10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 000-26041

F5 NETWORKS, INC.

(Exact name of registrant as specified in its charter)

Washington	91-1714307
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

801 5th Avenue

Seattle, Washington 98104

(Address of principal executive offices and zip code)

(206) 272-5555

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	FFIV	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐  (Do not check if a smaller reporting company)	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

The number of shares outstanding of the registrant’s common stock as of April 30, 2021 was 59,614,886.

F5 NETWORKS, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended March 31, 2021

Table of Contents

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)	4
Consolidated Balance Sheets	4
Consolidated Income Statements	5
Consolidated Statements of Comprehensive Income	6
Consolidated Statements of Shareholders' Equity	7
Consolidated Statements of Cash Flows	9
Notes to Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	34
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	36
SIGNATURES	37

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

F5 NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	March 31, 2021		September 30, 2020
ASSETS
Current assets
Cash and cash equivalents	$	532,166	$	849,556
Short-term investments	111,105		360,333
Accounts receivable, net of allowances of $3,420 and $3,105	374,404		296,183
Inventories	24,571		27,898
Other current assets	293,402		259,506
Total current assets	1,335,648		1,793,476
Property and equipment, net	207,599		229,239
Operating lease right-of-use assets	260,389		300,680
Long-term investments	19,078		102,939
Deferred tax assets	68,624		45,173
Goodwill	2,209,639		1,858,966
Other assets, net	418,215		347,447
Total assets	$	4,519,192	$	4,677,920
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	53,567	$	64,472
Accrued liabilities	324,865		321,398
Deferred revenue	929,397		883,134
Current portion of long-term debt	19,275		19,275
Total current liabilities	1,327,104		1,288,279
Deferred tax liabilities	1,888		602
Deferred revenue, long-term	437,506		389,498
Operating lease liabilities, long-term	320,132		338,715
Long-term debt	359,410		369,047
Other long-term liabilities	65,333		59,511
Total long-term liabilities	1,184,269		1,157,373
Commitments and contingencies (Note 9)
Shareholders' equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding	—		—
Common stock, no par value; 200,000 shares authorized, 60,052 and 61,099 shares issued and outstanding	39,507		305,453
Accumulated other comprehensive loss	(19,194)		(18,716)
Retained earnings	1,987,506		1,945,531
Total shareholders' equity	2,007,819		2,232,268
Total liabilities and shareholders' equity	$	4,519,192	$	4,677,920

The accompanying notes are an integral part of these consolidated financial statements.

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F5 NETWORKS, INC.

CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per share data)

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Net revenues
Products	$	309,189	$	259,538	$	597,234	$	494,074
Services	336,098		323,911		672,670		658,680
Total	645,287		583,449		1,269,904		1,152,754
Cost of net revenues
Products	73,289		53,086		140,327		95,204
Services	55,296		48,152		103,237		94,676
Total	128,585		101,238		243,564		189,880
Gross profit	516,702		482,211		1,026,340		962,874
Operating expenses
Sales and marketing	244,908		215,472		459,454		410,991
Research and development	140,453		109,028		254,644		205,033
General and administrative	77,840		74,013		140,993		133,017
Restructuring charges	—		—		—		7,800
Total	463,201		398,513		855,091		756,841
Income from operations	53,501		83,698		171,249		206,033
Other (loss) income, net	(1,377)		(141)		(2,060)		5,079
Income before income taxes	52,124		83,557		169,189		211,112
Provision for income taxes	8,883		22,178		38,270		51,206
Net income	$	43,241	$	61,379	$	130,919	$	159,906
Net income per share — basic	$	0.71	$	1.01	$	2.14	$	2.63
Weighted average shares — basic	60,667		60,869		61,058		60,758
Net income per share — diluted	$	0.70	$	1.00	$	2.10	$	2.62
Weighted average shares — diluted	62,158		61,084		62,292		61,017

The accompanying notes are an integral part of these consolidated financial statements.

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F5 NETWORKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Net income	$	43,241	$	61,379	$	130,919	$	159,906
Other comprehensive (loss) income:
Foreign currency translation adjustment	(841)		(1,586)		437		(952)
Available-for-sale securities:
Unrealized losses on securities, net of taxes of $(142) and $(368) for the three months ended March 31, 2021 and 2020, respectively, and $(192) and $(344) for the six months ended March 31, 2021 and 2020, respectively	(731)		(2,999)		(1,151)		(2,831)
Reclassification adjustment for realized losses included in net income, net of taxes of $(61) and $(17) for the three months ended March 31, 2021 and 2020, respectively, and $(61) and $(18) for the six months ended March 31, 2021 and 2020, respectively	233		58		236		70
Net change in unrealized losses on available-for-sale securities, net of tax	(498)		(2,941)		(915)		(2,761)
Total other comprehensive loss	(1,339)		(4,527)		(478)		(3,713)
Comprehensive income	$	41,902	$	56,852	$	130,441	$	156,193

The accompanying notes are an integral part of these consolidated financial statements.

6

F5 NETWORKS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited, in thousands)

	Common Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
	(In thousands)
	Three months ended March 31, 2020
Balances, December 31, 2019	60,803	$	211,217	$	(18,376)	$	1,736,617	$	1,929,458
Exercise of employee stock options	20	498		—		—		498
Issuance of restricted stock	248	—		—		—		—
Repurchase of common stock	(442)	(50,009)		—		—		(50,009)
Stock-based compensation	—	61,395		—		—		61,395
Net income	—	—		—		61,379		61,379
Other comprehensive loss	—	—		(4,527)		—		(4,527)
Balances, March 31, 2020	60,629	$	223,101	$	(22,903)	$	1,797,996	$	1,998,194
	Three months ended March 31, 2021
Balances, December 31, 2020	61,632	$	386,236	$	(17,855)	$	2,033,209	$	2,401,590
Exercise of employee stock options	44	1,492		—		—		1,492
Issuance of restricted stock	445	—		—		—		—
Repurchase of common stock	(2,052)	(311,056)		—		(88,944)		(400,000)
Purchase of forward contract under accelerated share repurchase program ("ASR")	—	(100,000)		—		—		(100,000)
Taxes paid related to net share settlement of equity awards	(17)	(3,447)		—		—		(3,447)
Stock-based compensation	—	66,282		—		—		66,282
Net income	—	—		—		43,241		43,241
Other comprehensive loss	—	—		(1,339)		—		(1,339)
Balances, March 31, 2021	60,052	$	39,507	$	(19,194)	$	1,987,506	$	2,007,819

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	Six months ended March 31, 2020
Balances, September 30, 2019	60,367	$	142,597	$	(19,190)	$	1,638,090	$	1,761,497
Exercise of employee stock options	31	789		—		—		789
Issuance of stock under employee stock purchase plan	169	20,670		—		—		20,670
Issuance of restricted stock	504	—		—		—		—
Repurchase of common stock	(442)	(50,009)		—		—		(50,009)
Stock-based compensation	—	109,054		—		—		109,054
Net income	—	—		—		159,906		159,906
Other comprehensive loss	—	—		(3,713)		—		(3,713)
Balances, March 31, 2020	60,629	$	223,101	$	(22,903)	$	1,797,996	$	1,998,194
	Six months ended March 31, 2021
Balances, September 30, 2020	61,099	$	305,453	$	(18,716)	$	1,945,531	$	2,232,268
Exercise of employee stock options	83	2,610		—		—		2,610
Issuance of stock under employee stock purchase plan	231	26,077		—		—		26,077
Issuance of restricted stock	742	—		—		—		—
Repurchase of common stock	(2,052)	(311,056)		—		(88,944)		(400,000)
Purchase of forward contract under accelerated share repurchase program ("ASR")	—	(100,000)		—		—		(100,000)
Taxes paid related to net share settlement of equity awards	(51)	(7,928)		—		—		(7,928)
Stock-based compensation	—	124,351		—		—		124,351
Net income	—	—		—		130,919		130,919
Other comprehensive loss	—	—		(478)		—		(478)
Balances, March 31, 2021	60,052	$	39,507	$	(19,194)	$	1,987,506	$	2,007,819

The accompanying notes are an integral part of these consolidated financial statements.

8

F5 NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Six months ended March 31,
	2021		2020
Operating activities
Net income	$	130,919	$	159,906
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	121,289		98,447
Depreciation and amortization	56,185		43,112
Non-cash operating lease costs	19,415		18,970
Deferred income taxes	(17,962)		5,353
Impairment of assets	40,698		—
Other	105		54
Changes in operating assets and liabilities (excluding effects of the acquisition of businesses):
Accounts receivable	(79,649)		4,317
Inventories	3,327		3,459
Other current assets	(32,939)		(19,603)
Other assets	(29,066)		(4,298)
Accounts payable and accrued liabilities	(14,529)		(1,936)
Deferred revenue	93,493		43,987
Lease liabilities	(25,447)		(25,948)
Net cash provided by operating activities	265,839		325,820
Investing activities
Purchases of investments	(65,725)		(195,123)
Maturities of investments	126,711		237,892
Sales of investments	269,986		232,255
Acquisition of businesses, net of cash acquired	(411,319)		(955,574)
Purchases of property and equipment	(14,090)		(35,463)
Net cash used in investing activities	(94,437)		(716,013)
Financing activities
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan	28,687		21,443
Repurchase of common stock	(500,000)		(50,009)
Proceeds from term debt agreement	—		400,000
Payments on term debt agreement	(10,000)		—
Payments for debt issuance costs	—		(3,040)
Taxes paid related to net share settlement of equity awards	(7,928)		—
Net cash (used in) provided by financing activities	(489,241)		368,394
Net decrease in cash, cash equivalents and restricted cash	(317,839)		(21,799)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	494		(1,090)
Cash, cash equivalents and restricted cash, beginning of period	852,826		602,254
Cash, cash equivalents and restricted cash, end of period	$	535,481	$	579,365
Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	$	30,809	$	30,067
Cash paid for interest on long-term debt	$	2,724	$	2,089
Supplemental disclosures of non-cash activities
Right-of-use assets obtained in exchange for lease obligations	$	9,523	$	399,203

The accompanying notes are an integral part of these consolidated financial statements.

9

F5 NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Summary of Significant Accounting Policies

Description of Business

F5 Networks, Inc. (the "Company") is a leading provider of multi-cloud application services which enable its customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud. The Company's cloud, software, and hardware solutions enable its customers to deliver digital experiences to their customers faster, reliably, and at scale. The Company's enterprise-grade application services are available as cloud-based, software-as-a-service, and software-only solutions optimized for multi-cloud environments, with modules that can run independently, or as part of an integrated solution on its high-performance appliances. In connection with its solutions, the Company offers a broad range of professional services, including consulting, training, installation, maintenance, and other technical support services. On January 22, 2021, the Company completed its acquisition of Volterra, Inc. ("Volterra"), a provider of edge-as-a-service platform solutions.

Basis of Presentation

The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

In December 2019, a novel strain of coronavirus (“COVID-19“) was first identified, and in March 2020, the World Health Organization categorized COVID-19 as a pandemic. The Company assessed the impact that COVID-19 had on its results of operations, including, but not limited to an assessment of its allowance for current expected credit losses, the carrying value of short-term and long-term investments, the carrying value of goodwill and other long-lived assets, and the impact to revenue recognition and cost of revenues. The Company is actively monitoring the impact to the results of its business operations, and may make decisions required by federal, state or local authorities, or that are determined to be in the best interests of its employees, customers, partners, suppliers and stockholders. As of the filing date, the extent to which the COVID-19 pandemic may impact the Company’s financial condition or results of operations in the future remains uncertain.

Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company adopted this new standard prospectively on October 1, 2020. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which modifies the accounting for credit losses for most financial assets and requires the use of an expected loss model, replacing the currently used incurred loss method. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The Company adopted this new standard on October 1, 2020 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. The following accounting policies were updated as a result of the adoption of this standard.

Investments

The Company classifies its investment securities as available-for-sale. Investment securities, consisting of certificates of deposit, corporate and municipal bonds and notes, the United States government and agency securities and international

10

government securities are reported at fair value with the related unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses and impairments due to credit losses, in which the fair value of a security is below its amortized cost and management’s intent is to sell the impaired security prior to its recovery, are included in other income (expense). An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in other income, net in the Company's consolidated income statements. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. Investments in securities with maturities of less than one year or where management’s intent is to use the investments to fund current operations are classified as short-term investments. Investments with maturities of greater than one year are classified as long-term investments.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount, net of allowances for credit losses for any potential uncollectible amounts. The allowance for credit losses is based on the assessment of the collectability of accounts. Management regularly reviews the adequacy of the allowance for credit losses on a collective basis by considering the age of each outstanding invoice, each customer’s expected ability to pay and collection history, current market conditions, and reasonable and supportable forecasts of future economic conditions to determine whether the allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. For the three and six months ended March 31, 2021 and 2020, the allowance for credit losses activity was not significant.

There have been no additional changes to the Company's significant accounting policies as of and for the six months ended March 31, 2021.

2. Revenue from Contracts with Customers

Capitalized Contract Acquisition Costs

The table below shows significant movements in capitalized contract acquisition costs (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	70,396	$	59,446
Additional capitalized contract acquisition costs deferred	18,614		21,836
Amortization of capitalized contract acquisition costs	(16,590)		(16,972)
Balance, end of period	$	72,420	$	64,310

Amortization of capitalized contract acquisition costs was $8.4 million and $8.3 million for the three months ended March 31, 2021 and 2020, respectively, and $16.6 million and $17.0 million for the six months ended March 31, 2021 and 2020, respectively, and is recorded in Sales and Marketing expense in the accompanying consolidated income statements. There was no impairment of any capitalized contract acquisition costs during any period presented.

Contract Balances

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to the Company's contracts with customers. The Company records assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected, in addition to contracts that have started, but not yet been fully billed. These assets are recorded as contract assets rather than receivables when receipt of the consideration is conditional on something other than the passage of time. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current deferred revenue.

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The table below shows significant movements in contract assets (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	200,472	$	132,492
Revenue recognized during period but not yet billed	30,294		13,998
Contract asset additions	81,040		38,060
Contract assets acquired through acquisition of businesses	—		6,045
Contract assets reclassified to accounts receivable	(65,909)		(33,211)
Balance, end of period	$	245,897	$	157,384

As of March 31, 2021, contract assets that are expected to be reclassified to receivables within the next 12 months are included in other current assets, with those expected to be transferred to receivables in more than 12 months included in other assets. There were no impairments of contract assets during the six months ended March 31, 2021 and 2020.

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	1,272,632	$	1,198,116
Amounts billed but not recognized as revenues	680,124		587,983
Deferred revenue acquired through acquisition of businesses	779		39,000
Revenues recognized related to the opening balance of deferred revenue	(586,632)		(543,995)
Balance, end of period	$	1,366,903	$	1,281,104

The Company's contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period.

Remaining Performance Obligations

Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. As of March 31, 2021, the total non-cancelable remaining performance obligations under the Company's contracts with customers was approximately $1.4 billion and the Company expects to recognize revenues on approximately 68.0% of these remaining performance obligations over the next 12 months, 19.4% in year two, and the remaining balance thereafter.

See Note 13, Segment Information, for disaggregated revenue by significant customer and geographic region, as well as disaggregated product revenue by systems and software.

3. Fair Value Measurements

In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.

The levels of fair value hierarchy are:

Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date that the Company has the ability to access.

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Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Unobservable inputs for which there is little or no market data available. These inputs reflect management's assumptions of what market participants would use in pricing the asset or liability.

Level 1 investments are valued based on quoted market prices in active markets and include the Company's cash equivalent investments. Level 2 investments, which include investments that are valued based on quoted prices in markets that are not active, broker or dealer quotations, actual trade data, benchmark yields or alternative pricing sources with reasonable levels of price transparency, include the Company's certificates of deposit, corporate bonds and notes, municipal bonds and notes, U.S. government securities, U.S. government agency securities and international government securities. Fair values for the Company's level 2 investments are based on similar assets without applying significant judgments. In addition, all of the Company's level 2 investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.

A financial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at March 31, 2021, were as follows (in thousands):

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Securities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at March 31, 2021
Cash equivalents	$	45,060	$	—	$	—	$	45,060
Short-term investments
Available-for-sale securities — corporate bonds and notes	—		90,909		—		90,909
Available-for-sale securities — municipal bonds and notes	—		2,908		—		2,908
Available-for-sale securities — U.S. government securities	—		12,036		—		12,036
Available-for-sale securities — U.S. government agency securities	—		5,252		—		5,252
Long-term investments
Available-for-sale securities — corporate bonds and notes	—		8,500		—		8,500
Available-for-sale securities — U.S. government securities	—		8,078		—		8,078
Available-for-sale securities — U.S. government agency securities	—		2,500		—		2,500
Total	$	45,060	$	130,183	$	—	$	175,243

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The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2020, were as follows (in thousands):

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Securities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at September 30, 2020
Cash equivalents	$	43,553	$	207,417	$	—	$	250,970
Short-term investments
Available-for-sale securities — corporate bonds and notes	—		189,662		—		189,662
Available-for-sale securities — municipal bonds and notes	—		6,146		—		6,146
Available-for-sale securities — U.S. government securities	—		117,374		—		117,374
Available-for-sale securities — U.S. government agency securities	—		47,151		—		47,151
Long-term investments
Available-for-sale securities — corporate bonds and notes	—		102,939		—		102,939
Total	$	43,553	$	670,689	$	—	$	714,242

The Company uses the fair value hierarchy for financial assets and liabilities. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value due to their short-term nature.

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

The Company's non-financial assets and liabilities, which include goodwill, intangible assets, and long-lived assets, are not required to be carried at fair value on a recurring basis. These non-financial assets and liabilities are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. The Company reviews goodwill for impairment annually, during the second quarter of each fiscal year, or as circumstances indicate the possibility of impairment. The Company monitors the carrying value of tangible and intangible long-lived assets for impairment whenever events or changes in circumstances indicate its carrying amount may not be recoverable. Included in the Company’s impairment considerations for non-financial assets and liabilities in the current quarter were the potential impacts of the COVID-19 pandemic.

During the three months ended March 31, 2021, the Company recorded an impairment of $23.5 million against the operating lease right-of-use asset related to the exit of six floors in its corporate headquarters. Impairment charges for the second quarter of fiscal 2021 also included $10.3 million for tenant improvements and other fixed assets associated with the exited floors. In the first quarter of fiscal 2021, the Company recorded an impairment of $6.7 million against the operating lease right-of-use asset related to the integration of the former Shape headquarters in Santa Clara, California. Impairment charges for the first quarter of fiscal 2021 also included $0.2 million for other fixed assets associated with the Shape headquarters in Santa Clara, California. The Company calculated the fair value of the right-of-use assets, tenant improvements and other fixed assets based on estimated future discounted cash flows and classified the fair value as a Level 3 measurement due to the significance of unobservable inputs, which included the amount and timing of estimated sublease rental receipts that the Company could reasonably obtain over the remaining lease term and the discount rate. The impairment charges for the three and six months ended March 31, 2021 were allocated to various expense line items on the Company’s consolidated income statements based on the teams that previously worked out of the exited space.

Impairment charges were allocated to the following income statement line items for the three and six months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Cost of net product revenue	$	897	$	—	$	2,865	$	—
Cost of net service revenue	3,491		—		3,492		—
Sales and marketing	10,256		—		11,515		—
Research and development	9,845		—		12,974		—
General and administrative	9,336		—		9,852		—
Total impairment charges	$	33,825	$	—	$	40,698	$	—

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During the three and six months ended March 31, 2021 and 2020, the Company did not recognize any impairment charges related to goodwill or intangible assets.

