Slide 1: Q4FY20 & FY20 Results
Q4FY20 & FY20 Results PERIOD ENDING SEPTEMBER 30, 2020 Published October 26, 2020
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, projected and target revenue and earnings ranges, income
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 | ©2019 F5
Slide 5: GAAP results
GAAP results Q4FY19 Q4FY20 FY19 FY20 Revenue $590.4M $614.8M $2,242M $2,351M Gross margin 84.6% 81.8% 84.1% 82.7% Operating margin 19.4% 16.0% 23.1% 16.7% Net income $94.8M $77.7M $427.7 $307.4 Diluted EPS $1.57 $1.26 $7.08 $5.01 5 | ©2020 F5
Slide 6: We are building momentum in our pivot to software
We are building momentum in our pivot to software FY20 Non-GAAP Revenue Growth +52% +5% -10% Software Services Systems 6 | ©2020 F5
Slide 7: Q4FY2020 Results
Q4FY2020 Results Frank Pelzer, CFO & EVP 7 | ©2019 F5
Slide 8: Q4FY20 non-GAAP revenue mix
Q4FY20 non-GAAP revenue mix $700 Growth 4% $617 $600 $590 Non-GAAP revenue $ in millions $83 $113 +36% $500 $182 -8% $168 $400 $300 $200 +3% $336 $325 $100 $0 Q4FY19 Q4FY20 Services Systems Software Q4FY20 INCLUDES FULL QUARTER OF SHAPE. SEE APPENDIX FOR GAAP-TO-NON-GAAP RECONCILIATIONS. 8 | ©2020 F
Slide 9: Growing non-GAAP software revenue from subscriptions
Growing non-GAAP software revenue from subscriptions 24% 34% 66% 76% Q4FY19 Q4FY20 Subscription Perpetual SEE APPENDIX FOR GAAP-TO-NON-GAAP RECONCILIATIONS. 9 | ©2020 F5
Slide 10: Growing non-GAAP revenue from recurring sources
Growing non-GAAP revenue from recurring sources 37% 34% 63% 66% Q4FY19 Q4FY20 Recurring Non-recurring SEE APPENDIX FOR GAAP-TO-NON-GAAP RECONCILIATIONS. 10 | ©2020 F5
Slide 11: Q4FY20 non-GAAP revenue contribution by geography
Q4FY20 non-GAAP revenue contribution by geography Non-GAAP Non-GAAP revenue growth Non-GAAP $ in millions $ in millions 4% 18% $109 -1% 18% $108 % of non-GAAP revenue contribution by geo 23% 24% $135 +9% $148 59% 58% $360 $346 +4% Total Total $590 $617 Q4FY19 Q4FY20 North America EMEA APAC SEE APPEN
Slide 12: Q4FY20 customer verticals as a % of product bookings
Q4FY20 customer verticals as a % of product bookings 16% 22% % of total product bookings 61% 70% 17% 15% Q4FY19 Q4FY20 Service Providers Enterprise Government TOTALS MAY NOT ADD TO 100% DUE TO ROUNDING. 12 | ©2020 F5
Slide 13: Q4FY20 non-GAAP gross and operating margins
Q4FY20 non-GAAP gross and operating margins NON-GAAP GROSS MARGIN NON-GAAP OPERATING MARGIN 90.0% 35.0% Q4FY20 includes dilution from As a % of non-GAAP revenue Shape Security, acquired in 32.6% January 2020 86.3% 30.1% 85.0% 84.4% 30.0% 80.0% 25.0% Q4FY19 Q4FY20 Q4FY19 Q4FY20 Q4FY20 INCLUDES FULL Q
Slide 14: Q4FY20 non-GAAP net income and EPS
Q4FY20 non-GAAP net income and EPS NON-GAAP NET INCOME NON-GAAP EPS $2.80 Q4FY20 includes dilution from $160.0 $156.7 $149.6 Shape Security, acquired in $2.70 January 2020 Non-GAAP Net Income Non-GAAP EPS in $ $2.59 $120.0 $2.60 $ in millions Q4FY20 non-GAAP effective tax rate of 19.0% $80.0 $2.50 $
Slide 15: Q4FY20 cash flow from operations
Q4FY20 cash flow from operations Shape acq $250 $206 $200 $50M in FFIV common stock $182 $175 repurchased during Q4FY20 $159 $ in millions $150 $144 We retain the option to repurchase shares during any $100 open trading window $50 $0 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 15 | ©2020 F5
Slide 16: Q4FY20 cash and investments
