ffiv-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-26041

F5, INC.

(Exact name of registrant as specified in its charter)


Washington						91-1714307
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

801 5th Avenue

Seattle, Washington 98104

(Address of principal executive offices and zip code)

(206) 272-5555

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	FFIV	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-accelerated Filer

☐ (Do not check if a smaller reporting company)

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares outstanding of the registrant’s common stock as of July 30, 2024 was 58,284,449.

Table of Contents

F5, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2024

Table of Contents


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)			4
Consolidated Balance Sheets			4
Consolidated Income Statements			5
Consolidated Statements of Comprehensive Income			6
Consolidated Statements of Shareholders' Equity			7
Consolidated Statements of Cash Flows			9
Notes to Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 4. Mine Safety Disclosures			30
Item 5. Other Information			30
Item 6. Exhibits			30
SIGNATURES			31

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

F5, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)


	June 30, 2024		September 30, 2023
ASSETS
Current assets
Cash and cash equivalents	$	934,809	$	797,163
Short-term investments	812		6,160
Accounts receivable, net of allowances of $3,685 and $3,561	419,986		454,832
Inventories	78,537		35,874
Other current assets	552,023		554,744
Total current assets	1,986,167		1,848,773
Property and equipment, net	154,238		170,422
Operating lease right-of-use assets	185,253		195,471
Long-term investments	7,298		5,068
Deferred tax assets	343,611		295,308
Goodwill	2,312,362		2,288,678
Other assets, net	425,521		444,613
Total assets	$	5,414,450	$	5,248,333
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	53,618	$	63,315
Accrued liabilities	259,874		282,890
Deferred revenue	1,142,090		1,126,576
Total current liabilities	1,455,582		1,472,781
Deferred tax liabilities	6,146		4,637
Deferred revenue, long-term	630,494		648,545
Operating lease liabilities, long-term	222,486		239,565
Other long-term liabilities	88,997		82,573
Total long-term liabilities	948,123		975,320
Commitments and contingencies (Note 8)
Shareholders' equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding	—		—
Common stock, no par value; 200,000 shares authorized, 58,284 and 59,207 shares issued and outstanding	17,898		24,399
Accumulated other comprehensive loss	(22,257)		(23,221)
Retained earnings	3,015,104		2,799,054
Total shareholders' equity	3,010,745		2,800,232
Total liabilities and shareholders' equity	$	5,414,450	$	5,248,333

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per share data)


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Net revenues
Products	$	308,489	$	328,175	$	914,510	$	1,009,314
Services	387,006		374,467		1,154,936		1,096,881
Total	695,495		702,642		2,069,446		2,106,195
Cost of net revenues
Products	80,813		87,940		248,834		286,590
Services	55,612		53,743		165,093		165,754
Total	136,425		141,683		413,927		452,344
Gross profit	559,070		560,959		1,655,519		1,653,851
Operating expenses
Sales and marketing	205,550		207,202		615,277		673,383
Research and development	124,387		128,765		366,169		412,451
General and administrative	65,950		64,775		197,852		201,802
Restructuring charges	93		56,648		8,655		65,388
Total	395,980		457,390		1,187,953		1,353,024
Income from operations	163,090		103,569		467,566		300,827
Other income, net	8,529		2,896		24,385		10,335
Income before income taxes	171,619		106,465		491,951		311,162
Provision for income taxes	27,540		17,489		90,469		68,348
Net income	$	144,079	$	88,976	$	401,482	$	242,814
Net income per share — basic	$	2.46	$	1.48	$	6.82	$	4.04
Weighted average shares — basic	58,584		59,977		58,832		60,133
Net income per share — diluted	$	2.44	$	1.48	$	6.75	$	4.02
Weighted average shares — diluted	59,147		60,314		59,461		60,463

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	Three months ended June 30,				Nine months ended June 30,
	2024		2023		2024		2023
Net income	$	144,079	$	88,976	$	401,482	$	242,814
Other comprehensive (loss) income:
Foreign currency translation adjustment	(1,232)		884		886		2,868
Available-for-sale securities:
Unrealized gains on securities, net of taxes of $1 and $30 for the three months ended June 30, 2024 and 2023, respectively, and $17 and $262 for the nine months ended June 30, 2024 and 2023, respectively	9		157		78		1,984
Reclassification adjustment for realized losses included in net income, net of taxes of $0 and $0 for the three months ended June 30, 2024 and 2023, respectively, and $0 and $78 for the nine months ended June 30, 2024 and 2023, respectively	—		—		—		(612)
Net change in unrealized gains and losses on available-for-sale securities, net of tax	9		157		78		1,372
Total other comprehensive (loss) income	(1,223)		1,041		964		4,240
Comprehensive income	$	142,856	$	90,017	$	402,446	$	247,054

