Slide 1: Q4 & FY22 Results
Q4 & FY22 Results PERIOD ENDING September 30, 2022 Published October 25, 2022
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 and earnings growth; demand for application security and delivery solutions, future customer demand
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 © 2022 F5
Slide 5: GAAP results
GAAP results Q421 Q422 FY21 FY22 Revenue $682.0M $700.0M $2.6B $2.7B Gross margin 81.1% 78.9% 81.1% 80.0% Operating margin 18.5% 15.4% 15.1% 15.0% Net income $110.7M $89.3M $331.2M $322.2M EPS $1.80 $1.49 $5.34 $5.27 5 © 2022 F5
Slide 6: Q422 revenue in line with top end of guidance; non-GAAP EPS above range
We delivered Q422 revenue in line with the top end of our guidance; non-GAAP EPS above the high end of our range Guidance Actuals Q422 revenue $680 - $700M $700M Q422 non-GAAP EPS $2.45 - $2.57 $2.62 See appendix for GAAP to non-GAAP reconciliation 6 © 2022 F5
Slide 7: Q422 results reflect lower software growth and higher systems contribution
Q422 results reflect lower software growth and higher systems contribution than we expected going into the quarter Q4FY22 Results +3% +2% Product Global Services Growth Growth +13% -5% Software Systems Growth Growth 7 © 2022 F5
Slide 8: We achieved several significant milestones in FY22
We achieved several 51% of product revenue $1B in security revenue, significant from software 37% of total revenue milestones in FY22 69% of total revenue 3 significant product recurring with a double- launches: F5 Distributed digit 3-yr CAGR Cloud Services, rSeries & Velos 8 © 2022 F5
Slide 9: Our FY23 performance expectations
Our FY23 performance expectations We are committed to 9% to 11% revenue growth maintaining the “Rule of Low-to-mid teens non-GAAP EPS growth 40” & to delivering Return to the “Rule of 40” double-digit earnings growth on an annual basis 9 © 2022 F5
Slide 10: Growth drivers and trends in FY23
Growth drivers and trends in FY23 F5’s multi-cloud, infrastructure-agnostic approach means we create a more 1 Efficiency unified experience across customers’ disparate environments, enhancing automation and driving operational and therefore, cost efficiencies. 2 Security Demand for security use case
Slide 11: Q422 use case examples
Q422 use case examples Multi-year subscription renewal F5 Distributed Cloud Services with sizable expansion (SaaS) security win • Global retailer with a goal of automatically bursting • Global South-American based transport company. capacity into public cloud as needed. • Needed unified, scalable pr
Slide 12: Q4FY22 Results
Q4FY22 Results Frank Pelzer, CFO & EVP 12 © 2022 F5
Slide 13: Q4FY22 revenue mix
Q4FY22 revenue mix $700 $682 $700 +3% $600 $152 $172 Total revenue growth $350M $340M product $500 product revenue Revenue $ in millions revenue $188 $178 $400 +3% +2% Product Global Services $300 revenue revenue growth growth $200 $342 $350 $100 +13% -5% $0 Software Systems revenue revenue Q4FY21 Q
Slide 14: Subscriptions are a substantial contributor to our software revenue
Subscriptions are a substantial contributor to our software revenue 20% 24% $152M $172M total total software software revenue revenue 80% 76% Subscription Perpetual Q4FY21 Q4FY22 Subscription revenue includes term subscriptions, both multi-year and annual, as well as SaaS-based revenue. 14 © 2022 F5
Slide 15: Revenue from recurring sources was consistent year over year
Revenue from recurring sources was consistent year over year 33% 33% 67% 67% Recurring Non-recurring Q4FY21 Q4FY22 Recurring revenue includes subscriptions, SaaS-based and utility-based revenue and the maintenance portion of our global services revenue.. 15 © 2022 F5
