F5 Reports Sluggish Topline Growth In Q2’16 Amidst Weak Macro Spending Environment

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Application delivery controller provider F5 Networks reported its Q2 2016 earnings on April 20, 2016. (Fiscal years end with September.) The company reported roughly flat growth, amid weak macro spending environment. Furthermore, the company’s GAAP net income dropped by more than 10% on account of the litigation charges incurred in the quarter for a lost patent battle against Radware. [1] Nevertheless, F5’s stock price increased after the earnings announcement, as the company revealed plans to buyback shares worth $1 billion. Though F5 can see future growth coming in from a product refresh cycle, which is expected in this fiscal year, we believe its growth can be limited from a stagnating ADC market, high competition in the security market and a shift of applications to cloud based servers. Below we analyse the key metrics of F5 as reported by the company in Q2’16 earnings:

Earnings_F5_Q&A2

Notes:

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1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for F5 Networks

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Notes:
  1. Radware Wins Patent Infringement Against F5 Networks in Jury Trial, Radware Press Release, March 2016 []