Updates Horizon 2 Targets Including 6% to 7%
Total Revenue Growth CAGR and Expanding Operating Margin, Resulting
in Double-Digit Non-GAAP EPS Growth
Announces $1 Billion in Total Share Repurchases
Across Fiscal Years 2021 and 2022 and Intention to Return 50% of
Free Cash Flow Thereafter
F5 Networks, Inc. (NASDAQ: FFIV) today announced a preview of
the Company’s upcoming analyst and investor meeting scheduled for
November 18, where the Company will provide a strategic overview
and updated financial targets. The Company is making information
available ahead of the scheduled meeting to enable a more informed
and in-depth review of its accelerating transformation strategy. F5
had originally planned its Analyst and Investor Meeting for March
2020 but postponed the event at the outset of the COVID-19
pandemic.
As the leading multi-cloud application security and delivery
provider, F5 is uniquely positioned to pioneer the era of Adaptive
Applications and drive significant new growth through its
best-in-class application security, delivery, and analytics
platform. With a software transformation well ahead of schedule,
and a growing recurring revenue base, the company expects to
deliver attractive shareholder returns, including a commitment to
double-digit non-GAAP EPS growth.
The event will feature presentations from President and Chief
Executive Officer, François Locoh-Donou, Chief Financial Officer,
Frank Pelzer, and leaders from F5’s portfolio and go-to-market
teams, outlining F5’s compelling market opportunity and its mission
to solve its customers’ most important application challenges. Mr.
Locoh-Donou’s presentation is available for preview under Coming
Events in the investor relations section of the Company’s
website.
Mr. Locoh-Donou commented, “We have transformed F5 at an
unprecedented pace, exceeding our original expectations on total
revenue, software growth, software mix, and subscription mix
performance. As the only true multi-cloud player serving both
traditional and modern applications, we are in a position to
pioneer the next phase of application performance innovation in a
high growth total addressable market of more than $28 billion in
2023.”
Mr. Locoh-Donou continued, “As shown in our recent results, we
have reached an inflection point in our transformation story where
operating margins are poised to expand and revenue will accelerate,
leading to sustainable double-digit non-GAAP EPS growth. With this
momentum, we now fully expect to grow revenue faster than non-GAAP
operating expenses. Moreover, the success of our transformation and
resiliency of our business through the pandemic thus far has
affirmed a confidence in our position to accelerate our return of
capital to shareholders.”
Highlights of F5’s presentation will include a Horizon 2 (fiscal
years 2021 - 2022) outlook that includes:
- Total revenue growth CAGR between 6% to 7%
- Software revenue growth CAGR of 35% to 40%
- Software representing at least 50% of product revenue by fiscal
year 2022
- Non-GAAP operating margin between 31% to 32% in fiscal year
2021, and between 32% to 34% in fiscal year 2022
- Double-digit non-GAAP EPS growth
- Commitment to achieving “Rule of 40” where total revenue growth
plus non-GAAP operating margins will total at least 40 by fiscal
year 2022
The company is also setting long-term (circa 2025) targets,
which include:
- Total revenue growth between 8% to 9%
- Software revenue growth of more than 20%
- Software representing at least 75% of product revenue
- Non-GAAP operating margin in the mid-30s%
- Sustained double-digit non-GAAP EPS growth
Other financial and operational highlights that will be
discussed include:
- Commitment to return $1 billion of capital over the next two
years, including the initiation of an accelerated share repurchase
of $500 million in fiscal year 2021
- Commitment to share repurchases of $500 million in fiscal year
2022
- Beginning in FY23, an intention to return 50% of free cash flow
to shareholders via share repurchases
- Successful integration of both the NGINX and Shape
acquisitions, including compelling early momentum with fiscal year
2020 revenue growth of 109% and 35% respectively
- The leading position F5 has achieved in application security
with an estimated $750+ million in total non-GAAP security-related
revenue including allocation from bundled offerings and services
revenue
Analyst and Investor Meeting presentations will begin at
approximately 1:00 p.m. ET on November 18, 2020. To attend F5’s
virtual Analyst and Investor Meeting webcast with live Q&A,
please register at
https://investors.f5.com/Investor-Day/default.aspx. Once
registered, you will receive an email with information about how to
access the webcast. Please note, all participants must register in
advance.
The event replay will be available following the live event
webcast on the investor relations portion of F5’s website.
Forward Looking Statements
This press release contains forward-looking statements
including, among other things, statements regarding the continuing
strength and momentum of F5's business, future financial
performance, projected and target revenue, revenue mix, revenue
growth rates and earnings ranges, income, earnings per share, share
amounts and share price assumptions, share repurchases, demand for
application delivery networking, application delivery services,
security, and software products, expectations regarding future
services and products, expectations regarding future customers,
markets and the benefits of products, and other statements that are
not historical facts and which are forward-looking statements.