4. Short-Term and Long-Term Investments

Short-term investments consist of the following (in thousands):

March 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	90,511	$	399	$	(1)	$	90,909
Municipal bonds and notes	2,907		1		—		2,908
U.S. government securities	12,035		1		—		12,036
U.S. government agency securities	5,250		2		—		5,252
	$	110,703	$	403	$	(1)	$	111,105

September 30, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	188,932	$	736	$	(6)	$	189,662
Municipal bonds and notes	6,143		3		—		6,146
U.S. government securities	117,363		14		(3)		117,374
U.S. government agency securities	47,148		3		—		47,151
	$	359,586	$	756	$	(9)	$	360,333

Long-term investments consist of the following (in thousands):

March 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	8,472	$	29	$	(1)	$	8,500
U.S. government securities	8,078		1		(1)		8,078
U.S. government agency securities	2,499		1		—		2,500
	$	19,049	$	31	$	(2)	$	19,078

September 30, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	102,206	$	756	$	(23)	$	102,939
	$	102,206	$	756	$	(23)	$	102,939

Interest income from investments was $0.7 million and $3.3 million for the three months ended March 31, 2021 and 2020, respectively, and $1.8 million and $8.9 million for the six months ended March 31, 2021 and 2020, respectively. Interest income is included in other income, net on the Company's consolidated income statements.

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of March 31, 2021 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
March 31, 2021	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and notes	$	12,248	$	(2)	$	—	$	—	$	12,248	$	(2)
U.S. government securities	9,707		(1)		—		—		9,707		(1)
Total	$	21,955	$	(3)	$	—	$	—	$	21,955	$	(3)

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The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of September 30, 2020 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
September 30, 2020	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and notes	$	43,492	$	(28)	$	5,006	$	(1)	$	48,498	$	(29)
U.S. government securities	41,812		(3)		—		—		41,812		(3)
Total	$	85,304	$	(31)	$	5,006	$	(1)	$	90,310	$	(32)

The Company invests in securities that are rated investment grade. The Company reviews the individual securities in its portfolio to determine whether a decline in a security's fair value below the amortized cost basis is other-than-temporary. The Company determined that as of March 31, 2021, there were no investments in its portfolio that were other-than-temporarily impaired.

5. Business Combinations

Fiscal Year 2021 Acquisition of Volterra, Inc.

On January 5, 2021, the Company entered into a Merger Agreement (the “Merger Agreement”) with Volterra, Inc. ("Volterra"), a provider of edge-as-a-service platform solutions. The transaction closed on January 22, 2021 with Volterra becoming a wholly-owned subsidiary of F5.

Pursuant to the Merger Agreement, at the effective time of the Merger, the capital stock of Volterra and the vested outstanding and unexercised stock options in Volterra were cancelled and converted to the right to receive approximately $427.2 million in cash, subject to certain adjustments and conditions set forth in the Merger Agreement. The unvested stock options and restricted stock units in Volterra held by continuing employees of Volterra were assumed by F5, on the terms and conditions set forth in the Merger Agreement. The Company incurred $6.9 million and $9.5 million of transaction costs associated with the acquisition for the three and six months ended March 31, 2021, respectively, which was included in General and Administrative expenses.

As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of Volterra. The goodwill related to the Volterra acquisition is comprised primarily of expected synergies from combining operations and the acquired intangible assets that do not qualify for separate recognition. Goodwill related to the Volterra acquisition is not expected to be deductible for tax purposes. The results of operations of Volterra have been included in the Company's consolidated financial statements from the date of acquisition.

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The allocated purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values is presented in the following table (in thousands):

			Estimated
			Useful Life
Assets acquired
Cash, cash equivalents, and restricted cash	$	14,012
Other tangible assets acquired, at fair value	7,499
Identifiable intangible assets:
Developed technologies	59,500		7 years
Customer relationships	500		1 year
Goodwill	351,417
Total assets acquired	432,928
Liabilities assumed	(5,686)
Net assets acquired	$	427,242

The initial allocation of the purchase price was based on preliminary valuations and assumptions and is subject to change within the measurement period. The Company expects to finalize the allocation of the purchase price as soon as practicable and no later than one year from the acquisition date.

The developed technologies intangible asset will be amortized on a straight-line basis over its estimated useful life of seven years and included in cost of net product revenues. The customer relationships intangible asset will be amortized on a straight-line basis over its estimated useful life of one year and included in sales and marketing expenses. The weighted-average life of the amortizable intangible assets recognized from the Volterra acquisition was 6.95 years as of January 22, 2021, the date the transaction closed. The estimated useful lives for the acquired intangible assets were based on the expected future cash flows associated with the respective asset.

Since the Volterra acquisition was completed on January 22, 2021, the F5 and Volterra teams have been executing a plan to integrate ongoing operations. The pro forma financial information, as well as the revenue and earnings generated by Volterra, were not material to the Company's operations for the periods presented.

Fiscal Year 2020 Acquisition of Shape Security, Inc.

On December 19, 2019, the Company entered into a Merger Agreement (the "Merger Agreement") with Shape Security, Inc. ("Shape"), a provider of fraud and abuse prevention solutions. The transaction closed on January 24, 2020 with Shape becoming a wholly-owned subsidiary of F5.

Pursuant to the Merger Agreement, at the effective time of the acquisition, the capital stock of Shape and the vested outstanding and unexercised stock options in Shape were cancelled and converted to the right to receive approximately $1.0 billion in cash, subject to certain adjustments and conditions set forth in the Merger Agreement, and the unvested stock options and restricted stock units in Shape held by continuing employees of Shape were assumed by F5, on the terms and conditions set forth in the Merger Agreement. Included in cash consideration was $23.2 million of transaction costs paid by F5 on behalf of Shape. In addition, the Company incurred $11.4 million and $15.3 million of transaction costs associated with the acquisition for the three and six months ended March 31, 2020, respectively, which was included in General and Administrative expenses.

As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of Shape. The goodwill related to the Shape acquisition is comprised primarily of expected synergies from combining operations and the acquired intangible assets that do not qualify for separate recognition. Goodwill related to the Shape acquisition is not expected to be deductible for tax purposes. The results of operations of Shape have been included in the Company's consolidated financial statements from the date of acquisition.

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The allocated purchase consideration to assets acquired and liabilities assumed is presented in the following table (in thousands):

			Estimated
			Useful Life
Assets acquired
Cash, cash equivalents, and restricted cash	$	53,934
Fair value of tangible assets:
Accounts receivable	21,077
Deferred tax assets	29,848
Operating lease right-of-use assets	29,644
Other tangible assets	22,571
Identifiable intangible assets:
Developed technologies	120,000		7 years
Customer relationships	21,000		4 years
Trade name	9,500		5 years
Goodwill	798,867
Total assets acquired	$	1,106,441
Liabilities assumed
Deferred revenue	$	(39,000)
Operating lease liabilities	(30,773)
Other assumed liabilities	(18,571)
Total liabilities assumed	$	(88,344)
Net assets acquired	$	1,018,097

The measurement period for the Shape acquisition lapsed in the second quarter of fiscal 2021. For the six months ended March 31, 2021, the Company recorded a net decrease to the carrying amount of goodwill of $0.7 million to reflect the final adjustments to consideration exchanged for the purchase of Shape within the post-close measurement period.

The developed technology intangible asset will be amortized on a straight-line basis over its estimated useful life of seven years and included in cost of net product revenues. The trade names and customer relationships intangible assets will be amortized on a straight-line basis over their estimated useful lives of five years and four years, respectively, and included in sales and marketing expenses. The weighted average life of the amortizable intangible assets recognized from the Shape acquisition was 6.5 years as of January 24, 2020, the date the transaction closed. The estimated useful lives for the acquired intangible assets were based on the expected future cash flows associated with the respective asset.

Since the Shape acquisition was completed on January 24, 2020, the F5 and Shape teams have been executing a plan to integrate ongoing operations. The pro forma financial information, as well as the revenue and earnings generated by Shape, were not material to the Company's operations for the periods presented.

6. Balance Sheet Details

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of the Company's cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows for the periods presented (in thousands):

	March 31, 2021		September 30, 2020
Cash and cash equivalents	$	532,166	$	849,556
Restricted cash included in other assets, net	3,315		3,270
Total cash, cash equivalents and restricted cash	$	535,481	$	852,826

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Inventories

Inventories consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Finished goods	$	14,697	$	17,096
Raw materials	9,874		10,802
	$	24,571	$	27,898

Other Current Assets

Other current assets consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Contract assets, current	$	161,867	$	138,096
Prepaid expenses	62,851		47,197
Capitalized contract acquisition costs, current	31,388		29,650
Other	37,296		44,563
	$	293,402	$	259,506

Other Assets

Other assets, net consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Intangible assets, net	$	273,480	$	225,900
Contract assets, net of current	84,030		62,377
Capitalized contract acquisition costs, net of current	41,032		40,746
Other	19,673		18,424
	$	418,215	$	347,447

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Payroll and benefits	$	172,080	$	169,708
Operating lease liabilities, current	48,730		46,010
Income and other tax accruals	36,521		33,048
Other	67,534		72,632
	$	324,865	$	321,398

Other Long-term Liabilities

Other long-term liabilities consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Income taxes payable	$	55,731	$	49,846
Other	9,602		9,665
	$	65,333	$	59,511

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7. Debt Facilities

Term Credit Agreement

In connection with the acquisition of Shape, on January 24, 2020, the Company entered into a Term Credit Agreement ("Term Credit Agreement") with certain institutional lenders that provides for a senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the "Term Loan Facility"). The proceeds from the Term Loan Facility were primarily used to finance the acquisition of Shape and related expenses. In connection with the Term Loan Facility, the Company incurred $2.2 million in debt issuance costs, which are recorded as a reduction to the carrying value of the principal amount of the debt.

Borrowings under the Term Loan Facility bear interest at a rate equal to, at the Company's option, (a) LIBOR, adjusted for customary statutory reserves, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio, or (b) an alternate base rate determined in accordance with the Term Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on the Company's leverage ratio. Interest on the outstanding principal of borrowings is currently due quarterly in arrears. As of March 31, 2021, the margin for LIBOR-based loans was 1.125% and the margin for alternate base rate loans was 0.125%.

The Term Loan Facility matures on January 24, 2023 with quarterly installments (commencing with the first full fiscal quarter ended after January 24, 2020) equal to 1.25% of the original principal amount of the Term Loan Facility. The remaining outstanding principal of borrowings under the Term Loan Facility is due upon maturity on January 24, 2023. Borrowings under the Term Loan Facility may be voluntarily prepaid, in whole or in part, without penalty or premium. Borrowings repaid or prepaid under the Term Loan Facility may not be reborrowed.

 Among certain affirmative and negative covenants provided in the Term Credit Agreement, there is a financial covenant that requires the Company to maintain a leverage ratio, calculated as of the last day of each fiscal quarter, of consolidated total indebtedness to consolidated EBITDA. This covenant may result in a higher interest rate on its outstanding principal borrowings on the Term Loan Facility in future periods, depending on the Company's performance. As of March 31, 2021, the Company was in compliance with all covenants.

As of March 31, 2021, $380.0 million of principal amount under the Term Loan Facility was outstanding, excluding unamortized debt issuance costs of $1.3 million. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 1.390% for the three and six months ended March 31, 2021. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 2.765% for the three and six months ended March 31, 2020. The following table presents the scheduled principal maturities as of March 31, 2021 (in thousands):

Fiscal Years Ending September 30:	Amount
2021 (remainder)	$	10,000
2022	20,000
2023	350,000
Total	$	380,000

Revolving Credit Agreement

On January 31, 2020, the Company entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). The Company has the option to increase commitments under the Revolving Credit Facility from time to time, subject to certain conditions, by up to $150.0 million. Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company's option, (a) LIBOR, adjusted for customary statutory reserves, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio, or (b) an alternate base rate determined in accordance with the Revolving Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on the Company's leverage ratio. The Revolving Credit Agreement also requires payment of a commitment fee calculated at a rate per annum of 0.125% to 0.300% depending on the Company's leverage ratio on the undrawn portion of the Revolving Credit Facility. Commitment fees incurred during the three and six months ended March 31, 2021 were not material.

The Revolving Credit Facility matures on January 31, 2025, at which time any remaining outstanding principal of borrowings under the Revolving Credit Facility is due. The Company has the option to request up to two extensions of the maturity date in each case for an additional period of one year. Among certain affirmative and negative covenants provided in the Revolving Credit Agreement, there is a financial covenant that requires the Company to maintain a leverage ratio, calculated as of the last day of each fiscal quarter, of consolidated total indebtedness to consolidated EBITDA. As of March 31, 2021, the Company was in compliance with all covenants. As of March 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, and the Company had available borrowing capacity of $350.0 million.

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8. Leases

During the first quarter of fiscal 2020, the Company adopted ASU 2016-02, Leases (Topic 842) (the "Leasing Standard") using the transition method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements. The impact of adopting the Leasing Standard resulted in the recognition of right-of-use assets and lease liabilities of $304.8 million and $386.4 million, respectively, on October 1, 2019, the date of adoption.

The majority of the Company's operating lease payments relate to its corporate headquarters in Seattle, Washington, which includes approximately 515,000 square feet of office space. The lease commenced in April 2019 and expires in 2033 with an option for renewal. The Company also leases additional office and lab space for product development and sales and support personnel in the United States and internationally. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of the Company's operating lease expenses for the three and six months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Operating lease expense	$	12,158	$	12,975	$	24,339	$	24,293
Short-term lease expense	575		813		1,561		1,627
Variable lease expense	5,310		4,262		12,336		10,101
Total lease expense	$	18,043	$	18,050	$	38,236	$	36,021

Variable lease expense primarily consists of common area maintenance and parking expenses.

Supplemental balance sheet information related to the Company's operating leases was as follows (in thousands, except lease term and discount rate):

	March 31, 2021			September 30, 2020
Operating lease right-of-use assets, net	$	260,389		$	300,680
Operating lease liabilities, current1	48,730			46,010
Operating lease liabilities, long-term	320,132			338,715
Total operating lease liabilities	$	368,862		$	384,725
Weighted average remaining lease term (in years)	9.9			10.2
Weighted average discount rate	2.58		%	2.58		%

(1)Current portion of operating lease liabilities is included in accrued liabilities on the Company's consolidated balance sheets.

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As of March 31, 2021, the future operating lease payments for each of the next five years and thereafter is as follows (in thousands):

Fiscal Years Ending September 30:	Operating Lease Payments
2021 (remainder)	$	26,772
2022	60,018
2023	47,183
2024	40,806
2025	33,496
2026	26,622
Thereafter	191,156
Total lease payments	426,053
Less: imputed interest	(57,191)
Total lease liabilities	$	368,862

Operating lease liabilities above do not include sublease income. As of March 31, 2021, the Company expects to receive sublease income of approximately $7.9 million, which consists of $2.1 million to be received for the remainder of fiscal 2021 and $5.8 million to be received over the two fiscal years thereafter. During the three months ended March 31, 2021, the Company recorded an impairment of $23.5 million against the operating lease right-of-use asset related to the exit of six floors in its corporate headquarters. In the first quarter of fiscal 2021, the Company recorded an impairment of $6.7 million against the right-of-use asset related to the integration of the former Shape headquarters in Santa Clara, California.

As of March 31, 2021, the Company had no significant operating leases that were executed but not yet commenced.

9. Commitments and Contingencies

Guarantees and Product Warranties

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, resellers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has entered into indemnification agreements with its officers and directors and certain other employees, and the Company's bylaws contain similar indemnification obligations to the Company's agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

The Company generally offers warranties of one year for hardware for those customers without service contracts, with the option of purchasing additional warranty coverage in yearly increments. The Company accrues for warranty costs as part of its cost of sales based on associated material product costs and technical support labor costs. Accrued warranty costs as of March 31, 2021 and September 30, 2020 were not material.

Commitments

As of March 31, 2021, the Company's principal commitments consisted of borrowings under the Term Loan Facility and obligations outstanding under operating leases. Refer to Note 7 for the scheduled principal maturities of the Term Loan Facility as of March 31, 2021.

The Company leases its facilities under operating leases that expire at various dates through 2033. There have been no material changes in the Company's lease obligations compared to those discussed in Note 8 to its annual consolidated financial statements.

The Company currently has arrangements with contract manufacturers and other suppliers for the manufacturing of its products. The arrangement with the primary contract manufacturer allows them to procure component inventory on the Company's behalf based on a rolling production forecast provided by the Company. The Company is obligated to the purchase of component inventory that the contract manufacturer procures in accordance with the forecast, unless it gives notice of order cancellation in advance of applicable lead times. There have been no material changes in the Company's inventory purchase obligations compared to those discussed in Note 13 to its annual consolidated financial statements.

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Legal Proceedings

On June 8, 2020, Lynwood Investment CY Limited (“Lynwood”) filed a lawsuit in the United States District Court for the Northern District of California against the Company and certain affiliates, along with other defendants. In its complaint, Lynwood claims to be the assignee of all rights and interests of Rambler Internet Holding LLC (“Rambler”), and alleges that the intellectual property in the NGINX software originally released by the co-founder of NGINX in 2004 belongs to Rambler (and therefore Lynwood, by assignment) because the software was created and developed while the co-founder was employed by Rambler. Lynwood asserts 26 causes of action against the various defendants, including copyright infringement, violation of trademark law, tortious interference, conspiracy, and fraud. The complaint seeks damages, disgorgement of profits, fees and costs, declarations of copyright and trademark ownership, trademark cancellations, and injunctive relief. Lynwood also initiated several trademark opposition and cancellation proceedings before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office, which have all since been suspended. In August and October 2020, the Company and the other defendants filed motions to dismiss all claims asserted against them in the lawsuit. While these motions were pending, the Court ordered Lynwood to select ten of its twenty-six claims to litigate through trial while the remaining sixteen claims would be stayed pending resolution of the ten selected claims.

On March 25 and 30, 2021, the Court dismissed the ten selected claims and granted Lynwood leave to cure the deficiencies in its complaint though it expressed doubt about Lynwood’s ability to do so. The Court further ruled that Lynwood may not add new causes of action or add new parties without stipulation or leave of court, and that unless Lynwood corrects “all the defects” identified in the Court’s orders and the Company’s and other defendants’ motions to dismiss, the Court will dismiss the ten claims with prejudice. Lynwood’s amended complaint is due on or before April 29, 2021. On April 6, the Court referred the parties to private mediation to be completed by June 1, 2021.

In addition to the above matter, the Company is subject to a variety of legal proceedings, claims, investigations, and litigation arising in the ordinary course of business, including intellectual property litigation. Management believes that the Company has meritorious defenses to the allegations made in its pending cases and intends to vigorously defend these lawsuits; however, the Company is unable currently to determine the ultimate outcome of these or similar matters or the potential exposure to loss, if any. There are many uncertainties associated with any litigation and these actions or other third-party claims against the Company may cause it to incur costly litigation and/or substantial settlement charges that could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.

The Company records an accrual for loss contingencies for legal proceedings when it believes that an unfavorable outcome is both (a) probable and (b) the amount or range of any possible loss is reasonably estimable. The Company has not recorded any accrual for loss contingencies associated with such legal proceedings or the investigations discussed above.

10. Income Taxes

The Company's tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items in the related period.

The effective tax rate was 17.0% and 22.6% for the three and six months ended March 31, 2021, respectively, compared to 26.5% and 24.3% for the three and six months ended March 31, 2020, respectively. The decrease in the effective tax rate for the three and six months ended March 31, 2021 as compared to the three and six months ended March 31, 2020 is primarily due to the tax benefit of stock-based compensation, partially offset by other non-deductible expenses related to the acquisition of Volterra, Inc., and a change in unrecognized tax benefits recorded in the three months ended March 31, 2020.

