FFIV

F5, Inc.

Next est. report 2026-10-26 · AMC

AI '25: Phase 2 Distribution AI '26: Data Sovereignty Agentic Utilities '26: Edge Compute & API Layer Agentic Utilities '26: Last Mile Telephony

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Overview

F5, Inc. secures and optimizes application delivery across various cloud environments, ensuring peak performance and constant availability. Its solutions protec

F5, Inc. secures and optimizes application delivery across various cloud environments, ensuring peak performance and constant availability. Its solutions protect critical network applications, servers, and storage. Revenue is split between product (54%) and services (46%). F5 serves global enterprises, government bodies, and service providers, with demand increasing from AI inference and a growing threat landscape.

What They Do (Plain English & Analogies): F5, Inc. acts like a sophisticated traffic controller and a highly effective bodyguard for all digital applications and data. Imagine you have many different apps – like your online banking, a shopping website, or a new AI tool – and they are hosted in various places: some on your company's own servers, some in Google's cloud, some in Amazon's cloud, and even at the 'edge' closer to users. F5 makes sure that all these apps run smoothly, quickly, and are always available to users, no matter where they are located. It also protects them from cyberattacks, much like a state-of-the-art security system protects your home and its valuable contents, especially as new and more sophisticated threats emerge from AI-driven attacks. They provide the tools and services to deliver and secure every application and API across all these different environments with one unified platform, simplifying complexity for businesses.
Very Brief History: F5, Inc. was established in Seattle, Washington, in 1996 as F5 Networks, Inc. Over the years, it specialized in solutions to secure and optimize application delivery. Key milestones include the acquisition of NGINX to strengthen its web serving and application delivery offerings, and Shape Security for advanced threat and fraud prevention. The company officially changed its name from F5 Networks, Inc. to F5, Inc. in November 2021, reflecting its evolution beyond traditional networking to a broader focus on multi-cloud application delivery and security.
"Street Stereotype": F5 is generally perceived by investors and analysts as a leader in application delivery and security, particularly well-positioned for the hybrid multi-cloud era. The company is currently benefiting from a strong hardware refresh cycle and is increasingly recognized as a critical enabler and protector of AI inference workloads. The market views F5 as providing 'best-in-class' security solutions, especially against sophisticated, AI-driven attacks, and for helping customers consolidate their security and delivery tools into a unified platform.
Subsidiaries On Linked In*: NGINX, Inc. (an F5 company) — Acquired by F5, operates as a distinct brand/division.; LinkedIn: nginx-inc
Shape Security, an F5 company — Acquired by F5, operates as a distinct brand/division focused on fraud and abuse prevention.; LinkedIn: shape-security
SurePath AI, an F5 company — Acquired by F5 in Q3 FY26, complements AI security capabilities with discovery.; LinkedIn: surepath-ai
Customer Sectors & Example Clients: F5 serves a diverse global clientele across major enterprise businesses, public sector organizations, government bodies (including U.S. Federal), and service providers. Specific sectors mentioned in the transcript include energy and utilities, healthcare, telecommunications, financial institutions, global enterprise technology providers, autonomous systems manufacturers, and professional sports leagues. Specific examples from the transcript include a large energy and utilities provider, a European government agency, a Fortune 100 global enterprise technology provider, a multi-brand telecommunications provider, a large multinational health care company, a major European retail banking institution, one of Asia's largest financial institutions, a U.S.-based professional sports league, a leading autonomous systems manufacturer, and a service provider in the EMEA region. Educated guesses for specific clients, based on their business model and industry, could include large financial institutions (e.g., JPMorgan Chase, Bank of America), major technology companies (e.g., Microsoft, Google, Amazon for their enterprise needs), large healthcare providers (e.g., Kaiser Permanente, UnitedHealth Group), and various government agencies.
New Customers / Segments They'Re Targeting: F5 is actively targeting customers undergoing hybrid multi-cloud adoption, particularly those seeking digital sovereignty solutions and repatriating workloads on-premises or to local alternatives. They are also focused on competitive displacements and platform consolidation wins. A significant new area of focus is customers leveraging AI, specifically for AI data delivery, AI runtime security, and AI factory load balancing. This includes organizations building sovereign AI factories and those needing to secure sensitive AI-powered applications and models, such as financial institutions, autonomous systems manufacturers, and professional sports leagues.
Supply Chain And Sourcing Geographies: F5's supply chain involves sourcing hardware components, notably memory (DDR4, with future appliances moving to DDR5) and SSDs. The company's manufacturing team proactively makes advanced purchases and diversifies the supply base to mitigate supply chain risks and manage component costs. While specific sourcing geographies are not explicitly disclosed in the transcript, the global nature of electronics manufacturing suggests a diverse international supply chain, likely including East Asia for memory and other components. Management noted that they are sourcing from multiple vendors for memory and SSDs, which helped with better cost profiles in Q3 and Q4.
Sales Geographies And Expansion Plans: F5 currently sells its products globally across three main regions: the Americas, EMEA (Europe, Middle East, and Africa), and APAC (Asia Pacific). In Q3 FY26, the Americas contributed 55% of total revenue, growing 11% year-over-year. EMEA delivered robust growth of 27% year-over-year, representing 30% of revenue. APAC represented 15% of revenue and was down 11% against a strong prior-year period, though the underlying demand in APAC is healthy. Management previously indicated plans to increase field coverage in EMEA and accentuate their focus on the defense sector within EMEA, driven by significant spending and demand for digital sovereignty initiatives.
How Key Themes May Help/Hurt: The 'AI '25: Phase 2 Distribution' theme strongly benefits F5. As enterprises move beyond AI experimentation to widespread integration of agentic AI into workflows and customer-facing products, F5's role in securing and delivering these AI-powered applications and APIs becomes critical. F5's AI runtime security, including AI Guardrails and AI Red Team, directly addresses the need to safeguard AI applications and models from abuse and attacks like prompt injection, which is a key concern in Phase 2 distribution. The theme's emphasis on 'Data + Design → Distribution + Deployment' aligns with F5's position at the 'front door of the world's most critical applications,' delivering and securing every app and every API, including those powered by AI. F5's AI data delivery and AI factory load balancing solutions directly contribute to optimizing the performance and cost-efficiency of AI deployments, which are crucial for demonstrating ROI in this phase. The increasing demand for platform consolidation in complex hybrid multi-cloud and AI environments also plays into F5's unified architecture strategy. However, the theme's bear points could present challenges. The 'AI Monetization Gap' and rising capital expenditures for AI infrastructure could pressure F5's customers, potentially impacting their budget for F5's solutions if ROI is not immediately clear or if they prioritize other AI investments. The 'human and organizational adoption' bottleneck could slow the pace of widespread AI agent deployment, which might temper the full growth potential from F5's AI-related offerings in the short to medium term. Operational complexity and evolving security risks, while F5 aims to solve them, could still create friction in customer adoption if integration proves too difficult or if new, unforeseen vulnerabilities emerge faster than F5 can address them.

