EX-99.1 2 d472193dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

CONTACT: Investor Relations
     John Eldridge
     (206) 272-6571
     j.eldridge@f5.com

 

     Public Relations
     Alane Moran
     (206) 272-6850
     a.moran@f5.com

F5 Networks Announces Results for First Quarter of Fiscal 2013

SEATTLE, WA—January 23, 2013— For the first quarter of fiscal 2013, F5 Networks, Inc. (NASDAQ: FFIV) announced revenue of $365.5 million, up 1 percent from $362.6 million in the prior quarter and 13 percent from $322.4 million in the first quarter of fiscal 2012.

GAAP net income was $69.5 million ($0.88 per diluted share), compared to $67.7 million ($0.85 per diluted share) in the prior quarter and $66.5 million ($0.83 per diluted share) in the first quarter a year ago.

Excluding the impact of stock-based compensation and amortization of purchased intangible assets, non-GAAP net income was $90.6 million ($1.14 per diluted share), compared to $88.7 million ($1.12 per diluted share) in the prior quarter and $82.2 million ($1.03 per diluted share) in the first quarter of last year.

A reconciliation of GAAP net income to non-GAAP net income is included on the attached Consolidated Statements of Operations.

“During the first quarter, strong sales to North American enterprises and service providers were offset by a substantial slowdown in U.S. Federal sales,” said John McAdam, F5 president and chief executive officer. “Japan sales were also weak during the quarter, in contrast to continuing strength in Europe and solid year-over-year growth in the rest of the Asia-Pacific region.

“A key driver of product revenue in the quarter was strong demand for BIG-IP 4200v, the first in our series of new ADC appliances, which we introduced in mid-October. Recently, we began shipping our new entry-level appliances, the 2000 series, which will be announced during the next few weeks along with our new high-end appliance, BIG-IP 10200, and our 8-blade VIPRION 4800 chassis.

“During the quarter, sales of our software modules and virtual edition (VE) products continued to gain traction. Very shortly, we will be announcing general availability of our Advanced


Firewall Manager (AFM), as well as enhanced versions of Application Security Manager (ASM) and Access Policy Manager (APM), key components of our Application Delivery Firewall solution. In addition we will be launching new high-performance versions of all our BIG-IP VE products.

“As these and other new products enter the market over the next two quarters, we believe they will have a positive impact on our product revenue and continue to expand our addressable market,” McAdam said.

F5 added 95 employees during the quarter and achieved a non-GAAP operating margin of 37.4 percent. The company also continued to strengthen its financial position, generating $145 million in cash from operations. After repurchasing 555,243 shares of outstanding common stock the company ended the quarter with $1.29 billion in cash and investments.

For the current quarter, ending March 31, management has set a revenue goal of $370 million to $380 million with a GAAP earnings target of $0.93 to $0.96 per diluted share and a non-GAAP earnings target of $1.21 to $1.24 per diluted share.

A reconciliation of the company’s expected GAAP and non-GAAP earnings is provided in the following table:

 

    

Three months ended

March 31, 2013

 

Reconciliation of Expected Non-GAAP Second Quarter Earnings

   Low     High  

Net income

   $ 74.0      $ 76.4   

Stock-based compensation expense

   $ 28.5      $ 28.5   

Amortization of purchased intangible assets

   $ 1.0      $ 1.0   

Tax effects related to above items

   ($ 7.5   ($ 7.5
  

 

 

   

 

 

 

Non-GAAP net income excluding stock-based compensation expense and amortization of purchased intangible assets

   $ 96.0      $ 98.4   
  

 

 

   

 

 

 

Net income per share - diluted

   $ 0.93      $ 0.96   
  

 

 

   

 

 

 

Non-GAAP net income per share - diluted

   $ 1.21      $ 1.24   
  

 

 

   

 

 

 

About F5 Networks

F5 Networks (NASDAQ: FFIV) makes the connected world run better. F5 helps organizations meet the demands and embrace the opportunities that come with the relentless growth of voice, data, and video traffic, mobile workers, and applications—in the data center, the network, and the cloud. The world’s largest businesses, service providers, government entities, and consumer brands rely on F5’s Intelligent Services Platform to deliver and protect their applications and services while ensuring people stay connected. Learn more at www.f5.com.

You can also follow @f5networks on Twitter or visit us on Facebook for more information about F5, its partners, and technology. For a complete listing of F5 community sites, please visit www.f5.com/news-press-events/web-media/community.html.


