F5(FFIV) - 2025 Q1 - Quarterly Report

Financial Performance - Net income for the three months ended December 31, 2024, was $166.4 million, compared to$138.4 million for the same period in 2023, resulting in a basic net income per share of $2.85[83] - Total revenues for the three months ended December 31, 2024, were$766.5 million, an increase from $692.6 million in the same period of 2023[86] - Total net revenues increased by 10.7$766.5 million for the three months ended December 31, 2024, compared to $692.6 million in the same period of the prior year[102] - Net product revenues rose by 20.5$368.5 million, driven by a 22.5% increase in software revenues and a growth in systems sales[103][104] - Net service revenues increased by 2.9% to $398.0 million, primarily due to higher maintenance contract renewals[105] - Gross profit for the three months ended December 31, 2024, was$626.0 million, with a gross margin of 81.7%, up from 80.3% in the prior year[106] - Operating expenses totaled $420.9 million, representing 54.9$166.4 million, reflecting a net income margin of 21.7%, compared to 20.0% in the same period last year[113] Revenue Recognition and Deferred Revenue - Deferred revenue balance rose to $1.95 billion at the end of December 2024, compared to$1.83 billion in December 2023, with $556.9 million added but not recognized as revenue during the period[35] - The total non-cancelable remaining performance obligations amounted to$1.9 billion, with an expectation to recognize 62.6% of these revenues over the next 12 months[36] - Deferred revenues increased in the first quarter of fiscal year 2025, primarily due to an increase in maintenance renewal contracts and subscription offerings[97] Cash and Investments - As of December 31, 2024, total cash, cash equivalents, and restricted cash amounted to $1,152.9 million, an increase from$1,078.3 million as of September 30, 2024[53] - Cash provided by operating activities for Q1 fiscal 2025 was $166.4 million, an increase from the prior year due to higher net income and cash received from customers[118] - Cash used in investing activities was$10.0 million for the three months ended December 31, 2024, compared to $7.1 million in the same period last year, primarily due to$8.1 million in capital expenditures[120] - Cash used in financing activities was $114.7 million for the three months ended December 31, 2024, a decrease from$135.0 million in the prior year, mainly due to $125.0 million used for share repurchases[121] - Cash and cash equivalents, along with investments, increased to$1,162.1 million as of December 31, 2024, up from $1,083.2 million at the end of September 2024[117] Share Repurchase and Equity - The Company repurchased 490,000 shares at an average price of$255.31 per share for a total of $125.0 million during the three months ended December 31, 2024[81] - The Company had$1.3 billion remaining authorized for share repurchases as of December 31, 2024[81] Taxation - The effective tax rate for the three months ended December 31, 2024, was 20.4%, a decrease from 20.7% in the same period of 2023, primarily due to the tax impact of stock-based compensation[77] - The Company had $88.9 million of unrecognized tax benefits as of December 31, 2024, which could affect the effective tax rate if recognized[78] - The effective tax rate decreased to 20.4$11.3 million for the three months ended December 31, 2024, compared to $9.8 million in the same period of 2023[88] - Restructuring charges amounted to$11.3 million for the three months ended December 31, 2024, compared to $8.5 million in the same period of the prior year[112] Inventory and Receivables - Inventories decreased from$76.4 million as of September 30, 2024, to $73.2 million as of December 31, 2024[54] - Unbilled receivables increased to$433.9 million as of December 31, 2024, compared to $401.1 million as of September 30, 2024[55] Debt and Credit Facilities - The Company had no outstanding borrowings under its$350.0 million Revolving Credit Facility as of December 31, 2024, with available borrowing capacity of $350.0 million[60] - As of December 31, 2024, the Company was in compliance with all covenants related to its Revolving Credit Agreement[60] - The Company had no outstanding borrowings under its$350.0 million Revolving Credit Facility as of December 31, 2024, which expired on January 31, 2025[92] Capitalized Costs and Goodwill - The balance of capitalized contract acquisition costs increased to $70.3 million as of December 31, 2024, from$66.5 million at the beginning of the period, with additional costs of $13.2 million capitalized during the quarter[33] - The amortization of capitalized contract acquisition costs was consistent at$9.1 million for both the three months ended December 31, 2024, and 2023[33] - The Company recorded $23.6 million of goodwill from two acquisitions completed in the second quarter of fiscal 2024, which did not materially impact operating results[52] Market and Economic Conditions - The company does not anticipate a material effect on its financial condition from a 10% change in interest rates due to its current investment portfolio[128] - The company is actively monitoring inflation but does not believe it has materially affected its business or financial condition[129] - The majority of the company's sales and expenses are in U.S. dollars, minimizing foreign currency transaction risks[130] - There have been no material changes to the company's market risk disclosures during the three months ended December 31, 2024[131] Accounting Standards and Disclosures - The company is currently evaluating the impact of new accounting standards on its disclosures, including ASU 2023-07 and ASU 2023-09, which will enhance segment and income tax disclosures respectively[30][31]