F5, Inc. · NASDAQ:FFIV

F5 — Q3 2024 Earnings Presentation

39 slides from F5's earnings presentation, Jul 29, 2024

  1. Slide 1: Q3FY24 Results

    Q3FY24 Results PERIOD ENDING June 30, 2024 Published July 29, 2024

  2. Slide 2: Forward-looking statements

    Forward-looking statements This presentation contains forward-looking statements including, among other things, statements regarding F5’s role as a partner with large enterprises, F5’s visibility to strong fourth quarter software demand, the Company’s future financial performance including revenue,

  3. 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

  4. Slide 4: Today's speakers

    Today’s speakers François Locoh-Donou Frank Pelzer CEO, President Chief Financial Officer, EVP Intro & Business Overview Q3FY24 Results & Business Outlook 4 © 2024 F5

  5. Slide 5: Business Overview

    Business Overview François Locoh-Donou, President & CEO 5 © 2024 F5

  6. Slide 6: GAAP & Non-GAAP results

    GAAP & Non-GAAP results GAAP results Non-GAAP results Q3FY24 Q3FY23 Q3FY24 Q3FY23 Revenue $695M $703M Gross profit $559M $561M Gross profit $578M $579M Gross margin 80.4% 79.8% Gross margin 83.1% 82.5% Operating profit $163M $104M Operating profit $233M $233M Operating margin 23.4% 14.7% Operating m

  7. Slide 7: Q3FY24 performance highlights

    Q3FY24 performance highlights $695M Total Q3FY24 revenue $3.36 Non-GAAP EPS v. guide of $675 to $695 million v. guide of $2.89 to $3.01 +3% Software revenue +3% Global Services growth Y/Y revenue growth Y/Y See appendix for GAAP to non-GAAP reconciliation 7 © 2024 F5

  8. Slide 8: Highlights of our Q4 and FY24 outlook

    Highlights of our Q4 and FY24 outlook Q3FY24 Commentary Q4FY24 Outlook FY24 Outlook Updates • Areas of improving demand • $720 to $740M in revenue • ~$2.8 billion in FY24 revenue after a prolonged period of • On track to deliver toward the • Mid-to-high single-digit budget scrutiny top end of our FY

  9. Slide 9: 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 9 © 2024 F5 customers have ended up

  10. 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

  11. Slide 11: F5 is differentiated in our ability to address 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 enables the hybrid multicloud F5 streamlines operations with comprehensive app and API flexibility our customers’ busine

  12. Slide 12: F5 is differentiated in our ability to address 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

  13. 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 API API App Security API Simplification API API Standardization & API Automation API API API 13 © 2024 F5

  14. Slide 14: Q3FY24 customer examples: App Security

    Q3FY24 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 Security

  15. Slide 15: F5 invented API security

    F5 is receiving third party F5 rated a leader in security efficacy accolades for its app security and operational efficiency by SecureIQLab’s 2024 Cloud WAAP CyberRisk Validation Report. F5 Distributed Cloud WAAP earned SecureIQLab’s “Secure by Design” rating passing the WAAP vulnerability assessmen

  16. Slide 16: Q3FY24 customer examples: Simplification

    Q3FY24 customer examples Simplification F5 is enabling the hybrid multicloud flexibility our customers’ businesses demand with the simplicity their IT operations require Solutions extend across public cloud, F5 empowers customers with the hybrid edge, and on-premises environments multicloud flexibil

  17. Slide 17: Q3FY24 customer examples: Standardization & Automation

    Q3FY24 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

  18. Slide 18: F5 is an AI enabler

    F5 is an AI enabler High-performance API Security High-Speed Data networking & Ingestion security 18 © 2024 F5

  19. Slide 19: Q3FY24 Results

    Q3FY24 Results Frank Pelzer, CFO & EVP 19 © 2024 F5

  20. Slide 20: Revenue mix and year-over-year change

    Revenue mix and year-over-year change Revenue mix Year/Year change $800 $700 $703 $707 $693 $681 $695 -1% $600 $174 $191 $170 $159 $179 Total revenue growth Revenue $ in millions $500 $135 +3% $155 $134 $142 $130 $400 -6% Product revenue growth Global Services $300 revenue growth $200 $374 $382 $387

  21. Slide 21: Software revenue mix

    Software revenue mix $200 $191 $179 $174 $25 $170 $24 $160 $22 $159 $46 $18 87% Revenue $ in millions $120 of Q3FY24 total software revenue from subscriptions $80 $166 $155 2% $152 $140 $125 $40 Subscription software revenue growth Y/Y $0 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Subscription Perpetual Lic

