[January 19, 2005] F5 Networks Announces Results for the First Quarter of Fiscal 2005 Tweet SEATTLE --(Business Wire)-- Jan. 19, 2005 -- Continuing Strength in Core Business Drives 66 Percent Year-over-Year Revenue Growth, Further Improvement in Profitability For the first quarter of fiscal 2005, F5 Networks (Nasdaq:FFIV) announced revenue of $60.0 million, a 20 percent increase over revenue of $50.2 million in the fourth quarter of fiscal 2004 and a 66 percent increase over revenue of $36.1 million in the first quarter a year ago. The company's operating margin for the quarter was 24 percent, compared to 20 percent in the prior quarter and 11 percent in the first quarter of fiscal 2004. Net income for first quarter of fiscal 2005 was $10.0 million ($0.26 per diluted share). During the fourth quarter of 2004, F5 became subject to income taxes on U.S. income and also reversed the valuation allowance on U.S. deferred tax assets, resulting in net income of $15.8 million ($0.43 per diluted share), which included a net tax benefit of $5.5 million. To present prior results on a tax-affected basis that is comparable to the current period, the company's financial statements include pro forma earnings for the first and fourth quarters of fiscal 2004. On a pro forma basis, excluding the net tax benefit resulting from the reversal of the valuation allowance and including a 37 percent provision for income taxes, net income for the fourth quarter of fiscal 2004 would have been $6.8 million ($0.18 per diluted share). In the first quarter of fiscal 2004 the company reported net income of $3.8 million ($0.11 per diluted share). On a pro forma basis, net income for the first quarter of fiscal 2004 would have been $2.6 million ($0.08 per diluted share) had the company recorded a 37 percent provision for income taxes. F5 president and chief executive officer John McAdam said the company's strong revenue growth was driven by continuing strength in its core traffic management business across all geographic regions. In addition, McAdam said he believes the recent introduction of the company's new products (the BIG-IP 6400, 3400 and 1500 running version 9 of the BIG-IP software), will expand its growth opportunities by enabling customers to secure, optimize and deliver their applications in ways that go beyond traditional definitions of application traffic management. Leveraging the full-proxy architecture of the company's new Traffic Management Operating System (TM/OS), BIG-IP's advanced functionality includes delivery and optimization features such as IPv6 translation, universal persistence, error response handling, connection pooling, intelligent compression, L7 rate shaping and TCP optimization, as well as a number of security features, including cookie encryption, resource cloaking, advanced client authentication and selective content encryption. During the first full quarter of shipment, McAdam said demand for the Version 9 BIG-IP products was strong, with sales of the new platforms accounting for 30 percent of application traffic management revenue. In addition to continued improvement in profitability, McAdam said, the company's strong revenue growth and leveraged business model enabled it to further strengthen its financial position. During the quarter, collections resulting in 42 days sales outstanding (DSO) contributed to a record $13.5 million in cash from operations and total cash and investments of $254 million at quarter end. For the second quarter of fiscal 2005, McAdam said management believes the company will continue to grow sequentially and has set a target range of $63.0 million to $65.0 million in revenue with net income of $0.28 to $0.29 per diluted share. About F5 Networks F5 enables organizations to successfully deliver business-critical applications and gives them the greatest level of agility to stay ahead of growing business demands. As the pioneer and global leader in Application Traffic Management, F5 continues to lead the industry by driving more intelligence into the network to deliver advanced application agility. F5 products ensure the secure and optimized delivery of applications to any user -- anywhere. Through its flexible and cohesive architecture, F5 delivers unmatched value by dramatically improving the way organizations serve their employees, customers and constituents, while lowering operational costs. The company is headquartered in Seattle, Washington with offices worldwide. For more information go to www.f5.com. Forward-Looking Statements Statements in this press release concerning sequential growth, revenue and net income targets for the second