Slide 16: Q4FY22 revenue contribution by geography
Q4FY22 revenue contribution by geography Regional revenue growth 17% 17% $118M $116M -2% Revenue growth 24% 23% APAC contribution by geo $ and % of revenue $165M $160M -3% Revenue growth EMEA 59% 61% $399M $424M +6% Revenue growth AMER Q4FY21 Q4FY22 Americas EMEA APAC Totals may not add due to round
Slide 17: Q4FY22 customer verticals as a % of product bookings
Q4FY22 customer verticals as a % of product bookings 13% 13% 18% % of total product bookings 21% 69% 66% Q4FY21 Q4FY22 Enterprise Government Service Provider Totals may not add to 100% due to rounding. 17 © 2022 F5
Slide 18: Q4FY22 non-GAAP gross and operating margins
Q4FY22 non-GAAP gross and operating margins Non-GAAP Gross Margin Non-GAAP Operating Margin 100.0% 40.0% 83.7% 81.4% 32.4% 80.0% % of non-GAAP revenue % of non-GAAP revenue 30.0% 27.3% 60.0% 20.0% 40.0% 10.0% 20.0% 0.0% 0.0% Q4FY21 Q4FY22 Q4FY21 Q4FY22 See appendix for GAAP to non-GAAP reconciliatio
Slide 19: Q4FY22 non-GAAP net income and EPS
Q4FY22 non-GAAP net income and EPS Reflects 14.1% Q4FY22 and 15.0% Q4FY21 non-GAAP effective tax rate Non-GAAP Net Income Non-GAAP EPS $200.0 $4.00 $185.2 $157.7 $3.00 $3.01 $150.0 $2.62 $ in millions $100.0 $2.00 $50.0 $1.00 $0.0 $0.00 Q4FY21 Q4FY22 Q4FY21 Q4FY22 See appendix for GAAP to non-GAAP r
Slide 20: Q4FY22 cash flow from operations
Q4FY22 cash flow from operations $250 • Q422’s cash flow from operations includes payments $200 $197 to partners related to securing component inventory to support $154 future hardware builds and $150 $ in millions $127 expedite fees. • FY22 cash flow has been $100 $90 impacted by multi-year $71 sub
Slide 21: Q4FY22 cash and investments
Q4FY22 cash and investments $1,043 $133 $936 $922 $894 $77 $35 $10 $757 $127 $330 $301 $19 $347 $ in millions $196 $758 $581 $587 $542 $512 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Cash and cash equivalents Short-term investments Long-term investments 21 © 2022 F5
Slide 22: Q4FY22 deferred revenue
Q4FY22 deferred revenue $ in millions $1,692 $1,637 $1,600 $1,576 $1,490 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 22 © 2022 F5
Slide 23: FY2022 Results
FY2022 Results 23 © 2022 F5
Slide 24: FY22 revenue mix
FY22 revenue mix $3,000 $2,605 $2,696 +3% Total revenue $2,500 $500 $665 growth $1,317M $1,248M product product revenue Revenue $ in millions $2,000 revenue $1,500 $748 $652 +6% +2% Product Global Services revenue revenue $1,000 growth growth $1,356 $1,379 $500 +33% -13% $0 Software Systems revenue
Slide 25: Subscription/perpetual software revenue mix trends
Subscription/perpetual software revenue mix trends $700 $600 $143 41% $500 Total software $109 revenue growth $ in millions $400 (FY19-22 CAGR) $300 $107 $522 $200 $392 $108 $100 $132 $257 58% Subscription* software 10% Perpetual software revenue growth revenue growth $0 (FY19-22 CAGR) (FY19-22 CAGR
Slide 26: 69% of our revenue is recurring with a double-digit CAGR
69% of our revenue is recurring with a double-digit CAGR Recurring Revenue1 Mix (% of Non-GAAP Total Revenue) 11% % 60% 69 FY19-22 Non-GAAP Recurring Revenue CAGR $1.35B FY19 $1.86B FY22 1Reflects reported revenue from recurring sources including software subscriptions, term agreements, utility and
Slide 27: FY22 product backlog grew 80%+
FY22 product backlog grew 80%+ • Product backlog expanded in $250 FY22 from FY21 due to $231 ongoing semiconductor shortages. $200 • The vast majority of product $ in millions $150 backlog is related to systems. $125 • Backlog orders are cancellable, $100 but we have seen very low to non-existent ca
