What To Expect From F5 Networks’ Third Quarter Earnings

F5 Networks (NYSE:FFIV) is scheduled to report its fiscal Q3’18 earnings on July 25. In recent years, the application delivery networking (ADN) provider has reported consistent low single digit growth in revenues driven by robust demand for its offerings. The company’s services segment has outpaced growth in its core ADN product sales over the years – a trend expected to continue in the current year as well. In the two most recent quarters, F5’s product revenues have declined in low single digits while the company faces some uncertainty in demand for its core ADC solutions over the cloud, as some of its customers are reevaluating their application architectures and deployment options. As the adoption rate remains relatively low, it can continue to put pricing pressure on hardware products. On the other hand, services revenues have increased at high single digits to offset the slowdown in product sales. We expect this trend to continue through the end of the current fiscal year.

We forecast product revenues to be around 1-2% lower on a y-o-y basis to $232 million, while services revenues are expected to be 8% higher at $305 million for the June ended quarter. In addition, the company’s services gross margin should continue to expand while its product gross margin is likely to compress slightly in line with the recent trend. We have summarized our expectations and forecasts for Q3’18 results on our interactive F5 Networks’ earnings preview dashboard. Our EPS forecast is slightly lower than the consensus estimates. If you think differently, you can change expected segment revenue and margin figures for F5 Networks to gauge how it will impact expected EPS for the June quarter.

See our complete analysis for F5 Networks

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