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F5 Networks announces fourth-quarter and fiscal 2012 results

Fourth quarter revenue up 15% year-over-year; 2012 revenue up 20% from 2011.


Johannesburg, 29 Oct 2012

F5 Networks today announced revenue of $362.6 million for the fourth quarter of fiscal year 2012, up 3% from $352.6 million in the prior quarter, and 15% from $314.6 million in the fourth quarter of fiscal year 2011. For fiscal year 2012, revenue was $1.38 billion, up 20% from $1.15 billion in fiscal year 2011.

GAAP net income for the fourth quarter was $67.7 million ($0.85 per diluted share) compared to $72.3 million ($0.91 per diluted share) in the third quarter of 2012 and $67.6 million ($0.84 per diluted share) in the fourth quarter a year ago. GAAP net income for the year was $275.2 million ($3.45 per diluted share) versus $241.4 million ($2.96 per diluted share) in fiscal year 2011.

Excluding the impact of stock-based compensation and amortisation of purchased intangible assets, non-GAAP net income for the fourth quarter was $88.7 million ($1.12 per diluted share), compared to $90.6 million ($1.14 per diluted share) in the prior quarter, and $85.2 million ($1.06 per diluted share) in the fourth quarter of fiscal 2011. For fiscal year 2012, non-GAAP net income was $348.6 million ($4.37 per diluted share) versus $308.3 million ($3.78 per diluted share) in fiscal year 2011.

The company's GAAP and non-GAAP net income reflect higher-than-expected effective tax rates for fiscal year 2012. This resulted from a higher-than-expected impact of foreign permanent tax differences and a higher blended effective state tax rate, which resulted in a GAAP effective tax rate for the fourth quarter of 39.9%. The non-GAAP effective tax rate for the quarter was 37.0%.

"F5 grew sequentially and year-over-year throughout fiscal 2012," says F5 president and chief executive officer, John McAdam. "But after a strong first half, revenue growth slowed in the second half of the year. Beginning in the third quarter and continuing through Q4, slowing growth in product revenue reflected smaller deal sizes, particularly among large US enterprise and telecommunications customers. Annual US revenue grew just over 16% from fiscal 2011. By contrast, international revenue grew nearly 24% in fiscal 2012, resulting in overall revenue growth of 20% for the year.

"We maintained strong product gross margins for the quarter and the year at 83%, and as a result, we were able to add 540 employees in fiscal 2012, including 125 in Q4, while delivering a non-GAAP operating margin of 39%," says McAdam.

During the fourth quarter, the company increased deferred revenue by $13.4 million to $447.3 million, up 30% from the fourth quarter of fiscal 2011. Cash flow from operations was $149 million in the fourth quarter and $495 million for the year. After repurchasing approximately 1.7 million shares of F5 common stock during fiscal 2012, the company ended the year with $1.2 billion in cash and investments.

"As we enter fiscal 2013, it is difficult to predict what turns the economy will take. But as we look out over the year, we believe that changes in the evolving technology landscape are creating new opportunities for growth and that our technology roadmap and product deliverables will enable us to capitalise on those changes. On October 16, 2012, we introduced BIG-IP 4200v, the first in a series of new appliances that will replace our entry-level and mid-range BIG-IP platforms and extend our market leadership in price/performance and functionality. In addition to these new platforms, we will be introducing significant performance and functionality enhancements to TMOS and new software modules that will expand the array of integrated application delivery functions currently available on our platforms and in virtual editions. We will also expand and upgrade our VIPRION family of chassis products over the next several quarters.

"While we are excited about these new products and their potential to drive revenue growth, current macroeconomic conditions and our expectation of normal Q1 seasonality have tempered our outlook for the near term," says McAdam.

For the first quarter of fiscal 2013, ending 31 December, the company has set a revenue target of $363 million to $370 million with a GAAP earnings target of $0.86 to $0.88 per diluted share. Excluding stock-based compensation expense and amortisation of purchased intangible assets, the company's non-GAAP earnings target is $1.14 to $1.16 per diluted share.

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F5 Networks

F5 Networks, the global leader in application delivery networking (ADN), helps the world's largest enterprises and service providers realise the full value of virtualisation, cloud computing and on-demand IT. F5 solutions help integrate disparate technologies to provide greater control of the infrastructure, improve application delivery and data management, and give users seamless, secure and accelerated access to applications from their corporate desktops and smart devices. An open architectural framework enables F5 customers to apply business policies at "strategic points of control" across the IT infrastructure and into the public cloud. F5 products give customers the agility they need to align IT with changing business conditions, deploy scalable solutions on demand, and manage mobile access to data and services. Enterprises, service and cloud providers, and leading online companies worldwide rely on F5 to optimise their IT investments and drive business forward. For more information, go to www.f5.com.

Editorial contacts

Kirsty Thompson
Watt Communications & G Watt Design
Kirsty@wattcommunications.co.za