F5, Inc.

FFIV · NASDAQ · USD

Analysis

Last 4 earnings calls · through Q3 FY2026

F5 spent years telling investors software was the future; the last four calls show hardware boxes driving growth instead. The bet now is that a heavy refresh, plus rules about where data must live, leaves a bigger estate to sell software into next year.How much of that hardware growth is new capacity versus replacements?

  • The security breach cost far less than F5 feared.

    The October guide assumed customers would pause projects to patch; management now calls disruption 'minimal' and has raised the outlook every quarter since. More customers sit on current software, which is what renewals are sold against.How much of the raised outlook rests on government bookings?

  • Hardware, not software, is now doing the growing.

    Systems revenue grew 32% last quarter while software grew mid-single digits. Management blames a weak renewal base and says a bigger one comes up next year, so the box cycle is covering for the business that was meant to be the story.How much has EMEA added to growth since the sovereignty rules took effect?

  • Memory prices are taking back the margin the box boom created.

    F5 bought components early and dodged this year's cost rise, lifting its margin guidance for the current quarter. It still tells investors to expect next year's gross margin near 80%, and each machine it ships from here costs more to build.

Bullish
  • Customers keep buying bigger units, not straight replacements. A bigger unit adds capacity to the estate F5 later sells software and support against, so one sale keeps paying.
  • The FY27 renewal pool is larger than this year's. More contracts coming up for renewal lets software grow again without winning a single new customer.
  • Sovereignty rules keep forcing rebuilds outside the US. Banks and governments must control where their data sits, and that work lands in hardware F5 sells, cycle or not.
Bearish
  • Much of the 30%-plus systems growth is a refresh catch-up. Once old boxes are replaced those sales stop, and management itself guides systems to single-digit growth from here.
  • Memory costs stay high through most of FY27. Each machine carries a bigger parts bill, so profit per box falls even as sales rise.
  • The FY27 software acceleration slips again. Software is the steadier business; if renewals stay flat, growth depends entirely on the hardware cycle repeating.
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Purchase≥$500KFeb 10May 13
Donald Trump
Republican · Executive
Purchase≥$250KJan 6May 13
Julie Johnson
Democratic · House · TX-32
Purchase≥$1KOct 21Aug 5
Julie Johnson
Democratic · House · TX-32
Sale≥$1KOct 21Aug 5
Alan Armstrong
Republican · Senate · OK
Purchase≥$1KMar 27Jul 21

Congressional trading data provided by QuiverQuant

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Product segmentsGeography
FY2025 · USD

How F5 turned $3.1B of revenue into $765.9M of operating income.

Revenue
Service$1.6B▲ 2.34% YoY
Product$1.5B▲ 18.53% YoY
Total revenue$3.1B
Gross profit$2.5B81.4%
Operating income$765.9M24.8%
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