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 June 30, 2023

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, 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 July 27, 2023 was 59,306,423.

F5, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2023

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	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 4. Mine Safety Disclosures	32
Item 5. Other Information	32
Item 6. Exhibits	32
SIGNATURES	33

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

F5, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	June 30, 2023		September 30, 2022
ASSETS
Current assets
Cash and cash equivalents	$	677,498	$	758,012
Short-term investments	13,109		126,554
Accounts receivable, net of allowances of $5,172 and $6,020	439,518		469,979
Inventories	46,102		68,365
Other current assets	537,557		489,314
Total current assets	1,713,784		1,912,224
Property and equipment, net	171,147		168,182
Operating lease right-of-use assets	204,196		227,475
Long-term investments	5,887		9,544
Deferred tax assets	271,171		183,365
Goodwill	2,288,678		2,259,282
Other assets, net	464,293		516,122
Total assets	$	5,119,156	$	5,276,194
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	65,499	$	113,178
Accrued liabilities	274,255		309,819
Deferred revenue	1,149,787		1,067,182
Current portion of long-term debt	—		349,772
Total current liabilities	1,489,541		1,839,951
Deferred tax liabilities	3,883		2,781
Deferred revenue, long-term	641,647		624,398
Operating lease liabilities, long-term	250,077		272,376
Other long-term liabilities	76,505		67,710
Total long-term liabilities	972,112		967,265
Commitments and contingencies (Note 8)
Shareholders' equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding	—		—
Common stock, no par value; 200,000 shares authorized, 59,296 and 59,860 shares issued and outstanding	32,519		91,048
Accumulated other comprehensive loss	(21,936)		(26,176)
Retained earnings	2,646,920		2,404,106
Total shareholders' equity	2,657,503		2,468,978
Total liabilities and shareholders' equity	$	5,119,156	$	5,276,194

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

4

F5, INC.

CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per share data)

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Net revenues
Products	$	328,175	$	326,482	$	1,009,314	$	967,149
Services	374,467		348,006		1,096,881		1,028,663
Total	702,642		674,488		2,106,195		1,995,812
Cost of net revenues
Products	87,940		73,558		286,590		226,454
Services	53,743		57,175		165,754		165,711
Total	141,683		130,733		452,344		392,165
Gross profit	560,959		543,755		1,653,851		1,603,647
Operating expenses
Sales and marketing	207,202		226,731		673,383		689,592
Research and development	128,765		138,737		412,451		404,846
General and administrative	64,775		70,823		201,802		205,038
Restructuring charges	56,648		—		65,388		7,909
Total	457,390		436,291		1,353,024		1,307,385
Income from operations	103,569		107,464		300,827		296,262
Other income (expense), net	2,896		(6,221)		10,335		(10,586)
Income before income taxes	106,465		101,243		311,162		285,676
Provision for income taxes	17,489		18,224		68,348		52,862
Net income	$	88,976	$	83,019	$	242,814	$	232,814
Net income per share — basic	$	1.48	$	1.38	$	4.04	$	3.85
Weighted average shares — basic	59,977		59,965		60,133		60,450
Net income per share — diluted	$	1.48	$	1.37	$	4.02	$	3.80
Weighted average shares — diluted	60,314		60,460		60,463		61,345

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

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F5, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Net income	$	88,976	$	83,019	$	242,814	$	232,814
Other comprehensive income (loss):
Foreign currency translation adjustment	884		(1,910)		2,868		(2,506)
Available-for-sale securities:
Unrealized gains (losses) on securities, net of taxes of $30 and $42 for the three months ended June 30, 2023 and 2022, respectively, and $262 and $(180) for the nine months ended June 30, 2023 and 2022, respectively	157		20		1,984		(1,895)
Reclassification adjustment for realized losses included in net income, net of taxes of $0 and $34 for the three months ended June 30, 2023 and 2022, respectively, and $78 and $48 for the nine months ended June 30, 2023 and 2022, respectively	—		(108)		(612)		(152)
Net change in unrealized gains (losses) on available-for-sale securities, net of tax	157		(88)		1,372		(2,047)
Total other comprehensive income (loss)	1,041		(1,998)		4,240		(4,553)
Comprehensive income	$	90,017	$	81,021	$	247,054	$	228,261

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

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F5, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited, in thousands)

	Common Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
	Three months ended June 30, 2022
Balances, March 31, 2022	60,465	$	82,133	$	(22,628)	$	2,337,623	$	2,397,128
Exercise of employee stock options	19	450		—		—		450
Issuance of stock under employee stock purchase plan	243	34,602		—		—		34,602
Issuance of restricted stock	305	—		—		—		—
Repurchase of common stock	(1,463)	(144,118)		—		(105,882)		(250,000)
Taxes paid related to net share settlement of equity awards	(13)	(2,091)		—		—		(2,091)
Stock-based compensation	—	61,875		—		—		61,875
Net income	—	—		—		83,019		83,019
Other comprehensive loss	—	—		(1,998)		—		(1,998)
Balances, June 30, 2022	59,556	$	32,851	$	(24,626)	$	2,314,760	$	2,322,985
	Three months ended June 30, 2023
Balances, March 31, 2023	60,465	$	190,592	$	(22,977)	$	2,557,944	$	2,725,559
Exercise of employee stock options	13	313		—		—		313
Issuance of stock under employee stock purchase plan	321	36,723		—		—		36,723
Issuance of restricted stock	320	—		—		—		—
Repurchase of common stock	(1,812)	(250,036)		—		—		(250,036)
Taxes paid related to net share settlement of equity awards	(11)	(1,545)		—		—		(1,545)
Stock-based compensation	—	56,472		—		—		56,472
Net income	—	—		—		88,976		88,976
Other comprehensive income	—	—		1,041		—		1,041
Balances, June 30, 2023	59,296	$	32,519	$	(21,936)	$	2,646,920	$	2,657,503

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	Nine months ended June 30, 2022
Balances, September 30, 2021	60,652	$	192,458	$	(20,073)	$	2,187,828	$	2,360,213
Exercise of employee stock options	115	2,753		—		—		2,753
Issuance of stock under employee stock purchase plan	412	60,927		—		—		60,927
Issuance of restricted stock	1,080	—		—		—		—
Repurchase of common stock	(2,611)	(394,141)		—		(105,882)		(500,023)
Taxes paid related to net share settlement of equity awards	(92)	(18,907)		—		—		(18,907)
Stock-based compensation	—	189,761		—		—		189,761
Net income	—	—		—		232,814		232,814
Other comprehensive loss	—	—		(4,553)		—		(4,553)
Balances, June 30, 2022	59,556	$	32,851	$	(24,626)	$	2,314,760	$	2,322,985
	Nine months ended June 30, 2023
Balances, September 30, 2022	59,860	$	91,048	$	(26,176)	$	2,404,106	$	2,468,978
Exercise of employee stock options	39	1,029		—		—		1,029
Issuance of stock under employee stock purchase plan	500	58,468		—		—		58,468
Issuance of restricted stock	1,051	—		—		—		—
Repurchase of common stock	(2,075)	(290,041)		—		—		(290,041)
Taxes paid related to net share settlement of equity awards	(79)	(11,369)		—		—		(11,369)
Stock-based compensation	—	183,384		—		—		183,384
Net income	—	—		—		242,814		242,814
Other comprehensive income	—	—		4,240		—		4,240
Balances, June 30, 2023	59,296	$	32,519	$	(21,936)	$	2,646,920	$	2,657,503

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

8

F5, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine months ended June 30,
	2023		2022
Operating activities
Net income	$	242,814	$	232,814
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	183,384		189,761
Depreciation and amortization	83,173		88,398
Non-cash operating lease costs	29,977		29,071
Deferred income taxes	(85,091)		(28,956)
Impairment of assets	3,455		6,175
Other	2,137		585
Changes in operating assets and liabilities (excluding effects of the acquisition of businesses):
Accounts receivable	31,507		(116,137)
Inventories	22,263		(21,732)
Other current assets	(47,488)		(106,070)
Other assets	13,231		(50,400)
Accounts payable and accrued liabilities	(79,608)		(33,398)
Deferred revenue	98,054		136,872
Lease liabilities	(34,200)		(38,707)
Net cash provided by operating activities	463,608		288,276
Investing activities
Purchases of investments	(1,789)		(58,514)
Maturities of investments	103,513		178,372
Sales of investments	16,085		120,564
Acquisition of businesses, net of cash acquired	(35,049)		(67,911)
Purchases of property and equipment	(38,802)		(25,117)
Net cash provided by investing activities	43,958		147,394
Financing activities
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan	59,497		63,681
Repurchase of common stock	(290,041)		(500,023)
Payments on term debt agreement	(350,000)		(15,000)
Taxes paid related to net share settlement of equity awards	(11,369)		(18,907)
Net cash used in financing activities	(591,913)		(470,249)
Net decrease in cash, cash equivalents and restricted cash	(84,347)		(34,579)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	3,729		(3,633)
Cash, cash equivalents and restricted cash, beginning of period	762,207		584,333
Cash, cash equivalents and restricted cash, end of period	$	681,589	$	546,121
Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	$	40,619	$	44,115
Cash paid for interest on long-term debt	2,970		4,287
Supplemental disclosures of non-cash activities
Right-of-use assets obtained in exchange for lease obligations	$	10,544	$	614

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

9

F5, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Summary of Significant Accounting Policies

Description of Business

F5, Inc. (the "Company") is a leading provider of multi-cloud application security and delivery solutions 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, maintenance, and other technical support services.

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, 2022.

There have been no changes to the Company's significant accounting policies as of and for the three and nine months ended June 30, 2023.

New Accounting Pronouncements

There have been no material changes in recently issued or adopted accounting standards from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

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 nine months ended June 30, 2023 and 2022 (in thousands):

	Nine months ended June 30,
	2023		2022
Balance, beginning of period	$	77,220	$	77,836
Additional capitalized contract acquisition costs	19,384		27,620
Amortization of capitalized contract acquisition costs	(28,514)		(28,782)
Balance, end of period	$	68,090	$	76,674

Amortization of capitalized contract acquisition costs was $9.4 million and $9.7 million for the three months ended June 30, 2023 and 2022, respectively, and $28.5 million and $28.8 million for the nine months ended June 30, 2023 and 2022, 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.

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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. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations, or for contracts with customers that contain the Company's unconditional rights to consideration, for which the customer has not been billed. These liabilities are classified as current and non-current deferred revenue.

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the nine months ended June 30, 2023 and 2022 (in thousands):

	Nine months ended June 30,
	2023		2022
Balance, beginning of period	$	1,691,580	$	1,489,841
Amounts added but not recognized as revenues	1,012,441		973,673
Deferred revenue acquired through acquisition of businesses	1,800		10,591
Revenues recognized related to the opening balance of deferred revenue	(914,387)		(836,800)
Balance, end of period	$	1,791,434	$	1,637,305

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. The composition of unsatisfied performance obligations consists mainly of deferred service revenue, and to a lesser extent, deferred product revenue, for which the Company has an obligation to perform, and has not yet recognized as revenue in the consolidated financial statements. As of June 30, 2023, the total non-cancelable remaining performance obligations under the Company's contracts with customers was $1.8 billion and the Company expects to recognize revenues on approximately 64.2% of these remaining performance obligations over the next 12 months, 23.1% in year two, and the remaining balance thereafter.

See Note 12, 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.

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

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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 June 30, 2023 and September 30, 2022, were as follows (in thousands):

				Gross Unrealized						Classification on Balance Sheet
As of June 30, 2023	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	186,499	$	—	$	—	$	186,499	$	186,499	$	—	$	—
Corporate bonds and notes	Level 2	7,271		—		(144)		7,127		—		6,354		773
Municipal bonds and notes	Level 2	2,156		—		(31)		2,125		—		2,125		—
U.S. government securities	Level 2	2,899		—		(34)		2,865		—		2,865		—
U.S. government agency securities	Level 2	1,785		—		(20)		1,765		—		1,765		—
Total debt investments		$	200,610	$	—	$	(229)	$	200,381	$	186,499	$	13,109	$	773
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	5,114	$	—	$	—	$	5,114
Total equity investments								5,114		—		—		5,114
Total investments								$	205,495	$	186,499	$	13,109	$	5,887

 * The fair value of this equity investment is measured at net asset value (NAV) which approximates fair value and is not classified within the fair value hierarchy.

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				Gross Unrealized						Classification on Balance Sheet
As of September 30, 2022	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	276,294	$	—	$	—	$	276,294	$	276,294	$	—	$	—
Corporate bonds and notes	Level 2	50,828		—		(950)		49,878		912		44,356		4,610
Municipal bonds and notes	Level 2	5,018		—		(102)		4,916		—		3,812		1,104
U.S. government securities	Level 2	84,734		—		(660)		84,074		10,120		73,954		—
U.S. government agency securities	Level 2	5,825		—		(75)		5,750		606		4,432		712
Total debt investments		$	422,699	$	—	$	(1,787)	$	420,912	$	287,932	$	126,554	$	6,426
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	3,118	$	—	$	—	$	3,118
Total equity investments								3,118		—		—		3,118
Total investments								$	424,030	$	287,932	$	126,554	$	9,544

* The fair value of this equity investment is measured at NAV which approximates fair value and is not classified within the fair value hierarchy.

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.