These forward-looking statements are subject to the safe harbor
provisions created by the Private Securities Litigation Reform Act
of 1995. Actual results could differ materially from those
projected in the forward-looking statements as a result of certain
risk factors. Such forward-looking statements involve risks and
uncertainties, as well as assumptions and other factors that, if
they do not fully materialize or prove correct, could cause the
actual results, performance or achievements of the company, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to: the impact of the COVID-19 global pandemic including
but not limited to the advantages of incumbency in an uncertain
environment, caution in spending patterns in the most severely
impacted verticals, delays in orders in some impacted regions due
to COVID-19 impacts; prolonged face-to-face sales engagement
delaying some new strategic projects; customer acceptance of our
new security, application delivery, optimization, and software and
SaaS offerings; the timely development, introduction and acceptance
of additional new products and features by F5 or its competitors;
F5 may not realize the financial and strategic goals that are
contemplated through its acquisitions, including Shape and NGINX,
and F5 may not successfully operate and integrate newly-acquired
businesses appropriately or as expected; competitive factors,
including but not limited to pricing pressures, industry
consolidation, entry of new competitors into F5’s markets, and new
product and marketing initiatives by our competitors; increased
sales discounts; uncertain global economic conditions, including
those related to COVID-19, which may result in reduced customer
demand for our products and services and changes in customer
payment patterns; global economic conditions and uncertainties in
the geopolitical environment; overall information technology
spending; litigation involving patents, intellectual property,
shareholder and other matters, and governmental investigations;
natural catastrophic events; F5's ability to sustain, develop and
effectively utilize distribution relationships; F5's ability to
attract, train and retain qualified product development, marketing,
sales, professional services and customer support personnel; F5's
ability to expand in international markets; the unpredictability of
F5's sales cycle; F5’s share repurchase program; future prices of
F5's common stock; and other risks and uncertainties described more
fully in our documents filed with or furnished to the Securities
and Exchange Commission, including our most recent reports on Form
10-K and Form 10-Q and current reports on Form 8-K and other
documents that we may file or furnish from time to time, which
could cause actual results, performance or achievements to vary
from expectations. The financial information contained in this
presentation should be read in conjunction with the consolidated
financial statements and notes thereto included in F5’s most recent
reports on Forms 10-Q and 10-K as each may be amended from time to
time. All forward-looking statements in this presentation are based
on information available as of the date hereof and qualified in
their entirety by this cautionary statement. F5 assumes no
obligation to revise or update these forward-looking
statements.
Use of Non-GAAP Measures
All forward-looking non-GAAP measures included in the outlook
exclude estimates for amortization of intangible assets,
share-based compensation expenses, significant effects of tax
legislation and judicial or administrative interpretation of tax
regulations, including the impact of income tax reform,
non-recurring income tax adjustments, valuation allowance on
deferred tax assets, and the income tax effect of non-GAAP
exclusions, and do not include the impact of any future
acquisitions or divestitures, acquisition-related charges and
write-downs, restructuring charges, facility exit costs, or other
non-recurring charges that may occur in the period. F5 is unable to
provide a reconciliation of non-GAAP earnings guidance measures to
corresponding U.S. generally accepted accounting principles or GAAP
measures on a forward-looking basis without unreasonable effort due
to the overall high variability and low visibility of most of the
foregoing items that have been excluded. Material changes to any
one of these items could have a significant effect on our guidance
and future GAAP results. Certain exclusions, such as amortization
of intangible assets and share-based compensation expenses, are
generally incurred each quarter, but the amounts have historically
varied and may continue to vary significantly from quarter to
quarter.
Management believes that non-GAAP net income per share provides
useful supplemental information to management and investors
regarding the performance of the company’s core business operations
and facilitates comparisons to the company’s historical operating
results. Although F5’s management finds this non-GAAP measure to be
useful in evaluating the performance of the core business,
management’s reliance on this measure is limited because items
excluded from such measures could have a material effect on F5’s
earnings and earnings per share calculated in accordance with GAAP.
Therefore, F5’s management will use its non-GAAP earnings and
earnings per share measures, in conjunction with GAAP earnings and
earnings per share measures, to address these limitations when
evaluating the performance of the company’s core business.
Investors should consider these non-GAAP measures in addition to,
and not as a substitute for, financial performance measures in
accordance with GAAP.
F5 believes that presenting its non-GAAP measures of earnings
and earnings per share provides investors with an additional tool
for evaluating the performance of the company’s core business and
is used by management in its own evaluation of the company’s
performance. Investors are encouraged to look at GAAP results as
the best measure of financial performance. However, while the GAAP
results are more complete, the company provides investors these
supplemental measures since, with reconciliation to GAAP, it may
provide additional insight into the company’s operational
performance and financial results.
About F5
F5 (NASDAQ: FFIV) is a multi-cloud application security and
delivery company that enables our customers—which include the
world’s largest enterprises, financial institutions, service
providers, and governments—to bring extraordinary digital
experiences to life. For more information, go to f5.com. You can
also follow @F5 on Twitter or visit us on LinkedIn and Facebook for
more information about F5, its partners, and technologies.
F5 is a trademark or service mark of F5 Networks, Inc., in the
U.S. and other countries. All other product and company names
herein may be trademarks of their respective owners.
Source: F5 Networks
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version on businesswire.com: https://www.businesswire.com/news/home/20201109005431/en/
Investor Relations Suzanne DuLong (206) 272-7049 s.dulong@f5.com
Public Relations Nathan Misner (206) 272-7494 n.misner@f5.com
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