At March 31, 2021, the Company had $60.0 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. It is anticipated that the Company’s existing liabilities for unrecognized tax benefits will change within the next twelve months due to audit settlements or the expiration of statutes of limitations. The Company does not expect these changes to be material to the consolidated financial statements. The Company recognizes interest and, if applicable, penalties for any uncertain tax positions as a component of income tax expense.

The Company and its subsidiaries are subject to U.S. federal income tax as well as the income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for fiscal years through September 30, 2016. Major jurisdictions where there are wholly owned subsidiaries of F5 Networks, Inc. which require income tax filings include the United Kingdom, Singapore, and Israel. The earliest periods open for review by local taxing authorities are fiscal years 2019 for the United Kingdom, 2016 for Singapore, and 2013 for Israel. The Company is currently under audit by various states for fiscal years 2015 through 2019, by Israel for fiscal years 2013 to 2017, by Saudi Arabia for fiscal years 2014 to 2019, and by Singapore for fiscal year 2018. Within the next four fiscal quarters, the statute of limitations will begin to close on the fiscal year 2017 federal income tax return, fiscal years 2016 and 2017 state income tax returns, and fiscal years 2014 to 2019 foreign income tax returns.

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11. Shareholders' Equity

Common Stock Repurchase

On October 31, 2018, the Company announced that its Board of Directors authorized an additional $1.0 billion for its common stock share repurchase program. This authorization is incremental to the existing $4.4 billion program, initially approved in October 2010 and expanded in each fiscal year thereafter. Acquisitions for the share repurchase programs will be made from time to time in private transactions, accelerated share repurchase programs, or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time.

On February 3, 2021, the Company entered into Accelerated Share Repurchase (ASR) agreements with two financial institutions under which the Company paid an aggregate of $500 million. The ASR agreements were accounted for as two separate transactions (1) a repurchase of common stock and (2) an equity-linked contract on the Company's own stock. Upon execution of the ASR agreements, the Company received an initial delivery of 2.1 million shares, which were retired immediately and, which approximates 80 percent of the total number of expected shares to be repurchased under the ASR agreements. In accordance with the terms of the ASR agreements, the final number of shares to be repurchased and the average price paid per share will be determined upon settlement of the agreements during the third quarter of fiscal 2021. The final number of shares to be repurchased will be based on the volume-weighted average price of the Company’s common stock over the duration of the ASR agreements, less applicable discounts. Upon settlement, the financial institutions may be required to deliver additional shares of common stock to the Company, or under certain conditions, the Company may be required to make cash payments or delivery of shares of common stock, at its election, to the financial institutions. The equity-linked contract for the remaining $100 million, representing remaining shares to be delivered by the financial institutions under the ASR agreements, was recorded to common stock as of March 31, 2021.

The following table summarizes the Company's repurchases and retirements of its common stock under its Stock Repurchase Program, including the ASR (in thousands, except per share data):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Shares repurchased	2,052		442		2,052		442
Average price per share	$	194.91	$	113.18	$	194.91	$	113.18
Amount repurchased	$	400,000	$	50,009	$	400,000	$	50,009

As of March 31, 2021, the Company had $873 million remaining authorized to purchase shares under its share repurchase program.

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12. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. The Company's nonvested restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents and are not considered participating securities that should be included in the computation of earnings per share under the two-class method.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Numerator
Net income	$	43,241	$	61,379	$	130,919	$	159,906
Denominator
Weighted average shares outstanding — basic	60,667		60,869		61,058		60,758
Dilutive effect of common shares from stock options and restricted stock units	1,491		215		1,234		259
Weighted average shares outstanding — diluted	62,158		61,084		62,292		61,017
Basic net income per share	$	0.71	$	1.01	$	2.14	$	2.63
Diluted net income per share	$	0.70	$	1.00	$	2.10	$	2.62

Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were not material for the three and six months ended March 31, 2021 and 2020. The impact of the outstanding shares expected to be delivered under the equity-linked contract described in Note 11, are anti-dilutive and are not included within the weighted average shares used to calculate diluted net income per share.

13. Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Management has determined that the Company is organized as, and operates in, one reportable operating segment: the development, marketing and sale of application services that optimize the security, performance and availability of network applications, servers and storage systems.

Revenues by Geographic Location and Other Information

The Company does business in three main geographic regions: the Americas (primarily the United States); Europe, the Middle East, and Africa (EMEA); and the Asia Pacific region (APAC). The Company's chief operating decision-maker reviews financial information presented on a consolidated basis accompanied by information about revenues by geographic region. The Company's foreign offices conduct sales, marketing and support activities. Revenues are attributed by geographic location based on the location of the customer.

The following presents revenues by geographic region (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Americas:
United States	$	323,402	$	302,192	$	643,745	$	577,691
Other	22,650		23,094		45,443		49,157
Total Americas	346,052		325,286		689,188		626,848
EMEA	172,222		147,985		334,306		303,937
Asia Pacific	127,013		110,178		246,410		221,969
	$	645,287	$	583,449	$	1,269,904	$	1,152,754

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The Company generates revenues from the sale of products and services. The Company continues to offer its products through a range of consumption models, from physical systems to software solutions and managed services. The following presents net product revenues by systems and software (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Net product revenues
Systems revenue	$	200,950	$	171,383	$	379,521	$	340,984
Software revenue	108,239		88,155		217,713		153,090
Total net product revenue	$	309,189	$	259,538	$	597,234	$	494,074

The following distributors of the Company's products accounted for more than 10% of total net revenue:

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Ingram Micro, Inc.	17.7	%	17.3	%	17.9	%	16.9	%
Synnex Corporation	11.5	%	—		10.7	%	—

The Company tracks assets by physical location. Long-lived assets consist of property and equipment, net, and are shown below (in thousands):

	March 31, 2021		September 30, 2020
United States	$	166,822	$	190,509
EMEA	22,217		20,361
Other countries	18,560		18,369
	$	207,599	$	229,239

14. Restructuring Charges

In December 2019, the Company initiated a restructuring plan to match strategic and financial objectives and optimize resources for long term growth, including a reduction in force program affecting approximately 75 employees. The Company recorded a restructuring charge of $7.8 million in the first quarter of fiscal 2020. The Company does not expect to record any significant future charges related to the restructuring plan.

During the six months ended March 31, 2020, the following activity was recorded (in thousands):

	Employee Severance, Benefits and Related Costs
Accrued expenses, October 1, 2019	$	—
Restructuring charges	7,800
Cash payments	(6,956)
Non-cash items	—
Accrued expenses, March 31, 2020	$	844

15. Subsequent Events

Share Repurchase Activities

The equity-linked contract of $100 million, described in Note 11, was settled as of April 26, 2021 with the Company receiving 449,049 additional shares, which were retired immediately upon receipt. The Company was not required to make any additional cash payments or delivery of common stock to the financial institutions upon settlement of the agreements. As of April 26, 2021, the Company had $773 million remaining authorized to purchase shares under its share repurchase program.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These statements include, but are not limited to, statements about our plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and similar expressions. These forward-looking statements are based on current information and expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part II, Item 1A. "Risk Factors" herein and in other documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to revise or update any such forward-looking statements.

Overview

F5 is a leading provider of multi-cloud application services which enable our customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud. Our enterprise-grade application services are available as cloud-based, software-as-a-service, and software-only solutions optimized for multi-cloud environments, with modules that can run independently, or as part of an integrated solution on our high-performance appliances. We market and sell our products primarily through multiple indirect sales channels in the Americas (primarily the United States); Europe, the Middle East, and Africa (EMEA); and the Asia Pacific region (APAC). Enterprise customers (Fortune 1000 or Business Week Global 1000 companies) in the technology, telecommunications, financial services, transportation, education, manufacturing and health care industries, along with government customers, continue to make up the largest percentage of our customer base.

Our management team monitors and analyzes a number of key performance indicators in order to manage our business and evaluate our financial and operating performance on a consolidated basis. Those indicators include:

•Revenues. The majority of our revenues are derived from sales of our application delivery controller (ADC) products including our BIG-IP appliances and VIPRION chassis and related software modules and our software-only Virtual Editions; Local Traffic Manager (LTM), DNS Services (formerly Global Traffic Manager); Advanced Firewall Manager (AFM) and Policy Enforcement Manager (PEM), that leverage the unique performance characteristics of our hardware and software architecture; and products that incorporate acquired technology, including Application Security Manager (ASM) and Access Policy Manager (APM); NGINX Plus and NGINX Controller; Shape Defense and Enterprise Defense; and the Secure Web Gateway and Silverline DDoS and Application security offerings which are sold to customers on a subscription basis. We also derive revenues from the sales of services including annual maintenance contracts, training and consulting services. We carefully monitor the sales mix of our revenues within each reporting period. We believe customer acceptance rates of our new products and feature enhancements are indicators of future trends. We also consider overall revenue concentration by customer and by geographic region as additional indicators of current and future trends. We are also monitoring the uncertainty related to the impacts that the COVID-19 pandemic has on the global economy and our customer base.

•Cost of revenues and gross margins. We strive to control our cost of revenues and thereby maintain our gross margins. Significant items impacting cost of revenues are hardware costs paid to our contract manufacturers, third-party software license fees, software-as-a-service infrastructure costs, amortization of developed technology and personnel and overhead expenses. Our margins have remained relatively stable; however, factors such as sales price, product and services mix, inventory obsolescence, returns, component price increases, warranty costs, and the uncertainty surrounding the COVID-19 pandemic and its potential impacts to our supply chain could significantly impact our gross margins from quarter to quarter and represent significant indicators we monitor on a regular basis.

•Operating expenses. Operating expenses are substantially driven by personnel and related overhead expenses. Existing headcount and future hiring plans are the predominant factors in analyzing and forecasting future operating expense trends. Other significant operating expenses that we monitor include marketing and promotions, travel, professional fees, computer costs related to the development of new products and provision of services, facilities and depreciation expenses.

•Liquidity and cash flows. Our financial condition remains strong with significant cash and investments. The decrease in cash and investments for the first six months of fiscal year 2021 was primarily due to $411.3 million in cash paid for the acquisition of Volterra in the second quarter of fiscal 2021, partially offset by cash provided by operating activities of $265.8 million. Going forward, we believe the primary driver of cash flows will be net income from operations. Capital expenditures of $14.1 million for the first six months of fiscal year 2021 were primarily related to the expansion of our facilities to support our operations worldwide as well as investments in information technology

27

infrastructure and equipment purchases to support our core business activities. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash. Additionally, on January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). We have the option to increase commitments under the Revolving Credit Facility from time to time, subject to certain conditions, by up to $150.0 million. As of March 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, and we had available borrowing capacity of $350.0 million.

•Balance sheet. We view cash, short-term and long-term investments, deferred revenue, accounts receivable balances and days sales outstanding as important indicators of our financial health. Deferred revenues continued to increase in the second quarter of fiscal year 2021 due to growth in the amount of annual maintenance contracts purchased on new products and maintenance renewal contracts related to our existing product installation base. In addition, we continued to see growth in our subscriptions business, including deferred revenue associated with the Volterra acquisition. Our days sales outstanding at the end of the second quarter of fiscal year 2021 was 52. Days sales outstanding is calculated by dividing ending accounts receivable by revenue per day for a given quarter.

Summary of Critical Accounting Policies and Estimates

The preparation of our financial condition and results of operations requires us to make judgments and estimates that may have a significant impact upon our financial results. We believe that, of our significant accounting policies, the following require estimates and assumptions that require complex, subjective judgments by management, which can materially impact reported results: revenue recognition, accounting for business combinations and accounting for leases. Actual results may differ from these estimates under different assumptions or conditions.

There were no material changes to our critical accounting policies and estimates compared to the critical accounting policies and estimates described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K for the fiscal year ended September 30, 2020. Refer to the "Recently Adopted Accounting Standards" section of Note 1 in this Quarterly Report on Form 10-Q for a summary of the new accounting policies.

COVID-19 Update

Management has prioritized a human-first approach to the COVID-19 pandemic. For F5, this means ensuring the health and safety of employees, their families and our communities. Further, this approach extends to our customers as we look for ways that we can support their operations during this crisis.

While our analysis shows COVID-19 did not have a significant impact on our results of operations for the quarter ended March 31, 2021, the full impacts of the global pandemic on our business and financial outlook are currently unknown. We are conducting business with substantial modifications to employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events, among other modifications. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers and prospects, or on our financial results.

Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements, related notes and risk factors included elsewhere in this Quarterly Report on Form 10-Q.

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	Three months ended March 31,						Six months ended March 31,
	2021			2020			2021			2020
	(in thousands, except percentages)
Net Revenues
Products	$	309,189		$	259,538		$	597,234		$	494,074
Services	336,098			323,911			672,670			658,680
Total	$	645,287		$	583,449		$	1,269,904		$	1,152,754
Percentage of net revenues
Products	47.9		%	44.5		%	47.0		%	42.9		%
Services	52.1			55.5			53.0			57.1
Total	100.0		%	100.0		%	100.0		%	100.0		%

Net Revenues. Total net revenues increased 10.6% and 10.2% for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. Overall revenue growth for the three and six months ended March 31, 2021, was primarily due to increased software product revenue including our subscription-based software products and increased service revenues as a result of our increased installed base of products. International revenues represented 49.9% and 49.3% of total net revenues for the three and six months ended March 31, 2021, respectively, compared to 48.2% and 49.9% for the same periods in the prior year, respectively.

Net Product Revenues. Net product revenues increased 19.1% and 20.9% for the three and six months ended March 31, 2021, respectively, from the comparable periods on the prior year. The increase in net product revenues for the three and six months ended March 31, 2021 was primarily due to an increase in software product sales compared to the same periods in the prior year.

The following presents net product revenues by systems and software:

	Three months ended March 31,						Six months ended March 31,
	2021			2020			2021			2020
	(in thousands, except percentages)
Net product revenues
Systems revenue	$	200,950		$	171,383		$	379,521		$	340,984
Software revenue	108,239			88,155			217,713			153,090
Total net product revenue	$	309,189		$	259,538		$	597,234		$	494,074
Percentage of net product revenues
Systems revenue	65.0		%	66.0		%	63.5		%	69.0		%
Software revenue	35.0			34.0			36.5			31.0
Total net product revenue	100.0		%	100.0		%	100.0		%	100.0		%

Net Service Revenues. Net service revenues increased 3.8% and 2.1% for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. The increase in net service revenues was primarily due to increases in the purchase or renewal of maintenance contracts driven by additions to our installed base of products.

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The following distributors of our products accounted for more than 10% of total net revenue:

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Ingram Micro, Inc.	17.7	%	17.3	%	17.9	%	16.9	%
Synnex Corporation	11.5	%	—		10.7	%	—

The following distributors of our products accounted for more than 10% of total receivables:

	March 31, 2021		September 30, 2020
Ingram Micro, Inc.	21.9	%	14.1	%
Arrow ECS	13.4	%	—
Synnex Corporation	18.8	%	11.4	%

No other distributors accounted for more than 10% of total net revenue or receivables. 

	Three months ended March 31,						Six months ended March 31,
	2021			2020			2021			2020
	(in thousands, except percentages)
Cost of net revenues and gross profit
Products	$	73,289		$	53,086		$	140,327		$	95,204
Services	55,296			48,152			103,237			94,676
Total	128,585			101,238			243,564			189,880
Gross profit	$	516,702		$	482,211		$	1,026,340		$	962,874
Percentage of net revenues and gross profit (as a percentage of related net revenue)
Products	23.7		%	20.5		%	23.5		%	19.3		%
Services	16.5			14.9			15.3			14.4
Total	19.9			17.4			19.2			16.5
Gross profit	80.1		%	82.6		%	80.8		%	83.5		%

Cost of Net Product Revenues. Cost of net product revenues consist of finished products purchased from our contract manufacturers, manufacturing overhead, freight, warranty, provisions for excess and obsolete inventory, software-as-a-service infrastructure costs and amortization expenses in connection with developed technology from acquisitions. Cost of net product revenues increased $20.2 million and $45.1 million, or 38.1% and 47.4% for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. The increase in cost of net product revenues was primarily due to software product revenue growth for the three and six months ended March 31, 2021 from the comparable periods in the prior year.

Cost of Net Service Revenues. Cost of net service revenues consist of the salaries and related benefits of our professional services staff, travel, facilities and depreciation expenses. For the three and six months ended March 31, 2021, cost of net service revenues as a percentage of net service revenues was 16.5% and 15.3%, respectively, compared to 14.9% and 14.4% for the comparable periods in the prior year, respectively. Professional services headcount at the end of March 2021 increased to 983 from 937 at the end of March 2020.

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	Three months ended March 31,						Six months ended March 31,
	2021			2020			2021			2020
	(in thousands, except percentages)
Operating expenses
Sales and marketing	$	244,908		$	215,472		$	459,454		$	410,991
Research and development	140,453			109,028			254,644			205,033
General and administrative	77,840			74,013			140,993			133,017
Restructuring charges	—			—			—			7,800
Total	$	463,201		$	398,513		$	855,091		$	756,841
Operating expenses (as a percentage of net revenue)
Sales and marketing	38.0		%	36.9		%	36.2		%	35.7		%
Research and development	21.8			18.7			20.0			17.8
General and administrative	12.0			12.7			11.1			11.5
Restructuring charges	—			—			—			0.7
Total	71.8		%	68.3		%	67.3		%	65.7		%

Sales and Marketing. Sales and marketing expenses consist of salaries, commissions and related benefits of our sales and marketing staff, the costs of our marketing programs, including public relations, advertising and trade shows, travel, facilities, and depreciation expenses. Sales and marketing expenses increased $29.4 million and $48.5 million, or 13.7% and 11.8% for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. The increase in sales and marketing expense was primarily due to an increase of $15.6 million and $31.5 million in personnel costs for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. Sales and marketing expenses for the three and six months ended March 31, 2021 also included impairment charges of $10.3 million and $11.5 million, respectively, related to the exit of certain facilities. The increase in sales and marketing expenses for the three and six months ended March 31, 2021 was partially offset by a decrease in travel and entertainment expenses primarily due to company-wide travel restrictions as a result of the COVID-19 pandemic. Sales and marketing headcount at the end of March 2021 increased to 2,429 from 2,302 at the end of March 2020. Sales and marketing expenses included stock-based compensation expense of $27.0 million and $52.3 million for the three and six months ended March 31, 2021, respectively, compared to $22.6 million and $44.4 million for the same periods in the prior year, respectively.

Research and Development. Research and development expenses consist of the salaries and related benefits of our product development personnel, prototype materials and other expenses related to the development of new and improved products, facilities and depreciation expenses. Research and development expenses increased $31.4 million and $49.6 million, or 28.8% and 24.2% for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. The increase in research and development expense was primarily due to an increase of $18.4 million and $28.3 million in personnel costs for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. Research and development expenses for the three and six months ended March 31, 2021 also included impairment charges of $9.8 million and $13.0 million, respectively, related to the exit of certain facilities. Research and development headcount at the end of March 2021 increased to 1,919 from 1,708 at the end of March 2020. Research and development expenses included stock-based compensation expense of $17.7 million and $32.7 million for the three and six months ended March 31, 2021, respectively, compared to $12.6 million and $23.8 million for the same periods in the prior year, respectively.

General and Administrative. General and administrative expenses consist of the salaries, benefits and related costs of our executive, finance, information technology, human resource and legal personnel, third-party professional service fees, facilities and depreciation expenses. General and administrative expenses increased $3.8 million and $8.0 million, or 5.2% and 6.0% for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. The increase in general and administrative expense was primarily due to an increase of $3.0 million and $5.8 million in personnel costs for the three and six months ended March 31, 2021, respectively, from the comparable periods in the prior year. General and administrative expenses for the three and six months ended March 31, 2021 also included impairment charges of $9.3 million and $9.9 million, respectively, related to the exit of certain facilities. General and administrative headcount at the end of March 2021 increased to 777 from 658 at the end of March 2020. General and administrative expenses included stock-based compensation expense of $11.1 million and $21.6 million for the three and six months ended March 31, 2021, respectively, compared to $9.6 million and $18.8 million for the same periods in the prior year, respectively.