Interest income from investments was not material for the three and nine months ended June 30, 2023 and 2022. Interest income is included in other income (expense), net on the Company's consolidated income statements. Unrealized losses on investments held for a period greater than 12 months at June 30, 2023 and September 30, 2022 were not material.

The Company invests in debt securities that are rated investment grade. The Company reviews the individual debt securities in its portfolio to determine whether a credit loss exists by comparing the extent to which the fair value is less than the amortized cost and considering any changes to ratings of a debt security by a ratings agency. The Company determined that as of June 30, 2023, there were no credit losses on any investments within its portfolio.

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

The Company's non-financial long-lived assets, which include goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis. These non-financial assets 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.

During the three months ended June 30, 2023, the Company recorded an impairment of $3.5 million against the operating lease right-of-use asset related to its third quarter of fiscal 2023 restructuring plan, see Note 13, Restructuring Charges. The charge was reflected in the Restructuring Charges line item on the Company's consolidated income statement.

In the first quarter of fiscal 2022, as a result of a planned change in the use of the asset, the Company recorded an impairment of $6.2 million against the Shape trade name intangible asset, which was reflected in the Sales and Marketing line item on the Company's consolidated income statement.

The Company did not recognize any other impairment charges related to non-financial long-lived assets for the three and nine months ended June 30, 2023 and 2022.

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4. Business Combinations

Fiscal Year 2023 Acquisition of Lilac Cloud, Inc.

On January 22, 2023, the Company entered into a Merger Agreement (the “Lilac Merger Agreement”) with Lilac Cloud, Inc. ("Lilac"), a provider of innovative application delivery services. The transaction closed on February 1, 2023 with Lilac becoming a wholly-owned subsidiary of F5. The addition of Lilac’s Content Delivery Network ("CDN") technologies enhances F5’s portfolio of solutions that secure and optimize any application and Application Programming Interface ("API") anywhere. The acquisition of Lilac was not material and did not have a material impact to the Company's operating results. 

Fiscal Year 2022 Acquisition of Threat Stack, Inc.

In September 2021, the Company entered into a Merger Agreement (the “Threat Stack Merger Agreement”) with Threat Stack, Inc. ("Threat Stack"), a provider of cloud security and workload protection solutions. The transaction closed on October 1, 2021 with Threat Stack becoming a wholly-owned subsidiary of F5. The addition of Threat Stack’s cloud security capabilities to F5’s application and API protection solutions enhances visibility across application infrastructure and workloads to deliver more actionable security insights for customers.

Pursuant to the Threat Stack Merger Agreement, at the effective time of the Merger, the capital stock of Threat Stack and the vested outstanding and unexercised stock options in Threat Stack were cancelled and converted to the right to receive approximately $68.9 million in cash, subject to certain adjustments and conditions set forth in the Threat Stack Merger Agreement. Transaction costs associated with the acquisition were not material.

As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of Threat Stack. The goodwill related to the Threat Stack 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 Threat Stack acquisition was not deductible for tax purposes. The results of operations of Threat Stack 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
Deferred tax assets	$	14,041
Other net tangible assets acquired, at fair value	5,481
Cash, cash equivalents, and restricted cash	911
Identifiable intangible assets:
Developed technology	11,400		5 years
Customer relationships	4,400		5 years
Goodwill	43,282
Total assets acquired	$	79,515
Liabilities assumed
Deferred revenue	$	(10,591)
Total liabilities assumed	$	(10,591)
Net assets acquired	$	68,924

The measurement period for the Threat Stack acquisition lapsed during the first quarter of fiscal 2023. The Company recorded immaterial adjustments to consideration exchanged for the purchase of Threat Stack within the post-close measurement period.

The developed technology intangible asset is amortized on a straight-line basis over its estimated useful life of five years and included in cost of net product revenues. The customer relationships intangible asset is amortized on a straight-line basis over its estimated useful life of five years and included in sales and marketing expenses. The weighted-average life of the amortizable intangible assets recognized from the Threat Stack acquisition was five years as of October 1, 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.

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The pro forma financial information, as well as the revenue and earnings generated by Threat Stack, were not material to the Company's operations for the periods presented.

5. 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):

	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	677,498	$	758,012
Restricted cash included in other assets, net	4,091		4,195
Total cash, cash equivalents and restricted cash	$	681,589	$	762,207

Inventories

Inventories consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Finished goods	$	10,115	$	10,164
Raw materials	35,987		58,201
	$	46,102	$	68,365

Other Current Assets

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

	June 30, 2023		September 30, 2022
Unbilled receivables	$	366,511	$	319,707
Prepaid expenses	76,678		57,340
Capitalized contract acquisition costs	31,992		34,658
Other1	62,376		77,609
	$	537,557	$	489,314

(1)     As of June 30, 2023 and September 30, 2022, includes a deposit of $36.2 million and $57.0 million, respectively, used to support the working capital needs of the Company’s primary contract manufacturer's procurement of components used in the manufacturing of system hardware.

Other Assets

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

	June 30, 2023		September 30, 2022
Intangible assets	$	163,995	$	200,288
Unbilled receivables	212,749		224,780
Capitalized contract acquisition costs	36,098		42,561
Other	51,451		48,493
	$	464,293	$	516,122

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Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Payroll and benefits	$	136,462	$	165,437
Operating lease liabilities, current	42,155		42,523
Income and other tax accruals	36,510		41,217
Other	59,128		60,642
	$	274,255	$	309,819

Other Long-term Liabilities

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

	June 30, 2023		September 30, 2022
Income taxes payable	$	68,001	$	59,553
Other	8,504		8,157
	$	76,505	$	67,710

6. 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 Term Loan Facility had an original maturity date of January 24, 2023 with quarterly installments equal to 1.25% of the original principal amount. Borrowings under the Term Loan Facility bore interest at a rate equal to LIBOR, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio. 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 were recorded as a reduction to the carrying value of the principal amount of the debt.

On December 15, 2022, the Company voluntarily prepaid, in full, all borrowings under the Term Loan Facility, including the outstanding principal balance of $350.0 million, and all accrued, but unpaid interest outstanding of $3.0 million. All remaining debt issuance costs were amortized to interest expense associated with the prepayment. As a result of the payoff of its Term Loan Facility, the Company was released of any and all obligations, maintenance of covenants, and indebtedness under the Term Credit Agreement. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 4.072% for the period of October 1, 2022 to December 15, 2022.

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As of September 30, 2022, $350.0 million of principal amount under the Term Loan Facility was outstanding, excluding unamortized debt issuance costs of $0.2 million. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 2.092% and 1.553% for the three and nine months ended June 30, 2022, respectively.

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. Historically, borrowings under the Revolving Credit Facility bore 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. On May 26, 2023, the Company amended the Revolving Credit Agreement as a result of the cessation of the LIBOR borrowing reference rate. The amendment modified and directly replaced the LIBOR borrowing reference rate within the Revolving Credit Agreement to the Secured Overnight Financing Rate (SOFR). After the amendment, borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company's option, (a) SOFR plus 0.10%, 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 nine months ended June 30, 2023 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 June 30, 2023, the Company was in compliance with all covenants. As of June 30, 2023, there were no outstanding borrowings under the Revolving Credit Facility, and the Company had available borrowing capacity of $350.0 million.

7. Leases

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 nine months ended June 30, 2023 and 2022 were as follows (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Operating lease expense	$	11,801	$	11,810	$	36,498	$	35,594
Short-term lease expense	872		683		2,271		1,858
Variable lease expense	5,895		5,208		16,881		17,486
Total lease expense	$	18,568	$	17,701	$	55,650	$	54,938

Variable lease expense primarily consists of common area maintenance, real estate taxes and parking expenses.

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

	June 30, 2023			September 30, 2022
Operating lease right-of-use assets, net	$	204,196		$	227,475
Operating lease liabilities, current1	42,155			42,523
Operating lease liabilities, long-term	250,077			272,376
Total operating lease liabilities	$	292,232		$	314,899
Weighted average remaining lease term (in years)	8.7			9.2
Weighted average discount rate	2.75		%	2.66		%

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

As of June 30, 2023, 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
2023 (remainder)	$	12,364
2024	49,024
2025	41,307
2026	31,727
2027	30,530
2028	28,396
Thereafter	138,797
Total lease payments	332,145
Less: imputed interest	(39,913)
Total lease liabilities	$	292,232

Operating lease liabilities above do not include sublease income. As of June 30, 2023, the Company expects to receive sublease income of approximately $16.2 million, which consists of $1.8 million to be received for the remainder of fiscal 2023 and $14.4 million to be received over the three fiscal years thereafter.

As of June 30, 2023, the Company had no significant operating leases that were executed but not yet commenced.

8. 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 June 30, 2023 and September 30, 2022 were not material.

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Commitments

In October 2022, the Company entered into an unconditional purchase commitment with one of its suppliers for the delivery of systems components. Under the terms of the agreement, the Company is obligated to purchase $10 million of component inventory annually, with a total committed amount of $40 million over a four-year term. As of June 30, 2023, the Company had no remaining purchase commitments under the first year of the agreement. The Company's total non-cancelable long-term purchase commitments outstanding as of June 30, 2023 was $30.0 million.

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 7 to its annual consolidated financial statements.

Legal Proceedings

Lynwood Investment CY Limited v. F5 Networks et al.

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 asserted 26 causes of action against the various defendants, including copyright infringement, violation of trademark law, tortious interference, conspiracy, and fraud. The complaint sought damages, disgorgement of profits, 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 Lynwood’s case. On March 25 and 30, 2021, the Court granted the Company’s and the other defendants’ motions to dismiss with leave to amend. Lynwood filed its amended complaint on April 29, 2021, seeking the same relief against the Company and other defendants. On May 27, 2021, the Company and other defendants filed a consolidated motion to dismiss.

The Court granted the consolidated motion to dismiss without leave to amend on August 16, 2022 and entered final judgment against Lynwood on September 9, 2022. On September 14, 2022, Lynwood filed a notice of appeal to the Ninth Circuit Court of Appeals to appeal the dismissal. Lynwood filed its opening brief on December 16, 2022. The Company filed its opening appellate brief on April 10, 2023 and Lynwood filed its reply on May 31, 2023.

Following the Court’s order granting the consolidated motion to dismiss and final judgment in the Company’s favor, the Court subsequently granted the Company attorneys' fees of over $0.8 million, which Lynwood appealed to the Ninth Circuit Court of Appeals. The Appeal is ongoing.

In addition to the above matters, 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 to currently determine if an unfavorable outcome is probable or estimate any potential amount or range of possible loss of these or similar matters. 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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9. 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 16.4% and 22.0% for the three and nine months ended June 30, 2023, respectively, compared to 18.0% and 18.5% for the three and nine months ended June 30, 2022, respectively. The decrease in the effective tax rate for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily due to a discrete impact from filing the Company’s fiscal year 2022 U.S. federal income tax return during the period ended June 30, 2023. The increase in the effective tax rate for the nine months ended June 30, 2023 as compared to the nine months ended June 30, 2022 is primarily due to the tax impact of stock-based compensation and foreign operations, partially offset by a discrete impact from filing the Company’s fiscal year 2022 U.S. federal income tax return during the period ended June 30, 2023.

At June 30, 2023, the Company had $73.2 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.

On July 21, 2023, the IRS issued Notice 2023-55 (the “Notice”) which provides guidance to taxpayers in determining whether a foreign tax is eligible for a U.S. foreign tax credit, specifically delaying until 2024 the application of foreign tax credit regulations that were issued in 2022. The Company is currently evaluating the impact of the Notice on its FY23 effective tax rate.

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, 2018. Major jurisdictions where there are wholly owned subsidiaries of F5, Inc. which require income tax filings include the United Kingdom, Singapore, Israel, and India. The earliest periods open for review by local taxing authorities are fiscal years 2020 for the United Kingdom, 2018 for Singapore, 2013 for Israel, and 2019 for India. The Company is currently under audit by the Internal Revenue Service for fiscal year 2019, by various states for fiscal years 2015 through 2021, and by various foreign jurisdictions including Germany for fiscal years 2016 to 2019, India for fiscal years 2019 to 2022, Israel for fiscal years 2013 to 2017, Saudi Arabia for fiscal years 2015 to 2020, and Singapore for fiscal years 2019 to 2020.

10. Shareholders' Equity

Common Stock Repurchase

On July 25, 2022, 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 $5.4 billion program, initially approved in October 2010 and expanded in subsequent fiscal years. 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.

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Shares repurchased	1,812		1,463		2,075		2,611
Average price per share	$	137.99	$	170.88	$	139.75	$	191.47
Amount repurchased	$	250,036	$	250,000	$	290,041	$	500,023

As of June 30, 2023, the Company had $982 million remaining authorized to purchase shares under its share repurchase program.

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11. 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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Numerator
Net income	$	88,976	$	83,019	$	242,814	$	232,814
Denominator
Weighted average shares outstanding — basic	59,977		59,965		60,133		60,450
Dilutive effect of common shares from stock options and restricted stock units	337		495		330		895
Weighted average shares outstanding — diluted	60,314		60,460		60,463		61,345
Basic net income per share	$	1.48	$	1.38	$	4.04	$	3.85
Diluted net income per share	$	1.48	$	1.37	$	4.02	$	3.80

Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were not material for the three and nine months ended June 30, 2023 and 2022.

12. 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.