Slide 28: Security is driving a growing percentage of our total revenue
Security is driving a growing percentage of our total revenue Security1 revenue mix (% of Total Revenue) $1BFY22 security revenue 37% FY22 1Comprised of standalone security offerings, bundled security offerings and related maintenance. 28 © 2022 F5
Slide 29: Standalone security is growing at a 30% CAGR
Standalone security is growing at a 30% CAGR Standalone Security1 Mix (% of Non-GAAP Product Revenue) 20% 30% 33% FY19-22 Non-GAAP Standalone Security Revenue CAGR FY19 FY22 1 Comprised of standalone security offerings including systems, standalone software licenses and security subscription service
Slide 30: FY22 non-GAAP gross and operating margins
FY22 non-GAAP gross and operating margins Non-GAAP Gross Margin Non-GAAP Operating Margin 100.0% 40.0% 83.9% 82.6% 31.6% 80.0% % of non-GAAP revenue % of non-GAAP revenue 30.0% 28.9% 60.0% 20.0% 40.0% 10.0% 20.0% 0.0% 0.0% FY21 FY22 FY21 FY22 See appendix for GAAP to non-GAAP reconciliation 30 © 202
Slide 31: FY22 non-GAAP net income and EPS
FY22 non-GAAP net income and EPS Reflects 18.1% FY22 and 17.7% FY21 non-GAAP effective tax rate Non-GAAP Net Income Non-GAAP EPS $800.0 $12.00 $10.81 $671.0 $10.19 $622.6 $10.00 $600.0 $8.00 $ in millions $400.0 $6.00 $4.00 $200.0 $2.00 $0.0 $0.00 FY21 FY22 FY21 FY22 See appendix for GAAP to non-GAA
Slide 32: Business Outlook
Business Outlook 32 © 2022 F5
Slide 33: Our FY23 and Q123 outlook
Our FY23 and Q123 outlook FY23 Guidance Software revenue growth 15% to 20% growth Systems revenue growth Growth in FY23 Low-to-mid Global services growth single-digit growth Total revenue growth 9% to 11% Non-GAAP operating margin 30% to 31% Non-GAAP effective tax rate 21% to 23% Low-to-mid Non-GAAP
Slide 34: Our FY23 and Q123 outlook
Our FY23 and Q123 outlook FY23 Q1FY23 Guidance Guidance Software revenue growth 15% to 20% growth Total revenue $690 to $710 Systems revenue growth Growth in FY23 Non-GAAP gross margin ~80% Low-to-mid Global services growth Non-GAAP operating expenses $370 to $382M single-digit growth Total revenue
Slide 35: We will maintain a balanced approach to capital deployment
We will maintain a balanced approach to capital deployment • Starting in FY23, we intend to Share Repurchases ($ in millions) $600 return 50% of free cash flow to shareholders via share $500 $500 $500 repurchases • We expect to pay down $400 ~$350M in remaining term debt when it comes due in Q123 $3
Slide 36: Q&A
Q&A 36 © 2022 F5
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Slide 38: Appendix
Appendix 38 © 2022 F5
Slide 39: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation Gross Profit Reconciliation ($ in thousands) Q4FY22 Q4FY21 FY22 FY21 GAAP revenue $700,033 $681,997 $2,695,845 $2,603,416 Acquisition-related write-downs of assumed deferred revenue $0 $0 $0 $1,283 Non-GAAP revenue $700,033 $681,997 $2,695,845 $2,604,699 GAAP gross pr
Slide 40: GAAP to non-GAAP reconciliation (continued)
GAAP to non-GAAP reconciliation (continued) Income from Operations Reconciliation ($ in thousands) Q4FY22 Q4FY21 FY22 FY21 GAAP operating income $107,530 $126,364 $403,792 $394,025 Total adjustments related to revenue $0 $0 $0 $1,283 Total adjustments related to gross profit $17,509 $17,360 $70,922
Slide 41: 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: Acquisition-related write-downs of assumed deferred revenue. Included in its GAAP financial statements, F5 records acquisition-related write-d
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