8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 19, 2006

F5 Networks, Inc.

(Exact name of registrant as specified in its charter)

Washington	000-26041	91-1714307
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

401 Elliott Avenue West
Seattle, WA 98119
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (206) 272-5555

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition
	Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 2.02 Results of Operations and Financial Condition

On January 19, 2006, F5 Networks, Inc. issued a press release regarding its financial results for the first quarter ended December 31, 2005. The press release is attached hereto as Exhibit 99.1. The information in this report shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:
 99.1     Press Release of F5 Networks, Inc. announcing quarterly earnings dated January 19, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	F5 NETWORKS, INC. (Registrant)
Date: January 19, 2006	By:	/s/ John McAdam
		John McAdam
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of F5 Networks, Inc. announcing quarterly earnings dated January 19, 2006.

EX-99.1

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 the First Quarter of Fiscal 2006

Solid revenue gains reflect continuing strength in core business

SEATTLE, WA—January 19, 2006—For the first quarter of fiscal 2006, F5 Networks announced revenue of $88.1 million, up 9 percent from $80.6 million in the prior quarter and 47 percent from $60.0 million in the first quarter of fiscal 2005. Net income was $15.2 million ($0.37 per diluted share), compared to $15.7 million ($0.39 per diluted share) in the prior quarter and $10.0 million ($0.26 per diluted share) in the first quarter a year ago.

During the fourth quarter of fiscal 2005, the company began expensing stock-based compensation. To facilitate a comparison of this quarter’s results with the results of prior quarters, the company is presenting pro forma net income for the first quarter of fiscal 2006 and the fourth quarter of fiscal 2005. Excluding the effects of stock compensation expense, net income for the first quarter of fiscal 2006 was $19.0 million ($0.47 per diluted share) compared to $19.0 million ($0.47 per diluted share) in the prior quarter.

A reconciliation of reported net income to pro forma net income is included on the attached Consolidated Statements of Operations.

F5 president and chief executive officer John McAdam said the company’s revenue growth reflected the continuing strength of its core business and growing demand for its TMOS-based products. Revenue from the company’s BIG-IP family of products grew 13 percent sequentially, and demand was strong across all geographic regions. As a result, overall revenue was up sequentially in North America, APAC and EMEA. In Japan, revenue was essentially flat with revenue in the seasonally strong September quarter.

Since the completion of the Swan Labs acquisition on October 4, integration of teams and products has proceeded smoothly. Given the incremental expenses related to the Swan integration, McAdam said he was pleased the company managed to maintain its pro forma operating margin at 31 percent, due in part to a higher mix of software revenue that boosted gross margins to 78 percent. In addition, McAdam said, the company continued to strengthen its balance sheet during the quarter. Deferred revenue grew 10 percent to $43.3 million, and $34.5 million in cash flow from operations contributed to a quarter-end balance of $373 million in cash and investments, after paying $43 million (net) in cash for Swan Labs.

Alluding to the continuing strength of F5’s core business, McAdam said management believes the company will continue to grow sequentially and has set a target range of $93 million to $95 million in revenue for the second quarter of fiscal 2006. Earnings for the second quarter are expected to be $0.39 to $0.40 per diluted share, including the charge for stock-based compensation. Excluding the compensation charge, the anticipated earnings range is expected to be $0.49 to $0.50 per diluted share. A reconciliation of the company’s expected GAAP and pro forma earnings is provided in the following table:

	Three months ended
	March 31, 2006
Reconciliation of Expected GAAP and Pro Forma Second Quarter Earnings	Low		High
Net income	$	16,100	$	16,500
Stock-based compensation expense, net of tax		4,200		4,200
Pro forma net income excluding stock-based compensation expense	$	20,300	$	20,700
Net income per share — diluted	$	0.39	$	0.40
Pro forma net income per share — diluted	$	0.49	$	0.50

About F5 Networks
F5 Networks is the global leader in Application Delivery Networking. F5 provides solutions that make applications secure, fast, and available for everyone, helping organizations get the most out of their investment. By adding intelligence and manageability into the network to offload applications, F5 optimizes applications and allows them to work faster and consume fewer resources. F5’s extensible architecture intelligently integrates application optimization, protects the application and the network, and delivers application reliability — all on one universal platform. Over 10,000 organizations and service providers worldwide trust F5 to keep their applications running. The company is headquartered in Seattle, Washington with offices worldwide. For more information, go to www.f5.com.