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 net product revenues and 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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Americas:
United States	$	374,023	$	364,333	$	1,109,676	$	1,084,853
Other	24,257		22,797		73,864		63,824
Total Americas	398,280		387,130		1,183,540		1,148,677
EMEA	181,147		156,471		555,701		474,906
APAC	123,215		130,887		366,954		372,229
	$	702,642	$	674,488	$	2,106,195	$	1,995,812

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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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Net product revenues
Systems revenue	$	154,659	$	147,540	$	536,379	$	473,671
Software revenue	173,516		178,942		472,935		493,478
Total net product revenue	$	328,175	$	326,482	$	1,009,314	$	967,149

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Ingram Micro, Inc.	14.3	%	20.7	%	16.1	%	19.9	%
Synnex Corporation	15.8	%	13.4	%	14.7	%	13.3	%
Carahsoft Technology Corporation	10.7	%	—		—		—

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

	June 30, 2023		September 30, 2022
Americas:
United States	$	126,155	$	134,699
Other	2,951		1,773
Total Americas	129,106		136,472
EMEA	24,626		17,376
APAC	17,415		14,334
	$	171,147	$	168,182

13. Restructuring Charges

In the third quarter of fiscal 2023, the Company initiated a restructuring plan to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, including a reduction in force affecting approximately 620 employees, or approximately 9% of the Company’s global workforce as of April 19, 2023. This included $53.2 million in severance benefits costs and related employer payroll taxes, and $3.5 million in charges related to the reduction of its leased facility space. The Company incurred $56.7 million in restructuring costs in the third quarter of fiscal 2023. The Company does not expect to record any significant future charges related to the third quarter of fiscal 2023 restructuring plan.

In the first quarters of fiscal 2023 and 2022, the Company initiated restructuring plans to match strategic and financial objectives and optimize resources for long term growth, including a reduction in force program. In the first quarter of fiscal 2023, the Company recorded a restructuring charge of $8.7 million. The Company did not record any significant future charges related to the first quarter of fiscal 2023 restructuring plan. In the first quarter of fiscal 2022, the Company recorded a restructuring charge of $7.9 million. The Company did not record any significant subsequent charges related to the first quarter of fiscal 2022 restructuring plan.

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During the nine months ended June 30, 2023 and 2022, the following activity was recorded (in thousands):

	Nine months ended June 30,
	2023		2022
Employee Severance, Benefits and Related Costs
Accrued expenses, beginning of period	$	—	$	—
Restructuring charges:
Q1	8,740		7,909
Q3	53,193		—
Cash payments:
Q1	(8,740)		(7,689)
Q3	(44,820)		—
Accrued expenses, end of period	$	8,373	$	220

Charges related to employee severance, benefits, and related costs; as well as charges related to the reduction of the Company’s leased facilities are reflected in the restructuring charges line item on the Company's consolidated income statements.

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 security and delivery solutions 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; 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. Our revenue is derived from the sales of both global services and products. Our global services revenue includes annual maintenance contracts, training and consulting services. The majority of our product revenues are derived from sales of our application security and delivery solutions including our BIG-IP software and systems, F5 NGINX software, and our F5 Distributed Cloud Services offerings. Our BIG-IP software solutions are sold both on a perpetual license and a subscription basis. We sell F5 NGINX on a subscription basis. F5 Distributed Cloud Services provides security, multi-cloud networking, and edge-based computing solutions, encompassing software solutions from what were previously branded as our Shape, Volterra, and Silverline product offerings. F5 Distributed Cloud Services are offered on a subscription basis, under a unified software-as-a-service ("SaaS") platform.

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We monitor the sales mix of our revenues within each reporting period. We believe customer acceptance rates of our new products, feature enhancements and consumption models are indicators of future trends. We also consider overall revenue concentration by geographic region as an additional indicator of current and future trends. Toward the end of fiscal 2022, and continuing into fiscal 2023, we saw changes in customer buying patterns due to the uncertain macroeconomic environment and resulting customer budget constraints. The impact of these buying patterns has led to softer demand for both our software and systems products and services. We believe the current demand environment is temporary based on several factors, notably the fact that demand for our products and services stems from the growth of applications and APIs. In addition, our stronger than normal maintenance renewals signal delays in purchases as customers extend their maintenance contracts over the products they currently own. This softer demand for new products is brought on by the current macroeconomic uncertainties and related customer budget constraints, rather than architectural shifts or losses to competitors. We will continue to closely monitor the macroeconomic environment and its impacts on our business.

•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. In addition, factors such as sales price, product and services mix, inventory obsolescence, returns, component price increases, warranty costs, global supply chain constraints, and the remaining uncertainty surrounding the COVID-19 pandemic could significantly impact our gross margins from quarter to quarter.

•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 nine months of fiscal year 2023 was primarily due to cash used for the voluntary prepayment of the Term Loan Facility, including the outstanding principal balance of $350.0 million, and all accrued, but unpaid interest outstanding of $3.0 million. In addition, $290.0 million of cash was used for the repurchase of outstanding common stock during the nine months ended June 30, 2023. The decrease was partially offset by cash provided by operating activities of $463.6 million. Going forward, we believe the primary driver of cash flows will be net income from operations. 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 June 30, 2023, 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 increased to $1.79 billion as of June 30, 2023 from $1.69 billion as of September 30, 2022 due to an increase in maintenance renewal contracts related to our existing product installation base and the growth of our subscriptions business. Our days sales outstanding for the third quarter of fiscal year 2023 was 56. 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, 2022. 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.

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Impact of Current Macroeconomic Conditions

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on customer behavior. Worsening economic conditions, including inflation, higher interest rates, slower growth, fluctuations in foreign exchange rates, and developments related to the COVID-19 pandemic, and other changes in economic conditions, may adversely affect our results of operations and financial performance. For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see Part 1, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 and Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q.

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.

	Three months ended June 30,						Nine months ended June 30,
	2023			2022			2023			2022
	(in thousands, except percentages)
Net revenues
Products	$	328,175		$	326,482		$	1,009,314		$	967,149
Services	374,467			348,006			1,096,881			1,028,663
Total	$	702,642		$	674,488		$	2,106,195		$	1,995,812
Percentage of net revenues
Products	46.7		%	48.4		%	47.9		%	48.5		%
Services	53.3			51.6			52.1			51.5
Total	100.0		%	100.0		%	100.0		%	100.0		%

Net Revenues. Total net revenues increased 4.2% and 5.5% for the three and nine months ended June 30, 2023, respectively, from the comparable periods in the prior year. The increase in total net revenues for the three months ended June 30, 2023 was primarily due to an increase in service revenue as a result of continued growth in maintenance contract renewals. Overall revenue growth for the nine months ended June 30, 2023 was primarily due to increases in both product and service revenue. International revenues represented 46.8% and 47.3% of total net revenues for the three and nine months ended June 30, 2023, respectively, compared to 46.0% and 45.6% for the same periods in the prior year, respectively.

Net Product Revenues. Net product revenues increased 0.5% and 4.4% for the three and nine months ended June 30, 2023, respectively, from the comparable periods in the prior year. The increase in net product revenues for the nine months ended June 30, 2023 was due to an increase in systems revenue compared to the same period in the prior year.

The following presents net product revenues by systems and software:

	Three months ended June 30,						Nine months ended June 30,
	2023			2022			2023			2022
	(in thousands, except percentages)
Net product revenues
Systems revenue	$	154,659		$	147,540		$	536,379		$	473,671
Software revenue	173,516			178,942			472,935			493,478
Total net product revenue	$	328,175		$	326,482		$	1,009,314		$	967,149
Percentage of net product revenues
Systems revenue	47.1		%	45.2		%	53.1		%	49.0		%
Software revenue	52.9			54.8			46.9			51.0
Total net product revenue	100.0		%	100.0		%	100.0		%	100.0		%

Net Service Revenues. Net service revenues increased 7.6% and 6.6% for the three and nine months ended June 30, 2023, respectively, from the comparable periods in the prior year. The increase in net service revenues for the three and nine months ended June 30, 2023 was the result of increased purchases or renewals of maintenance contracts driven by delayed purchase decisions in new product purchases by our install base and additions to our installed base of products. In addition, we are seeing the benefits of price increases put in place in fiscal 2022.

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Ingram Micro, Inc.	14.3	%	20.7	%	16.1	%	19.9	%
Synnex Corporation	15.8	%	13.4	%	14.7	%	13.3	%
Carahsoft Technology Corporation	10.7	%	—		—		—

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

	June 30, 2023		September 30, 2022
Ingram Micro, Inc.	11.5	%	12.9	%
Synnex Corporation	15.4	%	12.6	%
Carahsoft Technology Corporation	10.7	%	16.2	%

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

	Three months ended June 30,						Nine months ended June 30,
	2023			2022			2023			2022
	(in thousands, except percentages)
Cost of net revenues and gross profit
Products	$	87,940		$	73,558		$	286,590		$	226,454
Services	53,743			57,175			165,754			165,711
Total	141,683			130,733			452,344			392,165
Gross profit	$	560,959		$	543,755		$	1,653,851		$	1,603,647
Percentage of net revenues and gross margin (as a percentage of related net revenue)
Products	26.8		%	22.5		%	28.4		%	23.4		%
Services	14.4			16.4			15.1			16.1
Total	20.2			19.4			21.5			19.6
Gross margin	79.8		%	80.6		%	78.5		%	80.4		%

Cost of Net Product Revenues. Cost of net product revenues consists 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 $14.4 million, or 19.6% for the three months ended June 30, 2023 and increased $60.1 million, or 26.6% for the nine months ended June 30, 2023 from the comparable periods in the prior year. The increase in cost of net product revenues was primarily due to systems product revenue growth for the three and nine months ended June 30, 2023 from the comparable periods in the prior year. In addition, cost of product revenues increased due to component cost increases, expedite fees, and other sourcing-related costs in the first three quarters of fiscal 2023, from the comparable period in the prior year.

Cost of Net Service Revenues. Cost of net service revenues consists of the salaries and related benefits of our professional services staff, travel, facilities and depreciation expenses. For the three and nine months ended June 30, 2023, cost of net service revenues as a percentage of net service revenues was 14.4% and 15.1%, respectively, compared to 16.4% and 16.1% for the comparable periods in the prior year, respectively. Professional services headcount at the end of June 2023 decreased to 1,045 from 1,083 at the end of June 2022.

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	Three months ended June 30,						Nine months ended June 30,
	2023			2022			2023			2022
	(in thousands, except percentages)
Operating expenses
Sales and marketing	$	207,202		$	226,731		$	673,383		$	689,592
Research and development	128,765			138,737			412,451			404,846
General and administrative	64,775			70,823			201,802			205,038
Restructuring charges	56,648			—			65,388			7,909
Total	$	457,390		$	436,291		$	1,353,024		$	1,307,385
Operating expenses (as a percentage of net revenue)
Sales and marketing	29.5		%	33.6		%	32.0		%	34.5		%
Research and development	18.3			20.6			19.6			20.3
General and administrative	9.2			10.5			9.5			10.3
Restructuring charges	8.1			—			3.1			0.4
Total	65.1		%	64.7		%	64.2		%	65.5		%

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 decreased $19.5 million, or 8.6% for the three months ended June 30, 2023 and decreased $16.2 million, or 2.4% for the nine months ended June 30, 2023 from the comparable periods in the prior year. The decrease in sales and marketing expense for the three and nine months ended June 30, 2023 was primarily due to a decrease of $10.1 million and $8.2 million, respectively, in personnel costs from the comparable periods in the prior year. The decrease in sales and marketing expense for the three and nine months ended June 30, 2023 was also due to a decrease of $2.6 million and $6.6 million, respectively, in marketing spend as part of cost reductions implemented by management. In addition, sales and marketing expenses for the first quarter of fiscal 2022 included an impairment charge of $6.2 million related to the write-off of the Shape trade name intangible asset which offset the year-over-year increase. Sales and marketing headcount at the end of June 2023 decreased to 2,194 from 2,452 at the end of June 2022. Sales and marketing expenses included stock-based compensation expense of $22.6 million and $75.2 million for the three and nine months ended June 30, 2023, respectively, compared to $25.6 million and $79.9 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 decreased $10.0 million, or 7.2% for the three months ended June 30, 2023 and increased $7.6 million, or 1.9% for the nine months ended June 30, 2023 from the comparable periods in the prior year. The decrease in research and development expense for the three months ended June 30, 2023 was primarily due to a decrease of $7.0 million in personnel costs from the comparable period in the prior year. The increase in research and development expense for the nine months ended June 30, 2023 was primarily related to an increase of $10.1 million in personnel costs from the comparable period in the prior year. Research and development headcount at the end of June 2023 decreased to 2,052 from 2,093 at the end of June 2022. Research and development expenses included stock-based compensation expense of $16.3 million and $53.5 million for the three and nine months ended June 30, 2023, respectively, compared to $17.5 million and $54.3 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 resources and legal personnel, third-party professional service fees, facilities and depreciation expenses. General and administrative expenses decreased $6.0 million, or 8.5% for the three months ended June 30, 2023 and decreased $3.2 million, or 1.6% for the nine months ended June 30, 2023 from the comparable periods in the prior year. General and administrative headcount at the end of June 2023 decreased to 858 from 951 at the end of June 2022. General and administrative expenses included stock-based compensation expense of $10.3 million and $32.2 million for the three and nine months ended June 30, 2023, respectively, compared to $11.6 million and $33.4 million for the same periods in the prior year, respectively.

