Slide 1: Q1 FY23 Results
Q1 FY23 Results PERIOD ENDING December 31, 2022 Published January 24, 2023
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements including, among other things, statements regarding F5’s future financial performance including revenue, revenue growth, earnings growth, future customer demand, markets, the performance and benefits of products, and th
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 & Business Overview
Introduction & Business Overview François Locoh-Donou, CEO & President 4 © 2023 F5
Slide 5: GAAP results
GAAP results Q1FY22 Q1FY23 Revenue $687.1M $700.4M Gross margin 80.3% 77.9% Operating margin 16.6% 13.0% Net income $93.6M $72.4M EPS $1.51 $1.20 5 © 2023 F5
Slide 6: We delivered against our Q123 guidance
We delivered against our Q123 guidance Q1FY23 Q1FY23 Guidance Actuals Total revenue $690 to $710M $700M Non-GAAP gross margin ~80% 80.4% Non-GAAP operating $370 to $382M $378M expenses Non-GAAP EPS $2.25 to $2.37 $2.47 6 © 2023 F5
Slide 7: Q123 results reflect higher global services and systems contribution, lower software contribution
Q123 results reflect higher global services and systems contribution, lower software contribution Q1FY23 Results -1% +5% Product Global Services Growth Growth +3% -4% Software Systems Growth Growth 7 © 2023 F5
Slide 8: Q123 use case examples
Q123 use case examples Multi-cloud networking win at F5 Distributed Cloud Services N. American Service Provider security win at Healthcare Provider • F5 Distributed Cloud Services selected as the core • Healthcare provider needed web application firewall for the customers’ next-generation managed se
Slide 9: F5's broad multi-cloud portfolio
F5’s broad multi-cloud portfolio Product F5 Distributed Cloud F5 BIG-IP F5 NGINX family Services Deployment Managed Hardware Software Software SaaS models Services Consumption Subscription Subscription Consumption Perpetual Perpetual Subscription models WAF, Identity-Aware Proxy, SSLO, WAAP (WAF + A
Slide 10: Q1FY23 Results
Q1FY23 Results Frank Pelzer, CFO & EVP 10 © 2023 F5
Slide 11: Q1FY23 revenue mix
Q1FY23 revenue mix $700 $687 $700 +2% Total revenue $600 $163 $168 growth $341M $343M product Revenue $ in millions $500 product revenue revenue $400 $180 $173 -1% +5% Product Global Services $300 revenue revenue growth growth $200 $344 $360 $100 +3% -4% Software Systems revenue revenue $0 growth gr
Slide 12: Q1FY23 revenue mix
Q1FY23 revenue mix $700 $600 $163 $168 Revenue $ in millions $500 $180 $173 $400 $300 ` $200 $344 $360 $100 $0 Q1FY22 Q1FY23 Global Services Systems Software Totals may not add due to rounding. 12 © 2023 F5
Slide 13: Q1FY23 revenue mix – software
Q1FY23 revenue mix – software $700 $180 $600 $163 $168 $150 $32 $38 19% 23% Revenue $ in millions $500 $120 $180 $173 $400 $90 $300 ` $131 $60 $129 $200 81% 77% $344 $360 $30 $100 $0 $0 Q1FY22 Q1FY23 Q1FY22 Q1FY23 Global Services Systems Software Subscription Perpetual Totals may not add due to roun
Slide 14: Revenue from recurring sources was consistent year over year
Revenue from recurring sources was consistent year over year 32% 32% 68% 68% Recurring Non-recurring Q1FY22 Q1FY23 Recurring revenue includes subscriptions, SaaS-based and utility-based revenue and the maintenance portion of our global services revenue.. 14 © 2023 F5
Slide 15: Q1FY23 revenue contribution by geography
Q1FY23 revenue contribution by geography Regional revenue growth 18% 16% $122M $114M -7% Revenue growth APAC 24% 26% contribution by geo $ and % of revenue $162M $184M +14% Revenue growth EMEA 59% 57% $403M $402M +0% Revenue growth AMER Q1FY22 Q1FY23 Americas EMEA APAC Totals may not add due to roun
Slide 16: Q1FY23 customer verticals as a % of product bookings
Q1FY23 customer verticals as a % of product bookings 15% 21% 14% % of total product bookings 17% 71% 62% Q1FY22 Q1FY23 Enterprise Government Service Provider Totals may not add to 100% due to rounding. 16 © 2023 F5
Slide 17: Q1FY23 non-GAAP gross and operating margins
Q1FY23 non-GAAP gross and operating margins Non-GAAP Gross Margin Non-GAAP Operating Margin 100.0% 40.0% 83.0% 80.4% 32.7% 80.0% 30.0% % of non-GAAP revenue % of non-GAAP revenue 26.5% 60.0% 20.0% 40.0% 10.0% 20.0% 0.0% 0.0% Q1FY22 Q1FY23 Q1FY22 Q1FY23 See appendix for GAAP to non-GAAP reconciliatio