Restructuring Charges. In the first fiscal quarter of 2020, we completed a restructuring plan to align strategic and financial objectives and optimize resources for long term growth. As a result of these initiatives, we recorded a restructuring

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charge of $7.8 million related to a reduction in workforce that is reflected in our results for the six months ended March 31, 2020. There were no restructuring expenses recorded for the six months ended March 31, 2021.

	Three months ended March 31,						Six months ended March 31,
	2021			2020			2021			2020
	(in thousands, except percentages)
Other income and income taxes
Income from operations	$	53,501		$	83,698		$	171,249		$	206,033
Other income, net	(1,377)			(141)			(2,060)			5,079
Income before income taxes	52,124			83,557			169,189			211,112
Provision for income taxes	8,883			22,178			38,270			51,206
Net income	$	43,241		$	61,379		$	130,919		$	159,906
Other income and income taxes (as percentage of net revenue)
Income from operations	8.3		%	14.3		%	13.5		%	17.9		%
Other income, net	(0.2)			—			(0.2)			0.4
Income before income taxes	8.1			14.3			13.3			18.3
Provision for income taxes	1.4			3.8			3.0			4.4
Net income	6.7		%	10.5		%	10.3		%	13.9		%

Other Income, Net. Other income, net consists primarily of interest income and expense and foreign currency transaction gains and losses. Other income, net for the three months ended March 31, 2021 was relatively flat from the comparable period in the prior year. The decrease in other income, net for the six months ended March 31, 2021 was primarily due to a decrease in interest income of $7.1 million from our investments compared to the same period in the prior year.

Provision for Income Taxes. The effective tax rate was 17.0% and 22.6% for the three and six months ended March 31, 2021, respectively, compared to 26.5% and 24.3% for the three and six months ended March 31, 2020, respectively. The decrease in the effective tax rate for the three and six months ended March 31, 2021 as compared to the three and six months ended March 31, 2020 is primarily due to the tax benefit of stock-based compensation, partially offset by other non-deductible expenses related to the acquisition of Volterra, Inc., and a change in unrecognized tax benefits recorded in the three months ended March 31, 2020.

We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. In making these determinations we consider historical and projected taxable income, and ongoing prudent and feasible tax planning strategies in assessing the appropriateness of a valuation allowance. Our net deferred tax assets at March 31, 2021 and September 30, 2020 were $66.7 million and $44.6 million, respectively. The net deferred tax assets include valuation allowances of $40.4 million and $32.6 million as of March 31, 2021 and September 30, 2020, respectively, which are primarily related to certain state and foreign net operating losses and tax credit carryforwards.

Our worldwide effective tax rate may fluctuate based on a number of factors, including variations in projected taxable income in the various geographic locations in which we operate, changes in the valuation of our net deferred tax assets, resolution of potential exposures, tax positions taken on tax returns filed in the various geographic locations in which we operate, and the introduction of new accounting standards or changes in tax laws or interpretations thereof in the various geographic locations in which we operate. We have recorded liabilities to address potential tax exposures related to business and income tax positions we have taken that could be challenged by taxing authorities. The ultimate resolution of these potential exposures may be greater or less than the liabilities recorded which could result in an adjustment to our future tax expense.

Liquidity and Capital Resources

Cash and cash equivalents, short-term investments and long-term investments totaled $662.3 million as of March 31, 2021, compared to $1,312.8 million as of September 30, 2020, representing a decrease of $650.5 million. The decrease was primarily due to $411.3 million in cash paid for the acquisition of Volterra in the second quarter of fiscal 2021, partially offset by cash provided by operating activities of $265.8 million for the six months ended March 31, 2021. Cash provided by operating activities for the first six months of fiscal year 2021 resulted from net income of $130.9 million combined with changes in operating assets and liabilities, as adjusted for various non-cash items including stock-based compensation, deferred revenue, depreciation and amortization charges.

32

Cash from operations could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled “Risk Factors”. However, we anticipate our current cash, cash equivalents and investment balances, anticipated cash flows generated from operations, and available borrowing capacity on the Revolver Credit Facility will be sufficient to meet our liquidity needs.

Cash used in investing activities was $94.4 million for the six months ended March 31, 2021, compared to cash used in investing activities of $716.0 million for the same period in the prior year. Investing activities include purchases, sales and maturities of available-for-sale securities, business acquisitions and capital expenditures. The amount of cash used in investing activities for the six months ended March 31, 2021 was primarily the result of $411.3 million in cash paid for the acquisition of Volterra, partially offset by $126.7 million in maturities of investments and $270.0 million in sales of investments.

Cash used in financing activities was $489.2 million for the six months ended March 31, 2021, compared to cash provided by financing activities of $368.4 million for the same period in the prior year. Our financing activities for the six months ended March 31, 2021 primarily consisted of $500.0 million in cash used to repurchase shares under our Accelerated Share Repurchase agreements, as well as $10.0 million in cash used to make principal payments on our term loan and $7.9 million in cash used for taxes related to net share settlement of equity awards. Cash used in financing activities was partially offset by $28.7 million of cash received from the exercise of employee stock options and stock purchases under our employee stock purchase plan.

On January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). We have the option to increase commitments under the Revolving Credit Facility from time to time, subject to certain conditions, by up to $150.0 million. As of March 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, and we had available borrowing capacity of $350.0 million.

On February 3, 2021, we entered into Accelerated Share Repurchase ("ASR") agreements with two financial institutions under which we paid an aggregate of $500 million. See Note 11, Shareholders' Equity, for additional information on the ASR program.

Obligations and Commitments

As of March 31, 2021, our principal commitments consisted of borrowings under the Term Loan Facility and obligations outstanding under operating leases.

In connection with the acquisition of Shape, on January 24, 2020, we entered into a Term Credit Agreement ("Term Credit Agreement") with certain institutional lenders that provides for a senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the "Term Loan Facility"). The proceeds from the Term Loan Facility were primarily used to finance the acquisition of Shape and related expenses. As of March 31, 2021, $380.0 million of principal amount under the Term Loan Facility was outstanding. There is a financial covenant that requires us to maintain a leverage ratio, calculated as of the last day of each fiscal quarter, of consolidated total indebtedness to consolidated EBITDA. This covenant may result in a higher interest rate on our outstanding principal borrowings on the Term Loan Facility in future periods, depending on the Company's performance. We will monitor the effect that the COVID-19 pandemic may have on our leverage ratio calculation but do not believe there will be a material impact to the interest payable on our borrowings under the Term Loan Facility. Refer to Note 7 for the scheduled principal maturities of the Term Loan Facility as of March 31, 2021.

We lease our facilities under operating leases that expire at various dates through 2033. There have been no material changes in our principal lease commitments compared to those discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

We outsource the manufacturing of our pre-configured hardware platforms to contract manufacturers who assemble each product to our specifications. Our agreement with our largest contract manufacturer allows them to procure component inventory on our behalf based upon a rolling production forecast. We are contractually obligated to purchase the component inventory in accordance with the forecast, unless we give notice of order cancellation in advance of applicable lead times.

Recent Accounting Pronouncements

The anticipated impact of recent accounting pronouncements is discussed in Note 1 to the accompanying Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

33

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk. We maintain an investment portfolio of various holdings, types, and maturities. Our primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. At any time, a sharp rise in market interest rates could have a material adverse impact on the fair value of our fixed income investment portfolio. Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. Our fixed income investments are held for purposes other than trading. Our fixed income investments were not leveraged as of March 31, 2021. We monitor our interest rate and credit risks, including our credit exposures to specific rating categories and to individual issuers. As of March 31, 2021, 21.4% of our fixed income securities balance consisted of U.S. government and U.S. government agency securities. We believe the overall credit quality of our portfolio is strong.

Refer to Note 7 for information on our recent borrowings under the Term Loan Facility. Borrowings under the Term Loan Facility bear interest at a rate equal to, at our option, (a) LIBOR, adjusted for customary statutory reserves, plus an applicable margin of 1.125% to 1.75% depending on our leverage ratio, or (b) an alternate base rate determined in accordance with the Term Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on our leverage ratio.

The Term Loan Facility requires us to maintain a leverage ratio financial covenant, calculated as of the last day of each fiscal quarter, of consolidated total indebtedness to consolidated EBITDA. This covenant may result in a higher interest rate on our outstanding principal borrowings on the Term Loan Facility in future periods, depending on the Company's performance. At any time, a sharp rise in market interest rates could have a material adverse impact on the interest payable on outstanding principal borrowings on our Term Loan Facility. We monitor our interest rate and credit risks, which include the effect that the COVID-19 pandemic may have on interest rates on principal borrowings under the Term Loan Facility. As of March 31, 2021, we have not noted any adverse impacts to interest rates that would have a material impact to interest owed on principal borrowings.

Foreign Currency Risk. The majority of our sales and expenses are denominated in U.S. dollars and as a result, we have not experienced significant foreign currency transaction gains and losses to date.

Management believes there have been no material changes to our quantitative and qualitative disclosures about market risk during the six month period ended March 31, 2021, compared to those discussed in our Annual Report on Form 10-K for the year ended September 30, 2020.

Item 4.Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are designed to ensure that required information is recorded, processed, summarized and reported within the required timeframe, as specified in the rules set forth by the Securities Exchange Commission. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2021 and, based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2021.

Changes in Internal Control over Financial Reporting

During the second fiscal quarter, there were no changes to our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Although the entire global F5 workforce is working remotely as a result of the COVID-19 pandemic, there were no material changes to our existing internal controls over financial reporting as a result of this.

PART II — OTHER INFORMATION

Item 1.Legal Proceedings

See Note 9 - Commitments and Contingencies of the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q) for information regarding legal proceedings in which we are involved.

34

Item 1A.Risk Factors

There have been no material changes to our risk factors from those described in Part 1, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, which was filed with the Securities and Exchange Commission on November 19, 2020.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

On October 31, 2018, the Company announced that its Board of Directors authorized an additional $1.0 billion for its common stock share repurchase program. This authorization is incremental to the existing $4.4 billion program, initially approved in October 2010 and expanded in each fiscal year. Acquisitions for the share repurchase programs will be made from time to time in private transactions, accelerated share repurchase programs, or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time. As of March 31, 2021, the Company had $873 million remaining authorized to purchase shares under its share repurchase program.

Shares repurchased and retired for the three months ended March 31, 2021 are as follows (in thousands, except shares and per share data):

	Total Number of Shares Purchased1	Average Price Paid per Share		Total Number of Shares Purchased per the Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan2
January 1, 2021 — January 31, 2021	—	—		—	$	1,272,511
February 1, 2021 — February 28, 2021	2,069,761	$	194.92	2,069,761	$	872,511
March 1, 2021 — March 31, 2021	—	—		—	$	872,511

(1)Includes 17,531 shares withheld from restricted stock units that vested in the second quarter of 2021 to satisfy minimum tax withholding obligations that arose on the vesting of restricted stock units.

(2)Shares withheld from restricted stock units that vested to satisfy minimum tax withholding obligations that arose on the vesting of such awards do not deplete the dollar amount available for purchases under the repurchase program.

35

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

Item 6.Exhibits

Exhibit Number		Exhibit Description
2.1	—	Merger Agreement, dated January 5, 2021, by and among F5 Networks, Inc. Voyager Merger Sub Corporation, Volterra, Inc. and Shareholder Representative Services LLC(1)
10.1	—	F5 Networks, Inc. Assumed Volterra, Inc. Amended and Restated 2017 Stock Plan(2) §
10.2	—	F5 Networks, Inc. Volterra Acquisition Equity Incentive Plan(3) §
10.3	—	F5 Networks, Inc. Assumed Volterra, Inc. 2019 Restricted Stock Unit Sub-Plan France (sub-plan to the F5 Networks, Inc. Assumed Volterra, Inc. Amended and Restated 2017 Stock Plan)(4) §
10.4	—	F5 Networks, Inc. 2014 Incentive Plan, as amended and restated(5) §
31.1*	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	—	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	—	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*	—	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	—	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	—	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	—	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	—	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	—	Cover Page Interactive Data File (embedded within the Inline XBRL document)

*     Filed herewith.

§     Indicates a management contract or compensatory plan or arrangement.

(1)    Incorporated by reference to Exhibit 2.1 on Current Report on Form 8-K dated January 5, 2021 and filed with the SEC         

on January 7, 2021.

(2)    Incorporated by reference to Exhibit 99.1 on Current Report on Form S-8 filed with the SEC on February 1, 2021.

(3)     Incorporated by reference to Exhibit 99.2 on Current Report on Form S-8 filed with the SEC on February 1, 2021.

(4)    Incorporated by reference to Exhibit 99.3 on Current Report on Form S-8 filed with the SEC on February 1, 2021.

(5)    Incorporated by reference to Exhibit 10.1 on Current Report on Form 8-K dated March 11, 2021 and filed with the     

SEC on March 15, 2021.

36

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, thereunto duly authorized on this 6th day of May, 2021.

F5 NETWORKS, INC.
By:	/s/ FRANCIS J. PELZER
	Francis J. Pelzer
	Executive Vice President,
	Chief Financial Officer
	(principal financial officer and principal accounting officer)

37

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, François Locoh-Donou, certify that:

1)I have reviewed this Quarterly Report on Form 10-Q of F5 Networks, Inc.;

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 6, 2021
/s/ FRANÇOIS LOCOH-DONOU
François Locoh-Donou
Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Francis J. Pelzer, certify that:

1)I have reviewed this Quarterly Report on Form 10-Q of F5 Networks, Inc.;

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 6, 2021
/s/ FRANCIS J. PELZER
Francis J. Pelzer
Executive Vice President,
Chief Financial Officer
(principal financial officer and principal accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of F5 Networks, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, François Locoh-Donou, President and Chief Executive Officer and Francis J. Pelzer, Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 6, 2021
/s/ FRANÇOIS LOCOH-DONOU
François Locoh-Donou
Chief Executive Officer and President
/s/ FRANCIS J. PELZER
Francis J. Pelzer
Executive Vice President and Chief Financial Officer
(principal financial officer and principal accounting officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to F5 Networks, Inc., and will be retained by F5 Networks, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Apr. 30, 2021
Cover [Abstract]
Document Type		10-Q
Document Quarterly Report		true
Document Period End Date		Mar. 31, 2021
Document Transition Report		false
Entity File Number		000-26041
Entity Registrant Name		F5 NETWORKS, INC.
Entity Incorporation, State or Country Code		WA
Entity Tax Identification Number		91-1714307
Entity Address, Address Line One		801 5th Avenue
Entity Address, City or Town		Seattle
Entity Address, State or Province		WA
Entity Address, Postal Zip Code		98104
City Area Code		206
Local Phone Number		272-5555
Title of 12(b) Security		Common stock, no par value
Trading Symbol		FFIV
Security Exchange Name		NASDAQ
Entity Current Reporting Status		Yes
Entity Interactive Data Current		Yes
Entity Filer Category		Large Accelerated Filer
Entity Small Business		false
Entity Emerging Growth Company		false
Entity Shell Company		false
Entity Common Stock, Shares Outstanding			59,614,886
Entity Central Index Key		0001048695
Current Fiscal Year End Date		--09-30
Document Fiscal Year Focus		2021
Document Fiscal Period Focus	Q2
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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Current assets
Cash and cash equivalents	$ 532,166	$ 849,556
Short-term investments	111,105	360,333
Accounts receivable, net of allowances of $3,420 and $3,105	374,404	296,183
Inventories	24,571	27,898
Other current assets	293,402	259,506
Total current assets	1,335,648	1,793,476
Property and equipment, net	207,599	229,239
Operating lease right-of-use assets	260,389	300,680
Long-term investments	19,078	102,939
Deferred tax assets	68,624	45,173
Goodwill	2,209,639	1,858,966
Other assets, net	418,215	347,447
Total assets	4,519,192	4,677,920
Current liabilities
Accounts payable	53,567	64,472
Accrued liabilities	324,865	321,398
Deferred revenue	929,397	883,134
Current portion of long-term debt	19,275	19,275
Total current liabilities	1,327,104	1,288,279
Deferred tax liabilities	1,888	602
Deferred revenue, long-term	437,506	389,498
Operating lease liabilities, long-term	320,132	338,715
Long-term debt	359,410	369,047
Other long-term liabilities	65,333	59,511
Total long-term liabilities	1,184,269	1,157,373
Commitments and contingencies (Note 9)
Shareholders' equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding	0	0
Common stock, no par value; 200,000 shares authorized, 60,052 and 61,099 shares issued and outstanding	39,507	305,453
Accumulated other comprehensive loss	(19,194)	(18,716)
Retained earnings	1,987,506	1,945,531
Total shareholders' equity	2,007,819	2,232,268
Total liabilities and shareholders' equity	$ 4,519,192	$ 4,677,920

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Statement of Financial Position [Abstract]
Accounts Receivable, Allowance for Credit Loss	$ 3,420	$ 3,105
Preferred stock, par value (dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value (dollars per share)	$ 0	$ 0
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	60,052,000	61,099,000

XML

Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Net revenues
Revenue from contract with customer, excluding assessed tax	$ 645,287	$ 583,449	$ 1,269,904	$ 1,152,754
Cost of net revenues
Cost of net revenues	128,585	101,238	243,564	189,880
Gross profit	516,702	482,211	1,026,340	962,874
Operating expenses
Sales and marketing	244,908	215,472	459,454	410,991
Research and development	140,453	109,028	254,644	205,033
General and administrative	77,840	74,013	140,993	133,017
Restructuring charges	0	0	0	7,800
Total	463,201	398,513	855,091	756,841
Income from operations	53,501	83,698	171,249	206,033
Other (loss) income, net	(1,377)	(141)	(2,060)	5,079
Income before income taxes	52,124	83,557	169,189	211,112
Provision for income taxes	8,883	22,178	38,270	51,206
Net income	$ 43,241	$ 61,379	$ 130,919	$ 159,906
Net income per share — basic (dollars per share)	$ 0.71	$ 1.01	$ 2.14	$ 2.63
Weighted average shares — basic (shares)	60,667	60,869	61,058	60,758
Net income per share — diluted (dollars per share)	$ 0.70	$ 1.00	$ 2.10	$ 2.62
Weighted average shares — diluted (shares)	62,158	61,084	62,292	61,017
Product
Net revenues
Revenue from contract with customer, excluding assessed tax	$ 309,189	$ 259,538	$ 597,234	$ 494,074
Cost of net revenues
Cost of net revenues	73,289	53,086	140,327	95,204
Service
Net revenues
Revenue from contract with customer, excluding assessed tax	336,098	323,911	672,670	658,680
Cost of net revenues
Cost of net revenues	$ 55,296	$ 48,152	$ 103,237	$ 94,676

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 43,241	$ 61,379	$ 130,919	$ 159,906
Other comprehensive (loss) income:
Foreign currency translation adjustment	(841)	(1,586)	437	(952)
Available-for-sale securities:
Unrealized losses on securities, net of taxes of $(142) and $(368) for the three months ended March 31, 2021 and 2020, respectively, and $(192) and $(344) for the six months ended March 31, 2021 and 2020, respectively	(731)	(2,999)	(1,151)	(2,831)
Reclassification adjustment for realized losses included in net income, net of taxes of $(61) and $(17) for the three months ended March 31, 2021 and 2020, respectively, and $(61) and $(18) for the six months ended March 31, 2021 and 2020, respectively	233	58	236	70
Net change in unrealized losses on available-for-sale securities, net of tax	(498)	(2,941)	(915)	(2,761)
Total other comprehensive loss	(1,339)	(4,527)	(478)	(3,713)
Comprehensive income	$ 41,902	$ 56,852	$ 130,441	$ 156,193

