Slide 1: Q4 & FY24 Results
Q4 & FY24 Results PERIOD ENDING September 30, 2024 Published October 28, 2024
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements including, among other things, statements regarding F5’s position as a security and software leader in today’s multicloud world, F5’s role beyond the data center, F5’s value to customers, the Company’s future financial
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 Cooper Werner CEO, President Chief Financial Officer, EVP SVP Finance & Incoming CFO Intro & Business Overview Q4 & FY24 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 Q4FY24 Q4FY23 FY24 FY23 Q4FY24 Q4FY23 FY24 FY23 Revenue $747M $707M $2,816M $2,813M Gross profit $603M $566M $2,258M $2,220M Gross profit $619M $585M $2,332M $2,293M Gross margin 80.8% 80.1% 80.2% 78.9% Gross margin 83.0% 82.7% 82.8% 81.5% Operat
Slide 7: Q4FY24 performance highlights
Q4FY24 performance highlights $747M Total Q4FY24 revenue +10% Product revenue v. guide of $720 to $740 million growth Y/Y +19% Software revenue $3.67 Non-GAAP EPS growth Y/Y v. guide of $3.38 to $3.50 See appendix for GAAP to non-GAAP reconciliation 7 © 2024 F5
Slide 8: FY24 performance highlights
FY24 performance highlights $2.8B +11% +4% Total FY24 revenue Software revenue Global Services growth Y/Y revenue growth Y/Y +132bps +337bps 14% Non-GAAP gross margin Non-GAAP operating margin Non-GAAP EPS improvement Y/Y improvement Y/Y growth Y/Y See appendix for GAAP to non-GAAP reconciliation 8
Slide 9: The magnitude of F5's evolution is evident: product revenue mix
The magnitude of F5’s evolution is evident Product revenue mix shift Software, SaaS & Managed Services Systems $122M 13% $965M $1,273M Total product Total product revenue $537M revenue $843M $735M 42% 87% 58% FY17 FY24 Totals may not add to due to rounding. 9 © 2024 F5
Slide 10: The magnitude of F5's evolution is evident: software revenue mix
The magnitude of F5’s evolution is evident Software revenue mix shift Subscriptions Perpetual Software Licenses $112M $24M 15% 20% $122M $735M Total software Total software revenue revenue $98M 80% $624M 85% FY17 FY24 Totals may not add to due to rounding. 10 © 2024 F5
Slide 11: The magnitude of F5's evolution is evident: total revenue mix
The magnitude of F5’s evolution is evident Total revenue mix shift Recurring revenue (subscriptions + maintenance) Non-recurring revenue $0.7B 24% $1.1B $2.1B $1.0B $2.8B 52% Total 48% Total revenue revenue $2.1B 76% FY17 FY24 Totals may not add to due to rounding. 11 © 2024 F5
Slide 12: An overview of our FY25 outlook
An overview of our FY25 outlook FY25 Commentary 4% to 5% Total revenue growth Y/Y • Growing percentage of business from existing software customers • Good visibility to a large portion of Drive continued FY25 expected revenue, including operating leverage software renewals • Improving systems demand
Slide 13: F5 is aligned with robust and sustainable industry trends
F5 is aligned with robust and sustainable industry trends Hybrid Apps & APIs are The number of APIs are rapidly Apps & APIs multicloud becoming app instances proliferating require more environments increasingly continues to security and are now the distributed grow delivery norm services today Nearl
Slide 14: This is where enterprises thought they were going...
