[October 26, 2016]

F5 Networks Announces Fourth Quarter and Fiscal 2016 Results

F5 Networks, Inc. (NASDAQ: FFIV) today announced revenue of $525.3 million for the fourth quarter of fiscal year 2016, up 6 percent from $496.5 million in the prior quarter and 5 percent from $501.3 million in the fourth quarter of fiscal year 2015. For fiscal year 2016, revenue was $2.0 billion, up 4 percent from $1.92 billion last year.

GAAP net income for the fourth quarter was $108.9 million ($1.64 per diluted share) compared to $91.8 million ($1.37 per diluted share) in the third quarter of 2016 and $97.0 million ($1.36 per diluted share) in the fourth quarter a year ago. GAAP net income for the year was $365.9 million ($5.38 per diluted share) versus $365.0 million ($5.03 per diluted share) in fiscal year 2015.

Non-GAAP net income for the fourth quarter was $139.9 million ($2.11 per diluted share), compared to $121.7 million ($1.81 per diluted share) in the prior quarter and $130.7 million ($1.84 per diluted share) in the fourth quarter of fiscal 2015. For fiscal year 2016, non-GAAP net income was $496.2 million ($7.30 per diluted share) versus $480.3 million ($6.62 per diluted share) in fiscal year 2015.

A reconciliation of net income, earnings per share, and other measures on a GAAP to non-GAAP basis is included on the attached Consolidated Income Statements.

"Strengthening product sales in the second half of fiscal 2016 culminated in strong fourth quarter results and record annual revenue and earnings," said John McAdam, F5 president and chief executive officer. "On a regional basis, Americas, APAC and Japan all delivered solid sequential and year over year sales growth, while sales in EMEA were down significantly from the fourth quarter a year ago.

"We believe there are several emerging market conditions that are driving an increased appeal of our products with our customers. These include the ability to orchestrate SSL traffic flows, provision our proxy based security solutions to deploy a consistent security stack across on-premise, off-premise and public cloud infrastructures, and customers moving workloads to public and private cloud architectures. We believe these trends, combined with our new product offerings will drive our business forward in fiscal 2017 and beyond.

"During the current quarter, we will complete the rollout of our refreshed BIG-IP appliance family called the iSeries. In addition to massive performance and scalability across the entire line, these programmable, software-defined hardware platforms included features designed to simplify private cloud deployments and hybrid-cloud build-outs. Although the first BIG-IP iSeries products only began shipping in mid-September, customer response has been very positive and we expect to see sales ramp steadily throughout the year. As we have said previously, we are confident that the launch of the iSeries and all the other new products we have introduced in the second half of fiscal 2016 will drive a re-acceleration of product revenue growth in fiscal 2017."

For the first quarter of fiscal 2017, ending December 31, the company has set a revenue target of $510 million to $520 million with a GAAP earnings target of $1.40 to $1.43 per diluted share. Excluding stock-based compensation expense and amortization of purchased intangible assets, the company's non-GAAP earnings target is $1.92 to $1.95 per diluted share.

A reconciliation of the company's expected GAAP and non-GAAP earnings is provided in the following table:

Analyst/Investor Meeting

F5 will hold a meeting for analysts and investors at the InterContinental Chicago Magnificent Mile, from 8:00 a.m. to 12:30 p.m. Central Time on Thursday, November 17, 2016.

For more information and to register online, please visit: https://interact.f5.com/2017Q1S-Analyst-and-Investor-Meeting-NOV17_Landing-Page.html

The meeting will also be webcast live, beginning November 17th at 8:00 a.m. Central Time, and an archived version will be available through January 25, 2017. The link for the live webcast and the archived version is accessible from the Investor Relations Events page on f5.com.

About F5 Networks

F5 (NASDAQ: FFIV) provides solutions for an application world. F5 helps organizations seamlessly scale cloud, data center, telecommunications, and software defined networking (SDN) deployments to successfully deliver applications and services to anyone, anywhere, at any time. F5 solutions broaden the reach of IT through an open, extensible framework and a rich partner ecosystem of leading technology and orchestration vendors. This approach lets customers pursue the infrastructure model that best fits their needs over time. The world's largest businesses, service providers, government entities, and consumer brands rely on F5 to stay ahead of cloud, security, and mobility trends. For more information, go to f5.com.

You can also follow @f5networks on Twitter or visit us on LinkedIn and Facebook for more information about F5, its partners, and technologies.

Forward Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding the continuing strength and momentum of F5's business, future financial performance, sequential growth, projected revenues including target revenue and earnings ranges, income, earnings per share, share amount and share price assumptions, demand for application delivery networking, application delivery services, security, virtualization and diameter products, expectations regarding future services and products, expectations regarding future customers, markets and the benefits of products, and other statements that are not historical facts and which are forward-looking statements. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. Such forward-looking statements involve risks and uncertainties, as well as assumptions and other factors that, if they do not fully materialize or prove correct, could 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, but are not limited to: customer acceptance of our new traffic management, security, application delivery, optimization, diameter and virtualization offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into F5's markets, and new product and marketing initiatives by our competitors; increased sales discounts; uncertain global economic conditions which may result in reduced customer demand for our products and services and changes in customer payment patterns; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; litigation involving patents, intellectual property, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic; 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; the unpredictability of F5's sales cycle; F5's share repurchase program; future prices of F5's common stock; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in F5's most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. All forward-looking statements in this press release are based on information available as of the date hereof and qualified in their entirety by this cautionary statement. F5 assumes no obligation to revise or update these forward-looking statements.

GAAP to non-GAAP Reconciliation

F5's management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its products, services operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is net income excluding stock-based compensation, amortization of purchased intangible assets and acquisition-related charges, net of taxes, which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income excluding, as applicable, stock-based compensation, amortization of purchased intangible assets and acquisition-related charges. This measure of non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability. Stock-based compensation is a non-cash expense that F5 has accounted for since July 1, 2005 in accordance with the fair value recognition provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718 Compensation-Stock Compensation ("FASB ASC Topic 718"). Amortization of intangible assets is a non-cash expense. Investors should note that the use of intangible assets contribute to revenues earned during the periods presented and will contribute to revenues in future periods. Acquisition-related expenses consist of professional services fees incurred in connection with acquisitions. In addition, expense related to a jury verdict and other associated costs of that patent litigation have been excluded from GAAP net income for the purpose of measuring non-GAAP earnings and earnings per share in fiscal 2016.

Management believes that non-GAAP net income per share provides useful supplemental information to management and investors regarding the performance of the company's core business operations and facilitates comparisons to the company's historical operating results. Although F5's management finds this non-GAAP measure to be useful in evaluating the performance of the core business, management's reliance on this measure is limited because items excluded from such measures could have a material effect on F5's earnings and earnings per share calculated in accordance with GAAP. Therefore, F5's management will use its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations when evaluating the performance of the company's core business. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.

F5 believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company's core business and which management uses in its own evaluation of the company's performance. Investors are encouraged to look at GAAP results as the best measure of financial performance. However, while the GAAP results are more complete, the company provides investors this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into the company's operational performance and financial results.

For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, please see the section in our Consolidated Income Statements entitled "Non-GAAP Financial Measures."

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