Restructuring Charges. In the third quarter of fiscal 2023, we initiated a restructuring plan to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability. We estimate the expenses associated with the headcount reductions will result in annualized savings of approximately $130 million. As a result of these initiatives, we recorded a restructuring charge of $56.7 million related to a reduction in workforce and exit of leased space that is reflected in our results for the three and nine months ended June 30, 2023.

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In the first fiscal quarters of 2023 and 2022, we initiated restructuring plans to align strategic and financial objectives and optimize resources for long term growth. As a result of these initiatives, we recorded restructuring charges of $8.7 million and $7.9 million related to a reduction in workforce that is reflected in our results for the nine months ended June 30, 2023 and 2022, respectively.

	Three months ended June 30,						Nine months ended June 30,
	2023			2022			2023			2022
	(in thousands, except percentages)
Other income and income taxes
Income from operations	$	103,569		$	107,464		$	300,827		$	296,262
Other income (expense), net	2,896			(6,221)			10,335			(10,586)
Income before income taxes	106,465			101,243			311,162			285,676
Provision for income taxes	17,489			18,224			68,348			52,862
Net income	$	88,976		$	83,019		$	242,814		$	232,814
Other income and income taxes (as percentage of net revenue)
Income from operations	14.8		%	15.9		%	14.3		%	14.8		%
Other expense, net	0.4			(0.9)			0.5			(0.5)
Income before income taxes	15.2			15.0			14.8			14.3
Provision for income taxes	2.5			2.7			3.3			2.6
Net income	12.7		%	12.3		%	11.5		%	11.7		%

Other Income (Expense), Net. Other income (expense), net consists primarily of interest income and expense and foreign currency transaction gains and losses. The increase in other income (expense), net for the three months ended June 30, 2023 was primarily due to an increase in interest income of $5.2 million from our investments and a decrease in interest expense of $2.2 million compared to the same period in the prior year. The increase in other income (expense), net for the nine months ended June 30, 2023 was primarily due to an increase in interest income of $10.9 million from our investments and an increase in foreign currency gains of $8.5 million compared to the same period in the prior year.

Provision for Income Taxes. The effective tax rate was 16.4% and 22.0% for the three and nine months ended June 30, 2023, respectively, compared to 18.0% and 18.5% for the three and nine months ended June 30, 2022, respectively. The decrease in the effective tax rate for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily due to a discrete impact from filing the Company’s fiscal year 2022 U.S. federal income tax return during the period ended June 30, 2023. The increase in the effective tax rate for the nine months ended June 30, 2023 as compared to the nine months ended June 30, 2022 is primarily due to the tax impact of stock-based compensation and foreign operations, partially offset by a discrete impact from filing the Company’s fiscal year 2022 U.S. federal income tax return during the period ended June 30, 2023.

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 June 30, 2023 and September 30, 2022 were $267.3 million and $180.6 million, respectively. The net deferred tax assets include valuation allowances of $46.0 million and $46.1 million as of June 30, 2023 and September 30, 2022, respectively, which are primarily related to certain state and foreign net operating loss 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, the impact of stock-based compensation, 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.

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Liquidity and Capital Resources

Cash and cash equivalents, short-term investments and long-term investments totaled $696.5 million as of June 30, 2023, compared to $894.1 million as of September 30, 2022, representing a decrease of $197.6 million. The decrease was primarily due to cash used for the voluntary prepayment of the Term Loan Facility, including the outstanding principal balance of $350.0 million, and all accrued, but unpaid interest outstanding of $3.0 million. In addition, $290.0 million of cash was used for the repurchase of outstanding common stock during the nine months ended June 30, 2023. The decrease was partially offset by cash provided by operating activities of $463.6 million for the nine months ended June 30, 2023.

Cash provided by operating activities for the first nine months of fiscal year 2023 resulted from net income of $242.8 million combined with changes in operating assets and liabilities, as adjusted for various non-cash items including stock-based compensation, deferred revenue, depreciation, impairment and amortization charges. Cash provided by operating activities for the first nine months of fiscal year 2023 increased from the comparable period in the prior year primarily due to an increase in cash received from customers, which partially offset strong billings and an increase in the balance of accounts receivable.

Cash from operations could be affected by various risks and uncertainties, including, but not limited to, the effects of the risks detailed in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 and Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q. 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 provided by investing activities was $44.0 million for the nine months ended June 30, 2023, compared to cash provided by investing activities of $147.4 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 provided by investing activities for the nine months ended June 30, 2023 was primarily the result of $103.5 million in maturities of investments and $16.1 million in sales of investments, partially offset by $35.0 million in cash paid for acquisitions and $38.8 million in capital expenditures related to maintaining our operations worldwide.

Cash used in financing activities was $591.9 million for the nine months ended June 30, 2023, compared to cash used in financing activities of $470.2 million for the same period in the prior year. Our financing activities for the nine months ended June 30, 2023 primarily consisted of $350.0 million of cash used for the voluntary prepayment of the Term Loan Facility, as well as $290.0 million of cash used to repurchase shares. In addition, $11.4 million in cash was used for taxes related to net share settlement of equity awards. Cash used in financing activities was partially offset by cash received from the exercise of employee stock options and stock purchases under our employee stock purchase plan of $59.5 million.

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 June 30, 2023, there were no outstanding borrowings under the Revolving Credit Facility, and we had available borrowing capacity of $350.0 million.

Obligations and Commitments

As of June 30, 2023, our principal commitments consisted of obligations outstanding under operating leases and purchase obligations with one of our component suppliers.

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, 2022.

In October 2022, we entered into an unconditional purchase commitment with one of our suppliers for the delivery of systems components. Under the terms of the agreement, we are obligated to purchase $10 million of component inventory annually, with a total committed amount of $40 million over a four-year term. As of June 30, 2023, we had no remaining purchase commitments under the first year of the agreement. Our total non-cancelable long-term purchase commitments outstanding as of June 30, 2023 was $30.0 million.

We have a contractual obligation to purchase inventory components procured by our primary contract manufacturer in accordance with our annual build forecast. The contractual terms of the obligation contain cancellation provisions, which reduce our liability to purchase inventory components for periods greater than one year. In order to support our build forecast, we will, from time-to-time prepay our primary contract manufacturer for inventory purchases.

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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.

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 June 30, 2023. We monitor our interest rate and credit risks, including our credit exposures to specific rating categories and to individual issuers. As of June 30, 2023, 2% 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.

Inflation Risk. We are actively monitoring the current inflationary environment, but we do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. If the current inflationary environment constrains our customers’ ability to procure goods and services from us, we may see customers reprioritize these investment decisions. These macroeconomic conditions could harm our business, financial condition and results of operations.

Foreign Currency Risk. The majority of our sales, cost of net revenues, and operating expenses are denominated in U.S. dollars and as a result, we have not experienced significant foreign currency transaction gains and losses to date. While we conduct transactions in foreign currencies and expect to continue to do so, we do not anticipate that foreign currency transaction gains or losses will be significant at our current level of operations. However, as we continue to expand our operations internationally, transaction gains or losses may become significant in the future.

Management believes there have been no material changes to our quantitative and qualitative disclosures about market risk during the nine month period ended June 30, 2023, compared to those discussed in our Annual Report on Form 10-K for the year ended September 30, 2022.

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")) which 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 June 30, 2023 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 June 30, 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1.Legal Proceedings

See Note 8 - 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.

Item 1A.Risk Factors

The following information updates, and should be read in conjunction with, the information discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. The risks discussed below and in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. These are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future.

Continued macroeconomic downturns or uncertainties may harm our industry, business, and results of operations.

We operate globally and as a result, our business, revenues, and profitability may be impacted global macroeconomic conditions. The continuing adverse global macroeconomic conditions and related market uncertainties have, among other things, softened customer demand and customer purchase decisions, which may in turn, limit our ability to forecast future business activities involving our products and services. Prolonged adverse macroeconomic conditions both in the U.S. and abroad, including, but not limited to, rising interest rates to combat inflationary pressures of goods and services, challenges in the financial and credit markets, labor shortages, supply chain disruptions, trade uncertainty, adverse changes in global taxation and tariffs, sanctions, outbreaks of pandemic diseases such as COVID-19, political unrest and social strife, armed conflicts, such as the Russian invasion of Ukraine, or other impacts from the macroeconomic environment have led to a slowing of global economic growth. Continued worsening of macroeconomic conditions could adversely affect our business, financial condition, results of operations and cash flows through, among others, softer demand of our products and services as well as unfavorable increases to our operating costs, which could negatively impact our profitability.

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

On July 25, 2022, 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 $5.4 billion program, initially approved in October 2010 and expanded in subsequent fiscal years. 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 June 30, 2023, the Company had $982 million remaining authorized to purchase shares under its share repurchase program.

Shares repurchased and retired for the three months ended June 30, 2023 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
April 1, 2023 — April 30, 2023	76,271	$	131.13	76,271	$	1,222,481
May 1, 2023 — May 31, 2023	1,611,454	$	137.48	1,599,964	$	1,002,479
June 1, 2023 — June 30, 2023	135,811	$	147.50	135,811	$	982,447

(1)Includes 11,490 shares withheld from restricted stock units that vested in the third quarter of fiscal 2023 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.

31

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

During the three months ended June 30, 2023, certain of our officers and directors adopted or terminated Rule 10b5-1 trading arrangements as follows:

On May 1, 2023, Scot Rogers, EVP, General Counsel, adopted a written plan intended to satisfy the affirmative defense of Rule 10b5-1(c) that is designed to be in effect until March 15, 2024 with respect to the sale of 4,500 Company shares.

On May 1, 2023, Chad Whalen, EVP, Worldwide Sales, adopted a written plan intended to satisfy the affirmative defense of Rule 10b5-1(c) that is designed to be in effect until April 29, 2024 with respect to the sale of 5,585 Company shares (assuming the vesting of the maximum number of shares under certain performance-based equity awards based on maximum performance).

Item 6.Exhibits

Exhibit Number		Exhibit Description
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.

32

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 4th day of August, 2023.

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

33

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, 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:	August 4, 2023
/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, 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:	August 4, 2023
/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, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 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:	August 4, 2023
/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, Inc., and will be retained by F5, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	9 Months Ended
	Jun. 30, 2023	Jul. 27, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	000-26041
Entity Registrant Name	F5, 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		59,306,423
Entity Central Index Key	0001048695
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Current assets
Cash and cash equivalents	$ 677,498	$ 758,012
Short-term investments	13,109	126,554
Accounts receivable, net of allowances of $5,172 and $6,020	439,518	469,979
Inventories	46,102	68,365
Other current assets	537,557	489,314
Total current assets	1,713,784	1,912,224
Property and equipment, net	171,147	168,182
Operating lease right-of-use assets	204,196	227,475
Long-term investments	5,887	9,544
Deferred tax assets	271,171	183,365
Goodwill	2,288,678	2,259,282
Other assets, net	464,293	516,122
Total assets	5,119,156	5,276,194
Current liabilities
Accounts payable	65,499	113,178
Accrued liabilities	274,255	309,819
Deferred revenue	1,149,787	1,067,182
Current portion of long-term debt	0	349,772
Total current liabilities	1,489,541	1,839,951
Deferred tax liabilities	3,883	2,781
Deferred revenue, long-term	641,647	624,398
Operating lease liabilities, long-term	250,077	272,376
Other long-term liabilities	76,505	67,710
Total long-term liabilities	972,112	967,265
Commitments and contingencies (Note 8)
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, 59,296 and 59,860 shares issued and outstanding	32,519	91,048
Accumulated other comprehensive loss	(21,936)	(26,176)
Retained earnings	2,646,920	2,404,106
Total shareholders' equity	2,657,503	2,468,978
Total liabilities and shareholders' equity	$ 5,119,156	$ 5,276,194

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Statement of Financial Position [Abstract]
Accounts Receivable, Allowance for Credit Loss	$ 5,172	$ 6,020
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	59,296,000	59,860,000

XML

Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net revenues
Revenue from contract with customer, excluding assessed tax	$ 702,642	$ 674,488	$ 2,106,195	$ 1,995,812
Cost of net revenues
Cost of net revenues	141,683	130,733	452,344	392,165
Gross profit	560,959	543,755	1,653,851	1,603,647
Operating expenses
Sales and marketing	207,202	226,731	673,383	689,592
Research and development	128,765	138,737	412,451	404,846
General and administrative	64,775	70,823	201,802	205,038
Restructuring charges	56,648	0	65,388	7,909
Total	457,390	436,291	1,353,024	1,307,385
Income from operations	103,569	107,464	300,827	296,262
Other income (expense), net	2,896	(6,221)	10,335	(10,586)
Income before income taxes	106,465	101,243	311,162	285,676
Provision for income taxes	17,489	18,224	68,348	52,862
Net income	$ 88,976	$ 83,019	$ 242,814	$ 232,814
Net income per share — basic (dollars per share)	$ 1.48	$ 1.38	$ 4.04	$ 3.85
Weighted average shares — basic (shares)	59,977	59,965	60,133	60,450
Net income per share — diluted (dollars per share)	$ 1.48	$ 1.37	$ 4.02	$ 3.80
Weighted average shares — diluted (shares)	60,314	60,460	60,463	61,345
Product
Net revenues
Revenue from contract with customer, excluding assessed tax	$ 328,175	$ 326,482	$ 1,009,314	$ 967,149
Cost of net revenues
Cost of net revenues	87,940	73,558	286,590	226,454
Service
Net revenues
Revenue from contract with customer, excluding assessed tax	374,467	348,006	1,096,881	1,028,663
Cost of net revenues
Cost of net revenues	$ 53,743	$ 57,175	$ 165,754	$ 165,711

