © 2024 F5
Slide 29: Consistently delivered on our repurchase commitments
Since committing to return cash to shareholders in FY21, we have consistently delivered on our repurchase commitments Share Repurchases ($ in millions) • We repurchased $100 million in FFIV $600 shares during Q2FY24 $500 $500 • We are committed to using at least $500 50% of annual free cash flow for
Slide 30: Business Outlook
Business Outlook 30 © 2024 F5
Slide 31: Our Q3FY24 outlook
Our Q3FY24 outlook Q3FY24 Outlook Total revenue $675 to $695M Non-GAAP gross margin 82% to 83% Non-GAAP operating expenses $340 to $352M Share-based compensation $55 to $57M Non-GAAP EPS $2.89 to $3.01 31 © 2024 F5
Slide 32: We are raising our FY24 non-GAAP EPS growth expectations
We are raising our FY24 non-GAAP EPS growth expectations FY23A FY24 Outlook Total revenue 4% growth Flat to -2% growth Non-GAAP gross margin 81.5% 82% to 83% Non-GAAP operating margin 30.2% 33% to 34% Effective non-GAAP tax rate 18.3% 20% to 22% $11.70 7% to 9% growth Non-GAAP EPS 14.8% growth y/y (
Slide 33: The only company that secures, delivers, and optimizes any app, any API, anywhere
The only company that secures, delivers, and optimizes any app, any API, anywhere. 33 © 2024 F5
Slide 34: Appendix
Appendix 34 © 2024 F5
Slide 35: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Gross Profit Reconciliation ($ in thousands) Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 GAAP gross profit $547,521 $560,959 $566,010 $556,208 $540,241 Stock-based compensation $7,583 $7,297 $7,142 $7,684 $7,447 Amortization and impairment of purchased intangible assets $9,959
Slide 36: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Income from Operations Reconciliation ($ in thousands) Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 GAAP operating income $106,046 $103,569 $171,741 $164,516 $139,960 Total adjustments related to gross profit $17,766 $18,476 $18,560 $19,093 $19,030 Total adjustments related to
Slide 37: GAAP to non-GAAP reconciliation (continued)
GAAP to non-GAAP reconciliation (continued) The non-GAAP adjustments, and F5's basis for excluding them from non-GAAP financial measures, are Restructuring charges. F5 has incurred restructuring charges that are included in its GAAP outlined below: financial statements, primarily related to workforc
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