3 Main Long-Term Bull Details

Strategic Hybrid Multi-Cloud Adoption & Digital Sovereignty: The accelerating shift to hybrid multi-cloud architectures, driven by demands for flexibility, resiliency, and digital sovereignty, creates durable tailwinds for F5's unified platform that spans on-premises, private, and multiple public clouds. This includes a 'Refresh plus dynamic' where customers upgrade to higher performance systems and expand their F5 footprint for modern applications, leading to competitive displacement and platform consolidation.
Accelerating AI Inference Inflection & New Use Cases: The AI inference inflection is a significant demand driver, with F5 capturing new AI insertion points in AI data delivery, AI factory load balancing, and critical AI runtime security. F5 is safeguarding AI applications, APIs, and models from abuse and attacks, and optimizing traffic and GPU utilization for AI factories, with strong customer adoption and growth in AI-related sales.
Expanding AI-Driven Threat Landscape & Best-in-Class Security: The rapidly expanding threat landscape, fueled by AI models launching more frequent and sophisticated attacks, drives sustained demand for F5's best-in-class and AI-powered application and API security solutions. Innovations like AI-powered WAF are stopping zero-day attacks, and the company is seeing strong traction in web application and API protection, bot defense, and DDoS mitigation, leading to security consolidation wins.

3 Main Long-Term Bear Details

Cyclicality of Hardware Revenue: While F5 is currently experiencing a strong hardware refresh cycle, hardware sales are inherently cyclical. Sustaining double-digit systems revenue growth long-term could be challenging without continuous innovation in new appliance generations and significant market share gains beyond the current refresh dynamic.
Rising Component Costs and Gross Margin Pressure: Rising component costs, particularly for memory and storage components, are expected to cause F5's non-GAAP gross margin to remain dynamic, with potential for elevated prices impacting profitability despite strong revenue growth. This requires agile pricing adjustments and careful supply chain management.
Pace of Software Growth and AI Adoption: F5's software revenue growth, while expected to accelerate in FY27 due to a stronger renewal cohort, has been in the mid-single digits for FY26. The broader enterprise adoption of advanced AI security and delivery solutions is still in its nascent stages, and a slower pace of widespread deployment could temper the full growth potential from the AI inference inflection in the short to medium term.

Competitors And Differentiation: F5 competes with incumbent providers in application delivery and security, including SaaS-only competitors and cloud-native toolsets. F5 differentiates itself by offering a unified application delivery and security platform that spans hybrid multi-cloud environments, including on-premises, cloud, and edge. This platform eliminates the complexity of stitching together point products and provides consistent performance, security, and policy. F5 emphasizes its hardware innovation, which offers better throughput, higher performance, higher capacity, and less power consumption compared to competitors. In the AI space, F5 differentiates with best-in-class security for AI models and applications, including AI-powered WAF, AI Guardrails, and AI Red Team, which can stop zero-day attacks and secure sensitive AI data. They also highlight their ability to optimize traffic and GPU utilization for AI factories.
Recent Performance & What The Market'S Focused On: F5 delivered a strong Q3 fiscal year 2026, with total revenue growing 11% year-over-year to $865 million, exceeding guidance. Product revenue increased 19%, marking 8 consecutive quarters of double-digit product growth, while services revenue grew 3%. Non-GAAP EPS grew 14% to $4.73 per share. The company raised its fiscal year 2026 revenue outlook to approximately 9% to 10% growth, up from 7% to 8%. The market is focused on the sustainability of the strong systems revenue growth, the anticipated acceleration of software revenue in FY27, the impact of component costs on gross margins, and the continued momentum and monetization of F5's direct and indirect AI use cases. The rapid uptake of new AI-powered security products like Distributed Cloud WAF is also a key focus.