  22. Slide 22: 77% of our Q3FY24 revenue is recurring

    77% of our Q3FY24 revenue is recurring Recurring Non-recurring 25% 23% 75% 77% Q3FY23 Q3FY24 Recurring revenue includes term subscriptions, SaaS & managed services, utility-based revenue and the maintenance portion of our global services revenue. 22 © 2024 F5

  23. Slide 23: Revenue contribution by geography

    Revenue contribution by geography % of revenue contribution by geo Y/Y growth by region Q3FY24 18% 17% 18% 17% 18% -1% Growth APAC 26% 26% 28% 26% 27% +5% Growth EMEA 57% 57% 54% 57% 55% -4% Growth AMER Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Totals may not add to 100% due to rounding. Americas EMEA APAC

  24. Slide 24: Customer verticals as a % of product bookings

    Customer verticals as a % of product bookings % of total product bookings 13% 9% 13% 12% 17% 19% 21% 19% 21% 19% 72% 69% 67% 66% 64% Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Totals may not add to 100% due to rounding. Enterprise Government Service Provider 24 © 2024 F5

  25. Slide 25: 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% 83.1% 33.2% 33.9% 33.4% 82.5% 82.7% 83.1% 82.1% 30.9% % of non-GAAP revenue % of non-GAAP revenue 80.0% 30.0% 70.0% 20.0% 60.0% 10.0% Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24

  26. Slide 26: Non-GAAP net income and EPS

    Non-GAAP net income and EPS Reflects 17.5% Q3FY24 and 18.1% Q3FY23 non-GAAP effective tax rate Non-GAAP Net Income Non-GAAP EPS $250 $4.00 $3.50 $3.43 $209 $205 $3.36 $194 $199 $3.21 $200 $3.00 $2.91 $173 $150 $ in millions $2.00 $100 $1.00 $50 $0 $0.00 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY

  27. Slide 27: Cash flow from operations

    Cash flow from operations $250 $222 $200 $190 $165 $165 $159 $150 $ in millions $100 $50 $0 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 27 © 2024 F5

  28. Slide 28: Cash and investments

    Cash and investments $1,000 $943 $910 $7 $6 $1 $808 $832 $1 $6 $5 $3 $750 $696 $6 $6 $13 $ in millions $500 $903 $935 $797 $823 $677 $250 $0 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Cash and cash equivalents Short-term investments Long-term investments 28 © 2024 F5

  29. Slide 29: Deferred revenue

    Deferred revenue KEY INSIGHTS $2,000 $1,791 $1,830 $1,812 $1,775 $1,773 • Deferred revenue consists predominantly of global services maintenance renewals $1,500 as well as term-based software subscriptions. • The change from Q2FY24 is due to higher $ in millions $1,000 subscriptions and a correspond

  30. Slide 30: Consistently delivered on our 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) • We repurchased $150 million in $600 77% of FY24 YTD FFIV shares during Q3FY24 $500 $500 free cash* flow $500 used toward • FY24 YTD w

  31. Slide 31: Business Outlook

    Business Outlook 31 © 2024 F5

  32. Slide 32: Our Q4FY24 outlook

    Our Q4FY24 outlook Q4FY24 Outlook Total revenue $720 to $740M Non-GAAP gross margin ~83% Non-GAAP operating expenses $350 to $362M Share-based compensation $54 to $56M Non-GAAP EPS $3.38 to $3.50 32 © 2024 F5

  33. Slide 33: Our Q4FY24 outlook implies FY24 revenue at the top end of guidance

    Our Q4FY24 outlook implies FY24 revenue at the top end of our guidance range and ~12% non-GAAP EPS growth Prior FY24 Updated FY24 FY23A Outlook Outlook ~$2.8B Total revenue Flat to -2% growth ~$2.8B 4% growth Y/Y Flat-to-modest Mid-to-high single-digit Software revenue growth Flat growth growth Y/Y

  34. Slide 34: 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. 34 © 2024 F5

  35. Slide 35: Appendix

    Appendix 35 © 2024 F5

  36. Slide 36: GAAP to non-GAAP reconciliation

    GAAP to non-GAAP reconciliation Gross Profit Reconciliation ($ in thousands) Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 GAAP gross profit $560,959 $566,010 $556,208 $540,241 $559,070 Stock-based compensation $7,297 $7,142 $7,684 $7,447 $7,189 Amortization and impairment of purchased intangible assets $10,98

  37. Slide 37: GAAP to non-GAAP reconciliation (continued)

    GAAP to non-GAAP reconciliation (continued) Income from Operations Reconciliation ($ in thousands) Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 GAAP operating income $103,569 $171,741 $164,516 $139,960 $163,090 Total adjustments related to gross profit $18,476 $18,560 $19,093 $19,030 $19,013 Total adjustments

  38. Slide 38: 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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