F5 Networks announces fourth quarter, fiscal 2011 results

F5 Networks (NASDAQ: FFIV) today announced revenue of $314.6 million for the fourth quarter of fiscal year 2011, up 8% from $290.7 million in the prior quarter, and 24% from $254.3 million in the fourth quarter of fiscal year 2010. For fiscal year 2011, revenue was $1.15 billion, up 31% from $882 million in fiscal year 2010.

GAAP net income for the fourth quarter was $67.6 million ($0.84 per diluted share) compared to $62.5 million ($0.77 per diluted share) in the third quarter of 2011 and $48.2 million ($0.59 per diluted share) in the fourth quarter a year ago. GAAP net income for the year was $241.4 million ($2.96 per diluted share) versus $151.2 million ($1.86 per diluted share) in fiscal year 2010.

Excluding the impact of stock-based compensation, non-GAAP net income for the fourth quarter was $85.2 million ($1.06 per diluted share), compared to $79.4 million ($0.97 per diluted share) in the prior quarter and $63.9 million ($0.79 per diluted share) in the fourth quarter of fiscal 2010. For fiscal year 2011, non-GAAP net income was $308.3 million ($3.78 per diluted share) versus $203.8 million ($2.51 per diluted share) in fiscal year 2010.

F5 president and chief executive officer John McAdam said the company's fourth quarter results reflect solid year-over-year gains across all regions and vertical market segments. In addition, product sales strengthened during the quarter, driving product revenue up 10% sequentially and 20% year-over-year.

“In the first full quarter that VIPRION 2400 was generally available, demand for the new mid-range chassis exceeded our expectations. During the fourth quarter, we also saw strong demand for VIPRION 4400, our high-end chassis, particularly among our telco customers.

“Since we announced the availability of TMOS v.11 early in the quarter, customer response has been very positive. As more customers begin to roll out TMOS v.11 across their organisations, we expect to see strengthening demand for our VIPRION products, which are designed to support the full range of features and functions available in the new software. Several VIPRION customers are starting to deploy vCMP, a feature of TMOS v.11 that allows them to run multiple instances of BIG-IP on the same platform. During calendar 2012 we plan to release several new BIG-IP platforms designed to support vCMP and the other advanced capabilities of TMOS v.11,” McAdam said.

Reflecting slightly higher software attach rates and strong product and service revenue, gross margin ticked up during the quarter. GAAP operating margin increased to 31.6% and non-GAAP operating margin rose to 38.6%. In the fourth quarter, the company added 140 employees, increasing total headcount to 2 490.

On the company's balance sheet, deferred revenue grew 7% sequentially to $343.3 million, up 32% from the fourth quarter of fiscal 2010. Cash flow from operations was $121.5 million in the fourth quarter and $417 million for the year. After repurchasing $150 million of F5 common stock during the quarter, the company ended the year with $1.01 billion in cash and investments.

“The fourth quarter of fiscal 2011 was a strong finish to the year,” McAdam said. “As we begin a new fiscal year, we anticipate that the seasonality we experienced in the first quarter of last year will be a recurring factor in our first quarter results going forward.

“With that in mind, our revenue target for the first quarter of fiscal 2012, ending 31 December, is $315 million to $320 million with a GAAP earnings target of $0.79 to $0.81 per diluted share. Excluding stock-based compensation expense, the company's non-GAAP earnings target is $0.99 to $1.01 per diluted share. For fiscal 2012, we expect sequential revenue growth throughout the year and solid year-over-year growth.”