Revenue Segments And Estimated Mix: Total Revenue — Mix: n/m; Source: Q3 FY26 transcript; Trend: Grew 11% year-over-year to $865 million.
Product Revenue — Mix: 54%; Source: Q3 FY26 transcript; Trend: Increased 19% year-over-year to $463 million.
Services Revenue — Mix: 46%; Source: Q3 FY26 transcript; Trend: Grew 3% year-over-year to $402 million.
Systems Revenue (within Product) — Mix: n/m (reported as $240M); Source: Q3 FY26 transcript; Trend: Up 32% over Q3 FY25.
Software Revenue (within Product) — Mix: n/m (reported as $223M); Source: Q3 FY26 transcript; Trend: Grew 7% year-over-year.
Subscription-based Software Revenue (within Software) — Mix: 90% of Q3 software revenue; Source: Q3 FY26 transcript; Trend: Up 9% year-on-year to $201 million.
Perpetual License Software (within Software) — Mix: 10% of Q3 software revenue; Source: Q3 FY26 transcript; Trend: Down 4% year-over-year to $22 million.
Recurring Revenue — Mix: 69%; Source: Q3 FY26 transcript; Trend: Contributed 69% of Q3 revenue.
Product Brands: BIG-IP
VIPRION
Local Traffic Manager
DNS Services
Advanced Firewall Manager
Policy Enforcement Manager
Application Security Manager
Access Policy Manager
NGINX
NGINX Plus
NGINX Controller
NGINX One
F5 WAF for NGINX
F5 DoS for NGINX
NGINXaaS for Azure
F5 NGINXaaS for Google Cloud
Shape Defense
Enterprise Defense
Secure Web Gateway
Silverline DDoS
F5 Distributed Cloud Services
F5 AI Security Platform
Distributed Cloud WAF
Agentic Bot Defense
F5 AI Remediate
F5 Insight for ADSP
AI Guardrails
AI Red Team
BIG-IP Next for Kubernetes
F5 Insight

Bull / Bear Details

F5, Inc. is well-positioned for sustained growth by leveraging accelerating hybrid multi-cloud adoption, a rapidly expanding AI-driven threat landscape, and the

Thesis

F5, Inc. is well-positioned for sustained growth by leveraging accelerating hybrid multi-cloud adoption, a rapidly expanding AI-driven threat landscape, and the AI inference inflection. Its unified platform delivers best-in-class application delivery and security, driving significant competitive displacement and wallet share expansion. Strong Q3 FY26 performance, 8 consecutive quarters of double-digit product growth, and a raised FY26 outlook reinforce a bullish investment case as of 2026-07-29.

Bull case

F5 is experiencing robust systems revenue growth (32% in Q3 FY26) driven by a "refresh plus dynamic" in hybrid multi-cloud adoption. This includes significant expansion at refresh, digital sovereignty initiatives leading to workload repatriation, and increased demand for higher-performance systems to support AI-driven workloads, enabling competitive displacement and platform consolidation.
The AI inference inflection is a powerful demand driver, with F5 demonstrating strong momentum in direct AI use cases. Cumulative AI customer count grew 50% in Q3, and AI security customers doubled. Innovations like AI-powered WAF are effectively stopping zero-day attacks, while AI factory load balancing optimizes GPU utilization, driving new monetization opportunities.
The expanding, AI-driven threat landscape, with application layer attacks surging 140%, is fueling demand for F5's best-in-class security. Its AI-powered Distributed Cloud WAF shows extraordinary uptake, actively blocking zero-day attacks. F5's new AI security platform, bolstered by the SurePath AI acquisition, drives platform consolidation and addresses sophisticated AI-driven threats.

Bear case

Despite an improved Q4 FY26 gross margin outlook due to favorable product mix and sourcing, F5 is not revising its FY27 non-GAAP gross margin guidance (80%-82%). This reflects ongoing caution regarding the dynamic pricing environment for memory and storage components, which could still pressure profitability in the longer term.
Services revenue growth remains muted at 3% year-over-year in Q3 FY26. This is attributed to a near-term headwind from the strong refresh cycle, as the transition from legacy to new appliances creates a lag in maintenance revenue recognition, potentially impacting overall recurring revenue growth in the immediate term.
While F5 is gaining traction in AI use cases, the broader enterprise adoption of advanced AI security and delivery solutions, particularly for AI factory load balancing, is still in early stages. The evolving "tokenomics" for Neoscalers and the need for customers to fully realize ROI from AI deployments could temper the pace of widespread adoption and the full growth potential from the AI inference inflection.

Bull / Bear Case

Bear Case: Despite an improved Q4 FY26 gross margin outlook, F5 is not revising its FY27 non-GAAP gross margin guidance of 80%-82%, reflecting ongoing caution regarding dynamic memory and storage component pricing, which could pressure profitability. Services revenue growth remains muted at 3% year-over-year in Q3 FY26, attributed to a near-term headwind from the strong refresh cycle and a lag in maintenance revenue recognition. While F5 is gaining traction in AI use cases, the broader enterprise adoption of advanced AI security and delivery solutions, particularly for AI factory load balancing, is still in early stages. The evolving 'tokenomics' for Neoscalers and the need for customers to fully realize ROI from AI deployments could temper the pace of widespread adoption and the full growth potential from the AI inference inflection.
Bull Case: F5 is experiencing robust systems revenue growth, up 32% in Q3 FY26, driven by a 'refresh plus dynamic' that includes significant expansion, digital sovereignty initiatives, and increased demand for higher-performance systems to support AI-driven workloads. The AI inference inflection is a powerful demand driver, with cumulative AI customer count growing 50% in Q3 and AI security customers doubling. Innovations like AI-powered WAF are effectively stopping zero-day attacks, and AI factory load balancing optimizes GPU utilization. The expanding, AI-driven threat landscape further fuels demand for F5's best-in-class security, with its AI-powered Distributed Cloud WAF showing extraordinary uptake. Management raised its FY26 outlook to 9-10% revenue growth, and expects software revenue to reaccelerate in FY27, signaling durable growth beyond the current hardware cycle.
More Compelling & Why: Bull. Given F5's strong Q3 performance, raised FY26 outlook, and outperformance against the SPY post-earnings, the bull case is more compelling. The company's strategic positioning at the intersection of hybrid multi-cloud, expanding threat landscape, and AI inference inflection provides durable tailwinds. While specific current valuation metrics are not provided, the strong free cash flow generation (repurchasing at least 50% of FCF) and anticipated reacceleration of software growth in FY27 suggest underlying financial health and future upside. My view would flip if F5's software revenue growth fails to reaccelerate significantly in FY27 as projected, or if gross margins are materially pressured by component costs beyond current expectations, indicating a fundamental challenge to profitability and recurring revenue growth.