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Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Tax effect of unrealized gain (loss) on securities	$ (142)	$ (368)	$ (192)	$ (344)
Tax effect of reclassification adjustment for realized (gains) losses	$ (61)	$ (17)	$ (61)	$ (18)

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Consolidated Statements of Shareholders' Equity Statement - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	AOCI Attributable to Parent	Retained Earnings
Beginning Balance (in shares) at Sep. 30, 2019		60,367
Beginning Balance at Sep. 30, 2019	$ 1,761,497	$ 142,597	$ (19,190)	$ 1,638,090
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		31
Exercise of employee stock options	789	$ 789
Issuance of stock under employee stock purchase plan (in shares)		169
Issuance of stock under employee stock purchase plan	20,670	$ 20,670
Issuance of restricted stock (in shares)		504
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(442)
Repurchase of common stock	(50,009)	$ (50,009)
Taxes paid related to net share settlement of equity awards	0
Stock-based compensation	109,054	$ 109,054
Net income	159,906			159,906
Other comprehensive loss	(3,713)		(3,713)
Ending Balance ( in shares) at Mar. 31, 2020		60,629
Ending Balance at Mar. 31, 2020	1,998,194	$ 223,101	(22,903)	1,797,996
Beginning Balance (in shares) at Dec. 31, 2019		60,803
Beginning Balance at Dec. 31, 2019	1,929,458	$ 211,217	(18,376)	1,736,617
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		20
Exercise of employee stock options	498	$ 498
Issuance of restricted stock (in shares)		248
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(442)
Repurchase of common stock	(50,009)	$ (50,009)
Stock-based compensation	61,395	$ 61,395
Net income	61,379			61,379
Other comprehensive loss	(4,527)		(4,527)
Ending Balance ( in shares) at Mar. 31, 2020		60,629
Ending Balance at Mar. 31, 2020	$ 1,998,194	$ 223,101	(22,903)	1,797,996
Beginning Balance (in shares) at Sep. 30, 2020	61,099	61,099
Beginning Balance at Sep. 30, 2020	$ 2,232,268	$ 305,453	(18,716)	1,945,531
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		83
Exercise of employee stock options	2,610	$ 2,610
Issuance of stock under employee stock purchase plan (in shares)		231
Issuance of stock under employee stock purchase plan	26,077	$ 26,077
Issuance of restricted stock (in shares)		742
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(2,052)
Repurchase of common stock	(400,000)	$ (311,056)		(88,944)
Adjustments To Additional Paid In Capital, Equity Forward Contract	(100,000)	$ (100,000)
Cost of Issuance of Treasury Stock, Shares		(51)
Taxes paid related to net share settlement of equity awards	(7,928)	$ (7,928)
Stock-based compensation	124,351	$ 124,351
Net income	130,919			130,919
Other comprehensive loss	$ (478)		(478)
Ending Balance ( in shares) at Mar. 31, 2021	60,052	60,052
Ending Balance at Mar. 31, 2021	$ 2,007,819	$ 39,507	(19,194)	1,987,506
Beginning Balance (in shares) at Dec. 31, 2020		61,632
Beginning Balance at Dec. 31, 2020	2,401,590	$ 386,236	(17,855)	2,033,209
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		44
Exercise of employee stock options	1,492	$ 1,492
Issuance of restricted stock (in shares)		445
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(2,052)
Repurchase of common stock	(400,000)	$ (311,056)		(88,944)
Adjustments To Additional Paid In Capital, Equity Forward Contract	(100,000)	$ (100,000)
Cost of Issuance of Treasury Stock, Shares		(17)
Taxes paid related to net share settlement of equity awards	(3,447)	$ (3,447)
Stock-based compensation	66,282	$ 66,282
Net income	43,241			43,241
Other comprehensive loss	$ (1,339)		(1,339)
Ending Balance ( in shares) at Mar. 31, 2021	60,052	60,052
Ending Balance at Mar. 31, 2021	$ 2,007,819	$ 39,507	$ (19,194)	$ 1,987,506

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Operating activities
Net income	$ 130,919	$ 159,906
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	121,289	98,447
Depreciation and amortization	56,185	43,112
Non-cash operating lease costs	19,415	18,970
Deferred income taxes	(17,962)	5,353
Impairment of assets	40,698	0
Other	105	54
Changes in operating assets and liabilities (excluding effects of the acquisition of businesses):
Accounts receivable	(79,649)	4,317
Inventories	3,327	3,459
Other current assets	(32,939)	(19,603)
Other assets	(29,066)	(4,298)
Accounts payable and accrued liabilities	(14,529)	(1,936)
Deferred revenue	93,493	43,987
Lease liabilities	(25,447)	(25,948)
Net cash provided by operating activities	265,839	325,820
Investing activities
Purchases of investments	(65,725)	(195,123)
Maturities of investments	126,711	237,892
Sales of investments	269,986	232,255
Acquisition of businesses, net of cash acquired	(411,319)	(955,574)
Purchases of property and equipment	(14,090)	(35,463)
Net cash used in investing activities	(94,437)	(716,013)
Financing activities
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan	28,687	21,443
Repurchase of common stock	(500,000)	(50,009)
Proceeds from term debt agreement	0	400,000
Payments on term debt agreement	(10,000)	0
Payments for debt issuance costs	0	(3,040)
Taxes paid related to net share settlement of equity awards	(7,928)	0
Net cash (used in) provided by financing activities	(489,241)	368,394
Net decrease in cash, cash equivalents and restricted cash	(317,839)	(21,799)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	494	(1,090)
Cash, cash equivalents and restricted cash, beginning of period	852,826	602,254
Cash, cash equivalents and restricted cash, end of period	535,481	579,365
Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	30,809	30,067
Cash paid for interest on long-term debt	2,724	2,089
Supplemental disclosures of non-cash activities
Right-of-use assets obtained in exchange for lease obligations	$ 9,523	$ 399,203

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Summary of Significant Accounting Policies

6 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Description of Business

F5 Networks, Inc. (the "Company") is a leading provider of multi-cloud application services which enable its customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud. The Company's cloud, software, and hardware solutions enable its customers to deliver digital experiences to their customers faster, reliably, and at scale. The Company's enterprise-grade application services are available as cloud-based, software-as-a-service, and software-only solutions optimized for multi-cloud environments, with modules that can run independently, or as part of an integrated solution on its high-performance appliances. In connection with its solutions, the Company offers a broad range of professional services, including consulting, training, installation, maintenance, and other technical support services. On January 22, 2021, the Company completed its acquisition of Volterra, Inc. ("Volterra"), a provider of edge-as-a-service platform solutions.

Basis of Presentation

The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

In December 2019, a novel strain of coronavirus (“COVID-19“) was first identified, and in March 2020, the World Health Organization categorized COVID-19 as a pandemic. The Company assessed the impact that COVID-19 had on its results of operations, including, but not limited to an assessment of its allowance for current expected credit losses, the carrying value of short-term and long-term investments, the carrying value of goodwill and other long-lived assets, and the impact to revenue recognition and cost of revenues. The Company is actively monitoring the impact to the results of its business operations, and may make decisions required by federal, state or local authorities, or that are determined to be in the best interests of its employees, customers, partners, suppliers and stockholders. As of the filing date, the extent to which the COVID-19 pandemic may impact the Company’s financial condition or results of operations in the future remains uncertain.

Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company adopted this new standard prospectively on October 1, 2020. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which modifies the accounting for credit losses for most financial assets and requires the use of an expected loss model, replacing the currently used incurred loss method. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The Company adopted this new standard on October 1, 2020 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. The following accounting policies were updated as a result of the adoption of this standard.

Investments

The Company classifies its investment securities as available-for-sale. Investment securities, consisting of certificates of deposit, corporate and municipal bonds and notes, the United States government and agency securities and international

government securities are reported at fair value with the related unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses and impairments due to credit losses, in which the fair value of a security is below its amortized cost and management’s intent is to sell the impaired security prior to its recovery, are included in other income (expense). An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in other income, net in the Company's consolidated income statements. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. Investments in securities with maturities of less than one year or where management’s intent is to use the investments to fund current operations are classified as short-term investments. Investments with maturities of greater than one year are classified as long-term investments.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount, net of allowances for credit losses for any potential uncollectible amounts. The allowance for credit losses is based on the assessment of the collectability of accounts. Management regularly reviews the adequacy of the allowance for credit losses on a collective basis by considering the age of each outstanding invoice, each customer’s expected ability to pay and collection history, current market conditions, and reasonable and supportable forecasts of future economic conditions to determine whether the allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. For the three and six months ended March 31, 2021 and 2020, the allowance for credit losses activity was not significant.

There have been no additional changes to the Company's significant accounting policies as of and for the six months ended March 31, 2021.

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Revenue from Contracts with Customers

6 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Capitalized Contract Acquisition Costs

The table below shows significant movements in capitalized contract acquisition costs (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	70,396	$	59,446
Additional capitalized contract acquisition costs deferred	18,614		21,836
Amortization of capitalized contract acquisition costs	(16,590)		(16,972)
Balance, end of period	$	72,420	$	64,310

Amortization of capitalized contract acquisition costs was $8.4 million and $8.3 million for the three months ended March 31, 2021 and 2020, respectively, and $16.6 million and $17.0 million for the six months ended March 31, 2021 and 2020, respectively, and is recorded in Sales and Marketing expense in the accompanying consolidated income statements. There was no impairment of any capitalized contract acquisition costs during any period presented.

Contract Balances

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to the Company's contracts with customers. The Company records assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected, in addition to contracts that have started, but not yet been fully billed. These assets are recorded as contract assets rather than receivables when receipt of the consideration is conditional on something other than the passage of time. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current deferred revenue.

The table below shows significant movements in contract assets (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	200,472	$	132,492
Revenue recognized during period but not yet billed	30,294		13,998
Contract asset additions	81,040		38,060
Contract assets acquired through acquisition of businesses	—		6,045
Contract assets reclassified to accounts receivable	(65,909)		(33,211)
Balance, end of period	$	245,897	$	157,384

As of March 31, 2021, contract assets that are expected to be reclassified to receivables within the next 12 months are included in other current assets, with those expected to be transferred to receivables in more than 12 months included in other assets. There were no impairments of contract assets during the six months ended March 31, 2021 and 2020.

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	1,272,632	$	1,198,116
Amounts billed but not recognized as revenues	680,124		587,983
Deferred revenue acquired through acquisition of businesses	779		39,000
Revenues recognized related to the opening balance of deferred revenue	(586,632)		(543,995)
Balance, end of period	$	1,366,903	$	1,281,104

The Company's contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period.

Remaining Performance Obligations

Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. As of March 31, 2021, the total non-cancelable remaining performance obligations under the Company's contracts with customers was approximately $1.4 billion and the Company expects to recognize revenues on approximately 68.0% of these remaining performance obligations over the next 12 months, 19.4% in year two, and the remaining balance thereafter.

See Note 13, Segment Information, for disaggregated revenue by significant customer and geographic region, as well as disaggregated product revenue by systems and software.

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Fair Value Measurements

6 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.

The levels of fair value hierarchy are:

Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date that the Company has the ability to access.

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Unobservable inputs for which there is little or no market data available. These inputs reflect management's assumptions of what market participants would use in pricing the asset or liability.

Level 1 investments are valued based on quoted market prices in active markets and include the Company's cash equivalent investments. Level 2 investments, which include investments that are valued based on quoted prices in markets that are not active, broker or dealer quotations, actual trade data, benchmark yields or alternative pricing sources with reasonable levels of price transparency, include the Company's certificates of deposit, corporate bonds and notes, municipal bonds and notes, U.S. government securities, U.S. government agency securities and international government securities. Fair values for the Company's level 2 investments are based on similar assets without applying significant judgments. In addition, all of the Company's level 2 investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.

A financial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at March 31, 2021, were as follows (in thousands):

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Securities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at March 31, 2021
Cash equivalents	$	45,060	$	—	$	—	$	45,060
Short-term investments
Available-for-sale securities — corporate bonds and notes	—		90,909		—		90,909
Available-for-sale securities — municipal bonds and notes	—		2,908		—		2,908
Available-for-sale securities — U.S. government securities	—		12,036		—		12,036
Available-for-sale securities — U.S. government agency securities	—		5,252		—		5,252
Long-term investments
Available-for-sale securities — corporate bonds and notes	—		8,500		—		8,500
Available-for-sale securities — U.S. government securities	—		8,078		—		8,078
Available-for-sale securities — U.S. government agency securities	—		2,500		—		2,500
Total	$	45,060	$	130,183	$	—	$	175,243

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2020, were as follows (in thousands):

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Securities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at September 30, 2020
Cash equivalents	$	43,553	$	207,417	$	—	$	250,970
Short-term investments
Available-for-sale securities — corporate bonds and notes	—		189,662		—		189,662
Available-for-sale securities — municipal bonds and notes	—		6,146		—		6,146
Available-for-sale securities — U.S. government securities	—		117,374		—		117,374
Available-for-sale securities — U.S. government agency securities	—		47,151		—		47,151
Long-term investments
Available-for-sale securities — corporate bonds and notes	—		102,939		—		102,939
Total	$	43,553	$	670,689	$	—	$	714,242

The Company uses the fair value hierarchy for financial assets and liabilities. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value due to their short-term nature.

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

The Company's non-financial assets and liabilities, which include goodwill, intangible assets, and long-lived assets, are not required to be carried at fair value on a recurring basis. These non-financial assets and liabilities are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. The Company reviews goodwill for impairment annually, during the second quarter of each fiscal year, or as circumstances indicate the possibility of impairment. The Company monitors the carrying value of tangible and intangible long-lived assets for impairment whenever events or changes in circumstances indicate its carrying amount may not be recoverable. Included in the Company’s impairment considerations for non-financial assets and liabilities in the current quarter were the potential impacts of the COVID-19 pandemic.

During the three months ended March 31, 2021, the Company recorded an impairment of $23.5 million against the operating lease right-of-use asset related to the exit of six floors in its corporate headquarters. Impairment charges for the second quarter of fiscal 2021 also included $10.3 million for tenant improvements and other fixed assets associated with the exited floors. In the first quarter of fiscal 2021, the Company recorded an impairment of $6.7 million against the operating lease right-of-use asset related to the integration of the former Shape headquarters in Santa Clara, California. Impairment charges for the first quarter of fiscal 2021 also included $0.2 million for other fixed assets associated with the Shape headquarters in Santa Clara, California. The Company calculated the fair value of the right-of-use assets, tenant improvements and other fixed assets based on estimated future discounted cash flows and classified the fair value as a Level 3 measurement due to the significance of unobservable inputs, which included the amount and timing of estimated sublease rental receipts that the Company could reasonably obtain over the remaining lease term and the discount rate. The impairment charges for the three and six months ended March 31, 2021 were allocated to various expense line items on the Company’s consolidated income statements based on the teams that previously worked out of the exited space.

Impairment charges were allocated to the following income statement line items for the three and six months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Cost of net product revenue	$	897	$	—	$	2,865	$	—
Cost of net service revenue	3,491		—		3,492		—
Sales and marketing	10,256		—		11,515		—
Research and development	9,845		—		12,974		—
General and administrative	9,336		—		9,852		—
Total impairment charges	$	33,825	$	—	$	40,698	$	—

During the three and six months ended March 31, 2021 and 2020, the Company did not recognize any impairment charges related to goodwill or intangible assets.

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Short-Term and Long-Term Investments

6 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Short-Term and Long-Term Investments

Short-Term and Long-Term Investments

Short-term investments consist of the following (in thousands):

March 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	90,511	$	399	$	(1)	$	90,909
Municipal bonds and notes	2,907		1		—		2,908
U.S. government securities	12,035		1		—		12,036
U.S. government agency securities	5,250		2		—		5,252
	$	110,703	$	403	$	(1)	$	111,105

September 30, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	188,932	$	736	$	(6)	$	189,662
Municipal bonds and notes	6,143		3		—		6,146
U.S. government securities	117,363		14		(3)		117,374
U.S. government agency securities	47,148		3		—		47,151
	$	359,586	$	756	$	(9)	$	360,333

Long-term investments consist of the following (in thousands):

March 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	8,472	$	29	$	(1)	$	8,500
U.S. government securities	8,078		1		(1)		8,078
U.S. government agency securities	2,499		1		—		2,500
	$	19,049	$	31	$	(2)	$	19,078

September 30, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	102,206	$	756	$	(23)	$	102,939
	$	102,206	$	756	$	(23)	$	102,939

Interest income from investments was $0.7 million and $3.3 million for the three months ended March 31, 2021 and 2020, respectively, and $1.8 million and $8.9 million for the six months ended March 31, 2021 and 2020, respectively. Interest income is included in other income, net on the Company's consolidated income statements.

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of March 31, 2021 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
March 31, 2021	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and notes	$	12,248	$	(2)	$	—	$	—	$	12,248	$	(2)
U.S. government securities	9,707		(1)		—		—		9,707		(1)
Total	$	21,955	$	(3)	$	—	$	—	$	21,955	$	(3)

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of September 30, 2020 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
September 30, 2020	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and notes	$	43,492	$	(28)	$	5,006	$	(1)	$	48,498	$	(29)
U.S. government securities	41,812		(3)		—		—		41,812		(3)
Total	$	85,304	$	(31)	$	5,006	$	(1)	$	90,310	$	(32)

The Company invests in securities that are rated investment grade. The Company reviews the individual securities in its portfolio to determine whether a decline in a security's fair value below the amortized cost basis is other-than-temporary. The Company determined that as of March 31, 2021, there were no investments in its portfolio that were other-than-temporarily impaired.

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Business Combinations

6 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Business Combinations

Business Combinations

Fiscal Year 2021 Acquisition of Volterra, Inc.

On January 5, 2021, the Company entered into a Merger Agreement (the “Merger Agreement”) with Volterra, Inc. ("Volterra"), a provider of edge-as-a-service platform solutions. The transaction closed on January 22, 2021 with Volterra becoming a wholly-owned subsidiary of F5.

Pursuant to the Merger Agreement, at the effective time of the Merger, the capital stock of Volterra and the vested outstanding and unexercised stock options in Volterra were cancelled and converted to the right to receive approximately $427.2 million in cash, subject to certain adjustments and conditions set forth in the Merger Agreement. The unvested stock options and restricted stock units in Volterra held by continuing employees of Volterra were assumed by F5, on the terms and conditions set forth in the Merger Agreement. The Company incurred $6.9 million and $9.5 million of transaction costs associated with the acquisition for the three and six months ended March 31, 2021, respectively, which was included in General and Administrative expenses.

As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of Volterra. The goodwill related to the Volterra acquisition is comprised primarily of expected synergies from combining operations and the acquired intangible assets that do not qualify for separate recognition. Goodwill related to the Volterra acquisition is not expected to be deductible for tax purposes. The results of operations of Volterra have been included in the Company's consolidated financial statements from the date of acquisition.

The allocated purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values is presented in the following table (in thousands):

			Estimated
			Useful Life
Assets acquired
Cash, cash equivalents, and restricted cash	$	14,012
Other tangible assets acquired, at fair value	7,499
Identifiable intangible assets:
Developed technologies	59,500		7 years
Customer relationships	500		1 year
Goodwill	351,417
Total assets acquired	432,928
Liabilities assumed	(5,686)
Net assets acquired	$	427,242

The initial allocation of the purchase price was based on preliminary valuations and assumptions and is subject to change within the measurement period. The Company expects to finalize the allocation of the purchase price as soon as practicable and no later than one year from the acquisition date.

