F5 shares fall over 9% on disappointing earnings outlook

Shares in F5 Inc. fell over 9% in late trading today after the application security firm reported mixed results in its fiscal second quarter and fell short of expectations with its third-quarter outlook.

For the quarter ended March 31, F5 reported adjusted earnings per share of $2.91, up from $2.53 per share in the same quarter of the previous year, on revenue of $681 million, down 3% year-over-year. Earnings per share came in ahead of the $2.87 expected by analystsbut revenue fell slightly short of an expected $684.3 million.

F5 reported an adjusted gross profit of $559 million in the quarter, down from $565 million in the second quarter of the previous fiscal year, while the company’s gross margin grew to 82.1%, up from 80.4%. F5’s operating profit came in at $210 million, up from $191 million the year prior.

“We delivered a solid second quarter, with revenue near the midpoint of our guidance range and earnings per share at the high end of our guidance in an environment where customers remain cautious and are forecasting largely flat IT budgets for calendar 2024,” Chief Executive François Locoh-Donou said in the company’s earnings release. “During the quarter, our software subscription renewals continued to perform well, driving 20% total software revenue growth compared to a year ago, including 28% subscription revenue growth.”

For its fiscal third quarter, F5 expects adjusted earnings per share to come in at $2.89 to $3.01 on revenue of $675 million to $695 million. Both were misses at the midpoint, as analysts had been expecting to see an outlook of $3.09 per share on revenue of $694.8 million.

F5 Networks is a leading company in the network security and traffic management industry, primarily serving large enterprises and medium-sized businesses. As well as selling networking gear, F5 also provides software and services as part of an ongoing effort to move beyond its traditional hardware sales-based business model.

Photo: F5