Key Factors5 rows

Key Factor	Why It Matters	What To Watch	What It Signals	Where/How To Track	Free Alt Data	Paid Alt Data
FY27 Software Revenue Growth Guidance	Software revenue is crucial for F5's long-term growth and recurring revenue model. Management anticipates reacceleration in FY27, making this a key indicator of future trajectory and platform adoption.	F5's initial guidance for fiscal year 2027 software revenue growth.	Bullish if FY27 software revenue growth guidance is significantly above mid-single-digits (e.g., high single-digit or double-digit). Bearish if it is at or below mid-single-digits.	F5's Q4 FY26 earnings call and press release (expected October 2026).		Gartner/IDC: Enterprise software spending forecasts
Competitive Displacement and Market Share Gains	F5's ability to displace incumbents and gain market share, particularly in hybrid multi-cloud and AI environments, is a strong indicator of its competitive strength and differentiated platform.	Management commentary on specific competitive wins, examples of displacing incumbents, and any reported market share data in future earnings calls.	Bullish if management provides continued strong commentary on competitive wins, specific examples of displacing incumbents in hybrid multicloud/AI, or if third-party reports indicate market share gains. Bearish if there is a lack of such commentary or if increased competitive pressure is evident.	F5's Q4 FY26 earnings call and press release (expected October 2026).	Industry news and analyst reports covering application delivery and security market share.	Gartner/IDC: Market share reports for application delivery controllers (ADC) and web application and API protection (WAAP)
AI Use Case Customer Adoption and AI-Powered WAF Traction	F5's success in monetizing the AI inference inflection is critical for future growth. Strong customer adoption of direct AI use cases and AI-powered security validates its strategic positioning.	Updates on the cumulative total customer count for direct AI use cases and the number of AI security customers. Also, the percentage of Distributed Cloud WAF customers adopting AI-powered WAF and running in blocking mode.	Bullish if cumulative direct AI customers continue to grow significantly (e.g., >50% YoY), or AI security customers grow >100% YoY. Bullish if AI-powered WAF adoption rate increases beyond 15% and blocking mode usage exceeds 75%.	F5's Q4 FY26 earnings call and press release (expected October 2026).	Google Trends: 'F5 AI security,' 'F5 Distributed Cloud WAF' search volume	Apptopia/Mixpanel: F5 Distributed Cloud WAF feature adoption rates
Systems Revenue Growth Sustainability	The strong 32% systems revenue growth in Q3 FY26, driven by refresh-plus dynamics, digital sovereignty, and AI workloads, indicates a structural shift. Sustained growth beyond the cyclical refresh is crucial for F5's hardware business.	Management commentary on the drivers of systems revenue growth (digital sovereignty, AI-driven workloads, competitive displacement) and any updates to long-term hardware growth expectations.	Bullish if systems revenue growth remains double-digit in Q4 FY26 and management reiterates or strengthens its long-term hardware growth outlook. Bearish if growth decelerates significantly or the outlook is softened.	F5's Q4 FY26 earnings call and press release (expected October 2026).	Industry reports on data center build-out, cloud repatriation trends, and AI infrastructure spending.	IDC/Gartner: Enterprise hardware spending forecasts, data center equipment market share
FY27 Non-GAAP Gross Margin Outlook Update	Gross margin directly impacts profitability. While Q3/Q4 FY26 showed improvement, the unrevised FY27 guidance (80-82%) suggests caution due to dynamic component costs. An update will clarify future profitability.	F5's updated non-GAAP gross margin guidance for fiscal year 2027.	Bullish if FY27 non-GAAP gross margin guidance is raised above the current 80%-82% range. Bearish if it remains at the lower end or is lowered.	F5's Q4 FY26 earnings call and press release (expected October 2026).	Industry reports on memory and storage component pricing trends (e.g., DRAMeXchange, TrendForce).	Gartner/IDC: Component pricing forecasts

Key Reported Metrics, Reratings Triggers & Results3 rows

This metric highlights F5's early success in monetizing the AI inference inflection, particularly in safeguarding AI applications and models. Strong growth in A

Upcoming print · 2026-10-26

Key reported metrics
Metric	Last period	Why it matters
AI Security Customers Growth	100%	This metric highlights F5's early success in monetizing the AI inference inflection, particularly in safeguarding AI applications and models. Strong growth in AI security customers indicates effective capture of new market opportunities and differentiation.
Software Revenue Growth	7%	Software Revenue Growth is crucial for F5's long-term recurring revenue and its transition to a more software-centric business model. Its trajectory is key, especially with anticipated reacceleration in FY27, signaling future platform adoption.
Total Revenue Growth	11%	Total Revenue Growth is a primary indicator of F5's overall business health. It reflects the company's success in capitalizing on hybrid multi-cloud adoption, the expanding threat landscape, and the AI inference inflection, validating its strategic positioning.

Key Questions

Will F5 sustain its strong revenue momentum and meet its raised fiscal year 2026 outlook and Q4 guidance, particularly given the regional variability and the re

Will F5 sustain its strong revenue momentum and meet its raised fiscal year 2026 outlook and Q4 guidance, particularly given the regional variability and the reliance on the ongoing 'refresh plus dynamic'?

Question 2: How effectively can F5 monetize its rapidly growing AI customer base and translate strong AI security and data delivery adoption into accelerated software revenue growth in fiscal year 2027, beyond the current hardware refresh cycle?
Question 3: Will F5's non-GAAP gross margins for fiscal year 2027 be pressured by the dynamic pricing environment for memory and storage components, or can the company effectively mitigate these costs through pricing and sourcing strategies to maintain profitability?