The developed technologies intangible asset will be amortized on a straight-line basis over its estimated useful life of seven years and included in cost of net product revenues. The customer relationships intangible asset will be amortized on a straight-line basis over its estimated useful life of one year and included in sales and marketing expenses. The weighted-average life of the amortizable intangible assets recognized from the Volterra acquisition was 6.95 years as of January 22, 2021, the date the transaction closed. The estimated useful lives for the acquired intangible assets were based on the expected future cash flows associated with the respective asset.

Since the Volterra acquisition was completed on January 22, 2021, the F5 and Volterra teams have been executing a plan to integrate ongoing operations. The pro forma financial information, as well as the revenue and earnings generated by Volterra, were not material to the Company's operations for the periods presented.

Fiscal Year 2020 Acquisition of Shape Security, Inc.

On December 19, 2019, the Company entered into a Merger Agreement (the "Merger Agreement") with Shape Security, Inc. ("Shape"), a provider of fraud and abuse prevention solutions. The transaction closed on January 24, 2020 with Shape becoming a wholly-owned subsidiary of F5.

Pursuant to the Merger Agreement, at the effective time of the acquisition, the capital stock of Shape and the vested outstanding and unexercised stock options in Shape were cancelled and converted to the right to receive approximately $1.0 billion in cash, subject to certain adjustments and conditions set forth in the Merger Agreement, and the unvested stock options and restricted stock units in Shape held by continuing employees of Shape were assumed by F5, on the terms and conditions set forth in the Merger Agreement. Included in cash consideration was $23.2 million of transaction costs paid by F5 on behalf of Shape. In addition, the Company incurred $11.4 million and $15.3 million of transaction costs associated with the acquisition for the three and six months ended March 31, 2020, respectively, which was included in General and Administrative expenses.

As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of Shape. The goodwill related to the Shape acquisition is comprised primarily of expected synergies from combining operations and the acquired intangible assets that do not qualify for separate recognition. Goodwill related to the Shape acquisition is not expected to be deductible for tax purposes. The results of operations of Shape have been included in the Company's consolidated financial statements from the date of acquisition.

The allocated purchase consideration to assets acquired and liabilities assumed is presented in the following table (in thousands):

			Estimated
			Useful Life
Assets acquired
Cash, cash equivalents, and restricted cash	$	53,934
Fair value of tangible assets:
Accounts receivable	21,077
Deferred tax assets	29,848
Operating lease right-of-use assets	29,644
Other tangible assets	22,571
Identifiable intangible assets:
Developed technologies	120,000		7 years
Customer relationships	21,000		4 years
Trade name	9,500		5 years
Goodwill	798,867
Total assets acquired	$	1,106,441
Liabilities assumed
Deferred revenue	$	(39,000)
Operating lease liabilities	(30,773)
Other assumed liabilities	(18,571)
Total liabilities assumed	$	(88,344)
Net assets acquired	$	1,018,097

The measurement period for the Shape acquisition lapsed in the second quarter of fiscal 2021. For the six months ended March 31, 2021, the Company recorded a net decrease to the carrying amount of goodwill of $0.7 million to reflect the final adjustments to consideration exchanged for the purchase of Shape within the post-close measurement period.

The developed technology intangible asset will be amortized on a straight-line basis over its estimated useful life of seven years and included in cost of net product revenues. The trade names and customer relationships intangible assets will be amortized on a straight-line basis over their estimated useful lives of five years and four years, respectively, and included in sales and marketing expenses. The weighted average life of the amortizable intangible assets recognized from the Shape acquisition was 6.5 years as of January 24, 2020, the date the transaction closed. The estimated useful lives for the acquired intangible assets were based on the expected future cash flows associated with the respective asset.

Since the Shape acquisition was completed on January 24, 2020, the F5 and Shape teams have been executing a plan to integrate ongoing operations. The pro forma financial information, as well as the revenue and earnings generated by Shape, were not material to the Company's operations for the periods presented.

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Balance Sheet Details

6 Months Ended

Mar. 31, 2021

Balance Sheet Details [Abstract]

Balance Sheet Details

Balance Sheet Details

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of the Company's cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows for the periods presented (in thousands):

	March 31, 2021		September 30, 2020
Cash and cash equivalents	$	532,166	$	849,556
Restricted cash included in other assets, net	3,315		3,270
Total cash, cash equivalents and restricted cash	$	535,481	$	852,826

Inventories

Inventories consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Finished goods	$	14,697	$	17,096
Raw materials	9,874		10,802
	$	24,571	$	27,898

Other Current Assets

Other current assets consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Contract assets, current	$	161,867	$	138,096
Prepaid expenses	62,851		47,197
Capitalized contract acquisition costs, current	31,388		29,650
Other	37,296		44,563
	$	293,402	$	259,506

Other Assets

Other assets, net consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Intangible assets, net	$	273,480	$	225,900
Contract assets, net of current	84,030		62,377
Capitalized contract acquisition costs, net of current	41,032		40,746
Other	19,673		18,424
	$	418,215	$	347,447

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Payroll and benefits	$	172,080	$	169,708
Operating lease liabilities, current	48,730		46,010
Income and other tax accruals	36,521		33,048
Other	67,534		72,632
	$	324,865	$	321,398

Other Long-term Liabilities

Other long-term liabilities consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Income taxes payable	$	55,731	$	49,846
Other	9,602		9,665
	$	65,333	$	59,511

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Debt Facilities

6 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt Facilities

Debt Facilities

Term Credit Agreement

In connection with the acquisition of Shape, on January 24, 2020, the Company entered into a Term Credit Agreement ("Term Credit Agreement") with certain institutional lenders that provides for a senior unsecured term loan facility in an aggregate principal amount of $400.0 million (the "Term Loan Facility"). The proceeds from the Term Loan Facility were primarily used to finance the acquisition of Shape and related expenses. In connection with the Term Loan Facility, the Company incurred $2.2 million in debt issuance costs, which are recorded as a reduction to the carrying value of the principal amount of the debt.

Borrowings under the Term Loan Facility bear interest at a rate equal to, at the Company's option, (a) LIBOR, adjusted for customary statutory reserves, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio, or (b) an alternate base rate determined in accordance with the Term Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on the Company's leverage ratio. Interest on the outstanding principal of borrowings is currently due quarterly in arrears. As of March 31, 2021, the margin for LIBOR-based loans was 1.125% and the margin for alternate base rate loans was 0.125%.

The Term Loan Facility matures on January 24, 2023 with quarterly installments (commencing with the first full fiscal quarter ended after January 24, 2020) equal to 1.25% of the original principal amount of the Term Loan Facility. The remaining outstanding principal of borrowings under the Term Loan Facility is due upon maturity on January 24, 2023. Borrowings under the Term Loan Facility may be voluntarily prepaid, in whole or in part, without penalty or premium. Borrowings repaid or prepaid under the Term Loan Facility may not be reborrowed.

 Among certain affirmative and negative covenants provided in the Term Credit Agreement, there is a financial covenant that requires the Company to maintain a leverage ratio, calculated as of the last day of each fiscal quarter, of consolidated total indebtedness to consolidated EBITDA. This covenant may result in a higher interest rate on its outstanding principal borrowings on the Term Loan Facility in future periods, depending on the Company's performance. As of March 31, 2021, the Company was in compliance with all covenants.

As of March 31, 2021, $380.0 million of principal amount under the Term Loan Facility was outstanding, excluding unamortized debt issuance costs of $1.3 million. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 1.390% for the three and six months ended March 31, 2021. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 2.765% for the three and six months ended March 31, 2020. The following table presents the scheduled principal maturities as of March 31, 2021 (in thousands):

Fiscal Years Ending September 30:	Amount
2021 (remainder)	$	10,000
2022	20,000
2023	350,000
Total	$	380,000

Revolving Credit Agreement

On January 31, 2020, the Company entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). The Company has the option to increase commitments under the Revolving Credit Facility from time to time, subject to certain conditions, by up to $150.0 million. Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company's option, (a) LIBOR, adjusted for customary statutory reserves, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio, or (b) an alternate base rate determined in accordance with the Revolving Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on the Company's leverage ratio. The Revolving Credit Agreement also requires payment of a commitment fee calculated at a rate per annum of 0.125% to 0.300% depending on the Company's leverage ratio on the undrawn portion of the Revolving Credit Facility. Commitment fees incurred during the three and six months ended March 31, 2021 were not material.

The Revolving Credit Facility matures on January 31, 2025, at which time any remaining outstanding principal of borrowings under the Revolving Credit Facility is due. The Company has the option to request up to two extensions of the maturity date in each case for an additional period of one year. Among certain affirmative and negative covenants provided in the Revolving Credit Agreement, there is a financial covenant that requires the Company to maintain a leverage ratio, calculated as of the last day of each fiscal quarter, of consolidated total indebtedness to consolidated EBITDA. As of March 31, 2021, the Company was in compliance with all covenants. As of March 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, and the Company had available borrowing capacity of $350.0 million.

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Leases

6 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Leases

During the first quarter of fiscal 2020, the Company adopted ASU 2016-02, Leases (Topic 842) (the "Leasing Standard") using the transition method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements. The impact of adopting the Leasing Standard resulted in the recognition of right-of-use assets and lease liabilities of $304.8 million and $386.4 million, respectively, on October 1, 2019, the date of adoption.

The majority of the Company's operating lease payments relate to its corporate headquarters in Seattle, Washington, which includes approximately 515,000 square feet of office space. The lease commenced in April 2019 and expires in 2033 with an option for renewal. The Company also leases additional office and lab space for product development and sales and support personnel in the United States and internationally. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of the Company's operating lease expenses for the three and six months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Operating lease expense	$	12,158	$	12,975	$	24,339	$	24,293
Short-term lease expense	575		813		1,561		1,627
Variable lease expense	5,310		4,262		12,336		10,101
Total lease expense	$	18,043	$	18,050	$	38,236	$	36,021

Variable lease expense primarily consists of common area maintenance and parking expenses.

Supplemental balance sheet information related to the Company's operating leases was as follows (in thousands, except lease term and discount rate):

	March 31, 2021			September 30, 2020
Operating lease right-of-use assets, net	$	260,389		$	300,680
Operating lease liabilities, current1	48,730			46,010
Operating lease liabilities, long-term	320,132			338,715
Total operating lease liabilities	$	368,862		$	384,725
Weighted average remaining lease term (in years)	9.9			10.2
Weighted average discount rate	2.58		%	2.58		%

(1)Current portion of operating lease liabilities is included in accrued liabilities on the Company's consolidated balance sheets.

As of March 31, 2021, the future operating lease payments for each of the next five years and thereafter is as follows (in thousands):

Fiscal Years Ending September 30:	Operating Lease Payments
2021 (remainder)	$	26,772
2022	60,018
2023	47,183
2024	40,806
2025	33,496
2026	26,622
Thereafter	191,156
Total lease payments	426,053
Less: imputed interest	(57,191)
Total lease liabilities	$	368,862

Operating lease liabilities above do not include sublease income. As of March 31, 2021, the Company expects to receive sublease income of approximately $7.9 million, which consists of $2.1 million to be received for the remainder of fiscal 2021 and $5.8 million to be received over the two fiscal years thereafter. During the three months ended March 31, 2021, the Company recorded an impairment of $23.5 million against the operating lease right-of-use asset related to the exit of six floors in its corporate headquarters. In the first quarter of fiscal 2021, the Company recorded an impairment of $6.7 million against the right-of-use asset related to the integration of the former Shape headquarters in Santa Clara, California.

As of March 31, 2021, the Company had no significant operating leases that were executed but not yet commenced.

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Guarantees and Product Warranties

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, resellers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has entered into indemnification agreements with its officers and directors and certain other employees, and the Company's bylaws contain similar indemnification obligations to the Company's agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

The Company generally offers warranties of one year for hardware for those customers without service contracts, with the option of purchasing additional warranty coverage in yearly increments. The Company accrues for warranty costs as part of its cost of sales based on associated material product costs and technical support labor costs. Accrued warranty costs as of March 31, 2021 and September 30, 2020 were not material.

Commitments

As of March 31, 2021, the Company's principal commitments consisted of borrowings under the Term Loan Facility and obligations outstanding under operating leases. Refer to Note 7 for the scheduled principal maturities of the Term Loan Facility as of March 31, 2021.

The Company leases its facilities under operating leases that expire at various dates through 2033. There have been no material changes in the Company's lease obligations compared to those discussed in Note 8 to its annual consolidated financial statements.

The Company currently has arrangements with contract manufacturers and other suppliers for the manufacturing of its products. The arrangement with the primary contract manufacturer allows them to procure component inventory on the Company's behalf based on a rolling production forecast provided by the Company. The Company is obligated to the purchase of component inventory that the contract manufacturer procures in accordance with the forecast, unless it gives notice of order cancellation in advance of applicable lead times. There have been no material changes in the Company's inventory purchase obligations compared to those discussed in Note 13 to its annual consolidated financial statements.

Legal Proceedings

On June 8, 2020, Lynwood Investment CY Limited (“Lynwood”) filed a lawsuit in the United States District Court for the Northern District of California against the Company and certain affiliates, along with other defendants. In its complaint, Lynwood claims to be the assignee of all rights and interests of Rambler Internet Holding LLC (“Rambler”), and alleges that the intellectual property in the NGINX software originally released by the co-founder of NGINX in 2004 belongs to Rambler (and therefore Lynwood, by assignment) because the software was created and developed while the co-founder was employed by Rambler. Lynwood asserts 26 causes of action against the various defendants, including copyright infringement, violation of trademark law, tortious interference, conspiracy, and fraud. The complaint seeks damages, disgorgement of profits, fees and costs, declarations of copyright and trademark ownership, trademark cancellations, and injunctive relief. Lynwood also initiated several trademark opposition and cancellation proceedings before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office, which have all since been suspended. In August and October 2020, the Company and the other defendants filed motions to dismiss all claims asserted against them in the lawsuit. While these motions were pending, the Court ordered Lynwood to select ten of its twenty-six claims to litigate through trial while the remaining sixteen claims would be stayed pending resolution of the ten selected claims.

On March 25 and 30, 2021, the Court dismissed the ten selected claims and granted Lynwood leave to cure the deficiencies in its complaint though it expressed doubt about Lynwood’s ability to do so. The Court further ruled that Lynwood may not add new causes of action or add new parties without stipulation or leave of court, and that unless Lynwood corrects “all the defects” identified in the Court’s orders and the Company’s and other defendants’ motions to dismiss, the Court will dismiss the ten claims with prejudice. Lynwood’s amended complaint is due on or before April 29, 2021. On April 6, the Court referred the parties to private mediation to be completed by June 1, 2021.

In addition to the above matter, the Company is subject to a variety of legal proceedings, claims, investigations, and litigation arising in the ordinary course of business, including intellectual property litigation. Management believes that the Company has meritorious defenses to the allegations made in its pending cases and intends to vigorously defend these lawsuits; however, the Company is unable currently to determine the ultimate outcome of these or similar matters or the potential exposure to loss, if any. There are many uncertainties associated with any litigation and these actions or other third-party claims against the Company may cause it to incur costly litigation and/or substantial settlement charges that could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.

The Company records an accrual for loss contingencies for legal proceedings when it believes that an unfavorable outcome is both (a) probable and (b) the amount or range of any possible loss is reasonably estimable. The Company has not recorded any accrual for loss contingencies associated with such legal proceedings or the investigations discussed above.

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Income Taxes

6 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items in the related period.

The effective tax rate was 17.0% and 22.6% for the three and six months ended March 31, 2021, respectively, compared to 26.5% and 24.3% for the three and six months ended March 31, 2020, respectively. The decrease in the effective tax rate for the three and six months ended March 31, 2021 as compared to the three and six months ended March 31, 2020 is primarily due to the tax benefit of stock-based compensation, partially offset by other non-deductible expenses related to the acquisition of Volterra, Inc., and a change in unrecognized tax benefits recorded in the three months ended March 31, 2020.

At March 31, 2021, the Company had $60.0 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. It is anticipated that the Company’s existing liabilities for unrecognized tax benefits will change within the next twelve months due to audit settlements or the expiration of statutes of limitations. The Company does not expect these changes to be material to the consolidated financial statements. The Company recognizes interest and, if applicable, penalties for any uncertain tax positions as a component of income tax expense.

The Company and its subsidiaries are subject to U.S. federal income tax as well as the income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for fiscal years through September 30, 2016. Major jurisdictions where there are wholly owned subsidiaries of F5 Networks, Inc. which require income tax filings include the United Kingdom, Singapore, and Israel. The earliest periods open for review by local taxing authorities are fiscal years 2019 for the United Kingdom, 2016 for Singapore, and 2013 for Israel. The Company is currently under audit by various states for fiscal years 2015 through 2019, by Israel for fiscal years 2013 to 2017, by Saudi Arabia for fiscal years 2014 to 2019, and by Singapore for fiscal year 2018. Within the next four fiscal quarters, the statute of limitations will begin to close on the fiscal year 2017 federal income tax return, fiscal years 2016 and 2017 state income tax returns, and fiscal years 2014 to 2019 foreign income tax returns.

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Shareholders' Equity

6 Months Ended

Mar. 31, 2021

Equity [Abstract]

Stockholders' Equity Note Disclosure

Shareholders' Equity

Common Stock Repurchase

On October 31, 2018, the Company announced that its Board of Directors authorized an additional $1.0 billion for its common stock share repurchase program. This authorization is incremental to the existing $4.4 billion program, initially approved in October 2010 and expanded in each fiscal year thereafter. Acquisitions for the share repurchase programs will be made from time to time in private transactions, accelerated share repurchase programs, or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time.

On February 3, 2021, the Company entered into Accelerated Share Repurchase (ASR) agreements with two financial institutions under which the Company paid an aggregate of $500 million. The ASR agreements were accounted for as two separate transactions (1) a repurchase of common stock and (2) an equity-linked contract on the Company's own stock. Upon execution of the ASR agreements, the Company received an initial delivery of 2.1 million shares, which were retired immediately and, which approximates 80 percent of the total number of expected shares to be repurchased under the ASR agreements. In accordance with the terms of the ASR agreements, the final number of shares to be repurchased and the average price paid per share will be determined upon settlement of the agreements during the third quarter of fiscal 2021. The final number of shares to be repurchased will be based on the volume-weighted average price of the Company’s common stock over the duration of the ASR agreements, less applicable discounts. Upon settlement, the financial institutions may be required to deliver additional shares of common stock to the Company, or under certain conditions, the Company may be required to make cash payments or delivery of shares of common stock, at its election, to the financial institutions. The equity-linked contract for the remaining $100 million, representing remaining shares to be delivered by the financial institutions under the ASR agreements, was recorded to common stock as of March 31, 2021.

The following table summarizes the Company's repurchases and retirements of its common stock under its Stock Repurchase Program, including the ASR (in thousands, except per share data):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Shares repurchased	2,052		442		2,052		442
Average price per share	$	194.91	$	113.18	$	194.91	$	113.18
Amount repurchased	$	400,000	$	50,009	$	400,000	$	50,009

As of March 31, 2021, the Company had $873 million remaining authorized to purchase shares under its share repurchase program.

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Net Income Per Share

6 Months Ended

Mar. 31, 2021

Net Income Per Share [Abstract]

Net Income Per Share

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. The Company's nonvested restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents and are not considered participating securities that should be included in the computation of earnings per share under the two-class method.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Numerator
Net income	$	43,241	$	61,379	$	130,919	$	159,906
Denominator
Weighted average shares outstanding — basic	60,667		60,869		61,058		60,758
Dilutive effect of common shares from stock options and restricted stock units	1,491		215		1,234		259
Weighted average shares outstanding — diluted	62,158		61,084		62,292		61,017
Basic net income per share	$	0.71	$	1.01	$	2.14	$	2.63
Diluted net income per share	$	0.70	$	1.00	$	2.10	$	2.62

Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were not material for the three and six months ended March 31, 2021 and 2020. The impact of the outstanding shares expected to be delivered under the equity-linked contract described in Note 11, are anti-dilutive and are not included within the weighted average shares used to calculate diluted net income per share.