Slide 18: Q1FY23 non-GAAP net income and EPS
Q1FY23 non-GAAP net income and EPS Reflects 21.4% Q1FY23 and 19.5% Q1FY22 non-GAAP effective tax rate Non-GAAP Net Income Non-GAAP EPS $200.0 $179.0 $3.00 $2.89 $149.3 $150.0 $2.47 $ in millions $2.00 $100.0 $1.00 $50.0 $0.0 $0.00 Q1FY22 Q1FY23 Q1FY22 Q1FY23 See appendix for GAAP to non-GAAP reconci
Slide 19: Cash flow from operations
Cash flow from operations $250 • Cash flow over time has been impacted by multi-year $200 subscription sales which are invoiced annually and therefore $154 $158 spread cash collections over $150 $ in millions $127 time. $100 $90 $71 $50 $0 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 19 © 2023 F5
Slide 20: Cash and investments
Cash and investments • During Q1FY23 we paid down $936 $922 $894 $77 $35 $10 $350M in term debt remaining $127 from our Shape acquisition. $757 $301 $19 $347 $668 $8 $196 $54 $ in millions $758 $587 $606 $512 $542 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Cash and cash equivalents Short-term investments Lo
Slide 21: Deferred revenue
Deferred revenue • The growth in deferred revenue in Q1FY23 was largely driven by strong service maintenance renewals. $ in millions $1,760 $1,692 $1,637 $1,600 $1,576 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 21 © 2023 F5
Slide 22: We continue to take a balanced approach to capital deployment
We continue to take a balanced approach to capital deployment Share Repurchases ($ in millions) $600 • Starting in FY23, we intend to return 50% of free cash flow to $500 $500 $500 shareholders via share repurchases. $400 • During Q1FY23, we repurchased $40 million worth $300 of shares at an average
Slide 23: Business Outlook
Business Outlook 23 © 2023 F5
Slide 24: Our Q223 outlook
Our Q223 outlook Q2FY23 Guidance Total revenue $690 to $710M Non-GAAP gross margin ~80% Non-GAAP operating expenses $368 to $380M Share-based compensation $64 to $66M Non-GAAP EPS $2.36 to $2.48 24 © 2023 F5
Slide 25: Our Q223 and FY23 outlook
Our Q223 and FY23 outlook Q2FY23 FY23 Guidance Guidance Total revenue $690 to $710M Global services growth Mid single-digit growth Non-GAAP gross margin ~80% Total revenue growth 9% to 11% Non-GAAP operating expenses $368 to $380M Non-GAAP operating margin 30% to 31% Share-based compensation $64 to
Slide 26: Key takeaways
Key takeaways We remain committed to delivering double- 1 digit EPS growth this year, and on an annual basis going forward. 26 © 2023 F5
Slide 27: Key takeaways
Key takeaways We remain committed to delivering double- 1 digit EPS growth this year, and on an annual basis going forward. We will exercise operating discipline and 2 adjust our cost basis in order to achieve our EPS goals. 27 © 2023 F5
Slide 28: Key takeaways
Key takeaways We remain committed to delivering double- 1 digit EPS growth this year, and on an annual basis going forward. We will exercise operating discipline and 2 adjust our cost basis in order to achieve our EPS goals. We have a diversified and resilient revenue 3 base, which when combined wit
Slide 29: Q&A
Q&A 29 © 2023 F5
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Slide 31: Appendix
Appendix 31 © 2023 F5
Slide 32: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation GAAP-to-Non-GAAP Reconciliation Gross Profit Reconciliation ($ in thousands) Q1FY23 Q1FY22 GAAP gross profit $545,371 $552,027 Stock-based compensation $7,636 $7,545 Amortization and impairment of purchased intangible assets $9,959 $9,959 Facility-exit costs $201 $482
Slide 33: GAAP to non-GAAP reconciliation (continued)
GAAP to non-GAAP reconciliation (continued) Income from Operations Reconciliation ($ in thousands) Q1FY23 Q1FY22 GAAP operating income $91,212 $114,151 Total adjustments related to gross profit $17,889 $18,073 Total adjustments related to operating expense $76,153 $92,663 Total adjustments related t
Slide 34: 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 outlined below: Stock-based compensation. Stock-based compensation consists of expense for stock options, restricted stock, and employee stock purchases throu
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