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 88,976	$ 83,019	$ 242,814	$ 232,814
Other comprehensive income (loss):
Foreign currency translation adjustment	884	(1,910)	2,868	(2,506)
Available-for-sale securities:
Unrealized gains (losses) on securities, net of taxes of $30 and $42 for the three months ended June 30, 2023 and 2022, respectively, and $262 and $(180) for the nine months ended June 30, 2023 and 2022, respectively	157	20	1,984	(1,895)
Reclassification adjustment for realized losses included in net income, net of taxes of $0 and $34 for the three months ended June 30, 2023 and 2022, respectively, and $78 and $48 for the nine months ended June 30, 2023 and 2022, respectively	0	(108)	(612)	(152)
Net change in unrealized gains (losses) on available-for-sale securities, net of tax	157	(88)	1,372	(2,047)
Total other comprehensive income (loss)	1,041	(1,998)	4,240	(4,553)
Comprehensive income	$ 90,017	$ 81,021	$ 247,054	$ 228,261

XML

Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Tax effect of unrealized gain (loss) on securities	$ 30	$ 42	$ 262	$ (180)
Tax effect of reclassification adjustment for realized (gains) losses	$ 0	$ 34	$ 78	$ 48

XML

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, 2021		60,652
Beginning Balance at Sep. 30, 2021	$ 2,360,213	$ 192,458	$ (20,073)	$ 2,187,828
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		115
Exercise of employee stock options	2,753	$ 2,753
Issuance of stock under employee stock purchase plan (in shares)		412
Issuance of stock under employee stock purchase plan	60,927	$ 60,927
Issuance of restricted stock (in shares)		1,080
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(2,611)
Repurchase of common stock	(500,023)	$ (394,141)		(105,882)
Taxes paid related to net share settlement of equity awards (in shares)		(92)
Taxes paid related to net share settlement of equity awards	(18,907)	$ (18,907)
Stock-based compensation	189,761	$ 189,761
Net income	232,814			232,814
Other comprehensive income (loss)	(4,553)		(4,553)
Ending Balance ( in shares) at Jun. 30, 2022		59,556
Ending Balance at Jun. 30, 2022	2,322,985	$ 32,851	(24,626)	2,314,760
Beginning Balance (in shares) at Mar. 31, 2022		60,465
Beginning Balance at Mar. 31, 2022	2,397,128	$ 82,133	(22,628)	2,337,623
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		19
Exercise of employee stock options	450	$ 450
Issuance of stock under employee stock purchase plan (in shares)		243
Issuance of stock under employee stock purchase plan	34,602	$ 34,602
Issuance of restricted stock (in shares)		305
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(1,463)
Repurchase of common stock	(250,000)	$ (144,118)		(105,882)
Taxes paid related to net share settlement of equity awards (in shares)		(13)
Taxes paid related to net share settlement of equity awards	(2,091)	$ (2,091)
Stock-based compensation	61,875	$ 61,875
Net income	83,019			83,019
Other comprehensive income (loss)	(1,998)		(1,998)
Ending Balance ( in shares) at Jun. 30, 2022		59,556
Ending Balance at Jun. 30, 2022	$ 2,322,985	$ 32,851	(24,626)	2,314,760
Beginning Balance (in shares) at Sep. 30, 2022	59,860	59,860
Beginning Balance at Sep. 30, 2022	$ 2,468,978	$ 91,048	(26,176)	2,404,106
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		39
Exercise of employee stock options	1,029	$ 1,029
Issuance of stock under employee stock purchase plan (in shares)		500
Issuance of stock under employee stock purchase plan	58,468	$ 58,468
Issuance of restricted stock (in shares)		1,051
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(2,075)
Repurchase of common stock	(290,041)	$ (290,041)
Taxes paid related to net share settlement of equity awards (in shares)		(79)
Taxes paid related to net share settlement of equity awards	(11,369)	$ (11,369)
Stock-based compensation	183,384	$ 183,384
Net income	242,814			242,814
Other comprehensive income (loss)	$ 4,240		4,240
Ending Balance ( in shares) at Jun. 30, 2023	59,296	59,296
Ending Balance at Jun. 30, 2023	$ 2,657,503	$ 32,519	(21,936)	2,646,920
Beginning Balance (in shares) at Mar. 31, 2023		60,465
Beginning Balance at Mar. 31, 2023	2,725,559	$ 190,592	(22,977)	2,557,944
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of employee stock options (in shares)		13
Exercise of employee stock options	313	$ 313
Issuance of stock under employee stock purchase plan (in shares)		321
Issuance of stock under employee stock purchase plan	36,723	$ 36,723
Issuance of restricted stock (in shares)		320
Issuance of restricted stock	0
Repurchase of common stock (in shares)		(1,812)
Repurchase of common stock	(250,036)	$ (250,036)
Taxes paid related to net share settlement of equity awards (in shares)		(11)
Taxes paid related to net share settlement of equity awards	(1,545)	$ (1,545)
Stock-based compensation	56,472	$ 56,472
Net income	88,976			88,976
Other comprehensive income (loss)	$ 1,041		1,041
Ending Balance ( in shares) at Jun. 30, 2023	59,296	59,296
Ending Balance at Jun. 30, 2023	$ 2,657,503	$ 32,519	$ (21,936)	$ 2,646,920

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities
Net income	$ 242,814	$ 232,814
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	183,384	189,761
Depreciation and amortization	83,173	88,398
Non-cash operating lease costs	29,977	29,071
Deferred income taxes	(85,091)	(28,956)
Impairment of assets	3,455	6,175
Other	2,137	585
Changes in operating assets and liabilities (excluding effects of the acquisition of businesses):
Accounts receivable	31,507	(116,137)
Inventories	22,263	(21,732)
Other current assets	(47,488)	(106,070)
Other assets	13,231	(50,400)
Accounts payable and accrued liabilities	(79,608)	(33,398)
Deferred revenue	98,054	136,872
Lease liabilities	(34,200)	(38,707)
Net cash provided by operating activities	463,608	288,276
Investing activities
Purchases of investments	(1,789)	(58,514)
Maturities of investments	103,513	178,372
Sales of investments	16,085	120,564
Acquisition of businesses, net of cash acquired	(35,049)	(67,911)
Purchases of property and equipment	(38,802)	(25,117)
Net cash provided by investing activities	43,958	147,394
Financing activities
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan	59,497	63,681
Repurchase of common stock	(290,041)	(500,023)
Payments on term debt agreement	(350,000)	(15,000)
Taxes paid related to net share settlement of equity awards	(11,369)	(18,907)
Net cash used in financing activities	(591,913)	(470,249)
Net decrease in cash, cash equivalents and restricted cash	(84,347)	(34,579)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	3,729	(3,633)
Cash, cash equivalents and restricted cash, beginning of period	762,207	584,333
Cash, cash equivalents and restricted cash, end of period	681,589	546,121
Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	40,619	44,115
Cash paid for interest on long-term debt	2,970	4,287
Supplemental disclosures of non-cash activities
Right-of-use assets obtained in exchange for lease obligations	$ 10,544	$ 614

XML

Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Description of Business

F5, Inc. (the "Company") is a leading provider of multi-cloud application security and delivery solutions 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, maintenance, and other technical support services.

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, 2022.

There have been no changes to the Company's significant accounting policies as of and for the three and nine months ended June 30, 2023.

New Accounting Pronouncements

There have been no material changes in recently issued or adopted accounting standards from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

XML

Revenue from Contracts with Customers

9 Months Ended

Jun. 30, 2023

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 nine months ended June 30, 2023 and 2022 (in thousands):

	Nine months ended June 30,
	2023		2022
Balance, beginning of period	$	77,220	$	77,836
Additional capitalized contract acquisition costs	19,384		27,620
Amortization of capitalized contract acquisition costs	(28,514)		(28,782)
Balance, end of period	$	68,090	$	76,674

Amortization of capitalized contract acquisition costs was $9.4 million and $9.7 million for the three months ended June 30, 2023 and 2022, respectively, and $28.5 million and $28.8 million for the nine months ended June 30, 2023 and 2022, 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. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations, or for contracts with customers that contain the Company's unconditional rights to consideration, for which the customer has not been billed. These liabilities are classified as current and non-current deferred revenue.

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the nine months ended June 30, 2023 and 2022 (in thousands):

	Nine months ended June 30,
	2023		2022
Balance, beginning of period	$	1,691,580	$	1,489,841
Amounts added but not recognized as revenues	1,012,441		973,673
Deferred revenue acquired through acquisition of businesses	1,800		10,591
Revenues recognized related to the opening balance of deferred revenue	(914,387)		(836,800)
Balance, end of period	$	1,791,434	$	1,637,305

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. The composition of unsatisfied performance obligations consists mainly of deferred service revenue, and to a lesser extent, deferred product revenue, for which the Company has an obligation to perform, and has not yet recognized as revenue in the consolidated financial statements. As of June 30, 2023, the total non-cancelable remaining performance obligations under the Company's contracts with customers was $1.8 billion and the Company expects to recognize revenues on approximately 64.2% of these remaining performance obligations over the next 12 months, 23.1% in year two, and the remaining balance thereafter.

See Note 12, 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 Measures and Disclosures

9 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

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 June 30, 2023 and September 30, 2022, were as follows (in thousands):

				Gross Unrealized						Classification on Balance Sheet
As of June 30, 2023	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	186,499	$	—	$	—	$	186,499	$	186,499	$	—	$	—
Corporate bonds and notes	Level 2	7,271		—		(144)		7,127		—		6,354		773
Municipal bonds and notes	Level 2	2,156		—		(31)		2,125		—		2,125		—
U.S. government securities	Level 2	2,899		—		(34)		2,865		—		2,865		—
U.S. government agency securities	Level 2	1,785		—		(20)		1,765		—		1,765		—
Total debt investments		$	200,610	$	—	$	(229)	$	200,381	$	186,499	$	13,109	$	773
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	5,114	$	—	$	—	$	5,114
Total equity investments								5,114		—		—		5,114
Total investments								$	205,495	$	186,499	$	13,109	$	5,887

 * The fair value of this equity investment is measured at net asset value (NAV) which approximates fair value and is not classified within the fair value hierarchy.

				Gross Unrealized						Classification on Balance Sheet
As of September 30, 2022	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	276,294	$	—	$	—	$	276,294	$	276,294	$	—	$	—
Corporate bonds and notes	Level 2	50,828		—		(950)		49,878		912		44,356		4,610
Municipal bonds and notes	Level 2	5,018		—		(102)		4,916		—		3,812		1,104
U.S. government securities	Level 2	84,734		—		(660)		84,074		10,120		73,954		—
U.S. government agency securities	Level 2	5,825		—		(75)		5,750		606		4,432		712
Total debt investments		$	422,699	$	—	$	(1,787)	$	420,912	$	287,932	$	126,554	$	6,426
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	3,118	$	—	$	—	$	3,118
Total equity investments								3,118		—		—		3,118
Total investments								$	424,030	$	287,932	$	126,554	$	9,544

* The fair value of this equity investment is measured at NAV which approximates fair value and is not classified within the fair value hierarchy.

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.

Interest income from investments was not material for the three and nine months ended June 30, 2023 and 2022. Interest income is included in other income (expense), net on the Company's consolidated income statements. Unrealized losses on investments held for a period greater than 12 months at June 30, 2023 and September 30, 2022 were not material.

The Company invests in debt securities that are rated investment grade. The Company reviews the individual debt securities in its portfolio to determine whether a credit loss exists by comparing the extent to which the fair value is less than the amortized cost and considering any changes to ratings of a debt security by a ratings agency. The Company determined that as of June 30, 2023, there were no credit losses on any investments within its portfolio.

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

The Company's non-financial long-lived assets, which include goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis. These non-financial assets 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.

During the three months ended June 30, 2023, the Company recorded an impairment of $3.5 million against the operating lease right-of-use asset related to its third quarter of fiscal 2023 restructuring plan, see Note 13, Restructuring Charges. The charge was reflected in the Restructuring Charges line item on the Company's consolidated income statement.

In the first quarter of fiscal 2022, as a result of a planned change in the use of the asset, the Company recorded an impairment of $6.2 million against the Shape trade name intangible asset, which was reflected in the Sales and Marketing line item on the Company's consolidated income statement.

The Company did not recognize any other impairment charges related to non-financial long-lived assets for the three and nine months ended June 30, 2023 and 2022.

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Business Combinations

9 Months Ended

Jun. 30, 2023

Business Combinations [Abstract]

Business Combinations

Business Combinations

Fiscal Year 2023 Acquisition of Lilac Cloud, Inc.

On January 22, 2023, the Company entered into a Merger Agreement (the “Lilac Merger Agreement”) with Lilac Cloud, Inc. ("Lilac"), a provider of innovative application delivery services. The transaction closed on February 1, 2023 with Lilac becoming a wholly-owned subsidiary of F5. The addition of Lilac’s Content Delivery Network ("CDN") technologies enhances F5’s portfolio of solutions that secure and optimize any application and Application Programming Interface ("API") anywhere. The acquisition of Lilac was not material and did not have a material impact to the Company's operating results. 

Fiscal Year 2022 Acquisition of Threat Stack, Inc.