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Segment Information

6 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Management has determined that the Company is organized as, and operates in, one reportable operating segment: the development, marketing and sale of application services that optimize the security, performance and availability of network applications, servers and storage systems.

Revenues by Geographic Location and Other Information

The Company does business in three main geographic regions: the Americas (primarily the United States); Europe, the Middle East, and Africa (EMEA); and the Asia Pacific region (APAC). The Company's chief operating decision-maker reviews financial information presented on a consolidated basis accompanied by information about revenues by geographic region. The Company's foreign offices conduct sales, marketing and support activities. Revenues are attributed by geographic location based on the location of the customer.

The following presents revenues by geographic region (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Americas:
United States	$	323,402	$	302,192	$	643,745	$	577,691
Other	22,650		23,094		45,443		49,157
Total Americas	346,052		325,286		689,188		626,848
EMEA	172,222		147,985		334,306		303,937
Asia Pacific	127,013		110,178		246,410		221,969
	$	645,287	$	583,449	$	1,269,904	$	1,152,754

The Company generates revenues from the sale of products and services. The Company continues to offer its products through a range of consumption models, from physical systems to software solutions and managed services. The following presents net product revenues by systems and software (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Net product revenues
Systems revenue	$	200,950	$	171,383	$	379,521	$	340,984
Software revenue	108,239		88,155		217,713		153,090
Total net product revenue	$	309,189	$	259,538	$	597,234	$	494,074

The following distributors of the Company's products accounted for more than 10% of total net revenue:

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Ingram Micro, Inc.	17.7	%	17.3	%	17.9	%	16.9	%
Synnex Corporation	11.5	%	—		10.7	%	—

The Company tracks assets by physical location. Long-lived assets consist of property and equipment, net, and are shown below (in thousands):

	March 31, 2021		September 30, 2020
United States	$	166,822	$	190,509
EMEA	22,217		20,361
Other countries	18,560		18,369
	$	207,599	$	229,239

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Restructuring Charges

6 Months Ended

Mar. 31, 2021

Restructuring Charges [Abstract]

Restructuring Charges

Restructuring Charges

In December 2019, the Company initiated a restructuring plan to match strategic and financial objectives and optimize resources for long term growth, including a reduction in force program affecting approximately 75 employees. The Company recorded a restructuring charge of $7.8 million in the first quarter of fiscal 2020. The Company does not expect to record any significant future charges related to the restructuring plan.

During the six months ended March 31, 2020, the following activity was recorded (in thousands):

	Employee Severance, Benefits and Related Costs
Accrued expenses, October 1, 2019	$	—
Restructuring charges	7,800
Cash payments	(6,956)
Non-cash items	—
Accrued expenses, March 31, 2020	$	844

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Subsequent Events

6 Months Ended

Mar. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

Share Repurchase Activities

The equity-linked contract of $100 million, described in Note 11, was settled as of April 26, 2021 with the Company receiving 449,049 additional shares, which were retired immediately upon receipt. The Company was not required to make any additional cash payments or delivery of common stock to the financial institutions upon settlement of the agreements. As of April 26, 2021, the Company had $773 million remaining authorized to purchase shares under its share repurchase program.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Description of Business

Description of Business

F5 Networks, Inc. (the "Company") is a leading provider of multi-cloud application services which enable its customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud. The Company's cloud, software, and hardware solutions enable its customers to deliver digital experiences to their customers faster, reliably, and at scale. The Company's enterprise-grade application services are available as cloud-based, software-as-a-service, and software-only solutions optimized for multi-cloud environments, with modules that can run independently, or as part of an integrated solution on its high-performance appliances. In connection with its solutions, the Company offers a broad range of professional services, including consulting, training, installation, maintenance, and other technical support services. On January 22, 2021, the Company completed its acquisition of Volterra, Inc. ("Volterra"), a provider of edge-as-a-service platform solutions.

Basis of Presentation

Basis of Presentation

The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

In December 2019, a novel strain of coronavirus (“COVID-19“) was first identified, and in March 2020, the World Health Organization categorized COVID-19 as a pandemic. The Company assessed the impact that COVID-19 had on its results of operations, including, but not limited to an assessment of its allowance for current expected credit losses, the carrying value of short-term and long-term investments, the carrying value of goodwill and other long-lived assets, and the impact to revenue recognition and cost of revenues. The Company is actively monitoring the impact to the results of its business operations, and may make decisions required by federal, state or local authorities, or that are determined to be in the best interests of its employees, customers, partners, suppliers and stockholders. As of the filing date, the extent to which the COVID-19 pandemic may impact the Company’s financial condition or results of operations in the future remains uncertain.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company adopted this new standard prospectively on October 1, 2020. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which modifies the accounting for credit losses for most financial assets and requires the use of an expected loss model, replacing the currently used incurred loss method. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The Company adopted this new standard on October 1, 2020 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. The following accounting policies were updated as a result of the adoption of this standard.

Investments

The Company classifies its investment securities as available-for-sale. Investment securities, consisting of certificates of deposit, corporate and municipal bonds and notes, the United States government and agency securities and international

government securities are reported at fair value with the related unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses and impairments due to credit losses, in which the fair value of a security is below its amortized cost and management’s intent is to sell the impaired security prior to its recovery, are included in other income (expense). An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in other income, net in the Company's consolidated income statements. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. Investments in securities with maturities of less than one year or where management’s intent is to use the investments to fund current operations are classified as short-term investments. Investments with maturities of greater than one year are classified as long-term investments.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount, net of allowances for credit losses for any potential uncollectible amounts. The allowance for credit losses is based on the assessment of the collectability of accounts. Management regularly reviews the adequacy of the allowance for credit losses on a collective basis by considering the age of each outstanding invoice, each customer’s expected ability to pay and collection history, current market conditions, and reasonable and supportable forecasts of future economic conditions to determine whether the allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. For the three and six months ended March 31, 2021 and 2020, the allowance for credit losses activity was not significant.

There have been no additional changes to the Company's significant accounting policies as of and for the six months ended March 31, 2021.

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Capitalized Contract Cost

The table below shows significant movements in capitalized contract acquisition costs (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	70,396	$	59,446
Additional capitalized contract acquisition costs deferred	18,614		21,836
Amortization of capitalized contract acquisition costs	(16,590)		(16,972)
Balance, end of period	$	72,420	$	64,310

Contract with Customer, Asset and Liability

The table below shows significant movements in contract assets (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	200,472	$	132,492
Revenue recognized during period but not yet billed	30,294		13,998
Contract asset additions	81,040		38,060
Contract assets acquired through acquisition of businesses	—		6,045
Contract assets reclassified to accounts receivable	(65,909)		(33,211)
Balance, end of period	$	245,897	$	157,384

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the six months ended March 31, 2021 and 2020 (in thousands):

	Six months ended March 31,
	2021		2020
Balance, beginning of period	$	1,272,632	$	1,198,116
Amounts billed but not recognized as revenues	680,124		587,983
Deferred revenue acquired through acquisition of businesses	779		39,000
Revenues recognized related to the opening balance of deferred revenue	(586,632)		(543,995)
Balance, end of period	$	1,366,903	$	1,281,104

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Financial Assets Measured at Fair Value on a Recurring Basis

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at March 31, 2021, were as follows (in thousands):

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Securities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at March 31, 2021
Cash equivalents	$	45,060	$	—	$	—	$	45,060
Short-term investments
Available-for-sale securities — corporate bonds and notes	—		90,909		—		90,909
Available-for-sale securities — municipal bonds and notes	—		2,908		—		2,908
Available-for-sale securities — U.S. government securities	—		12,036		—		12,036
Available-for-sale securities — U.S. government agency securities	—		5,252		—		5,252
Long-term investments
Available-for-sale securities — corporate bonds and notes	—		8,500		—		8,500
Available-for-sale securities — U.S. government securities	—		8,078		—		8,078
Available-for-sale securities — U.S. government agency securities	—		2,500		—		2,500
Total	$	45,060	$	130,183	$	—	$	175,243

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2020, were as follows (in thousands):

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Securities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at September 30, 2020
Cash equivalents	$	43,553	$	207,417	$	—	$	250,970
Short-term investments
Available-for-sale securities — corporate bonds and notes	—		189,662		—		189,662
Available-for-sale securities — municipal bonds and notes	—		6,146		—		6,146
Available-for-sale securities — U.S. government securities	—		117,374		—		117,374
Available-for-sale securities — U.S. government agency securities	—		47,151		—		47,151
Long-term investments
Available-for-sale securities — corporate bonds and notes	—		102,939		—		102,939
Total	$	43,553	$	670,689	$	—	$	714,242

Property, Plant and Equipment

Impairment charges were allocated to the following income statement line items for the three and six months ended March 31, 2021 and 2020 (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Cost of net product revenue	$	897	$	—	$	2,865	$	—
Cost of net service revenue	3,491		—		3,492		—
Sales and marketing	10,256		—		11,515		—
Research and development	9,845		—		12,974		—
General and administrative	9,336		—		9,852		—
Total impairment charges	$	33,825	$	—	$	40,698	$	—

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Short-Term and Long-Term Investments (Tables)

6 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of Short-Term and Long-Term Investments

Short-term investments consist of the following (in thousands):

March 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	90,511	$	399	$	(1)	$	90,909
Municipal bonds and notes	2,907		1		—		2,908
U.S. government securities	12,035		1		—		12,036
U.S. government agency securities	5,250		2		—		5,252
	$	110,703	$	403	$	(1)	$	111,105

September 30, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	188,932	$	736	$	(6)	$	189,662
Municipal bonds and notes	6,143		3		—		6,146
U.S. government securities	117,363		14		(3)		117,374
U.S. government agency securities	47,148		3		—		47,151
	$	359,586	$	756	$	(9)	$	360,333

Long-term investments consist of the following (in thousands):

March 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	8,472	$	29	$	(1)	$	8,500
U.S. government securities	8,078		1		(1)		8,078
U.S. government agency securities	2,499		1		—		2,500
	$	19,049	$	31	$	(2)	$	19,078

September 30, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds and notes	$	102,206	$	756	$	(23)	$	102,939
	$	102,206	$	756	$	(23)	$	102,939

Schedule of Investments That Have Been in a Continuous Unrealized Loss Position

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of March 31, 2021 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
March 31, 2021	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and notes	$	12,248	$	(2)	$	—	$	—	$	12,248	$	(2)
U.S. government securities	9,707		(1)		—		—		9,707		(1)
Total	$	21,955	$	(3)	$	—	$	—	$	21,955	$	(3)

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of September 30, 2020 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
September 30, 2020	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and notes	$	43,492	$	(28)	$	5,006	$	(1)	$	48,498	$	(29)
U.S. government securities	41,812		(3)		—		—		41,812		(3)
Total	$	85,304	$	(31)	$	5,006	$	(1)	$	90,310	$	(32)

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Business Combinations (Tables)

6 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The allocated purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values is presented in the following table (in thousands):

			Estimated
			Useful Life
Assets acquired
Cash, cash equivalents, and restricted cash	$	14,012
Other tangible assets acquired, at fair value	7,499
Identifiable intangible assets:
Developed technologies	59,500		7 years
Customer relationships	500		1 year
Goodwill	351,417
Total assets acquired	432,928
Liabilities assumed	(5,686)
Net assets acquired	$	427,242

The allocated purchase consideration to assets acquired and liabilities assumed is presented in the following table (in thousands):

			Estimated
			Useful Life
Assets acquired
Cash, cash equivalents, and restricted cash	$	53,934
Fair value of tangible assets:
Accounts receivable	21,077
Deferred tax assets	29,848
Operating lease right-of-use assets	29,644
Other tangible assets	22,571
Identifiable intangible assets:
Developed technologies	120,000		7 years
Customer relationships	21,000		4 years
Trade name	9,500		5 years
Goodwill	798,867
Total assets acquired	$	1,106,441
Liabilities assumed
Deferred revenue	$	(39,000)
Operating lease liabilities	(30,773)
Other assumed liabilities	(18,571)
Total liabilities assumed	$	(88,344)
Net assets acquired	$	1,018,097

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Balance Sheet Details (Tables)

6 Months Ended

Mar. 31, 2021

Balance Sheet Details [Abstract]

Cash and Cash Equivalents

The following table provides a reconciliation of the Company's cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows for the periods presented (in thousands):

	March 31, 2021		September 30, 2020
Cash and cash equivalents	$	532,166	$	849,556
Restricted cash included in other assets, net	3,315		3,270
Total cash, cash equivalents and restricted cash	$	535,481	$	852,826

Inventories

Inventories consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Finished goods	$	14,697	$	17,096
Raw materials	9,874		10,802
	$	24,571	$	27,898

Other Current Assets

Other current assets consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Contract assets, current	$	161,867	$	138,096
Prepaid expenses	62,851		47,197
Capitalized contract acquisition costs, current	31,388		29,650
Other	37,296		44,563
	$	293,402	$	259,506

Other Assets, Noncurrent

Other assets, net consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Intangible assets, net	$	273,480	$	225,900
Contract assets, net of current	84,030		62,377
Capitalized contract acquisition costs, net of current	41,032		40,746
Other	19,673		18,424
	$	418,215	$	347,447

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Payroll and benefits	$	172,080	$	169,708
Operating lease liabilities, current	48,730		46,010
Income and other tax accruals	36,521		33,048
Other	67,534		72,632
	$	324,865	$	321,398

Noncurrent Liabilities

Other long-term liabilities consist of the following (in thousands):

	March 31, 2021		September 30, 2020
Income taxes payable	$	55,731	$	49,846
Other	9,602		9,665
	$	65,333	$	59,511

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Debt Facilities (Tables)

6 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

The following table presents the scheduled principal maturities as of March 31, 2021 (in thousands):

Fiscal Years Ending September 30:	Amount
2021 (remainder)	$	10,000
2022	20,000
2023	350,000
Total	$	380,000

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Leases (Tables)

6 Months Ended

Mar. 31, 2021

Leases [Abstract]

Lease, Cost

The components of the Company's operating lease expenses for the three and six months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Operating lease expense	$	12,158	$	12,975	$	24,339	$	24,293
Short-term lease expense	575		813		1,561		1,627
Variable lease expense	5,310		4,262		12,336		10,101
Total lease expense	$	18,043	$	18,050	$	38,236	$	36,021

Assets And Liabilities Lessee

Supplemental balance sheet information related to the Company's operating leases was as follows (in thousands, except lease term and discount rate):

	March 31, 2021			September 30, 2020
Operating lease right-of-use assets, net	$	260,389		$	300,680
Operating lease liabilities, current1	48,730			46,010
Operating lease liabilities, long-term	320,132			338,715
Total operating lease liabilities	$	368,862		$	384,725
Weighted average remaining lease term (in years)	9.9			10.2
Weighted average discount rate	2.58		%	2.58		%

(1)Current portion of operating lease liabilities is included in accrued liabilities on the Company's consolidated balance sheets.

Lessee, Operating Lease, Liability, Maturity

As of March 31, 2021, the future operating lease payments for each of the next five years and thereafter is as follows (in thousands):

Fiscal Years Ending September 30:	Operating Lease Payments
2021 (remainder)	$	26,772
2022	60,018
2023	47,183
2024	40,806
2025	33,496
2026	26,622
Thereafter	191,156
Total lease payments	426,053
Less: imputed interest	(57,191)
Total lease liabilities	$	368,862

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Shareholders' Equity (Tables)

6 Months Ended

Mar. 31, 2021

Equity [Abstract]

Class of Treasury Stock

The following table summarizes the Company's repurchases and retirements of its common stock under its Stock Repurchase Program, including the ASR (in thousands, except per share data):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Shares repurchased	2,052		442		2,052		442
Average price per share	$	194.91	$	113.18	$	194.91	$	113.18
Amount repurchased	$	400,000	$	50,009	$	400,000	$	50,009

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Net Income Per Share (Tables)

6 Months Ended

Mar. 31, 2021

Net Income Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Numerator
Net income	$	43,241	$	61,379	$	130,919	$	159,906
Denominator
Weighted average shares outstanding — basic	60,667		60,869		61,058		60,758
Dilutive effect of common shares from stock options and restricted stock units	1,491		215		1,234		259
Weighted average shares outstanding — diluted	62,158		61,084		62,292		61,017
Basic net income per share	$	0.71	$	1.01	$	2.14	$	2.63
Diluted net income per share	$	0.70	$	1.00	$	2.10	$	2.62

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Segment Information (Tables)

6 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Schedule of Revenues by Geographic Region

The following presents revenues by geographic region (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Americas:
United States	$	323,402	$	302,192	$	643,745	$	577,691
Other	22,650		23,094		45,443		49,157
Total Americas	346,052		325,286		689,188		626,848
EMEA	172,222		147,985		334,306		303,937
Asia Pacific	127,013		110,178		246,410		221,969
	$	645,287	$	583,449	$	1,269,904	$	1,152,754

Schedule of Segment Reporting Information, by Segment

The following presents net product revenues by systems and software (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Net product revenues
Systems revenue	$	200,950	$	171,383	$	379,521	$	340,984
Software revenue	108,239		88,155		217,713		153,090
Total net product revenue	$	309,189	$	259,538	$	597,234	$	494,074

Schedule of Revenue by Major Customers by Reporting Segments

The following distributors of the Company's products accounted for more than 10% of total net revenue:

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Ingram Micro, Inc.	17.7	%	17.3	%	17.9	%	16.9	%
Synnex Corporation	11.5	%	—		10.7	%	—

Long-lived Assets by Geographic Areas

The Company tracks assets by physical location. Long-lived assets consist of property and equipment, net, and are shown below (in thousands):

	March 31, 2021		September 30, 2020
United States	$	166,822	$	190,509
EMEA	22,217		20,361
Other countries	18,560		18,369
	$	207,599	$	229,239

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Restructuring Charges (Tables)

6 Months Ended

Mar. 31, 2021

Restructuring Charges [Abstract]

Restructuring and Related Costs

During the six months ended March 31, 2020, the following activity was recorded (in thousands):

	Employee Severance, Benefits and Related Costs
Accrued expenses, October 1, 2019	$	—
Restructuring charges	7,800
Cash payments	(6,956)
Non-cash items	—
Accrued expenses, March 31, 2020	$	844

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Revenue from Contracts with Customers - Capitalized contract acquisition costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Changes In Capitalized Contract Cost [Roll Forward]
Beginning Balance			$ 70,396	$ 59,446
Additional capitalized contract acquisition costs deferred			18,614	21,836
Amortization of capitalized contract acquisition costs	$ (8,400)	$ (8,300)	(16,590)	(16,972)
Ending Balance	$ 72,420	$ 64,310	$ 72,420	$ 64,310

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Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Change in Contract with Customer, Asset [Roll Forward]
Beginning Balance	$ 200,472	$ 132,492
Revenue recognized during period but not yet billed	30,294	13,998
Contract asset additions	81,040	38,060
Contract assets acquired through acquisition of businesses	0	6,045
Contract assets reclassified to accounts receivable	(65,909)	(33,211)
Ending Balance	245,897	157,384
Change in Contract with Customer, Liability [Roll Forward]
Beginning Balance	1,272,632	1,198,116
Amounts billed but not recognized as revenues	680,124	587,983
Deferred revenue acquired through acquisition of businesses	779	39,000
Revenues recognized related to the opening balance of deferred revenue	(586,632)	(543,995)
Ending Balance	$ 1,366,903	$ 1,281,104

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Revenue from Contracts with Customers - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Revenue from Contract with Customer [Abstract]
Amortization of capitalized contract acquisition costs	$ 8,400,000	$ 8,300,000	$ 16,590,000	$ 16,972,000
Capitalized Contract Cost, Impairment Loss			$ 0	$ 0