Earnings Transcript Summary2 rows

2026-07-27 · 2026Q3 Earnings Call

3 Things Management Is Most Focused On	Call Takeaway & Tone	Prior Quarter'S Y/Y Growth By Segment	3 Things Analysts Most Pressed On (And Mgmt Responses)	Revenue Segments
3 Things Management Is Most Focused On1. Capitalizing on Hybrid Multi-Cloud Adoption: Management emphasized that hybrid multi-cloud adoption is accelerating, driving expansion opportunities, competitive displacements, digital sovereignty wins, and platform consolidation. They highlighted customer examples of repatriating workloads and standardizing delivery across multi-cloud environments. 2. Innovating for Application and API Security: Management is highly focused on addressing the expanding threat landscape, particularly the surge in application layer attacks and new AI-driven threats. They are innovating with AI-powered WAF, API security, and hardened software releases to provide runtime protection and faster vulnerability remediation. 3. Building AI Momentum Across Use Cases: F5 is actively building momentum in three direct AI use cases: AI data delivery, AI runtime security, and AI factory load balancing. They reported a 50% cumulative customer count growth for direct AI use cases in Q3 alone and highlighted wins in securing AI models and optimizing GPU utilization.	Call Takeaway & ToneThe overall takeaway of the call was highly positive, with management expressing confidence in F5's strategic positioning and execution. The tone was optimistic and upbeat, reinforced by strong Q3 fiscal 2026 results that exceeded guidance and a raised full-year fiscal 2026 outlook. Key themes included the robust demand driven by durable secular trends (hybrid multi-cloud adoption, expanding threat landscape, and AI inference inflection), significant growth in product and systems revenue, and strong momentum in AI-related security and delivery solutions. Management highlighted continuous innovation, particularly in AI-powered security, and anticipated an acceleration in software growth in fiscal year 2027.	Prior Quarter'S Y/Y Growth By SegmentIn Q2 FY26, total revenue grew 11%. Product revenue grew 22%. Services revenue grew 2%. Systems revenue grew 26%. Software revenue grew 17%. Subscription-based software revenue grew 20%. Perpetual license software revenue was down 4%. Revenue from the Americas grew 3%. EMEA revenue grew 22%. APAC revenue grew 19%.	3 Things Analysts Most Pressed On (And Mgmt Responses)1. AI Revenue Growth vs. Customer Count Growth: Analysts questioned if AI-related direct business revenue growth was in line with the 50% customer base growth. Management (Francois Locoh-Donou) responded that while they don't update the specific revenue number ($50M mark last quarter) every quarter, momentum is very strong, especially in AI security (100% customer growth in the quarter). He also noted the indirect AI opportunity driving hardware growth (32% year-on-year in Q3) due to customers scaling AI inference. 2. Gross Margin Outlook and Component Costs: Analysts questioned the improved near-term gross margin outlook for Q4 while the FY27 guidance remained unchanged, asking about potential pressure. Management (Cooper Werner) attributed the Q3/Q4 improvement to stronger adoption of high-performance appliances (better gross margin profile) and better sourcing outcomes for memory/SSDs. He stated they are not updating FY27 guidance yet due to the dynamic environment and mixed signals on memory pricing, but will monitor it. 3. Sustainability of Systems Growth and Software Acceleration: Analysts inquired about the drivers of strong systems growth (iSeries refresh, mix-up to high-performance systems) and the trajectory for software revenue to accelerate to double-digits in FY27. Management (Cooper Werner and Francois Locoh-Donou) explained that systems growth is driven by refresh-plus dynamics (expansion at refresh, digital sovereignty, AI traffic, competitive displacement) which are structural. For software, they anticipate reacceleration in FY27 due to a stronger renewal cohort and the end of a transition on legacy SaaS offerings, along with strong Distributed Cloud business trends.	Revenue SegmentsTotal revenue grew 11% year-over-year. Product revenue increased 19% year-over-year. Services revenue grew 3% year-over-year. Systems revenue was up 32% over Q3 FY25. Software revenue grew 7% year-over-year. Subscription-based software revenue increased 9% year-on-year. Perpetual license software was down 4% year-over-year. Revenue from the Americas grew 11% year-over-year. EMEA delivered 27% revenue growth. APAC revenue was down 11% year-over-year.