In September 2021, the Company entered into a Merger Agreement (the “Threat Stack Merger Agreement”) with Threat Stack, Inc. ("Threat Stack"), a provider of cloud security and workload protection solutions. The transaction closed on October 1, 2021 with Threat Stack becoming a wholly-owned subsidiary of F5. The addition of Threat Stack’s cloud security capabilities to F5’s application and API protection solutions enhances visibility across application infrastructure and workloads to deliver more actionable security insights for customers.

Pursuant to the Threat Stack Merger Agreement, at the effective time of the Merger, the capital stock of Threat Stack and the vested outstanding and unexercised stock options in Threat Stack were cancelled and converted to the right to receive approximately $68.9 million in cash, subject to certain adjustments and conditions set forth in the Threat Stack Merger Agreement. Transaction costs associated with the acquisition were not material.

As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of Threat Stack. The goodwill related to the Threat Stack 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 Threat Stack acquisition was not deductible for tax purposes. The results of operations of Threat Stack 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
Deferred tax assets	$	14,041
Other net tangible assets acquired, at fair value	5,481
Cash, cash equivalents, and restricted cash	911
Identifiable intangible assets:
Developed technology	11,400		5 years
Customer relationships	4,400		5 years
Goodwill	43,282
Total assets acquired	$	79,515
Liabilities assumed
Deferred revenue	$	(10,591)
Total liabilities assumed	$	(10,591)
Net assets acquired	$	68,924

The measurement period for the Threat Stack acquisition lapsed during the first quarter of fiscal 2023. The Company recorded immaterial adjustments to consideration exchanged for the purchase of Threat Stack within the post-close measurement period.

The developed technology intangible asset is amortized on a straight-line basis over its estimated useful life of five years and included in cost of net product revenues. The customer relationships intangible asset is amortized on a straight-line basis over its estimated useful life of five years and included in sales and marketing expenses. The weighted-average life of the amortizable intangible assets recognized from the Threat Stack acquisition was five years as of October 1, 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.

The pro forma financial information, as well as the revenue and earnings generated by Threat Stack, were not material to the Company's operations for the periods presented.

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Balance Sheet Details

9 Months Ended

Jun. 30, 2023

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):

	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	677,498	$	758,012
Restricted cash included in other assets, net	4,091		4,195
Total cash, cash equivalents and restricted cash	$	681,589	$	762,207

Inventories

Inventories consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Finished goods	$	10,115	$	10,164
Raw materials	35,987		58,201
	$	46,102	$	68,365

Other Current Assets

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

	June 30, 2023		September 30, 2022
Unbilled receivables	$	366,511	$	319,707
Prepaid expenses	76,678		57,340
Capitalized contract acquisition costs	31,992		34,658
Other1	62,376		77,609
	$	537,557	$	489,314

(1)     As of June 30, 2023 and September 30, 2022, includes a deposit of $36.2 million and $57.0 million, respectively, used to support the working capital needs of the Company’s primary contract manufacturer's procurement of components used in the manufacturing of system hardware.

Other Assets

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

	June 30, 2023		September 30, 2022
Intangible assets	$	163,995	$	200,288
Unbilled receivables	212,749		224,780
Capitalized contract acquisition costs	36,098		42,561
Other	51,451		48,493
	$	464,293	$	516,122

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Payroll and benefits	$	136,462	$	165,437
Operating lease liabilities, current	42,155		42,523
Income and other tax accruals	36,510		41,217
Other	59,128		60,642
	$	274,255	$	309,819

Other Long-term Liabilities

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

	June 30, 2023		September 30, 2022
Income taxes payable	$	68,001	$	59,553
Other	8,504		8,157
	$	76,505	$	67,710

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Debt Facilities

9 Months Ended

Jun. 30, 2023

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 Term Loan Facility had an original maturity date of January 24, 2023 with quarterly installments equal to 1.25% of the original principal amount. Borrowings under the Term Loan Facility bore interest at a rate equal to LIBOR, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio. 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 were recorded as a reduction to the carrying value of the principal amount of the debt.

On December 15, 2022, the Company voluntarily prepaid, in full, all borrowings under the Term Loan Facility, including the outstanding principal balance of $350.0 million, and all accrued, but unpaid interest outstanding of $3.0 million. All remaining debt issuance costs were amortized to interest expense associated with the prepayment. As a result of the payoff of its Term Loan Facility, the Company was released of any and all obligations, maintenance of covenants, and indebtedness under the Term Credit Agreement. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 4.072% for the period of October 1, 2022 to December 15, 2022.

As of September 30, 2022, $350.0 million of principal amount under the Term Loan Facility was outstanding, excluding unamortized debt issuance costs of $0.2 million. The weighted average interest rate on the principal amount under the Term Loan Facility outstanding balance was 2.092% and 1.553% for the three and nine months ended June 30, 2022, respectively.

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. Historically, borrowings under the Revolving Credit Facility bore 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. On May 26, 2023, the Company amended the Revolving Credit Agreement as a result of the cessation of the LIBOR borrowing reference rate. The amendment modified and directly replaced the LIBOR borrowing reference rate within the Revolving Credit Agreement to the Secured Overnight Financing Rate (SOFR). After the amendment, borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company's option, (a) SOFR plus 0.10%, 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 nine months ended June 30, 2023 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 June 30, 2023, the Company was in compliance with all covenants. As of June 30, 2023, 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

9 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

Leases

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 nine months ended June 30, 2023 and 2022 were as follows (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Operating lease expense	$	11,801	$	11,810	$	36,498	$	35,594
Short-term lease expense	872		683		2,271		1,858
Variable lease expense	5,895		5,208		16,881		17,486
Total lease expense	$	18,568	$	17,701	$	55,650	$	54,938

Variable lease expense primarily consists of common area maintenance, real estate taxes 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):

	June 30, 2023			September 30, 2022
Operating lease right-of-use assets, net	$	204,196		$	227,475
Operating lease liabilities, current1	42,155			42,523
Operating lease liabilities, long-term	250,077			272,376
Total operating lease liabilities	$	292,232		$	314,899
Weighted average remaining lease term (in years)	8.7			9.2
Weighted average discount rate	2.75		%	2.66		%

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

As of June 30, 2023, 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
2023 (remainder)	$	12,364
2024	49,024
2025	41,307
2026	31,727
2027	30,530
2028	28,396
Thereafter	138,797
Total lease payments	332,145
Less: imputed interest	(39,913)
Total lease liabilities	$	292,232

Operating lease liabilities above do not include sublease income. As of June 30, 2023, the Company expects to receive sublease income of approximately $16.2 million, which consists of $1.8 million to be received for the remainder of fiscal 2023 and $14.4 million to be received over the three fiscal years thereafter.

As of June 30, 2023, the Company had no significant operating leases that were executed but not yet commenced.

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2023

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 June 30, 2023 and September 30, 2022 were not material.

Commitments

In October 2022, the Company entered into an unconditional purchase commitment with one of its suppliers for the delivery of systems components. Under the terms of the agreement, the Company is obligated to purchase $10 million of component inventory annually, with a total committed amount of $40 million over a four-year term. As of June 30, 2023, the Company had no remaining purchase commitments under the first year of the agreement. The Company's total non-cancelable long-term purchase commitments outstanding as of June 30, 2023 was $30.0 million.

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 7 to its annual consolidated financial statements.

Legal Proceedings

Lynwood Investment CY Limited v. F5 Networks et al.

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 asserted 26 causes of action against the various defendants, including copyright infringement, violation of trademark law, tortious interference, conspiracy, and fraud. The complaint sought damages, disgorgement of profits, 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 Lynwood’s case. On March 25 and 30, 2021, the Court granted the Company’s and the other defendants’ motions to dismiss with leave to amend. Lynwood filed its amended complaint on April 29, 2021, seeking the same relief against the Company and other defendants. On May 27, 2021, the Company and other defendants filed a consolidated motion to dismiss.

The Court granted the consolidated motion to dismiss without leave to amend on August 16, 2022 and entered final judgment against Lynwood on September 9, 2022. On September 14, 2022, Lynwood filed a notice of appeal to the Ninth Circuit Court of Appeals to appeal the dismissal. Lynwood filed its opening brief on December 16, 2022. The Company filed its opening appellate brief on April 10, 2023 and Lynwood filed its reply on May 31, 2023.

Following the Court’s order granting the consolidated motion to dismiss and final judgment in the Company’s favor, the Court subsequently granted the Company attorneys' fees of over $0.8 million, which Lynwood appealed to the Ninth Circuit Court of Appeals. The Appeal is ongoing.

In addition to the above matters, 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 to currently determine if an unfavorable outcome is probable or estimate any potential amount or range of possible loss of these or similar matters. 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

9 Months Ended

Jun. 30, 2023

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 16.4% and 22.0% for the three and nine months ended June 30, 2023, respectively, compared to 18.0% and 18.5% for the three and nine months ended June 30, 2022, respectively. The decrease in the effective tax rate for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily due to a discrete impact from filing the Company’s fiscal year 2022 U.S. federal income tax return during the period ended June 30, 2023. The increase in the effective tax rate for the nine months ended June 30, 2023 as compared to the nine months ended June 30, 2022 is primarily due to the tax impact of stock-based compensation and foreign operations, partially offset by a discrete impact from filing the Company’s fiscal year 2022 U.S. federal income tax return during the period ended June 30, 2023.

At June 30, 2023, the Company had $73.2 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.

On July 21, 2023, the IRS issued Notice 2023-55 (the “Notice”) which provides guidance to taxpayers in determining whether a foreign tax is eligible for a U.S. foreign tax credit, specifically delaying until 2024 the application of foreign tax credit regulations that were issued in 2022. The Company is currently evaluating the impact of the Notice on its FY23 effective tax rate.

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, 2018. Major jurisdictions where there are wholly owned subsidiaries of F5, Inc. which require income tax filings include the United Kingdom, Singapore, Israel, and India. The earliest periods open for review by local taxing authorities are fiscal years 2020 for the United Kingdom, 2018 for Singapore, 2013 for Israel, and 2019 for India. The Company is currently under audit by the Internal Revenue Service for fiscal year 2019, by various states for fiscal years 2015 through 2021, and by various foreign jurisdictions including Germany for fiscal years 2016 to 2019, India for fiscal years 2019 to 2022, Israel for fiscal years 2013 to 2017, Saudi Arabia for fiscal years 2015 to 2020, and Singapore for fiscal years 2019 to 2020.

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Shareholders' Equity

9 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders' Equity Note Disclosure

Shareholders' Equity

Common Stock Repurchase

On July 25, 2022, 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 $5.4 billion program, initially approved in October 2010 and expanded in subsequent fiscal years. 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.

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Shares repurchased	1,812		1,463		2,075		2,611
Average price per share	$	137.99	$	170.88	$	139.75	$	191.47
Amount repurchased	$	250,036	$	250,000	$	290,041	$	500,023

As of June 30, 2023, the Company had $982 million remaining authorized to purchase shares under its share repurchase program.

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Net Income Per Share

9 Months Ended

Jun. 30, 2023

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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Numerator
Net income	$	88,976	$	83,019	$	242,814	$	232,814
Denominator
Weighted average shares outstanding — basic	59,977		59,965		60,133		60,450
Dilutive effect of common shares from stock options and restricted stock units	337		495		330		895
Weighted average shares outstanding — diluted	60,314		60,460		60,463		61,345
Basic net income per share	$	1.48	$	1.38	$	4.04	$	3.85
Diluted net income per share	$	1.48	$	1.37	$	4.02	$	3.80

Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were not material for the three and nine months ended June 30, 2023 and 2022.

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Segment Information

9 Months Ended

Jun. 30, 2023

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.

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 net product revenues and 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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Americas:
United States	$	374,023	$	364,333	$	1,109,676	$	1,084,853
Other	24,257		22,797		73,864		63,824
Total Americas	398,280		387,130		1,183,540		1,148,677
EMEA	181,147		156,471		555,701		474,906
APAC	123,215		130,887		366,954		372,229
	$	702,642	$	674,488	$	2,106,195	$	1,995,812

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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Net product revenues
Systems revenue	$	154,659	$	147,540	$	536,379	$	473,671
Software revenue	173,516		178,942		472,935		493,478
Total net product revenue	$	328,175	$	326,482	$	1,009,314	$	967,149

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Ingram Micro, Inc.	14.3	%	20.7	%	16.1	%	19.9	%
Synnex Corporation	15.8	%	13.4	%	14.7	%	13.3	%
Carahsoft Technology Corporation	10.7	%	—		—		—

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

	June 30, 2023		September 30, 2022
Americas:
United States	$	126,155	$	134,699
Other	2,951		1,773
Total Americas	129,106		136,472
EMEA	24,626		17,376
APAC	17,415		14,334
	$	171,147	$	168,182

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Restructuring Charges

9 Months Ended

Jun. 30, 2023

Restructuring Charges [Abstract]

Restructuring Charges

Restructuring Charges

In the third quarter of fiscal 2023, the Company initiated a restructuring plan to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, including a reduction in force affecting approximately 620 employees, or approximately 9% of the Company’s global workforce as of April 19, 2023. This included $53.2 million in severance benefits costs and related employer payroll taxes, and $3.5 million in charges related to the reduction of its leased facility space. The Company incurred $56.7 million in restructuring costs in the third quarter of fiscal 2023. The Company does not expect to record any significant future charges related to the third quarter of fiscal 2023 restructuring plan.

