F5, Inc 10-Q for FY2023 Q1

F5, Inc. (FFIV)

10-Q 2023-02-03 For: 2022-12-31

Added on April 09, 2026

About this 10-Q

F5, Inc filed this 10-Q on February 3, 2023, covering the quarter ended December 31, 2022 (FY2023 Q1).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $700.38M; up 1.9% from $687.1M a year earlier
Net income: $72.4M; down 22.6% from net income of $93.56M a year earlier
Diluted EPS: $1.20; down 20.5% from $1.51 a year earlier

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


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


			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			8
Notes to Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			29
Item 4. Controls and Procedures			29
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			30
Item 4. Mine Safety Disclosures			31
Item 5. Other Information			31
Item 6. Exhibits			31
SIGNATURES			32


	December 31, 2022		September 30, 2022
ASSETS
Current assets
Cash and cash equivalents	$	605,739	$	758,012
Short-term investments	54,015		126,554
Accounts receivable, net of allowances of $6,417 and $6,020	485,277		469,979
Inventories	59,197		68,365
Other current assets	510,279		489,314
Total current assets	1,714,507		1,912,224
Property and equipment, net	167,709		168,182
Operating lease right-of-use assets	223,953		227,475
Long-term investments	7,812		9,544
Deferred tax assets	208,562		183,365
Goodwill	2,259,277		2,259,282
Other assets, net	503,748		516,122
Total assets	$	5,085,568	$	5,276,194
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	71,760	$	113,178
Accrued liabilities	330,524		309,819
Deferred revenue	1,131,195		1,067,182
Current portion of long-term debt	—		349,772
Total current liabilities	1,533,479		1,839,951
Deferred tax liabilities	2,973		2,781
Deferred revenue, long-term	628,924		624,398
Operating lease liabilities, long-term	267,700		272,376

Other long-term liabilities	70,143		67,710
Total long-term liabilities	969,740		967,265
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, 60,117 and 59,860 shares issued and outstanding	129,060		91,048
Accumulated other comprehensive loss	(23,219)		(26,176)
Retained earnings	2,476,508		2,404,106
Total shareholders' equity	2,582,349		2,468,978
Total liabilities and shareholders' equity	$	5,085,568	$	5,276,194


	Three months ended December 31,
	2022		2021
Net revenues
Products	$	340,558	$	343,149
Services	359,820		343,951
Total	700,378		687,100
Cost of net revenues
Products	98,855		81,662
Services	56,152		53,411
Total	155,007		135,073
Gross profit	545,371		552,027
Operating expenses
Sales and marketing	233,105		234,035
Research and development	142,323		130,271
General and administrative	69,991		65,661
Restructuring charges	8,740		7,909
Total	454,159		437,876
Income from operations	91,212		114,151
Other income (expense), net	4,702		(2,431)
Income before income taxes	95,914		111,720
Provision for income taxes	23,512		18,161
Net income	$	72,402	$	93,559
Net income per share — basic	$	1.20	$	1.54
Weighted average shares — basic	60,096		60,810
Net income per share — diluted	$	1.20	$	1.51
Weighted average shares — diluted	60,387		61,882


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


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


	Common Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount

	Three months ended December 31, 2021
Balances, September 30, 2021	60,652	$	192,458	$	(20,073)	$	2,187,828	$	2,360,213
Exercise of employee stock options	50	1,255		—		—		1,255
Issuance of stock under employee stock purchase plan	169	26,325		—		—		26,325
Issuance of restricted stock	442	—		—		—		—
Repurchase of common stock	(539)	(125,011)		—		—		(125,011)
Taxes paid related to net share settlement of equity awards	(63)	(13,595)		—		—		(13,595)
Stock-based compensation	—	63,757		—		—		63,757
Net income	—	—		—		93,559		93,559
Other comprehensive loss	—	—		(1,142)		—		(1,142)
Balances, December 31, 2021	60,711	$	145,189	$	(21,215)	$	2,281,387	$	2,405,361

	Three months ended December 31, 2022
Balances, September 30, 2022	59,860	$	91,048	$	(26,176)	$	2,404,106	$	2,468,978
Exercise of employee stock options	14	435		—		—		435
Issuance of stock under employee stock purchase plan	179	21,745		—		—		21,745
Issuance of restricted stock	376	—		—		—		—
Repurchase of common stock	(263)	(40,005)		—		—		(40,005)
Taxes paid related to net share settlement of equity awards	(49)	(7,037)		—		—		(7,037)
Stock-based compensation	—	62,874		—		—		62,874
Net income	—	—		—		72,402		72,402
Other comprehensive income	—	—		2,957		—		2,957
Balances, December 31, 2022	60,117	$	129,060	$	(23,219)	$	2,476,508	$	2,582,349


				Gross Unrealized						Classification on Balance Sheet
December 31, 2022	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income
Money Market Funds	Level 1	$	208,279	$	—	$	—	$	208,279	$	208,279	$	—	$	—

Corporate bonds and notes	Level 2	30,908		—		(613)		30,295		—		26,595		3,700
Municipal bonds and notes	Level 2	2,962		—		(81)		2,881		—		2,785		96
U.S. government securities	Level 2	23,154		—		(246)		22,908		—		22,908		—
U.S. government agency securities	Level 2	1,784		—		(57)		1,727		—		1,727		—
Total debt investments		$	267,087	$	—	$	(997)	$	266,090	$	208,279	$	54,015	$	3,796
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	4,016	$	—	$	—	$	4,016
Total equity investments								4,016		—		—		4,016
Total investments								$	270,106	$	208,279	$	54,015	$	7,812


