What Can We Expect From F5 Networks’ Q1’17 Earnings?

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Leading application delivery controller provider, F5 Networks (NYSE:FFIV) is set to report its Q1 2017 earnings on January 25th. (Fiscal years end with September.) The company has guided a revenue of approximately $515 million, at the midpoint, for the first quarter, which essentially implies a year over year revenue growth 3.6%. F5’s revenue growth in the quarter has likely been driven by the launch of its new appliances, named the Shuttle series. The company claims that its new appliances have significant performance improvements over its previous line of products. Since F5 started shipping the new products towards the end of the quarter, we can expect the impact on sales should be visible starting this quarter.

However, it still remains to be seen how the company’s products will fare in the evolving landscape of the Application Delivery Controller (ADC) market. The company is facing competition not only from new entrants in the ADC market but also from native cloud-based service providers. Traditionally, ADC vendors have focussed on helping customers manage applications in their own data centers. However, as more and more applications are now being deployed on cloud, ADC vendors are increasingly focussed on evolving their support for applications on the cloud. Consequently, these companies have to compete with the offerings of cloud vendors. Thus, despite being a market leader in the ADC market, F5’s market share is being slowly eroded by cloud vendors. According to Gartner, F5’s market share declined from 49% in 2014 to 47% in 2015. Nevertheless, the company sees the shift of application workloads to private and public cloud architectures as a new opportunity.

In the table below, we can note the key metrics as expected for the company in Q1:

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For information, please refer to our complete analysis for F5 Networks

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