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited, in thousands)


	Common Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
	Three months ended June 30, 2023
Balances, March 31, 2023	60,465	$	190,592	$	(22,977)	$	2,557,944	$	2,725,559
Exercise of employee stock options	13	313		—		—		313
Issuance of stock under employee stock purchase plan	321	36,723		—		—		36,723
Issuance of restricted stock	320	—		—		—		—
Repurchase of common stock	(1,812)	(250,036)		—		—		(250,036)
Taxes paid related to net share settlement of equity awards	(11)	(1,545)		—		—		(1,545)
Stock-based compensation	—	56,472		—		—		56,472
Net income	—	—		—		88,976		88,976
Other comprehensive income	—	—		1,041		—		1,041
Balances, June 30, 2023	59,296	$	32,519	$	(21,936)	$	2,646,920	$	2,657,503

	Three months ended June 30, 2024
Balances, March 31, 2024	58,609	$	19,029	$	(21,034)	$	2,935,271	$	2,933,266
Exercise of employee stock options	7	175		—		—		175
Issuance of stock under employee stock purchase plan	249	32,135		—		—		32,135
Issuance of restricted stock	299	—		—		—		—
Repurchase of common stock, including excise taxes	(873)	(86,362)		—		(64,246)		(150,608)

Taxes paid related to net share settlement of equity awards	(7)	(1,285)		—		—		(1,285)
Stock-based compensation	—	54,206		—		—		54,206
Net income	—	—		—		144,079		144,079
Other comprehensive loss	—	—		(1,223)		—		(1,223)
Balances, June 30, 2024	58,284	$	17,898	$	(22,257)	$	3,015,104	$	3,010,745

Table of Contents



	Nine months ended June 30, 2023
Balances, September 30, 2022	59,860	$	91,048	$	(26,176)	$	2,404,106	$	2,468,978
Exercise of employee stock options	39	1,029		—		—		1,029
Issuance of stock under employee stock purchase plan	500	58,468		—		—		58,468
Issuance of restricted stock	1,051	—		—		—		—
Repurchase of common stock	(2,075)	(290,041)		—		—		(290,041)

Taxes paid related to net share settlement of equity awards	(79)	(11,369)		—		—		(11,369)
Stock-based compensation	—	183,384		—		—		183,384
Net income	—	—		—		242,814		242,814
Other comprehensive income	—	—		4,240		—		4,240
Balances, June 30, 2023	59,296	$	32,519	$	(21,936)	$	2,646,920	$	2,657,503

	Nine months ended June 30, 2024
Balances, September 30, 2023	59,207	$	24,399	$	(23,221)	$	2,799,054	$	2,800,232
Exercise of employee stock options	40	1,264		—		—		1,264
Issuance of stock under employee stock purchase plan	437	53,604		—		—		53,604
Issuance of restricted stock	1,000	—		—		—		—
Repurchase of common stock, including excise taxes	(2,338)	(216,766)		—		(185,432)		(402,198)

Taxes paid related to net share settlement of equity awards	(62)	(9,952)		—		—		(9,952)
Stock-based compensation	—	165,349		—		—		165,349
Net income	—	—		—		401,482		401,482
Other comprehensive income	—	—		964		—		964
Balances, June 30, 2024	58,284	$	17,898	$	(22,257)	$	3,015,104	$	3,010,745

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

F5, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine months ended June 30,
	2024		2023
Operating activities
Net income	$	401,482	$	242,814
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	165,349		183,384
Depreciation and amortization	84,062		83,173
Non-cash operating lease costs	24,776		29,977
Deferred income taxes	(47,237)		(85,091)
Impairment of assets	—		3,455
Other	(3,059)		2,137
Changes in operating assets and liabilities (excluding effects of the acquisition of businesses):
Accounts receivable	34,700		31,507
Inventories	(42,663)		22,263
Other current assets	3,246

SEC Form 10-Q filed by F5 Inc.