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F5 Networks Q1 Sales Rise 5%

January 26, 2017

For the first quarter of fiscal 2017, F5 Networks reported revenue of $516.0 million, up 5.4 percent from $489.5 million in the first quarter of fiscal 2016.

GAAP net income was $94.2 million ($1.44 per diluted share), compared to $89.7 million ($1.28 per diluted share) in the first quarter a year ago. Excluding the impact of stock-based compensation and amortization of purchased intangible assets, non-GAAP net income was $130.3 million ($1.98 per diluted share), compared to $120.6 million ($1.73 per diluted share) in the first quarter of last year.

Investors were looking for a profit of $1.94 per share on revenue of $517 million.

"As we anticipated, the launch of BIG-IP iSeries, which we successfully completed in November, was a significant contributor to product revenue which grew 2 percent year-over-year," said John McAdam, F5 president and chief executive officer. "iSeries bookings during the quarter represented approximately 18 percent of appliance bookings and we believe that percentage will increase during the current quarter with general availability of the complete family for the entire quarter.

"In addition to strong initial demand for the iSeries, software sales, including software modules that run on our purpose-built hardware and Virtual Editions designed to run on any standard hypervisor, continued to grow as a percentage of product revenue. We expect this trend to continue in the current quarter, driven by the release of our 40-Gigabit VEs, with throughput four times faster than previous versions, and by increasing uptake of iSeries appliances, designed to support more modules than their predecessors.

"For the second quarter in a row, security sales also accounted for an increasing percentage of product sales reflecting strong demand for Access Policy Manager and our firewall products and benefiting from increased sales of SSL Orchestrator. During the quarter, both SSL Orchestrator and DDoS Hybrid defender shipped as software modules on BIG-IP. Beginning this quarter, each will ship as a standalone product on our new Herculon security platform.

"Product sales were robust in the Americas, APAC and Japan in Q1, while sales in EMEA remained relatively soft, and were down year over year. As we emphasized during our Analyst/Investor Meeting in November, the array of new products we have brought to market recently and those we are introducing this quarter are closely aligned with major industry trends and the needs of large organizations worldwide. We believe the migration of applications to public and private clouds, the build-out of hybrid cloud infrastructures, the explosion of SSL-encrypted traffic, and the need to provide security for applications, including the burgeoning array of IoT applications, all represent major market opportunities in the current quarter and beyond."

For the second quarter of fiscal 2017, ending March 31st, the company has set a revenue goal of $518 million to $528 million with a GAAP earnings target of $1.41 to $1.44 per diluted share and a non-GAAP earnings target of $1.95 to $1.98 per diluted share.

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