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Gain: $747 million in the fourth quarter, up 6% year over year.
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Software revenue growth: 19% in the fourth quarter.
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Non-GAAP EPS: $3.67 in Q4, $0.17 above guidance.
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Global services revenues: $388 million in the fourth quarter, up 2% year over year.
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Product yields: $358 million in the fourth quarter, up 10% year over year.
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System yields: $130 million in the fourth quarter, down 3% year over year.
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Subscription-based software revenue: $204 million in the fourth quarter, 89% of total software revenue.
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Recurring revenue: 78% of total sales in the fourth quarter.
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GAAP gross margin: 80.8% in the fourth quarter.
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Non-GAAP gross margin: 83% in the fourth quarter.
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GAAP operating margin: 25.6% in the fourth quarter.
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Non-GAAP operating margin: 34.4% in the fourth quarter.
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Cash flow from operating activities: $247 million in the fourth quarter.
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Deferred income: $1.8 billion, up 1% year over year.
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Share buybacks: $100 million in Q4, $500 million in FY24.
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Turnover for financial year 24: $2.82 billion, at the high end of the guideline.
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Software revenue FY24: $735 million, up 11% year over year.
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Security revenues FY24: $1.1 billion, 41% of total revenue.
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Non-GAAP net income FY24: $794 million, $13.37 per share.
Release date: October 28, 2024
For the full earnings call transcript, please refer to the full earnings call transcript.
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F5 Inc (NASDAQ:FFIV) posted a record fourth quarter with $747 million in revenue, up 6% year over year, exceeding the upper end of their expectations.
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Software revenues increased 19% year-on-year, highlighting the strong performance in this segment.
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The company achieved non-GAAP earnings per share of $3.67, which was $0.17 above the top of the guidance range, indicating improved operating margins.
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F5 Inc (NASDAQ:FFIV) has successfully transformed from a hardware-focused company to a leader in security and software for hybrid multi-cloud environments.
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The company expects revenue growth to accelerate in FY25, with expected growth of 4% to 5% over FY24, driven by a high opportunity for software renewal and improving demand trends.
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Despite strong software growth, SaaS and managed services revenues declined 5% year-over-year due to planned retirements and transitions of existing offerings.
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Sales from the APAC region decreased by 3%, which presented a challenge in that geographic market.
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The company expects only low single-digit revenue growth in the first half of FY25, indicating a cautious outlook for the first part of the fiscal year.
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F5 Inc (NASDAQ:FFIV) did not include significant contributions from AI capabilities in their FY25 guidance, indicating uncertainty in this emerging area.
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Demand for service providers remains subdued, with the sector failing to demonstrate a broad recovery, impacting overall growth potential.
Q: Can you detail the composition of the strong software results in the quarter? Was this the result of innovations or new business? A: The outperformance was due to two key factors: expansion within the existing innovation base and new business activities from projects that had been postponed. This resulted in strong upside potential in the software sector for the quarter and improved our FY25 outlook. – Francis Pelzer, CFO
Q: Why are there high single-digit growth expectations for software in FY25, despite strong growth in FY24? A: The guidance is driven by the macro trend of enterprises adopting hybrid and multi-cloud architectures. While AI is an emerging opportunity, more and more significant contributions from AI are expected in FY26 and beyond. – François Locoh-Donou, CEO
Q: Is the improvement in system yields due to market share gains or accelerated renewal cycles? A: The strength of systems comes from both competitive replacement options and more material technical renewal of our installed base. Customers are now more confident about their budget and are reinvesting in their hardware infrastructure. – François Locoh-Donou, CEO
Q: What is the expected cadence of subscription revenues in FY25? A: The renewal basis is more focused on the second half of the year, which will likely result in stronger software growth in the second half. The variability in revenue is due to the timing of renewals and the recognition of term-based licenses. – Cooper Werner, SVP Finance
Q: Can you tell us more about the BIG-IP NGINX for Kubernetes and its target customer base? A: The solution is aimed at enterprises and service providers building AI factories at scale. It increases GPU utilization and serves multiple AI workloads. This opportunity is expected to materialize more strongly in FY26 and beyond. – François Locoh-Donou, CEO
For the full earnings call transcript, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