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Revenue from Contracts with Customers - Remaining Performance Obligations (Details) $ in Billions	Mar. 31, 2021 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, amount	$ 1.4
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, percentage	68.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, percentage	19.40%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months

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Fair Value Measurements - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	$ 45,060	$ 250,970
Investments, fair value	175,243	714,242
Corporate Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	90,909	189,662
Debt Securities, Available-for-sale, Noncurrent	8,500	102,939
Municipal Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	2,908	6,146
U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	12,036	117,374
Debt Securities, Available-for-sale, Noncurrent	8,078
U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	5,252	47,151
Debt Securities, Available-for-sale, Noncurrent	2,500
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	45,060	43,553
Investments, fair value	45,060	43,553
Level 1 | Corporate Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Debt Securities, Available-for-sale, Noncurrent	0	0
Level 1 | Municipal Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Level 1 | U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Debt Securities, Available-for-sale, Noncurrent	0
Level 1 | U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Debt Securities, Available-for-sale, Noncurrent	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	0	207,417
Investments, fair value	130,183	670,689
Level 2 | Corporate Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	90,909	189,662
Debt Securities, Available-for-sale, Noncurrent	8,500	102,939
Level 2 | Municipal Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	2,908	6,146
Level 2 | U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	12,036	117,374
Debt Securities, Available-for-sale, Noncurrent	8,078
Level 2 | U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	5,252	47,151
Debt Securities, Available-for-sale, Noncurrent	2,500
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	0	0
Investments, fair value	0	0
Level 3 | Corporate Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Debt Securities, Available-for-sale, Noncurrent	0	0
Level 3 | Municipal Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Level 3 | U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	0
Debt Securities, Available-for-sale, Noncurrent	0
Level 3 | U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Current	0	$ 0
Debt Securities, Available-for-sale, Noncurrent	$ 0

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Fair Value Measurements - Schedule of Impairment Charges by Income Statement Line Item (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Property, Plant and Equipment [Line Items]
Impairment of assets	$ 33,825	$ 0	$ 40,698	$ 0
Cost of net product revenue
Property, Plant and Equipment [Line Items]
Impairment of assets	897	0	2,865	0
Cost of net service revenue
Property, Plant and Equipment [Line Items]
Impairment of assets	3,491	0	3,492	0
Selling and Marketing Expense
Property, Plant and Equipment [Line Items]
Impairment of assets	10,256	0	11,515	0
Research and Development Expense
Property, Plant and Equipment [Line Items]
Impairment of assets	9,845	0	12,974	0
General and Administrative Expense
Property, Plant and Equipment [Line Items]
Impairment of assets	$ 9,336	$ 0	$ 9,852	$ 0

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Fair Value Measurements Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Operating Lease, Impairment Loss	$ 23.5	$ 6.7
Fair Value, Nonrecurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Operating Lease, Impairment Loss	23.5	6.7
Tangible Asset Impairment Charges	$ 10.3	$ 0.2

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Short-Term and Long-Term Investments - Schedule of Short-Term and Long-Term Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Short-Term Investments
Schedule of Investments [Line Items]
Cost or amortized cost	$ 110,703	$ 359,586
Gross unrealized gains	403	756
Gross unrealized losses	(1)	(9)
Fair value	111,105	360,333
Short-Term Investments | Corporate Bonds and Notes
Schedule of Investments [Line Items]
Cost or amortized cost	90,511	188,932
Gross unrealized gains	399	736
Gross unrealized losses	(1)	(6)
Fair value	90,909	189,662
Short-Term Investments | Municipal Bonds And Notes [Member]
Schedule of Investments [Line Items]
Cost or amortized cost	2,907	6,143
Gross unrealized gains	1	3
Gross unrealized losses	0	0
Fair value	2,908	6,146
Short-Term Investments | U.S. Government Securities
Schedule of Investments [Line Items]
Cost or amortized cost	12,035	117,363
Gross unrealized gains	1	14
Gross unrealized losses	0	(3)
Fair value	12,036	117,374
Short-Term Investments | U.S. Government Agency Securities
Schedule of Investments [Line Items]
Cost or amortized cost	5,250	47,148
Gross unrealized gains	2	3
Gross unrealized losses	0	0
Fair value	5,252	47,151
Long-Term Investments
Schedule of Investments [Line Items]
Cost or amortized cost	19,049	102,206
Gross unrealized gains	31	756
Gross unrealized losses	(2)	(23)
Fair value	19,078	102,939
Long-Term Investments | Corporate Bonds and Notes
Schedule of Investments [Line Items]
Cost or amortized cost	8,472	102,206
Gross unrealized gains	29	756
Gross unrealized losses	(1)	(23)
Fair value	8,500	$ 102,939
Long-Term Investments | U.S. Government Securities
Schedule of Investments [Line Items]
Cost or amortized cost	8,078
Gross unrealized gains	1
Gross unrealized losses	(1)
Fair value	8,078
Long-Term Investments | U.S. Government Agency Securities
Schedule of Investments [Line Items]
Cost or amortized cost	2,499
Gross unrealized gains	1
Gross unrealized losses	0
Fair value	$ 2,500

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Short-Term and Long-Term Investments - Schedule of Investments That Have Been in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Fair Value
Less than 12 months	$ 21,955	$ 85,304
12 months or greater	0	5,006
Total	21,955	90,310
Gross Unrealized Losses
Less than 12 months	(3)	(31)
12 months or greater	0	(1)
Total	(3)	(32)
Corporate Bonds and Notes
Fair Value
Less than 12 months	12,248	43,492
12 months or greater	0	5,006
Total	12,248	48,498
Gross Unrealized Losses
Less than 12 months	(2)	(28)
12 months or greater	0	(1)
Total	(2)	(29)
U.S. Government Securities
Fair Value
Less than 12 months	9,707	41,812
12 months or greater	0	0
Total	9,707	41,812
Gross Unrealized Losses
Less than 12 months	(1)	(3)
12 months or greater	0	0
Total	$ (1)	$ (3)

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Short-Term and Long-Term Investments - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Interest income from investments	$ 0.7	$ 3.3	$ 1.8	$ 8.9

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Business Combinations - Narrative (Details) - USD ($) $ in Millions			3 Months Ended		6 Months Ended
	Jan. 22, 2021	Jan. 24, 2020	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Volterra, Inc.
Business Acquisition [Line Items]
Total purchase price	$ 427.2
Identifiable intangible assets useful life	6 years 11 months 12 days
Volterra, Inc. | General and Administrative Expense
Business Acquisition [Line Items]
Business combination, acquisition related costs			$ 6.9		$ 9.5
Shape Security, Inc.
Business Acquisition [Line Items]
Total purchase price		$ 1,000.0
Transaction costs		$ 23.2
Identifiable intangible assets useful life		6 years 6 months
Goodwill, Other Increase (Decrease)					$ 0.7
Shape Security, Inc. | General and Administrative Expense
Business Acquisition [Line Items]
Business combination, acquisition related costs				$ 11.4		$ 15.3
Developed Technology Rights | Volterra, Inc.
Business Acquisition [Line Items]
Identifiable intangible assets useful life	7 years
Developed Technology Rights | Shape Security, Inc.
Business Acquisition [Line Items]
Identifiable intangible assets useful life		7 years
Customer Relationships | Volterra, Inc.
Business Acquisition [Line Items]
Identifiable intangible assets useful life	1 year
Customer Relationships | Shape Security, Inc.
Business Acquisition [Line Items]
Identifiable intangible assets useful life		4 years
Trade Names | Shape Security, Inc.
Business Acquisition [Line Items]
Identifiable intangible assets useful life		5 years

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Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands	Jan. 22, 2021	Jan. 24, 2020	Mar. 31, 2021	Sep. 30, 2020
Fair value of tangible assets:
Goodwill			$ 2,209,639	$ 1,858,966
Volterra, Inc.
Assets Acquired
Cash, cash equivalents, and restricted cash	$ 14,012
Fair value of tangible assets:
Other tangible assets acquired, at fair value	$ 7,499
Identifiable intangible assets useful life	6 years 11 months 12 days
Goodwill	$ 351,417
Total assets acquired	432,928
Liabilities assumed
Total liabilities assumed	(5,686)
Net assets acquired	427,242
Volterra, Inc. | Developed Technology Rights
Fair value of tangible assets:
Identifiable intangible assets:	$ 59,500
Identifiable intangible assets useful life	7 years
Volterra, Inc. | Customer Relationships
Fair value of tangible assets:
Identifiable intangible assets:	$ 500
Identifiable intangible assets useful life	1 year
Shape Security, Inc.
Assets Acquired
Cash, cash equivalents, and restricted cash		$ 53,934
Fair value of tangible assets:
Accounts receivable		21,077
Deferred tax assets		29,848
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Operating Lease, Right-Of-Use Assets		29,644
Other tangible assets		$ 22,571
Identifiable intangible assets useful life		6 years 6 months
Goodwill		$ 798,867
Total assets acquired		1,106,441
Liabilities assumed
Deferred revenue		(39,000)
Business Combination, Recognized Identifiable Asset Acquired and Liability Assumed, Lease Obligation		(30,773)
Other assumed liabilities		(18,571)
Total liabilities assumed		(88,344)
Net assets acquired		1,018,097
Shape Security, Inc. | Developed Technology Rights
Fair value of tangible assets:
Identifiable intangible assets:		$ 120,000
Identifiable intangible assets useful life		7 years
Shape Security, Inc. | Customer Relationships
Fair value of tangible assets:
Identifiable intangible assets:		$ 21,000
Identifiable intangible assets useful life		4 years
Shape Security, Inc. | Trade Names
Fair value of tangible assets:
Identifiable intangible assets:		$ 9,500
Identifiable intangible assets useful life		5 years

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Balance Sheet Details - Cash and Cash Equivalent (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019
Balance Sheet Details [Abstract]
Cash and cash equivalents	$ 532,166	$ 849,556
Restricted cash included in other assets, net	3,315	3,270
Total cash, cash equivalents and restricted cash	$ 535,481	$ 852,826	$ 579,365	$ 602,254

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Balance Sheet Details - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Balance Sheet Details [Abstract]
Finished goods	$ 14,697	$ 17,096
Raw materials	9,874	10,802
Inventories	$ 24,571	$ 27,898

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Balance Sheet Details - Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Balance Sheet Details [Abstract]
Contract assets, current	$ 161,867	$ 138,096
Prepaid expenses	62,851	47,197
Capitalized contract acquisition costs, current	31,388	29,650
Other	37,296	44,563
Other Assets, Current	$ 293,402	$ 259,506

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Balance Sheet Details - Other Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Balance Sheet Details [Abstract]
Intangible assets, net	$ 273,480	$ 225,900
Contract assets, net of current	84,030	62,377
Capitalized contract acquisition costs, net of current	41,032	40,746
Other	19,673	18,424
Other Assets, Noncurrent	$ 418,215	$ 347,447

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Balance Sheet Details - Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Balance Sheet Details [Abstract]
Payroll and benefits	$ 172,080	$ 169,708
Operating lease liabilities, current	48,730	46,010
Income and other tax accruals	36,521	33,048
Other	67,534	72,632
Accrued Liabilities, Current	$ 324,865	$ 321,398

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Balance Sheet Details - Other Long-term Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Balance Sheet Details [Abstract]
Income taxes payable	$ 55,731	$ 49,846
Other	9,602	9,665
Other long-term liabilities	$ 65,333	$ 59,511

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Debt Facilities - Narrative (Details)			3 Months Ended		6 Months Ended
	Jan. 31, 2020 USD ($)	Jan. 24, 2020 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2020	Mar. 31, 2021 USD ($) extension	Mar. 31, 2020
Term Loan Facility
Debt Instrument [Line Items]
Aggregate principal amount		$ 400,000,000.0
Debt issuance costs		$ 2,200,000	$ 1,300,000		$ 1,300,000
Redemption percentage		1.25%
Long-term line of credit			$ 380,000,000.0		$ 380,000,000.0
Line of Credit Facility, Interest Rate During Period			1.39%	2.765%	1.39%	2.765%
Term Loan Facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					1.125%
Term Loan Facility | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		1.125%
Term Loan Facility | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%
Term Loan Facility | Alternate Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate					0.125%
Term Loan Facility | Alternate Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		0.125%
Term Loan Facility | Alternate Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		0.75%
Revolving Credit Facility
Debt Instrument [Line Items]
Aggregate principal amount	$ 350,000,000.0
Long-term line of credit			$ 0		$ 0
Conditional increase in borrowing capacity	$ 150,000,000.0
Number of extensions | extension					2
Length of extension period					1 year
Outstanding line of credit balance			$ 350,000,000.0		$ 350,000,000.0
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Commitment fee percentage	0.125%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Commitment fee percentage	0.30%
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	1.125%
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%
Revolving Credit Facility | Alternate Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	0.125%
Revolving Credit Facility | Alternate Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%

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Debt Facilities - Long-term Debt Maturities (Details) - Term Loan Facility $ in Thousands	Mar. 31, 2021 USD ($)
Debt Instrument [Line Items]
2021 (remainder)	$ 10,000
2022	20,000
2023	350,000
Total	$ 380,000

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Leases - Narrative (Details) ft² in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021 USD ($) ft²	Dec. 31, 2020 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2020 USD ($)	Oct. 01, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets	$ 260,389		$ 260,389	$ 300,680
Sublease Income			7,900
Sublease income payment remainder of fiscal year	2,100		2,100
Payment to be received between year two and four	5,800		$ 5,800
Operating Lease, Impairment Loss	$ 23,500	$ 6,700
Office Building
Lessee, Lease, Description [Line Items]
Operating lease, number of square feet | ft²	515
Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets					$ 304,800
Lease liabilities					$ 386,400

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Leases - Operating Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Operating lease expense	$ 12,158	$ 12,975	$ 24,339	$ 24,293
Short-term lease expense	575	813	1,561	1,627
Variable lease expense	5,310	4,262	12,336	10,101
Total lease expense	$ 18,043	$ 18,050	$ 38,236	$ 36,021

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Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 260,389	$ 300,680
Operating lease liabilities, current	48,730	46,010
Operating lease liabilities, long-term	320,132	338,715
Total lease liabilities	$ 368,862	$ 384,725
Weighted average remaining lease term (in years)	9 years 10 months 24 days	10 years 2 months 12 days
Weighted average discount rate	2.58%	2.58%

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Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Leases [Abstract]
2021 (remainder)	$ 26,772
2022	60,018
2023	47,183
2024	40,806
2025	33,496
2026	26,622
Thereafter	191,156
Total lease payments	426,053
Less: imputed interest	(57,191)
Total lease liabilities	$ 368,862	$ 384,725

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Commitments And Contingencies (Details)	6 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Product warranty period	1 year

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Effective tax rate	17.00%	26.50%	22.60%	24.30%
Unrecognized tax benefit	$ 60.0		$ 60.0

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Shareholders' Equity - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Feb. 03, 2021	Mar. 31, 2021	Mar. 31, 2021	Oct. 31, 2018	Oct. 26, 2010
Equity, Class of Treasury Stock [Line Items]
Accelerated Share Repurchases, Settlement (Payment) or Receipt	$ 500,000
Accelerated Share Repurchases, Cash or Stock Settlement	2.1 million
Accelerated Share Repurchases, Cash or Stock Settlement, Percentage	80.00%
Adjustments To Additional Paid In Capital, Equity Forward Contract	$ 100,000	$ (100,000)	$ (100,000)
October Twenty Six Two Thousand Ten Program
Equity, Class of Treasury Stock [Line Items]
Stock Repurchase Program, Authorized Amount				$ 1,000,000	$ 4,400,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 873,000	$ 873,000

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Shareholders' Equity - Class of Treasury Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Equity, Class of Treasury Stock [Line Items]
Treasury Stock Acquired, Average Cost Per Share	$ 194.91	$ 113.18	$ 194.91	$ 113.18
Stock Repurchased and Retired During Period, Value	$ 400,000	$ 50,009	$ 400,000	$ 50,009
October Twenty Six Two Thousand Ten Program
Equity, Class of Treasury Stock [Line Items]
Stock Repurchased and Retired During Period, Shares	2,052	442	2,052	442

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Numerator
Net income	$ 43,241	$ 61,379	$ 130,919	$ 159,906
Denominator
Weighted average shares outstanding — basic (shares)	60,667	60,869	61,058	60,758
Dilutive effect of common shares from stock options and restricted stock units	1,491	215	1,234	259
Weighted average shares outstanding — diluted (shares)	62,158	61,084	62,292	61,017
Basic net income per share (dollars per share)	$ 0.71	$ 1.01	$ 2.14	$ 2.63
Diluted net income per share (dollars per share)	$ 0.70	$ 1.00	$ 2.10	$ 2.62

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Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2021 USD ($) geographic_region segment	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			1
Number of geographic regions | geographic_region			3
Net revenues	$ 645,287	$ 583,449	$ 1,269,904	$ 1,152,754
Long-lived assets	$ 207,599		$ 207,599		$ 229,239
Ingram Micro, Inc. | Net Revenue | Geographic Concentration
Segment Reporting Information [Line Items]
Concentration risk percentage	17.70%	17.30%	17.90%	16.90%
Synnex Corporation | Net Revenue | Geographic Concentration
Segment Reporting Information [Line Items]
Concentration risk percentage	11.50%	0.00%	10.70%	0.00%
Product
Segment Reporting Information [Line Items]
Net revenues	$ 309,189	$ 259,538	$ 597,234	$ 494,074
Product | Systems
Segment Reporting Information [Line Items]
Net revenues	200,950	171,383	379,521	340,984
Product | Software
Segment Reporting Information [Line Items]
Net revenues	108,239	88,155	217,713	153,090
United States
Segment Reporting Information [Line Items]
Net revenues	323,402	302,192	643,745	577,691
Long-lived assets	166,822		166,822		190,509
Other
Segment Reporting Information [Line Items]
Net revenues	22,650	23,094	45,443	49,157
Total Americas
Segment Reporting Information [Line Items]
Net revenues	346,052	325,286	689,188	626,848
EMEA
Segment Reporting Information [Line Items]
Net revenues	172,222	147,985	334,306	303,937
Long-lived assets	22,217		22,217		20,361
Asia Pacific
Segment Reporting Information [Line Items]
Net revenues	127,013	$ 110,178	246,410	$ 221,969
Other countries
Segment Reporting Information [Line Items]
Long-lived assets	$ 18,560		$ 18,560		$ 18,369

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Restructuring Charges - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($) employee
Restructuring Charges [Abstract]
Number of employees in reduction of force program | employee					75
Restructuring charges | $	$ 0	$ 0	$ 0	$ 7,800	$ 7,800

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Restructuring Charges - Restructuring Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020
Restructuring Reserve [Roll Forward]
Accrued expenses (Beginning balance)				$ 0	$ 0
Restructuring charges	$ 0	$ 0	$ 0	7,800	$ 7,800
Cash payments				(6,956)
Non-cash items				0
Accrued expenses (Ending balance)		$ 844		$ 844

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Subsequent Events (Details) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
	Apr. 26, 2021	Feb. 03, 2021	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Subsequent Event [Line Items]
Adjustments To Additional Paid In Capital, Equity Forward Contract		$ 100,000	$ (100,000)		$ (100,000)
October Twenty Six Two Thousand Ten Program
Subsequent Event [Line Items]
Stock Repurchased and Retired During Period, Shares			2,052,000	442,000	2,052,000	442,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount			$ 873,000		$ 873,000
Subsequent Event
Subsequent Event [Line Items]
Adjustments To Additional Paid In Capital, Equity Forward Contract	$ (100,000)
Stock Repurchased and Retired During Period, Shares	449,049
Subsequent Event | October Twenty Six Two Thousand Ten Program
Subsequent Event [Line Items]
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 773,000