2026-04-28 · 2026Q2 Earnings Call

3 Things Management Is Most Focused On	Call Takeaway & Tone	Prior Quarter'S Y/Y Growth By Segment	3 Things Analysts Most Pressed On (And Mgmt Responses)	Revenue Segments
3 Things Management Is Most Focused On1. Hybrid Multicloud Adoption: Management highlighted that hybrid multicloud has become a strategic architecture, driving increased demand for F5's solutions as customers scale digital infrastructures for resiliency, data sovereignty, and AI readiness. They are seeing a 'Refresh plus' dynamic where customers are deploying higher performance F5 systems and expanding use cases. 2. Threat Landscape Expansion: Management emphasized that the pace and scope of the expanding threat landscape, fueled by AI-driven attacks, are driving demand for best-in-class application and API security. They noted that the era of 'checkbox security is over' and AI applications require robust defenses. 3. AI Inference Inflection: F5 is seeing the AI inference inflection driving demand both indirectly through hybrid multicloud adoption and directly through three primary AI use cases: AI data delivery, AI factory load balancing, and AI runtime security. They reported approximately $50 million in sales from these AI use cases in the first half of the year, up over 200% year-on-year, with nearly 100 customers.	Call Takeaway & ToneThe overall takeaway of the call was positive, reflecting F5's strong Q2 FY26 performance with robust revenue and earnings growth, leading to a raised full-year outlook. The tone was confident, with management emphasizing that F5 is well-positioned to capitalize on three durable secular trends: hybrid multicloud adoption, an expanding threat landscape, and the AI inference inflection. Key themes included significant product and systems revenue growth, strong international demand driven by digital sovereignty, and increasing traction in AI-related use cases and security solutions. Management also highlighted continuous innovation, particularly in AI-powered security, to address evolving customer needs. While acknowledging potential headwinds from rising memory costs impacting gross margins, the company expressed confidence in its operating model and future growth prospects, including an anticipated acceleration in software growth in FY27.	Prior Quarter'S Y/Y Growth By SegmentIn Q1 FY26, total revenue grew 7%. Product revenue grew 11%. Services revenue grew 4%. Systems revenue grew 37%. Software revenue was down 8%. Subscription-based software revenue grew 1%. Perpetual license software revenue was down year over year. Revenue from the Americas grew 2%. EMEA revenue grew 24%. APAC revenue was down 1%.	3 Things Analysts Most Pressed On (And Mgmt Responses)1. Software Growth Sustainability and Acceleration: Analysts questioned why the full-year software growth outlook remained mid-single-digit despite a strong Q2. Management (Cooper Werner) responded that Q2 was as expected, and while they caution against over-rotating on a single quarter, they anticipate an inflection to a higher software growth rate in FY27 due to strong consumption rates and a larger renewal base. 2. Sustainability of High Single-Digit Growth and AI Impact: Analysts inquired about the sustainability of high single-digit growth beyond FY26, particularly linking AI uplift to regional growth (less in the U.S. compared to international). Management (Francois Locoh-Donou) clarified that while the refresh cycle is cyclical, the three major trends (hybrid multicloud, threat landscape, AI inference) are secular and global, providing durable tailwinds. They noted that strong international growth, especially in EMEA, is driven by digital sovereignty requirements, but AI and security trends are global and also strong in the U.S. 3. Memory Costs and Gross Margin Implications: Analysts pressed on the impact of rising memory costs on gross margins and the timing of price increases. Management (Cooper Werner) explained that while they have an annual pricing review, they are also monitoring memory and SSD pricing to make agile, one-off price adjustments to offset impacts. They expect higher component costs, primarily related to memory, to cause gross margin to step down sequentially from Q3 into Q4, with elevated prices potentially through FY27.	Revenue SegmentsTotal revenue grew 11%. Product revenue grew 22%. Services revenue grew 2%. Systems revenue grew 26%. Software revenue grew 17%. Subscription-based software revenue grew 20%. Perpetual license software revenue was down 4%. Revenue from the Americas grew 3%. EMEA revenue grew 22%. APAC revenue grew 19%.

