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F5 Networks Inc FFIV

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Morningstar’s Analysis

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F5’s Q1 Showcases Systems Resiliency Alongside Profound Software Growth; Maintaining $185 FVE

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

Narrow-moat F5 Networks’ first-quarter 10% year-over-year revenue growth was in line with FactSet consensus estimates while adjusted earnings of $2.59 came in higher than expected. In our view, F5 already positively surprised investors after providing preliminary first-quarter results on Jan. 7 upon announcing its $500 million Volterra acquisition to expand its security-as-as-service and edge platform capabilities. Drivers of the strong results included momentum with software offerings, increased application security demand, and F5’s systems business staying resilient. In our view, F5 is well positioned to capitalize on the heightened importance of delivering secure applications. We believe its product portfolio is gaining increased traction with enterprises transforming their networking architectures. We are maintaining our $185 fair value estimate 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 Dec 31, 2020
Fiscal Year End Sep 30, 2021
Stock Type Slow Growth
Employees 6,109