This is where enterprises thought they were going... AWS SaaS Azure Colocation Data Public Google Data Centers center cloud Cloud Traditional & Private Cloud Edge and this is where 9 in 10 14 © 2024 F5 CONFIDENTIAL have ended up
Slide 15: Land, expand, and renew motions
We are driving strong success with our land, expand, and renew motions Renew with existing Expand with customers existing customers Win new customers • Deliver exceptional ownership experience • Drive cross-portfolio leverage and • Continuously demonstrate platform adoption proof of value • Capture
Slide 16: Early customer traction for F5 Distributed Cloud Services
Early customer traction for F5 Distributed Cloud Services demonstrates the power of our expand motion 1000 800+ 60% growth 500+ 500 0 FY23 FY24 Existing Customers New Customers 16 © 2024 F5
Slide 17: F5 addresses customers' "Ball of Fire" pain points
F5 is differentiated in our ability to address customers’“Ball of Fire” pain points 1 2 3 App & API Security Simplification Standardization & Automation F5 offers the industry’s most F5 enables the hybrid multicloud F5 streamlines operations with comprehensive app and API flexibility our customers’
Slide 18: Q4FY24 customer examples
Q4FY24 customer examples App Security Simplification F5 offers the industry’s most comprehensive app and API security platform F5 is enabling the hybrid multicloud flexibility our customers’ businesses demand with the simplicity their IT operations require Integrated and comprehensive suite F5 empow
Slide 19: Q4FY24 customer examples
Q4FY24 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 20: F5 extinguishes the "Ball of Fire"
F5 extinguishes the “Ball of Fire,” empowering our customers to run at the speed their businesses demand App Security Simplification Standardization & Automation 20 © 2024 F5
Slide 21: F5's initial opportunities in AI span three networking use cases
F5’s initial opportunities in AI span three networking use cases AI Data Ingestion AI Factory Load Balancing Secure AI Inferencing Efficiently collect and prepare Optimize performance and Protect sensitive data and models large volumes of diverse data scalability of AI factories with during AI appli
Slide 22: F5's initial opportunities in AI: customer example
F5’s initial opportunities in AI span three networking use cases Customer example Global conglomerate • F5 selected to optimize data ingest for AI model training. • Customer’s AI factories collecting information and telemetry to power its connected vehicle business. • F5 providing high performance l
Slide 23: F5's initial opportunities in AI span three networking use cases
F5’s initial opportunities in AI span three networking use cases AI Data Ingestion AI Factory Load Balancing Efficiently collect and prepare Optimize performance and large volumes of diverse data scalability of AI factories with for AI model training and RAG advanced traffic management 23 © 2024 F5
Slide 24: F5 is collaborating with Nvidia
F5 is collaborating with Nvidia to deliver superior AI-driven customer experiences • F5 BIG-IP Next for Kubernetes brings F5 market-leading networking, traffic management, and security capabilities to modern environments and AI workloads. • F5 partnered with Nvidia to ensure BIG-IP Next for Kubernet
Slide 25: F5's initial opportunities in AI span three networking use cases
F5’s initial opportunities in AI span three networking use cases AI Data Ingestion AI Factory Load Balancing Secure AI Inferencing Efficiently collect and prepare Optimize performance and Protect sensitive data and models large volumes of diverse data scalability of AI factories with during AI appli
Slide 26: Q4FY24 Results
Q4FY24 Results Frank Pelzer, CFO & EVP 26 © 2024 F5
Slide 27: Revenue mix and year-over-year change
Revenue mix and year-over-year change Revenue mix Year/Year change +19% $800 $747 $707 $693 $695 $700 $681 $228 Software $600 $191 $170 $159 $179 $500 -3% Revenue $ in millions $134 $135 $142 $130 $130 $400 Systems $300 $200 $382 $387 $381 $387 $388 +2% Global services $100 $0 Q4FY23 Q1FY24 Q2FY24 Q
Slide 28: Software revenue mix