Transcript Tidbits2 rows

2026-07-27

About Expanding Eligible Market	About Competition	About The Broader Industry	Where Things Are Headed	Updates On Theme	Broader Themes Emerging	Bullish-Leaning Quotes (Short)	Bearish-Leaning Quotes (Short)
About Expanding Eligible MarketF5 is expanding its eligible market by aligning with three secular megatrends: hybrid multi-cloud adoption, the expanding threat landscape, and the AI inference inflection. The company is converting hybrid multi-cloud adoption into expansion opportunities, competitive displacements, digital sovereignty wins, and platform consolidation wins. F5 is also capitalizing on heightened demand for best-in-class application and API security, and building AI momentum with strong wins across AI data delivery, AI runtime security, and AI factory load balancing. The cumulative total customer count for direct AI use cases grew 50% in Q3, and the number of AI security customers grew 100% in the quarter. F5 also sees an indirect AI opportunity through increased traffic on its ADC systems, driving hardware growth, with some expansion linked to customers scaling AI inference in their enterprise environments. The rate of expansion during refresh cycles has improved, and new projects around data center modernization, digital sovereignty, and AI-driven workloads are contributing to growth. Specifically, digital sovereignty is driving customers in Europe, the Middle East, and Asia to repatriate workloads from global hyperscalers to local alternatives, with an analyst forecast suggesting 75% of international enterprises will do so within the next 3 to 5 years.	About CompetitionF5 is gaining market share by displacing incumbents and outperforming competitors. In Q3, F5 displaced an incumbent at a Fortune 100 global enterprise technology provider in an AI data delivery win. The company also displaced both a SaaS-only competitor and a cloud-native tool set for a multi-brand telecommunications provider. In another instance, Distributed Cloud Services displaced an incumbent at a large multinational health care company. F5 outperformed a competitor for an autonomous systems manufacturer, simplifying connectivity and storage sharing. The company's breadth of functional coverage also beat out a competitor for a U.S.-based professional sports league, enabling standardization on F5. F5 continues to win share from competitors in hardware due to its investments in hardware innovation, leading to better throughput, higher performance, higher capacity, and less power consumption. Management noted that F5's competitive takeout rate has 'gone up pretty materially' [cite: 2026Q2 Earnings Call] because F5 is positioned as 'the only vendor in the space that can support the customers' applications in any environment.' [cite: 2026Q2 Earnings Call]	About The Broader IndustryThe broader industry is being shaped by the increasing complexity customers face due to AI accelerating everything, including more traffic, more APIs, more distributed architectures, and a dramatically larger attack surface. The world runs on applications, including a new generation of AI-powered applications. Hybrid multi-cloud adoption, the expanding threat landscape, and the AI inference inflection are identified as three secular megatrends. The front lines of cyber defense have shifted to the application layer, with application layer attacks surging 140% over the last three years, compared to IT asset attacks growing over 60%. Frontier AI models have escalated the threat level globally, creating urgency for stronger defenses against AI-driven attacks and zero-day vulnerabilities. In the 'post-Mythos era,' attackers can use AI to discover vulnerabilities and develop exploits at unprecedented speed and scale, compressing the time between vulnerability discovery and exploitation. This necessitates runtime protection to detect malicious behavior and stop attacks while applications, APIs, models, and agents are running. There is a market realization that security provided by frontier model providers is inadequate. Customers are modernizing architectures, and requirements for application delivery and security are rising. The market is moving towards F5 as hybrid multi-cloud accelerates, threats grow more sophisticated, and AI inference becomes core to how applications run. There is an expectation that 75% of enterprises internationally will repatriate workloads into local alternatives within the next 3 to 5 years. The industry is also seeing a broader trend towards consolidation of security and application delivery solutions onto unified platforms to reduce complexity in hybrid multi-cloud and AI environments [cite: 2026Q2 Earnings Call]. The economics of tokens are expected to become increasingly important for Neoscalers as they target the enterprise market and AI-native companies.	Where Things Are HeadedF5 is raising its fiscal year 2026 outlook, now expecting approximately 9% to 10% revenue growth, up from the prior 7% to 8%. The company anticipates continued strong demand in Q4 and into FY '27, driven by hybrid multi-cloud adoption, threat landscape expansion, and AI inference inflection. For Q4, F5 expects revenue in the range of $870 million to $890 million, reflecting just under 9% year-over-year growth at the midpoint. The full-year FY '26 outlook includes mid-single-digit software revenue growth, double-digit systems revenue growth, and low-single-digit services revenue growth. Non-GAAP gross margin for FY '26 is expected to be in the range of 83.5% to 84%, with non-GAAP operating margin between 34.5% and 35.5%, and a non-GAAP effective tax rate of 18% to 19%. Non-GAAP EPS for FY '26 is projected between $17.21 and $17.33, an increase from the prior range. F5 expects full-year share repurchases to be at least 50% of free cash flow. Software revenue growth is expected to reaccelerate in FY '27 due to a much stronger renewal cohort and the SaaS and Managed Service business becoming a growth driver. The company expects hardware to continue growing for the next few years. Post-quantum crypto is also on customers' minds and could drive earlier adoption of the next product cycle. F5 anticipates continued growth in AI security, with investments in this area. The company believes that customers will increasingly use a mix of AI models and infrastructure, consuming public AI and building their own on-premises stacks, and will seek a partner like F5 to deliver and secure these models across any environment and cloud. The market is expected to evolve, with token economics becoming more important for Neoscalers.	Updates On ThemePhase	Broader Themes EmergingDigital sovereignty initiatives are driving significant demand for F5's solutions, particularly in EMEA, the Middle East, and Asia, as enterprises repatriate workloads to local alternatives. There is a broader industry trend towards the consolidation of security and application delivery solutions onto unified platforms, moving away from point products, especially in complex hybrid multi-cloud and AI environments [cite: 2026Q2 Earnings Call]. The concept of 'post-quantum crypto' is also emerging as a factor that could influence future product cycles and customer adoption.	Bullish-Leaning Quotes (Short)Q3 was another outstanding quarter. We delivered 19% product revenue growth, driving 11% total growth. We have now delivered 8 consecutive quarters of double-digit product growth. F5 is precisely where the market needs us to be. Our strong Q3 results reflect these trends and F5's alignment with where customers are investing. We are raising our fiscal year 2026 outlook to approximately 9% to 10% revenue growth, up from 7% to 8%. Our cumulative total customer count for direct AI use cases grew 50% just in Q3. The number of AI security customers actually grew 100% just in the quarter. Our AI-powered WAF is already stopping zero-day attacks without requiring new signatures. We expect software growth to reaccelerate next year. We expect hardware to be growing for the next few years.	Bearish-Leaning Quotes (Short)APAC was down 11% against a very strong year ago period. We are not revising our FY '27 gross margin guidance of 80% to 82%, given the dynamic pricing environment for memory and storage components. The security that's provided by the frontier model providers is inadequate.