				Gross Unrealized						Classification on Balance Sheet
September 30, 2022	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income
Money Market Funds	Level 1	$	276,294	$	—	$	—	$	276,294	$	276,294	$	—	$	—

Corporate bonds and notes	Level 2	50,828		—		(950)		49,878		912		44,356		4,610
Municipal bonds and notes	Level 2	5,018		—		(102)		4,916		—		3,812		1,104
U.S. government securities	Level 2	84,734		—		(660)		84,074		10,120		73,954		—
U.S. government agency securities	Level 2	5,825		—		(75)		5,750		606		4,432		712
Total debt investments		$	422,699	$	—	$	(1,787)	$	420,912	$	287,932	$	126,554	$	6,426
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	3,118	$	—	$	—	$	3,118
Total equity investments								3,118		—		—		3,118
Total investments								$	424,030	$	287,932	$	126,554	$	9,544


			Estimated
			Useful Life
Assets acquired
Deferred tax assets	$	14,041
Other net tangible assets acquired, at fair value	5,481
Cash, cash equivalents, and restricted cash	911
Identifiable intangible assets:
Developed technology	11,400		5 years
Customer relationships	4,400		5 years
Goodwill	43,282
Total assets acquired	$	79,515
Liabilities assumed
Deferred revenue	$	(10,591)
Total liabilities assumed	$	(10,591)
Net assets acquired	$	68,924


	December 31, 2022		September 30, 2022
Finished goods	$	9,947	$	10,164
Raw materials	49,250		58,201
	$	59,197	$	68,365


	December 31, 2022		September 30, 2022
Unbilled receivables	$	333,816	$	319,707
Prepaid expenses	74,613		57,340
Capitalized contract acquisition costs	33,828		34,658
Other1	68,022		77,609
	$	510,279	$	489,314


	December 31, 2022		September 30, 2022
Intangible assets	$	187,367	$	200,288
Unbilled receivables	226,120		224,780
Capitalized contract acquisition costs	39,972		42,561
Other	50,289		48,493
	$	503,748	$	516,122


	December 31, 2022		September 30, 2022
Payroll and benefits	$	140,995	$	165,437
Operating lease liabilities, current	43,397		42,523
Income and other tax accruals	79,878		41,217
Other	66,254		60,642
	$	330,524	$	309,819


	Three months ended December 31,
	2022		2021
Balance, beginning of period	$	77,220	$	77,836
Additional capitalized contract acquisition costs	6,267		10,512
Amortization of capitalized contract acquisition costs	(9,687)		(9,414)
Balance, end of period	$	73,800	$	78,934


	Three months ended December 31,
	2022		2021
Balance, beginning of period	$	1,691,580	$	1,489,842
Amounts added but not recognized as revenues	460,408		441,591
Deferred revenue acquired through acquisition of businesses	—		10,591
Revenues recognized related to the opening balance of deferred revenue	(391,869)		(365,525)
Balance, end of period	$	1,760,119	$	1,576,499


Fiscal Years Ending September 30:	Operating Lease Payments
2023 (remainder)	$	38,611
2024	48,196
2025	40,683
2026	30,812
2027	29,746
2028	27,885
Thereafter	138,747
Total lease payments	354,680
Less: imputed interest	(43,583)
Total lease liabilities	$	311,097


	Three months ended December 31,
	2022		2021
Americas:
United States	$	375,748	$	381,289
Other	26,410		21,702
Total Americas	402,158		402,991
EMEA	184,115		162,062
Asia Pacific	114,105		122,047
	$	700,378	$	687,100


	December 31, 2022		September 30, 2022
Income taxes payable	$	61,865	$	59,553

Other	8,278		8,157
	$	70,143	$	67,710


	December 31, 2022			September 30, 2022
Operating lease right-of-use assets, net	$	223,953		$	227,475

Operating lease liabilities, current1	43,397			42,523
Operating lease liabilities, long-term	267,700			272,376
Total operating lease liabilities	$	311,097		$	314,899

Weighted average remaining lease term (in years)	9.0			9.2
Weighted average discount rate	2.70		%	2.66		%


	December 31, 2022		September 30, 2022
Ingram Micro, Inc.	—		12.9	%
Synnex Corporation	13.1	%	12.6	%
Carahsoft Technology	—		16.2	%


	Total Number of Shares Purchased1	Average Price Paid per Share		Total Number of Shares Purchased per the Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan2
October 1, 2022 — October 31, 2022	—	—		—	$	1,272,488
November 1, 2022 — November 30, 2022	229,925	$	150.18	181,296	$	1,244,986
December 1, 2022 — December 31, 2022	82,126	$	152.25	82,126	$	1,232,483


Exhibit Number		Exhibit Description

31.1*	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	—	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*	—	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*	—	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	—	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	—	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	—	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	—	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*	—	Cover Page Interactive Data File (embedded within the Inline XBRL document)


			F5, INC.

			By:						/s/ FRANCIS J. PELZER
									Francis J. Pelzer
									Executive Vice President,
									Chief Financial Officer
									(principal financial officer and principal accounting officer)


Date:			February 3, 2023

/s/ FRANÇOIS LOCOH-DONOU
François Locoh-Donou
Chief Executive Officer and President