Software revenue mix $250 $228 +19% $24 $200 $191 $179 $25 $170 Total software $24 revenue growth Y/Y $159 89% $150 $46 $18 Revenue $ in millions of Q4FY24 total software $204 revenue from subscriptions $100 +23% $166 $155 $140 $125 $50 Subscription software revenue growth Y/Y $0 Q4FY23 Q1FY24 Q2FY2
Slide 29: 78% of Q4FY24 revenue is recurring
78% of our Q4FY24 revenue is recurring via subscription, SaaS & managed services, and maintenance Recurring Non-recurring 24% 22% $538M $583M Recurring Recurring revenue revenue 76% 78% Q4FY23 Q4FY24 Recurring revenue includes term subscriptions, SaaS & managed services, utility-based revenue and th
Slide 30: Revenue contribution by geography
Revenue contribution by geography % of revenue by geo Y/Y growth by region Q4FY24 17% 18% 17% 18% 16% -3% Growth APAC 26% 26% 27% 26% 28% +4% Growth EMEA 57% 54% 57% 55% 58% +9% Growth AMER Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Totals may not add to 100% due to rounding. Americas EMEA APAC 30 © 2024 F5
Slide 31: Customer verticals as a % of product bookings
Customer verticals as a % of product bookings % of total product bookings 9% 13% 12% 10% 17% 19% 18% 19% 21% 19% 72% 69% 67% 72% 64% Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Totals may not add to 100% due to rounding. Enterprise Government Service Provider 31 © 2024 F5
Slide 32: 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% 33.9% 34.4% 82.7% 83.1% 83.1% 83.0% 33.4% 82.1% 30.9% % of non-GAAP revenue % of non-GAAP revenue 80.0% 30.0% 70.0% 20.0% 60.0% 10.0% Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q4FY23 Q1FY24 Q2FY24 Q3FY24
Slide 33: Non-GAAP net income and EPS
Non-GAAP net income and EPS Reflects 19.5% Q4FY24 and 14.0% Q4FY23 non-GAAP effective tax rate Non-GAAP net income Non-GAAP EPS $250 $4.00 $3.67 $217 $3.50 $3.43 $209 $205 $3.36 $199 $200 $3.00 $2.91 $173 $150 $ in millions $2.00 $100 $1.00 $50 $0 $0.00 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q4FY23 Q1FY
Slide 34: Cash flow from operations
Cash flow from operations $280 $247 $240 $222 $200 $190 $165 $159 $160 $ in millions $120 $80 $40 $0 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 34 © 2024 F5
Slide 35: Cash and investments
Cash and investments $1,250 $1,083 $1,000 $943 $910 $808 $832 $750 $ in millions $500 $250 $0 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 35 © 2024 F5
Slide 36: Deferred revenue
Deferred revenue KEY INSIGHTS $2,000 $1,830 $1,812 $1,798 $1,775 $1,773 Deferred revenue consists predominantly of global services maintenance renewals and $1,500 also includes term-based software subscriptions. $ in millions $1,000 $500 $0 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 36 © 2024 F5
Slide 37: Consistently delivered on repurchase commitments
Since committing to return cash to shareholders in FY21, we have consistently delivered on our repurchase commitments KEY INSIGHTS Share repurchases ($ in millions) 66% of FY24 free cash flow* • We repurchased $100 million in $600 used toward repurchases FFIV shares during Q4FY24 $500 $500 $500 $500
Slide 38: FY24 Results
FY24 Results Frank Pelzer, CFO & EVP 38 © 2024 F5
Slide 39: Revenue mix and year-over-year change
Revenue mix and year-over-year change Revenue mix Year/Year change +11% $3,000 $2,813 $2,816 $2,696 $2,605 $2,500 $664 $2,358 $735 Software $500 $665 $365 $2,000 $671 $537 -20% Revenue $ in millions $748 $652 $668 $1,500 Systems $1,000 $1,379 $1,479 $1,543 +4% $1,325 $1,356 Global Services $500 $0 F
Slide 40: Term-based subscriptions underpin overall software growth
Term-based subscriptions underpin overall software growth; SaaS & Managed Services transitions progressing Year/Year change $800 $735 $665 $664 -5% SaaS & Managed Services F5 Distributed Cloud Services growing, $193 legacy transitions progressing. $600 Revenue $ in millions $199 $203 $500 $400 +22%
Slide 41: SaaS & Managed Services ARR
SaaS & Managed Services ARR reflects strong F5 Distributed Cloud growth offset by ongoing legacy transitions and bot softness SaaS & Managed Services F5 Distributed Cloud growing; legacy transitions progressing • Planned legacy SaaS & Managed Services transition $65 progressing across FY24 and FY25.