quarter of fiscal 2005 and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: customer acceptance of our new traffic management and security offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; F5's ability to sustain, develop and effectively utilize distribution relationships; F5's ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel; F5's ability to expand in international markets and the unpredictability of F5's sales cycle. F5 has no duty to update any guidance provided or other matters discussed in this press release. More information about potential risk factors that could affect F5's business and financial results is included in the company's annual report on Form 10K for the fiscal year ended September 30, 2004, and other public filings with the Securities and Exchange Commission. -0- *T F5 Networks, Inc. Consolidated Balance Sheets (unaudited, in thousands) December 31, September 30, 2004 2004 ------------- ------------- Assets Current assets Cash and cash equivalents $ 23,803 $ 24,901 Investments 139,909 115,600 Accounts receivable, net of allowances of $3,269 and $3,161 28,101 22,665 Inventories 1,728 1,696 Deferred tax assets 4,619 4,494 Other current assets 8,495 5,776 ------------- ------------- Total current assets 206,655 175,132 ------------- ------------- Restricted cash 6,221 6,243 Property and equipment, net 12,969 11,954 Long-term investments 90,657 81,792 Deferred tax assets 32,966 26,886 Goodwill 50,067 50,067 Other assets, net 7,954 8,279 ------------- ------------- Total assets $ 407,489 $ 360,353 ============= ============= Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 7,746 $ 4,840 Accrued liabilities 16,537 17,668 Deferred revenue 29,046 28,064 ------------- ------------- Total current liabilities 53,329 50,572 ------------- ------------- Long-term liabilities 2,298 2,136 ------------- ------------- Commitments and contingencies Shareholders' equity Preferred stock, no par value; 10,000 shares authorized, no shares outstanding -- -- Common stock, no par value; 100,000 shares authorized 36,307 and 34,772 shares issued and outstanding 341,318 306,655 Accumulated other comprehensive loss (937) (498) Retained earnings 11,481 1,488 ------------- ------------- Total shareholders' equity 351,862 307,645 ------------- ------------- Total liabilities and shareholders' equity $ 407,489 $ 360,353 ============= ============= F5 Networks, Inc. Condensed Consolidated Statements of Operations (unaudited, in thousands, except per share amounts) Three Months Ended ---------------------------------------- December 31, September 30, December 31, 2004 2004 2003 ------------ ------------ ----------- Net revenues Products $ 46,397 $ 37,536 $ 26,376 Services 13,612 12,683 9,705 ------------ ------------ ----------- Total 60,009 50,219 36,081 ------------ ------------ ----------- Cost of net revenues Products 10,528 8,489 5,849 Services 3,386 3,055 2,462 ------------ ------------ ----------- Total 13,914 11,544 8,311 ------------ ------------ ----------- Gross profit 46,095 38,675 27,770 ------------ ------------ ----------- Operating expenses Sales and marketing 19,640 17,597 14,954 Research and development 6,974 6,764 5,444 General and administrative 5,006 4,463 3,347 Amortization of unearned compensation - - 10 ------------ ------------ ----------- Total operating expenses 31,620 28,824 23,755 ------------ ------------ ----------- Income from operations 14,475 9,851 4,015 Other income, net 1,387 891 184 ------------ ------------ ----------- Income before income taxes 15,862 10,742 4,199 Provision (benefit) for income taxes 5,869 (5,039) 398 ------------ ------------ ----------- Net income $ 9,993 $ 15,781 $ 3,801 ============ ============ =========== Net income per share -- basic $ 0.28 $ 0.46 $ 0.13 ============ ============ =========== Weighted average shares -- basic 35,577 34,593 30,159 ============ ============ =========== Net income per share -- diluted $ 0.26 $ 0.43 $ 0.11 ============ ============ =========== Weighted average shares -- diluted 37,818 36,779 33,121 ============ ============ =========== Reconciliation to pro forma results Net income as reported $ 15,781 $ 3,801 Provision (benefit) for income taxes as reported (5,039) 398 ------------ ----------- Income before income taxes 10,742 4,199 Pro forma 37% provision for income taxes 3,975 1,554 ------------ ----------- Pro forma net income $ 6,767 $ 2,645 ============ =========== Pro forma net income per share -- diluted $ 0.18 $ 0.08 ============ =========== Pro forma weighted average shares -- diluted 36,779 33,121 ============ =========== *T [ Back To TMCnet.com's Homepage ]