In the first quarters of fiscal 2023 and 2022, the Company initiated restructuring plans to match strategic and financial objectives and optimize resources for long term growth, including a reduction in force program. In the first quarter of fiscal 2023, the Company recorded a restructuring charge of $8.7 million. The Company did not record any significant future charges related to the first quarter of fiscal 2023 restructuring plan. In the first quarter of fiscal 2022, the Company recorded a restructuring charge of $7.9 million. The Company did not record any significant subsequent charges related to the first quarter of fiscal 2022 restructuring plan.

During the nine months ended June 30, 2023 and 2022, the following activity was recorded (in thousands):

	Nine months ended June 30,
	2023		2022
Employee Severance, Benefits and Related Costs
Accrued expenses, beginning of period	$	—	$	—
Restructuring charges:
Q1	8,740		7,909
Q3	53,193		—
Cash payments:
Q1	(8,740)		(7,689)
Q3	(44,820)		—
Accrued expenses, end of period	$	8,373	$	220

Charges related to employee severance, benefits, and related costs; as well as charges related to the reduction of the Company’s leased facilities are reflected in the restructuring charges line item on the Company's consolidated income statements.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net income	$ 88,976	$ 83,019	$ 242,814	$ 232,814

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Insider Trading Arrangements

3 Months Ended

Jun. 30, 2023

shares

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

During the three months ended June 30, 2023, certain of our officers and directors adopted or terminated Rule 10b5-1 trading arrangements as follows:

On May 1, 2023, Scot Rogers, EVP, General Counsel, adopted a written plan intended to satisfy the affirmative defense of Rule 10b5-1(c) that is designed to be in effect until March 15, 2024 with respect to the sale of 4,500 Company shares.

On May 1, 2023, Chad Whalen, EVP, Worldwide Sales, adopted a written plan intended to satisfy the affirmative defense of Rule 10b5-1(c) that is designed to be in effect until April 29, 2024 with respect to the sale of 5,585 Company shares (assuming the vesting of the maximum number of shares under certain performance-based equity awards based on maximum performance).

Rule 10b5-1 Arrangement Adopted

true

Rule 10b5-1 Arrangement Terminated

false

Scot Rogers [Member]

Trading Arrangements, by Individual

Name

Scot Rogers

Title

EVP, General Counsel

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

May 1, 2023

Aggregate Available

4,500

Chad Whalen [Member]

Trading Arrangements, by Individual

Name

Chad Whalen

Title

EVP, Worldwide Sales

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

May 1, 2023

Aggregate Available

5,585

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Description of Business

Description of Business

F5, Inc. (the "Company") is a leading provider of multi-cloud application security and delivery solutions 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, maintenance, and other technical support services.

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, 2022.

Recent Accounting Pronouncements

There have been no changes to the Company's significant accounting policies as of and for the three and nine months ended June 30, 2023.

New Accounting Pronouncements

There have been no material changes in recently issued or adopted accounting standards from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

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Revenue from Contracts with Customers (Tables)

9 Months Ended

Jun. 30, 2023

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 nine months ended June 30, 2023 and 2022 (in thousands):

	Nine months ended June 30,
	2023		2022
Balance, beginning of period	$	77,220	$	77,836
Additional capitalized contract acquisition costs	19,384		27,620
Amortization of capitalized contract acquisition costs	(28,514)		(28,782)
Balance, end of period	$	68,090	$	76,674

Contract with Customer, Asset and Liability

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the nine months ended June 30, 2023 and 2022 (in thousands):

	Nine months ended June 30,
	2023		2022
Balance, beginning of period	$	1,691,580	$	1,489,841
Amounts added but not recognized as revenues	1,012,441		973,673
Deferred revenue acquired through acquisition of businesses	1,800		10,591
Revenues recognized related to the opening balance of deferred revenue	(914,387)		(836,800)
Balance, end of period	$	1,791,434	$	1,637,305

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2023

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 June 30, 2023 and September 30, 2022, were as follows (in thousands):

				Gross Unrealized						Classification on Balance Sheet
As of June 30, 2023	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	186,499	$	—	$	—	$	186,499	$	186,499	$	—	$	—
Corporate bonds and notes	Level 2	7,271		—		(144)		7,127		—		6,354		773
Municipal bonds and notes	Level 2	2,156		—		(31)		2,125		—		2,125		—
U.S. government securities	Level 2	2,899		—		(34)		2,865		—		2,865		—
U.S. government agency securities	Level 2	1,785		—		(20)		1,765		—		1,765		—
Total debt investments		$	200,610	$	—	$	(229)	$	200,381	$	186,499	$	13,109	$	773
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	5,114	$	—	$	—	$	5,114
Total equity investments								5,114		—		—		5,114
Total investments								$	205,495	$	186,499	$	13,109	$	5,887

 * The fair value of this equity investment is measured at net asset value (NAV) which approximates fair value and is not classified within the fair value hierarchy.

				Gross Unrealized						Classification on Balance Sheet
As of September 30, 2022	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	276,294	$	—	$	—	$	276,294	$	276,294	$	—	$	—
Corporate bonds and notes	Level 2	50,828		—		(950)		49,878		912		44,356		4,610
Municipal bonds and notes	Level 2	5,018		—		(102)		4,916		—		3,812		1,104
U.S. government securities	Level 2	84,734		—		(660)		84,074		10,120		73,954		—
U.S. government agency securities	Level 2	5,825		—		(75)		5,750		606		4,432		712
Total debt investments		$	422,699	$	—	$	(1,787)	$	420,912	$	287,932	$	126,554	$	6,426
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	3,118	$	—	$	—	$	3,118
Total equity investments								3,118		—		—		3,118
Total investments								$	424,030	$	287,932	$	126,554	$	9,544

* The fair value of this equity investment is measured at NAV which approximates fair value and is not classified within the fair value hierarchy.

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Business Combinations (Tables)

9 Months Ended

Jun. 30, 2023

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
Deferred tax assets	$	14,041
Other net tangible assets acquired, at fair value	5,481
Cash, cash equivalents, and restricted cash	911
Identifiable intangible assets:
Developed technology	11,400		5 years
Customer relationships	4,400		5 years
Goodwill	43,282
Total assets acquired	$	79,515
Liabilities assumed
Deferred revenue	$	(10,591)
Total liabilities assumed	$	(10,591)
Net assets acquired	$	68,924

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Balance Sheet Details (Tables)

9 Months Ended

Jun. 30, 2023

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):

	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	677,498	$	758,012
Restricted cash included in other assets, net	4,091		4,195
Total cash, cash equivalents and restricted cash	$	681,589	$	762,207

Inventories

Inventories consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Finished goods	$	10,115	$	10,164
Raw materials	35,987		58,201
	$	46,102	$	68,365

Other Current Assets

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

	June 30, 2023		September 30, 2022
Unbilled receivables	$	366,511	$	319,707
Prepaid expenses	76,678		57,340
Capitalized contract acquisition costs	31,992		34,658
Other1	62,376		77,609
	$	537,557	$	489,314

(1)     As of June 30, 2023 and September 30, 2022, includes a deposit of $36.2 million and $57.0 million, respectively, used to support the working capital needs of the Company’s primary contract manufacturer's procurement of components used in the manufacturing of system hardware.

Other Assets, Noncurrent

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

	June 30, 2023		September 30, 2022
Intangible assets	$	163,995	$	200,288
Unbilled receivables	212,749		224,780
Capitalized contract acquisition costs	36,098		42,561
Other	51,451		48,493
	$	464,293	$	516,122

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Payroll and benefits	$	136,462	$	165,437
Operating lease liabilities, current	42,155		42,523
Income and other tax accruals	36,510		41,217
Other	59,128		60,642
	$	274,255	$	309,819

Noncurrent Liabilities

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

	June 30, 2023		September 30, 2022
Income taxes payable	$	68,001	$	59,553
Other	8,504		8,157
	$	76,505	$	67,710

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Leases (Tables)

9 Months Ended

Jun. 30, 2023

Leases [Abstract]

Lease, Cost

The components of the Company's operating lease expenses for the three and nine months ended June 30, 2023 and 2022 were as follows (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Operating lease expense	$	11,801	$	11,810	$	36,498	$	35,594
Short-term lease expense	872		683		2,271		1,858
Variable lease expense	5,895		5,208		16,881		17,486
Total lease expense	$	18,568	$	17,701	$	55,650	$	54,938

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):

	June 30, 2023			September 30, 2022
Operating lease right-of-use assets, net	$	204,196		$	227,475
Operating lease liabilities, current1	42,155			42,523
Operating lease liabilities, long-term	250,077			272,376
Total operating lease liabilities	$	292,232		$	314,899
Weighted average remaining lease term (in years)	8.7			9.2
Weighted average discount rate	2.75		%	2.66		%

(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 June 30, 2023, 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
2023 (remainder)	$	12,364
2024	49,024
2025	41,307
2026	31,727
2027	30,530
2028	28,396
Thereafter	138,797
Total lease payments	332,145
Less: imputed interest	(39,913)
Total lease liabilities	$	292,232

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Shareholders' Equity (Tables)

9 Months Ended

Jun. 30, 2023

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 (in thousands, except per share data):

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Shares repurchased	1,812		1,463		2,075		2,611
Average price per share	$	137.99	$	170.88	$	139.75	$	191.47
Amount repurchased	$	250,036	$	250,000	$	290,041	$	500,023

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Net Income Per Share (Tables)

9 Months Ended

Jun. 30, 2023

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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Numerator
Net income	$	88,976	$	83,019	$	242,814	$	232,814
Denominator
Weighted average shares outstanding — basic	59,977		59,965		60,133		60,450
Dilutive effect of common shares from stock options and restricted stock units	337		495		330		895
Weighted average shares outstanding — diluted	60,314		60,460		60,463		61,345
Basic net income per share	$	1.48	$	1.38	$	4.04	$	3.85
Diluted net income per share	$	1.48	$	1.37	$	4.02	$	3.80

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Segment Information (Tables)

9 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Schedule of Revenues by Geographic Region

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Americas:
United States	$	374,023	$	364,333	$	1,109,676	$	1,084,853
Other	24,257		22,797		73,864		63,824
Total Americas	398,280		387,130		1,183,540		1,148,677
EMEA	181,147		156,471		555,701		474,906
APAC	123,215		130,887		366,954		372,229
	$	702,642	$	674,488	$	2,106,195	$	1,995,812

Schedule of Segment Reporting Information, by Segment

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

	Three months ended June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Net product revenues
Systems revenue	$	154,659	$	147,540	$	536,379	$	473,671
Software revenue	173,516		178,942		472,935		493,478
Total net product revenue	$	328,175	$	326,482	$	1,009,314	$	967,149

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 June 30,				Nine months ended June 30,
	2023		2022		2023		2022
Ingram Micro, Inc.	14.3	%	20.7	%	16.1	%	19.9	%
Synnex Corporation	15.8	%	13.4	%	14.7	%	13.3	%
Carahsoft Technology Corporation	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):

	June 30, 2023		September 30, 2022
Americas:
United States	$	126,155	$	134,699
Other	2,951		1,773
Total Americas	129,106		136,472
EMEA	24,626		17,376
APAC	17,415		14,334
	$	171,147	$	168,182

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Restructuring Charges (Tables)

9 Months Ended

Jun. 30, 2023

Restructuring Charges [Abstract]

Restructuring and Related Costs

During the nine months ended June 30, 2023 and 2022, the following activity was recorded (in thousands):

	Nine months ended June 30,
	2023		2022
Employee Severance, Benefits and Related Costs
Accrued expenses, beginning of period	$	—	$	—
Restructuring charges:
Q1	8,740		7,909
Q3	53,193		—
Cash payments:
Q1	(8,740)		(7,689)
Q3	(44,820)		—
Accrued expenses, end of period	$	8,373	$	220

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Revenue from Contracts with Customers - Capitalized contract acquisition costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Changes In Capitalized Contract Cost [Roll Forward]
Beginning Balance			$ 77,220	$ 77,836
Additional capitalized contract acquisition costs			19,384	27,620
Amortization of capitalized contract acquisition costs	$ (9,400)	$ (9,700)	(28,514)	(28,782)
Ending Balance	$ 68,090	$ 76,674	$ 68,090	$ 76,674

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Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Change in Contract with Customer, Liability [Roll Forward]
Beginning Balance	$ 1,691,580	$ 1,489,841
Amounts added but not recognized as revenues	1,012,441	973,673
Deferred revenue acquired through acquisition of businesses	1,800	10,591
Revenues recognized related to the opening balance of deferred revenue	(914,387)	(836,800)
Ending Balance	$ 1,791,434	$ 1,637,305

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Revenue from Contracts with Customers - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue from Contract with Customer [Abstract]
Amortization of capitalized contract acquisition costs	$ 9,400,000	$ 9,700,000	$ 28,514,000	$ 28,782,000
Capitalized Contract Cost, Impairment Loss			$ 0	$ 0

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Revenue from Contracts with Customers - Remaining Performance Obligations (Details) $ in Billions	Jun. 30, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01
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, percentage	64.20%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01
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, percentage	23.10%