Slide 42: Term-based subscriptions underpin overall software growth
Term-based subscriptions underpin overall software growth; SaaS & Managed Services transitions progressing Year/Year change $800 $735 $665 $664 -5% SaaS & Managed Services F5 Distribute Cloud Services growing, $193 legacy transitions progressing $600 Revenue $ in millions $199 $203 $500 $400 $365 +2
Slide 43: Term-based subscriptions underpin overall software growth
Term-based subscriptions underpin overall software growth; SaaS & Managed Services transitions progressing Year/Year change $800 $735 $665 $664 -5% SaaS & Managed Services F5 Distribute Cloud Services growing, $193 legacy transitions progressing $600 Revenue $ in millions $199 $203 $500 +22% Term-ba
Slide 44: Security-related revenue contributing consistently to total revenue
Security-related revenue contributing consistently to total revenue FY24 total security FY24 standalone security $1.1B FY24 security revenue1 ~$460M FY24 standalone security revenue 41% of total 36% of product revenue revenue 1Comprised of standalone security offerings, bundled security offerings, a
Slide 45: Non-GAAP gross and operating margins
Non-GAAP gross and operating margins Non-GAAP gross margin Non-GAAP operating margin 90.0% 40.0% 84.9% 83.9% 33.6% 82.6% 82.8% 81.5% 31.6% 30.4% 30.2% 80.0% 30.0% 28.9% % of non-GAAP revenue % of non-GAAP revenue +132 +337 70.0% bps Y/Y 20.0% bps Y/Y 60.0% 10.0% FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY
Slide 46: Non-GAAP net income and EPS
Non-GAAP net income and EPS Reflects 19.2% FY24 and 18.3% FY23 non-GAAP effective tax rate Non-GAAP net income Non-GAAP EPS $14.00 $13.37 $800 $794 $12.00 $11.70 $705 $10.81 $671 $10.19 $623 $10.00 $9.37 $600 $575 +13% +14% $8.00 $ in millions growth growth $400 $6.00 Y/Y $4.00 Y/Y $200 $2.00 $0 $0.
Slide 47: Business Outlook
Business Outlook Cooper Werner, SVP Finance & Incoming CFO 47 © 2024 F5
Slide 48: Our FY25 outlook
Our FY25 outlook FY24A FY25 outlook $2.82B 4% to 5% growth Total revenue (low-single-digits 1H, mid-single-digits 2H) Upper-single-digit growth Software revenue growth 11% (on higher FY24 compare) Systems revenue growth -20% Mid-single-digit growth Global Services revenue growth 4% Low-single-digit
Slide 49: Our Q1FY25 outlook
Our Q1FY25 outlook Q1FY25 outlook Total revenue $705 to $725M Non-GAAP gross margin ~83% Non-GAAP operating expenses $343 to $355M Share-based compensation $55 to $57M Non-GAAP EPS $3.29 to $3.41 49 © 2024 F5
Slide 50: The only company that secures, delivers, and optimizes any app, any API, anywhere
The only company that secures, delivers, and optimizes any app, any API, anywhere. 50 © 2024 F5
Slide 51: Appendix
Appendix 51 © 2024 F5
Slide 52: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Gross Profit Reconciliation ($ in thousands) Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 FY20 FY21 FY22 FY23 FY24 GAAP revenue $706,974 $692,597 $681,354 $695,495 $746,674 $2,350,822 $2,603,416 $2,695,845 $2,813,169 $2,816,120 Acquisition-related write-downs of assumed deferre
Slide 53: GAAP to non-GAAP reconciliation (continued)
GAAP to non-GAAP reconciliation (continued) Operating Expense Reconciliation ($ in thousands) Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 FY20 FY21 FY22 FY23 FY24 GAAP operating expense $394,269 $391,692 $400,281 $395,980 $411,929 $1,550,668 $1,716,245 $1,752,426 $1,747,293 $1,599,882 Stock-based compensatio
Slide 54: GAAP to non-GAAP reconciliation (continued)
GAAP to non-GAAP reconciliation (continued) Net Income Reconciliation ($ in thousands except per share data) Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 FY20 FY21 FY22 FY23 FY24 GAAP net income 152,134 138,382 119,021 144,079 165,296 307,441 331,241 322,160 394,948 566,778 Total adjustments related to revenu
Slide 55: 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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