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F5 Networks Inc FFIV

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F5 Releases Strong Preliminary Q1 Results and Announces Volterra Acquisition; Raising FVE to $185

Mark Cash Equity Analyst

Analyst Note

| Mark Cash |

Narrow-moat F5 Networks announced its intention to acquire Volterra for a total consideration of about $500 million. F5 also provided preliminary first fiscal quarter results for revenue growth and adjusted earnings that both eclipsed its earlier guidance, and F5 increased its revenue growth targets for fiscal years 2021 and 2022 and the longer term. We believe the Volterra acquisition is aligned with F5’s strategy of ensuring application delivery and security, can accelerate its software and as-a-service growth plans, and help differentiate itself from public cloud application delivery controller offerings. Based on expecting higher revenue growth from this acquisition and still being able to gain operating leverage in the coming years, we are raising our fair value estimate to $185 from $175 and view shares as fairly valued.

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Company Profile

Business Description

F5 Networks is a market leader in the application delivery controller market. The company sells products for networking traffic, security, and policy management. Its products ensure applications are safely routed in efficient manners within on-premises data centers and across cloud environments. More than half of its revenue is based on providing services, and its three customer verticals are enterprises, service providers, and government entities. The Seattle-based firm was incorporated in 1996 and generates sales globally.

801 5th Avenue
Seattle, WA, 98104
T +1 206 272-5555
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Sep 30, 2020
Fiscal Year End Sep 30, 2021
Stock Type Slow Growth
Employees 6,109