2026-04-28

About Expanding Eligible Market	About Competition	About The Broader Industry	Where Things Are Headed	Updates On Theme	Broader Themes Emerging	Bullish-Leaning Quotes (Short)	Bearish-Leaning Quotes (Short)	Hiring
About Expanding Eligible MarketF5 is expanding its eligible market by capitalizing on hybrid multicloud adoption, which is now a strategic architecture for over 90% of enterprises. This includes leveraging a 'Refresh plus dynamic' where customers upgrade to higher performance F5 systems for modern applications, digital resilience, sovereignty, and AI, leading to expansion and new use cases. The company is also seeing significant growth in demand for best-in-class application and API security due to an expanding threat landscape, with web attacks up 77% and bot attacks up 150% year-on-year. The AI inference inflection is a major driver, with F5 winning new AI insertion points in data delivery, AI factory load balancing, and AI runtime security. AI-related sales reached approximately $50 million in the first half of FY26, up over 200% year-on-year, with around 100 customers. F5 is also seeing increased customer adoption for web application firewalls (up 62% YoY), API security (up 54% YoY), and bot defense (up 33% YoY). The company has also generated about $60 million in sales from customers recommitting to hardware.	About CompetitionF5 is gaining market share by displacing competitors who lack the breadth and depth of hybrid multicloud capabilities across on-premises, software, and SaaS. For example, F5 displaced a long-standing incumbent at a Fortune 100 energy company that couldn't scale into the cloud while maintaining on-premises performance. F5 also displaced an in-house solution and a competitor in an AI data delivery win. The company's competitive takeout rate has 'gone up pretty materially' because F5 is positioned as 'the only vendor in the space that can support the customers' applications in any environment.' F5's extensive security portfolio for runtime application and API security, covering on-premises and cloud environments, is a key differentiator, as 'none of our competitors, whether it's for application security or AI security are really hybrid multicloud.'	About The Broader IndustryThe broader industry is being reshaped by three significant forces: hybrid multicloud adoption, threat landscape expansion, and AI inference inflection. Over 90% of enterprises now run hybrid multicloud across an average of 19 locations, driven by needs for flexibility, resiliency, and digital sovereignty. The threat landscape is expanding rapidly, with AI models enabling attackers to launch more sophisticated and higher-volume attacks, making 'the era of checkbox security over' and necessitating best-in-class application security. AI inference is inflecting, with 78% of enterprises running inference themselves using over seven models on average. This is leading to standardization on new architectures with models distributed across data centers, clouds, and the edge, and AI agents are moving into production, driving more compute, data delivery, and security. The industry is also seeing a shift towards 'all security is going to be AI-powered' and a consolidation towards unified platforms to reduce complexity in hybrid multicloud environments. Globally, government defense spending is also growing.	Where Things Are HeadedF5 is raising its fiscal year 2026 revenue outlook to 7% to 8% growth (up from 5% to 6%), driven by strong Q3 visibility and pipeline. The company expects continued growth in FY26 and beyond, supported by the durable secular shifts of hybrid multicloud adoption, threat landscape expansion, and AI inference inflection. Software revenue growth is expected to accelerate into FY27. AI agents are anticipated to dramatically increase in number and models for inference over the next couple of years, with F5 at the 'very start of this trend.' F5 believes 'all security is going to be AI-powered' and expects more customers to consolidate towards platform solutions for simplified operations. Memory prices are expected to remain elevated through most of FY27, impacting gross margins. F5 anticipates a growth opportunity for its systems business in FY27 and plans continuous investment and innovation in systems, including future appliance cycles and opportunities like PQC. Global government spending is expected to remain strong for several quarters.	Updates On ThemeF5	Broader Themes EmergingDigital sovereignty initiatives, particularly in EMEA, are driving significant demand for F5's solutions. There is a broader industry trend towards the consolidation of security and application delivery solutions onto unified platforms, moving away from point products, especially in complex hybrid multicloud and AI environments. Global government defense spending is also emerging as a strong and sustained growth driver.	Bullish-Leaning Quotes (Short)Our team delivered another robust quarter with 11% revenue growth. Product revenue grew 22%, marking our seventh consecutive quarter of double-digit product growth. We are raising our fiscal year 2026 outlook to reflect revenue growth of 7% to 8%, up from 5% to 6% previously. The powerful combination of secular and cyclical demand trends is providing strong Q3 visibility and a growing pipeline. AI sales in the first half of the year on these use cases [AI]... up more than 200% year-on-year. We do expect to see an inflection in the growth rate [software] into FY '27. Our competitive takeout rate has gone up pretty materially. F5 is built for hybrid multicloud and the AI era.	Bearish-Leaning Quotes (Short)Perpetual license software totaled $19 million, down 4% year-over-year. Higher component costs, primarily related to memory will cause gross margin to step down sequentially from Q3 into Q4. We would expect memory prices to stay elevated [through] the better part of FY '27. Services growth at 2% was fairly muted. In the very immediate term, as customers are making the transition [refresh], it's a bit of a headwind on the maintenance revenue.	HiringF5 ended the quarter with approximately 6,500 employees. The company has increased its field coverage in EMEA and plans to 'probably continue to do that in the future,' implying ongoing hiring for field roles in that region.

NotesTable

Date	Comment	Comment Type	Comment Sentiment	Link	Price Reaction
2026-07-27	F5's Q3 FY26 earnings surpassed expectations, driven by robust product revenue growth and strong AI security momentum. Management raised the FY26 outlook to 9-10% revenue growth and anticipates FY27 software acceleration. Despite unchanged FY27 gross margin guidance due to component costs, the market reacted positively, with FFIV stock returning 2.87% (outperforming SPY's 0.35%) post-earnings, aligning with the bullish messaging.	Earnings Transcript	Neutral		+2.87% (vs SPY: +2.52%)

Upcoming Events4 rows

Catalyst ID	Estimated Timing	Estimated Date Start	Estimated Date End	Catalyst	Why It Matters	Ticker Or Theme Specific	Transcript Date	Source Type
FFIV_53070019	at the end of the year	2026-09-01	2026-09-30	F5 management may provide an update on the cumulative direct AI use case revenue for the fiscal year 2026.	This update will indicate the continued monetization and growth trajectory of F5's AI-related offerings, supporting the bull case for the AI inference inflection and F5's strategic positioning.	Ticker	2026-07-27	earnings_transcript
FFIV_012e8c34	end of software support date in our Q2 of '27	2027-01-01	2027-03-31	End of software support for F5's iSeries appliances, which is expected to drive acceleration of customer refresh activity to rSeries products.	This milestone is anticipated to accelerate the iSeries to rSeries refresh cycle, significantly boosting F5's hardware revenue and reinforcing its 'refresh plus' growth dynamic.	Ticker	2026-07-27	earnings_transcript
FFIV_1db80fff	from Q3 into Q4 fiscal year 2026, with full run rate in Q4	2026-07-01	2026-09-30	Gross margin is expected to step down sequentially from Q3 into Q4 fiscal year 2026 due to higher component costs, particularly memory, with the full run rate impact in Q4.	This indicates a material headwind to profitability for the current fiscal quarter, potentially impacting investor expectations for future earnings and stock performance.	Ticker	2026-04-28	earnings_transcript
FFIV_1794269f	beginning in fiscal year 2027	2026-10-01	2026-12-31	F5 anticipates an inflection in software revenue growth, leading to a higher growth rate beginning in fiscal year 2027.	This signals a positive shift in a key revenue segment, driven by strong consumption rates and a larger renewal base, which could improve long-term revenue and profitability outlook.	Ticker	2026-04-28	earnings_transcript