Forward Looking Statements

Statements in this press release concerning the continuing strength of F5’s business, sequential growth, the target revenue and earnings range, share amount and share price assumptions, demand for application delivery networking and storage virtualization products and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve risks and uncertainties, as well as assumptions and other factors that, if they do not fully materialize or prove correct, could cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: customer acceptance of our new traffic management, security, application delivery, WAN optimization and storage virtualization offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; uncertain global economic conditions which may result in reduced customer demand for our products and services and changes in customer payment patterns; F5’s ability to sustain, develop and effectively utilize distribution relationships; F5’s ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel; F5’s ability to expand in international markets; the unpredictability of F5’s sales cycle; the share repurchase program; future prices of F5’s common stock; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. All forward-looking statements in this press release are based on information available as of the date hereof and qualified in their entirety by this cautionary statement. F5 assumes no obligation to revise or update these forward-looking statements.

GAAP to non-GAAP Reconciliation

F5’s management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its products, services operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is net income excluding stock-based compensation, amortization of purchased intangible assets and acquisition-related charges, net of taxes, which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income excluding, as applicable, stock-based compensation,


amortization of purchased intangible assets and acquisition-related charges. This measure of non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. Stock-based compensation is a non-cash expense that F5 has accounted for since July 1, 2005 in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 Compensation—Stock Compensation (“FASB ASC Topic 718”). Amortization of intangible assets is a non-cash expense. Investors should note that the use of intangible assets contribute to revenues earned during the periods presented and will contribute to revenues in future periods. Acquisition-related expenses consist of professional services fees incurred in connection with acquisitions.

Management believes that non-GAAP net income per share provides useful supplemental information to management and investors regarding the performance of the company’s core business operations and facilitates comparisons to the company’s historical operating results. Although F5’s management finds this non-GAAP measure to be useful in evaluating the performance of the core business, management’s reliance on this measure is limited because items excluded from such measures could have a material effect on F5’s earnings and earnings per share calculated in accordance with GAAP. Therefore, F5’s management will use its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations when evaluating the performance of the company’s core business. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.

F5 believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company’s core business and which management uses in its own evaluation of the company’s performance. Investors are encouraged to look at GAAP results as the best measure of financial performance. However, while the GAAP results are more complete, the company provides investors this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into the company’s operational performance and financial results.

For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, please see the section in our Condensed Consolidated Statement of Operations entitled “GAAP to Non-GAAP Reconciliation.”

###


F5 Networks, Inc.

Consolidated Balance Sheets

(unaudited, in thousands)

 

     December 31,
2012
    September 30,
2012
 
Assets     

Current assets

    

Cash and cash equivalents

   $ 184,563      $ 211,181   

Short-term investments

     333,174        320,970   

Accounts receivable, net of allowances of $3,309 and $3,254

     209,078        185,172   

Inventories

     18,723        17,410   

Deferred tax assets

     10,335        10,362   

Other current assets

     35,916        30,986   
  

 

 

   

 

 

 

Total current assets

     791,789        776,081   
  

 

 

   

 

 

 

Property and equipment, net

     62,026        59,604   

Long-term investments

     771,300        662,803   

Deferred tax assets

     36,234        35,478   

Goodwill

     348,239        348,239   

Other assets, net

     28,064        28,996   
  

 

 

   

 

 

 

Total assets

   $ 2,037,652      $ 1,911,201   
  

 

 

   

 

 

 
Liabilities and Shareholders’ Equity     

Current liabilities

    

Accounts payable

   $ 32,221      $ 27,026   

Accrued liabilities

     117,413        86,409   

Deferred revenue

     379,944        352,594   
  

 

 

   

 

 

 

Total current liabilities

     529,578        466,029   
  

 

 

   

 

 

 

Other long-term liabilities

     21,163        21,078   

Deferred revenue, long-term

     100,612        94,694   
  

 

 

   

 

 

 

Total long-term liabilities

     121,775        115,772   
  

 

 

   

 

 

 

Commitments and contingencies

    

Shareholders’ equity

    

Preferred stock, no par value; 10,000 shares authorized, no shares outstanding

     —          —     

Common stock, no par value; 200,000 shares authorized, 78,574 and 78,715 shares issued and outstanding

     315,039        326,922   

Accumulated other comprehensive loss

     (4,540     (3,829

Retained earnings

     1,075,800        1,006,307   
  

 

 

   

 

 

 

Total shareholders’ equity

     1,386,299        1,329,400   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 2,037,652      $ 1,911,201   
  

 

 

   

 

 

 


F5 Networks, Inc.

Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)

 

     Three months ended
December 31,

2012
    Three months ended
September 30,

2012
    Three months ended
December 31,

2011
 

Net revenues

      

Products

   $ 204,712      $ 209,718      $ 196,554   

Services

     160,739        152,841        125,878   
  

 

 

   

 

 

   

 

 

 

Total

     365,451        362,559        322,432   

Cost of net revenues (1)(2)

      

Products

     31,792        35,752        33,200   

Services

     29,093        26,929        22,406   
  

 

 

   

 

 

   

 

 

 

Total

     60,885        62,681        55,606   
  

 

 

   

 

 

   

 

 

 

Gross profit

     304,566        299,878        266,826   

Operating expenses (1)(2)

      

Sales and marketing

     122,268        116,298        106,238   

Research and development

     48,541        47,731        39,122   

General and administrative

     24,673        24,015        21,677   
  

 

 

   

 

 

   

 

 

 

Total

     195,482        188,044        167,037   
  

 

 

   

 

 

   

 

 

 

Income from operations

     109,084        111,834        99,789   

Other income, net

     1,550        909        1,861   
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     110,634        112,743        101,650   

Provision for income taxes

     41,141        45,026        35,158   
  

 

 

   

 

 

   

 

 

 

Net Income

   $ 69,493      $ 67,717      $ 66,492   
  

 

 

   

 

 

   

 

 

 

Net income per share - basic

   $ 0.88      $ 0.86      $ 0.84   
  

 

 

   

 

 

   

 

 

 

Weighted average shares - basic

     78,789        78,980        79,272   
  

 

 

   

 

 

   

 

 

 

Net income per share - diluted

   $ 0.88      $ 0.85      $ 0.83   
  

 

 

   

 

 

   

 

 

 

Weighted average shares - diluted

     79,278        79,425        79,822   
  

 

 

   

 

 

   

 

 

 

Non-GAAP Financial Measures

      

Net income as reported

   $ 69,493      $ 67,717      $ 66,492   

Stock-based compensation expense (3)

     26,710        26,343        22,123   

Amortization of purchased intangible assets (4)

     1,033        1,610        —     

Tax effects related to above items

     (6,613     (6,965     (6,375
  

 

 

   

 

 

   

 

 

 

Net income excluding stock-based compensation and amortization of purchased intangible assets (non-GAAP) - diluted

   $ 90,623      $ 88,705      $ 82,240   
  

 

 

   

 

 

   

 

 

 

Net income per share excluding stock-based compensation and amortization of purchased intangible assets (non-GAAP) - diluted

   $ 1.14      $ 1.12      $ 1.03   
  

 

 

   

 

 

   

 

 

 

Weighted average shares - diluted

     79,278        79,425        79,822   
  

 

 

   

 

 

   

 

 

 

(1)    Includes stock-based compensation as follows:

      

Cost of net revenues

   $ 2,967      $ 3,082      $ 2,538   

Sales and marketing

     10,556        10,043        9,054   

Research and development

     7,802        8,036        5,826   

General and administrative

     5,385        5,182        4,705   
  

 

 

   

 

 

   

 

 

 
   $ 26,710      $ 26,343      $ 22,123   
  

 

 

   

 

 

   

 

 

 

(2)    Includes amortization of purchased intangible assets  as

follows:

      

Cost of net revenues

   $ 958      $ 1,458      $ —     

Sales and marketing

     75        152        —     
  

 

 

   

 

 

   

 

 

 
   $ 1,033      $ 1,610      $ —     
  

 

 

   

 

 

   

 

 

 

(3)    Stock-based compensation is accounted for in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”)

(4)    Beginning with the second quarter of fiscal 2012, the company will exclude amortization of purchased intangible assets and acquisition-related charges in addition to stock-based compensation expense as a non-GAAP financial measure

 

 


F5 Networks, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

     Three months ended
December 31,
 
     2012     2011  

Operating activities

    

Net income

   $ 69,493      $ 66,492   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Realized loss on disposition of assets and investments

     26        579   

Stock-based compensation

     26,710        22,123   

Provisions for doubtful accounts and sales returns

     349        415   

Depreciation and amortization

     9,934        5,822   

Deferred income taxes

     (1,265     (598

Changes in operating assets and liabilities:

    

Accounts receivable

     (24,256     (22,601

Inventories

     (1,313     (344

Other current assets

     (4,979     (3,879

Other assets

     428        562   

Accounts payable and accrued liabilities

     36,411        26,576   

Deferred revenue

     33,268        36,732   
  

 

 

   

 

 

 

Net cash provided by operating activities

     144,806        131,879   
  

 

 

   

 

 

 

Investing activities

    

Purchases of investments

     (313,114     (262,499

Maturities of investments

     165,193        199,102   

Sales of investments

     23,020        1,886   

Increase in restricted cash

     (728     (3

Purchases of property and equipment

     (7,788     (5,857
  

 

 

   

 

 

 

Net cash used in investing activities

     (133,417     (67,371
  

 

 

   

 

 

 

Financing activities

    

Excess tax benefit from stock-based compensation

     503        1,399   

Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan

     11,583        9,577   

Repurchase of common stock

     (50,000     (34,473
  

 

 

   

 

 

 

Net cash used in financing activities

     (37,914     (23,497
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (26,525     41,011   

Effect of exchange rate changes on cash and cash equivalents

     (93     (307

Cash and cash equivalents, beginning of period

     211,181        216,784   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 184,563      $ 257,488