F5 Networks (FFIV) Q1 Earnings Top Estimates, Revenues Lag
Zacks Investment Research | Jan 23, 2019 10:37PM ET
F5 Networks Inc. (NASDAQ:FFIV) delivered first-quarter fiscal 2019 GAAP earnings per share (excluding amortization of intangible assets, stock-based compensation and other one-time items) of $2.70, surpassing the Zacks Consensus Estimate of $2.54. Furthermore, earnings increased 19.5% year over year.
F5 Networks’ revenues grew 4% year over year to $544 million but missed the Zacks Consensus Estimate of $547 million. However, the figure is within the company’s guided range of $542-$552 million. Software growth, particularly in public cloud, and surging demand for security offerings were key growth drivers.
Quarterly Details
Products revenues (43% of total revenues) during the reported quarter totaled $233.9 million, up 3% from the year-ago quarter, driven by software.
Software rose 21% year over year and contributed 19% to product revenues. This upside can be attributed to deployments in public (fastest growing part) cloud. Growing demand for security solutions, particularly Advanced Web Application Firewalls, is also a tailwind.
Moreover, acceleration in Enterprise License Agreement (ELA) and Virtual Edition (VE) subscription software deals is a positive. ELA pipeline consistently grows on the back customers’ continuous shift to multi-cloud deployments.
Systems revenues, representing 81% of product revenues, slipped less than 1% on a year-over-year basis.
Services revenues (57%) increased 4.7% year over year to $309.9 million.
Geographically, on a year-over-year basis, revenues from the Americas, which reflected 54% of total revenues, remained flat. EMEA rose 7% and accounted for 27% of total revenues. Asia Pacific and Japan revenues grew 11% and represented 19% of total revenues.
By verticals, Enterprise, Service providers and Government (including 10% from the U.S. federal) contributed to 65%, 14% and 21% of total revenues, respectively.
The company’s distributor, Ingram Micro translated into 17% of revenues. Arrow (NYSE:ARW) and Westcon contributed 11% each to total revenues.
F5 Networks’ non-GAAP gross margin came in at 85.2%, aided by improving product margins on the back of an increasing mix of software sales and a steady uptrend in services margins.
The company’s non-GAAP operating margin was 37% in the quarter under review, boosted by gross margin strength and operating expense efficiency.
F5 Networks, Inc. Price, Consensus and EPS Surprise
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