Q4FY20 cash and investments $1,600 Shape acq $1,474 $1,400 $1,331 $1,313 $1,206 3-year $400M Term Loan $1,200 associated with Shape $1,026 $ in millions $1,000 acquisition to be paid down over time $800 $600 $400 $200 $- Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 SHAPE ACQUIRED Q2FY20 FOR $600M CASH PLUS $4
Slide 17: FY2020 Results
FY2020 Results 17 | ©2019 F5
Slide 18: FY20 Non-GAAP revenue mix
FY20 Non-GAAP revenue mix $2,500 Growth $2,358 $2,242 5% $365 $240 +52% Non-GAAP revenue $ in millions $2,000 $746 $668 $1,500 -10% $1,000 $1,257 +5% $1,325 $500 $0 FY19 FY20 Services Systems Software FY20 INCLUDES FULL QUARTER OF SHAPE. SEE APPENDIX FOR GAAP-TO-NON-GAAP RECONCILIATIONS. 18 | ©2020
Slide 19: Growing non-GAAP software revenue from subscriptions
Growing non-GAAP software revenue from subscriptions 29% 45% 55% 71% FY19 FY20 Subscription Perpetual SEE APPENDIX FOR GAAP-TO-NON-GAAP RECONCILIATIONS. 19 | ©2020 F5
Slide 20: Growing non-GAAP revenue from recurring sources
Growing non-GAAP revenue from recurring sources 40% 35% 60% 65% FY19 FY20 Recurring Non-recurring SEE APPENDIX FOR GAAP-TO-NON-GAAP RECONCILIATIONS. 20 | ©2020 F5
Slide 21: FY20 non-GAAP net income and EPS
FY20 non-GAAP net income and EPS NON-GAAP NET INCOME NON-GAAP EPS $700.0 $12.00 FY20 includes dilution from $626.3 $10.36 $575.0 Shape Security, acquired in $600.0 $10.00 $9.37 January 2020 Non-GAAP Net Income Non-GAAP EPS in $ $500.0 $8.00 $ in millions FY20 non-GAAP effective $400.0 tax rate of 20
Slide 22: Business Outlook
Business Outlook 22 | ©2019 F5
Slide 23: Q1FY21 outlook
Q1FY21 outlook PROVIDED OCTOBER 26, 2020 Q1 FY2021 Non-GAAP revenue1 $595 - $615M Non-GAAP gross margin 84.5% - 85% Non-GAAP operating expense $324 - $336M Non-GAAP diluted EPS $2.26 - $2.38 Non-GAAP effective tax rate 21% - 22% Share-based compensation $56 - $58M 1 SHAPE HAS A SUBSCRIPTION SOFTWARE
Slide 24: FY21 operating model and planning assumptions
FY21 operating model and planning assumptions PROVIDED OCTOBER 26, 2020 FY2021 Non-GAAP software revenue growth >35% Non-GAAP systems revenue growth Down high-single digits Non-GAAP gross margins ~85% Non-GAAP operating margins At least 31% for FY21, likely moving down from Q1 to Q2, and increasing
Slide 25: Business Overview
Business Overview François Locoh-Donou, CEO & President 25 | ©2019 F5
Slide 26: We expect continued software and subscription momentum in FY21
We expect continued software and subscription momentum in FY21 FY21 Software Growth Drivers BIG-IP NGINX App Security Public Cloud 26 | ©2018 F5 NETWORKS
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Slide 28: Appendix
Appendix 28 | ©2020 F5
Slide 29: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Gross Profit Reconciliation ($ in thousands) Q4FY19 Q4FY20 FY19 FY20 GAAP revenue $590,388 $614,816 $2,242,447 $2,350,822 Acquisition-related write-downs of assumed deferred revenue $0 $1,963 $0 $6,824 Non-GAAP revenue $590,388 $616,779 $2,242,447 $2,357,646 GAAP gros
Slide 30: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Income from Operations Reconciliation ($ in thousands) Q4FY19 Q4FY20 FY19 FY20 GAAP operating income $114,714 $98,613 $518,463 $392,267 Total adjustments related to revenue $0 $1,963 $6,824 Total adjustments related to gross profit $10,135 $15,729 $31,558 $51,711 Tota
Slide 31: 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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