F5 Networks (FFIV) Last Update 5/20/21
Related: VMW MSFT ADBE ORCL
% of Stock Price
Revenue
Gross Profits
Free Cash Flow
F5 Networks
$206.85
Yours
Trefis Price
N/A
$204
Market
 
Top Drivers for Period
Key Drivers
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RECENT NEWS AND ANALYSIS

Potential upside & downside to trefis price

F5 Networks Company

VALUATION HIGHLIGHTS

  1. Services constitute 67% of the Trefis price estimate for F5 Networks's stock.
  2. Application Delivery Network constitutes 30% of the Trefis price estimate for F5 Networks's stock.

WHAT HAS CHANGED?

  1. Latest Earnings - Q1'21
F5 Networks delivered a strong performance for its fiscal first quarter 2021 (ending December 2020), with the company's total revenue jumping by 10% year-over-year to $625 million, driven by a 20% growth in the company's products segment. However, the company reported earnings per share of $1.43, down from $1.62 for the same period last year, as COGS and operating expenses increased (operating margins dropped from 21.5% to 18.9%).

BUSINESS SUMMARY

F5 Networks is a leading provider of technology that optimizes the delivery of network-based applications and the security, performance and availability of servers, data storage devices and other network resources. F5’s products collectively simplify the management of data center operations and delivery of services across diverse data center resources.

F5 Networks pioneered load-balancing technology that distributes internet traffic evenly across multiple servers, making them look like a single device.

SOURCES OF VALUE

Application Delivery Network

Application delivery network solutions continue to be a fast growing segment in the enterprise networking market. The need for enterprises to invest less in building and owning a new datacenter and to optimize the existing facilities has led to increase in demand for application delivery products, which deliver the same. Moreover, the shift to cloud based applications and storage has also driven up the demand for application delivery products.

Services

F5 continues to derive a significant portion of its revenues from service and maintenance contracts. Its high quality of service is usually a selling point for its products.

KEY TRENDS

Growth in enterprise internet traffic

There is a growing adoption of advanced video communications in the enterprise segment. Web-based video conferencing and network management is expected to grow faster than average business video conferencing.

Shift to cloud based services and storage

F5 is facing competition not only from new entrants in the ADC market, but also from native cloud-based service providers. Traditionally, ADC vendors have focused on helping customers manage applications in their own data centers. However, as more and more applications are now being deployed in Cloud data centers, ADC vendors are increasingly focused on evolving their support for applications on the cloud. Consequently, traditional load balancing companies, such as F5 Networks, have to compete with the offerings of cloud vendors, such as Amazon. We can expect cloud-based load-balancers to command a larger percentage of the application delivery controller market in future. This can have a negative impact on F5’s revenue growth too.

Security solutions is a key growth driver

With increasing network complexity, reducing security risk is an important criteria for enterprises. Over the years, data theft technology has become more sophisticated and the global cyber-crime market is currently sized at over $100 billion.