Story Stocks®
Updated: 28-Apr-20 14:28 ET
F5 Networks gets high-5 from investors for sizable beat and upside guidance (FFIV)
- F5 Networks (FFIV +9%) is getting a high five from investors today for a really quite impressive Q2 (Mar) result with a $0.24 EPS beat and nice revenue upside.
- FFIV says it saw continued rapid acceptance of its software and subscription-based offerings in MarQ from both its enterprise and service provider customers. Plus, it got an added boost late in the quarter as customers looked to quickly and, in some cases, massively scale remote access capabilities as more people work from home.
- What jumps out to us even more is that FFIV not only provided guidance (how many companies are doing that these days?) but it reported sharply upside guidance for Q3 (Jun).
- FFIV could have decided to not provide guidance at all or it could have been conservative with guidance. To guide higher is really a sign of confidence and it shows FFIV has good visibility into how its business is doing.
- FFIV has been in transformation mode in recent years.
- For a long time, it focused more on hardware appliances. Specifically, it sells application delivery controllers (ADCs), which are devices placed in a data center between the firewall and application servers. Their function is to accelerate applications, handle load balancing between servers, etc.
- The company wants to go beyond being a traditional ADC supplier. It wants to capture the growing opportunity for virtual ADCs and ADC-as-a-Service with new software offerings as well as expand its security offerings.
- Bottom line, F5 has been criticized, and rightly so, for being somewhat slow to adapt its hardware-intensive offering to the cloud computing era of today. FFIV's decision to move more to the software side seems to be paying off these days as demand appears to be robust right now and software tends to be much more recurring/predictable in nature.