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Fair Value Measurements - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	$ 186,499	$ 287,932
Cost or amortized cost	200,610	422,699
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(229)	(1,787)
Fair value	200,381	420,912
Debt Securities, Available-for-sale, Current	13,109	126,554
Debt Securities, Available-for-sale, Noncurrent	773	6,426
Equity Securities, FV-NI	5,114	3,118
Equity Securities, FV-NI, Current	0	0
Equity Securities, FV-NI, Noncurrent	5,114	3,118
Available-for-sale Securities	205,495	424,030
Available-for-sale Securities, Current	13,109	126,554
Long-term investments	5,887	9,544
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Equity Securities, FV-NI	5,114	3,118
Equity Securities, FV-NI, Current	0	0
Equity Securities, FV-NI, Noncurrent	5,114	3,118
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	186,499	276,294
Money Market Funds | Fair Value, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value	186,499	276,294
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cost or amortized cost	7,271	50,828
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(144)	(950)
Corporate Debt Securities [Member] | Fair Value, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value		912
Fair value	7,127	49,878
Debt Securities, Available-for-sale, Current	6,354	44,356
Debt Securities, Available-for-sale, Noncurrent	773	4,610
Municipal Bonds And Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cost or amortized cost	2,156	5,018
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(31)	(102)
Municipal Bonds And Notes [Member] | Fair Value, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Fair value	2,125	4,916
Debt Securities, Available-for-sale, Current	2,125	3,812
Debt Securities, Available-for-sale, Noncurrent	0	1,104
U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cost or amortized cost	2,899	84,734
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(34)	(660)
U.S. Government Securities | Fair Value, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value		10,120
Fair value	2,865	84,074
Debt Securities, Available-for-sale, Current	2,865	73,954
Debt Securities, Available-for-sale, Noncurrent	0	0
U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cost or amortized cost	1,785	5,825
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(20)	(75)
U.S. Government Agency Securities | Fair Value, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]
Cash equivalents, fair value		606
Fair value	1,765	5,750
Debt Securities, Available-for-sale, Current	1,765	4,432
Debt Securities, Available-for-sale, Noncurrent	$ 0	$ 712

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Fair Value Measurements Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Q3 2023 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Other Restructuring Costs	$ 3.5
Fair Value, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment of Intangible Assets (Excluding Goodwill)		$ 6.2

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Business Combinations - Narrative (Details) - Threat Stack, Inc $ in Millions	Oct. 01, 2021 USD ($)
Business Acquisition [Line Items]
Total purchase price	$ 68.9
Identifiable intangible assets useful life	5 years
Developed Technology Rights
Business Acquisition [Line Items]
Identifiable intangible assets useful life	5 years
Customer Relationships
Business Acquisition [Line Items]
Identifiable intangible assets useful life	5 years

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Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands	Oct. 01, 2021	Jun. 30, 2023	Sep. 30, 2022
Assets Acquired
Goodwill		$ 2,288,678	$ 2,259,282
Threat Stack, Inc
Assets Acquired
Deferred tax assets	$ 14,041
Other net tangible assets acquired, at fair value	5,481
Cash, cash equivalents, and restricted cash	$ 911
Identifiable intangible assets useful life	5 years
Goodwill	$ 43,282
Total assets acquired	79,515
Liabilities assumed
Deferred revenue	(10,591)
Total liabilities assumed	(10,591)
Net assets acquired	68,924
Threat Stack, Inc | Developed Technology Rights
Assets Acquired
Identifiable intangible assets:	$ 11,400
Identifiable intangible assets useful life	5 years
Threat Stack, Inc | Customer Relationships
Assets Acquired
Identifiable intangible assets:	$ 4,400
Identifiable intangible assets useful life	5 years

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Balance Sheet Details - Cash and Cash Equivalent (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2021
Balance Sheet Details [Abstract]
Cash and cash equivalents	$ 677,498	$ 758,012
Restricted cash included in other assets, net	4,091	4,195
Total cash, cash equivalents and restricted cash	$ 681,589	$ 762,207	$ 546,121	$ 584,333

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Balance Sheet Details - Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Balance Sheet Details [Abstract]
Finished goods	$ 10,115	$ 10,164
Raw materials	35,987	58,201
Inventories	$ 46,102	$ 68,365

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Balance Sheet Details - Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Balance Sheet Details [Abstract]
Unbilled receivables	$ 366,511	$ 319,707
Prepaid expenses	76,678	57,340
Capitalized contract acquisition costs	31,992	34,658
Other1	62,376	77,609
Other Assets, Current	537,557	489,314
Deposit Assets	$ 36,200	$ 57,000

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Balance Sheet Details - Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Balance Sheet Details [Abstract]
Intangible assets	$ 163,995	$ 200,288
Unbilled receivables	212,749	224,780
Capitalized contract acquisition costs	36,098	42,561
Other	51,451	48,493
Other Assets, Noncurrent	$ 464,293	$ 516,122

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Balance Sheet Details - Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Balance Sheet Details [Abstract]
Payroll and benefits	$ 136,462	$ 165,437
Operating lease liabilities, current	42,155	42,523
Income and other tax accruals	36,510	41,217
Other	59,128	60,642
Accrued Liabilities, Current	$ 274,255	$ 309,819

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Balance Sheet Details - Other Long-term Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Balance Sheet Details [Abstract]
Income taxes payable	$ 68,001	$ 59,553
Other	8,504	8,157
Other long-term liabilities	$ 76,505	$ 67,710

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Debt Facilities - Narrative (Details)					2 Months Ended	3 Months Ended	9 Months Ended
	May 26, 2023	Dec. 15, 2022 USD ($)	Jan. 31, 2020 USD ($)	Jan. 24, 2020 USD ($)	Dec. 15, 2022	Jun. 30, 2022	Jun. 30, 2023 USD ($) extension	Jun. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)
Debt Instrument [Line Items]
Payments on term debt agreement							$ 350,000,000	$ 15,000,000
Term Loan Facility
Debt Instrument [Line Items]
Aggregate principal amount				$ 400,000,000
Redemption percentage				1.25%
Debt issuance costs				$ 2,200,000					$ 200,000
Long-Term Debt									$ 350,000,000
Payments on term debt agreement		$ 350,000,000
Interest Expense, Long-Term Debt		$ 3,000,000
Line of Credit Facility, Interest Rate During Period					4.072%	2.092%		1.553%
Term Loan Facility | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate				1.125%
Term Loan Facility | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate				1.75%
Revolving Credit Facility
Debt Instrument [Line Items]
Aggregate principal amount			$ 350,000,000
Conditional increase in borrowing capacity			$ 150,000,000
Number of extensions | extension							2
Length of extension period							1 year
Long-term line of credit							$ 0
Outstanding line of credit balance							$ 350,000,000
Debt Instrument, Interest Rate, Basis for Effective Rate	0.10
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	1.125%		1.125%
Commitment fee percentage			0.125%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%		1.75%
Commitment fee percentage			0.30%
Revolving Credit Facility | Alternate Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	0.125%		0.125%
Revolving Credit Facility | Alternate Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%		0.75%

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Leases - Narrative (Details) ft² in Thousands, $ in Millions	9 Months Ended
	Jun. 30, 2023 USD ($) ft²
Lessee, Lease, Description [Line Items]
Sublease Income	$ 16.2
Sublease income payment remainder of fiscal year	1.8
Payment to be received between year two through four	$ 14.4
Office Building
Lessee, Lease, Description [Line Items]
Operating lease, number of square feet | ft²	515

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Leases - Operating Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating lease expense	$ 11,801	$ 11,810	$ 36,498	$ 35,594
Short-term lease expense	872	683	2,271	1,858
Variable lease expense	5,895	5,208	16,881	17,486
Total lease expense	$ 18,568	$ 17,701	$ 55,650	$ 54,938

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Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating lease right-of-use assets	$ 204,196	$ 227,475
Operating lease liabilities, current	42,155	42,523
Operating lease liabilities, long-term	250,077	272,376
Total lease liabilities	$ 292,232	$ 314,899
Weighted average remaining lease term (in years)	8 years 8 months 12 days	9 years 2 months 12 days
Weighted average discount rate	2.75%	2.66%

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Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Leases [Abstract]
2023 (remainder)	$ 12,364
2024	49,024
2025	41,307
2026	31,727
2027	30,530
2028	28,396
Thereafter	138,797
Total lease payments	332,145
Less: imputed interest	(39,913)
Total lease liabilities	$ 292,232	$ 314,899

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Commitments And Contingencies (Details) - USD ($) $ in Millions			9 Months Ended
	Apr. 11, 2023	Oct. 27, 2022	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Product warranty period			1 year
Unrecorded Unconditional Purchase Obligation, to be Paid, Year One		$ 10.0
Unrecorded Unconditional Purchase Obligation, to be Paid, Year Two		10.0
Unrecorded Unconditional Purchase Obligation, to be Paid, Year Three		10.0
Unrecorded Unconditional Purchase Obligation, to be Paid, Year Four		10.0
Unrecorded Unconditional Purchase Obligation		$ 40.0	$ 30.0
Unrecorded Unconditional Purchase Obligation, Term		4 years
Unrecorded Unconditional Purchase Obligation, to be Paid, Remainder of Fiscal Year			$ 0.0
Loss Contingencies [Line Items]
Litigation Settlement, Amount Awarded from Other Party	$ 0.8

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	16.40%	18.00%	22.00%	18.50%
Unrecognized tax benefit	$ 73.2		$ 73.2

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Shareholders' Equity - Narrative (Details) - October Twenty Six Two Thousand Ten Program - USD ($) $ in Millions	Jun. 30, 2023	Jul. 22, 2022	Oct. 31, 2018
Equity, Class of Treasury Stock [Line Items]
Stock Repurchase Program, Authorized Amount		$ 1,000	$ 5,400
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 982

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Shareholders' Equity - Class of Treasury Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Equity, Class of Treasury Stock [Line Items]
Treasury Stock Acquired, Average Cost Per Share	$ 137.99	$ 170.88	$ 139.75	$ 191.47
Stock Repurchased and Retired During Period, Value	$ 250,036	$ 250,000	$ 290,041	$ 500,023
October Twenty Six Two Thousand Ten Program
Equity, Class of Treasury Stock [Line Items]
Stock Repurchased and Retired During Period, Shares	1,812	1,463	2,075	2,611

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator
Net income	$ 88,976	$ 83,019	$ 242,814	$ 232,814
Denominator
Weighted average shares outstanding — basic (shares)	59,977	59,965	60,133	60,450
Dilutive effect of common shares from stock options and restricted stock units	337	495	330	895
Weighted average shares outstanding — diluted (shares)	60,314	60,460	60,463	61,345
Basic net income per share (dollars per share)	$ 1.48	$ 1.38	$ 4.04	$ 3.85
Diluted net income per share (dollars per share)	$ 1.48	$ 1.37	$ 4.02	$ 3.80

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Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment geographic_region	Jun. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			1
Number of geographic regions | geographic_region			3
Net revenues	$ 702,642	$ 674,488	$ 2,106,195	$ 1,995,812
Long-lived assets	$ 171,147		$ 171,147		$ 168,182
Ingram Micro, Inc. | Net Revenue | Geographic Concentration
Segment Reporting Information [Line Items]
Concentration risk percentage	14.30%	20.70%	16.10%	19.90%
Synnex Corporation | Net Revenue | Geographic Concentration
Segment Reporting Information [Line Items]
Concentration risk percentage	15.80%	13.40%	14.70%	13.30%
Carahsoft Technology Corporation | Net Revenue | Geographic Concentration
Segment Reporting Information [Line Items]
Concentration risk percentage	10.70%
Product
Segment Reporting Information [Line Items]
Net revenues	$ 328,175	$ 326,482	$ 1,009,314	$ 967,149
Product | Systems
Segment Reporting Information [Line Items]
Net revenues	154,659	147,540	536,379	473,671
Product | Software
Segment Reporting Information [Line Items]
Net revenues	173,516	178,942	472,935	493,478
United States
Segment Reporting Information [Line Items]
Net revenues	374,023	364,333	1,109,676	1,084,853
Long-lived assets	126,155		126,155		134,699
Other
Segment Reporting Information [Line Items]
Net revenues	24,257	22,797	73,864	63,824
Long-lived assets	2,951		2,951		1,773
Total Americas
Segment Reporting Information [Line Items]
Net revenues	398,280	387,130	1,183,540	1,148,677
Long-lived assets	129,106		129,106		136,472
EMEA
Segment Reporting Information [Line Items]
Net revenues	181,147	156,471	555,701	474,906
Long-lived assets	24,626		24,626		17,376
APAC
Segment Reporting Information [Line Items]
Net revenues	123,215	$ 130,887	366,954	$ 372,229
Long-lived assets	$ 17,415		$ 17,415		$ 14,334

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Restructuring Charges - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Rate	Jun. 30, 2022 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 56,648	$ 0	$ 65,388	$ 7,909
Q3 2023 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges			56,700
Severance Costs			53,193
Other Restructuring Costs			$ 3,500
Restructuring and Related Cost, Number of Positions Eliminated			620
Restructuring and Related Cost, Number of Positions Eliminated, Period Percent | Rate			9.00%
Q1 2023 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 8,700
Severance Costs			$ 8,740
Q1 2022 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges				7,900
Severance Costs				$ 7,909

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Restructuring Charges - Restructuring Activity (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Restructuring Cost and Reserve [Line Items]
Accrued expenses (Beginning balance)	$ 0	$ 0
Accrued expenses (Ending balance)	8,373	220
Q1 2023 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Severance Costs	8,740
Cash payments:	(8,740)
Q3 2023 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Severance Costs	53,193
Cash payments:	$ (44,820)
Q1 2022 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Severance Costs		7,909
Cash payments:		$ (7,689)