Forward Looking Statements
Statements in this press release concerning the continuing strength of F5’s core business, sequential growth, the target revenue range, earnings ranges with and without the charge for stock-based compensation and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may 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, among others: customer acceptance of our new traffic management, security, application delivery and WAN optimization offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; 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; and the unpredictability of F5’s sales cycle. F5 has no duty to update any guidance provided or other matters discussed in this press release. More information about potential risk factors that could affect F5’s business and financial results is included in the company’s annual report on Form 10-K for the fiscal year ended September 30, 2005, and other public filings with the Securities and Exchange Commission.

# # # #

F5 Networks, Inc.
Consolidated Balance Sheets
(unaudited, in thousands)

	December 31,			September 30,
	2005			2005
Assets
Current assets
Cash and cash equivalents	$	18,730		$	51,867
Short-term investments		240,116			184,314
Accounts receivable, net of allowances of $3,045 and $2,969		49,203			41,703
Inventories		2,698			2,699
Deferred tax assets		4,260			3,935
Other current assets		9,788			9,906
Total current assets		324,795			294,424
Restricted cash		3,867			3,871
Property and equipment, net		19,076			16,158
Long-term investments		113,879			128,834
Deferred tax assets		28,979			36,212
Goodwill		81,652			49,677
Other assets, net		16,529			8,323
Total assets	$	588,777		$	537,499
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	12,965		$	7,668
Accrued liabilities		21,098			19,648
Deferred revenue		39,684			36,009
Total current liabilities		73,747			63,325
Other long-term liabilities		6,759			6,650
Deferred revenue, long-term		3,647			3,314
Total long-term liabilities		10,406			9,964
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding		—			—
Common stock, no par value; 100,000 shares authorized 39,593 and 38,593 shares issued and outstanding		437,642			412,419
Accumulated other comprehensive loss		(1,460	)		(1,430	)
Retained earnings		68,442			53,221
Total shareholders’ equity		504,624			464,210
Total liabilities and shareholders’ equity	$	588,777		$	537,499

F5 Networks, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)

	Three months Ended
	December 31,		September 30,		December 31,
	2005		2005		2004
Net revenues
Products	$	68,591	$	62,762	$	46,397
Services		19,496		17,845		13,612
Total		88,087		80,607		60,009
Cost of net revenues (1)
Products		14,593		13,886		10,528
Services		4,974		4,572		3,386
Total		19,567		18,458		13,914
Gross profit		68,520		62,149		46,095
Operating expenses (1)
Sales and marketing		28,865		25,521		19,640
Research and development		10,478		9,039		6,974
General and administrative		7,397		7,067		5,006
Total		46,740		41,627		31,620
Income from operations		21,780		20,522		14,475
Other income, net		2,970		2,925		1,387
Income before income taxes		24,750		23,447		15,862
Provision for income taxes (1)		9,529		7,796		5,869
Net income	$	15,221	$	15,651	$	9,993
Net income per share — basic	$	0.39	$	0.41	$	0.28
Weighted average shares — basic		39,163		38,479		35,577
Net income per share — diluted	$	0.37	$	0.39	$	0.26
Weighted average shares — diluted		40,805		40,015		37,818

Reconciliation to pro forma results
Net income as reported	$	15,221		$	15,651
Stock-based compensation expense, net of tax		3,811			3,328
Pro forma net income	$	19,032		$	18,979
Pro forma net income per share — diluted	$	0.47		$	0.47
Pro forma weighted average shares — diluted		40,805			40,015
(1) Includes stock-based compensation as follows:
Cost of net revenues	$	349		$	315
Sales and marketing		2,088			1,850
Research and development		1,443			1,345
General and administrative		1,370			1,063
Tax effect of stock based compensation		(1,439	)		(1,245	)
		3,811			3,328