Exhibit 99.1
FOR IMMEDIATE RELEASE
     
CONTACT:
  Investor Relations
 
  John Eldridge
(206) 272-6571
 
  j.eldridge@f5.com
 
    
 
  Public Relations
 
  Alane Moran
 
  (206) 272-6850
 
  a.moran@f5.com
F5 Networks Announces Results for Second Quarter of Fiscal 2007
Strength of core business drives 17th consecutive quarter of revenue growth
SEATTLE, WA—April 24, 2007—For the second quarter of fiscal 2007, F5 Networks announced revenue of $127.6 million, up 6 percent from $120.0 million in the prior quarter and 36 percent from $94.1 million in the second quarter of fiscal 2006. Net income was $20.0 million ($0.47 per diluted share), compared to $22.4 million ($0.53 per diluted share) in the prior quarter, which included a one-time tax benefit of $0.04 per share. Net income was $16.1 million ($0.39 per diluted share) in the second quarter a year ago.
The company’s solid revenue gains reflect the continuing strength of its core application delivery networking business, which grew 8 percent during the quarter and accounted for 92 percent of total revenue. John McAdam, F5 president and chief executive officer, said the strength of the company’s core business relative to its WAN optimization and security offerings was no surprise and further validated the company’s plans to port WANJet and FirePass to TMOS and integrate their functionality into its application delivery networking solutions. TMOS-based versions of both products are scheduled for delivery in late summer.
“In the meantime, the rich functionality of BIG-IP’s TMOS-based solution set, coupled with the flexibility of iRules and the high-performance of our integrated hardware platforms, is continuing to open new market opportunities,” McAdam said. “Along with growing demand in large enterprises, changes in the technology landscape are driving telecommunications companies and internet service providers to look for new and better ways to manage the complex array of data, information and services they are attempting to provide their customers. From the perspective of both functionality and performance, our family of BIG-IP products offers these organizations the widest array of fully-integrated solutions to meet their needs, and we are continuing to invest in all areas of our business to take advantage of these opportunities.”
In addition to its solid operating results, F5 continued to strengthen its balance sheet during the second quarter. Reflecting the strong growth of its services business, deferred revenue

 

 

increased 10% to $75.2 million at quarter end. Cash flow from operations was $37.0 million, and the company ended the quarter with $586 million in cash and investments.
For the current quarter, ending June 30, 2007, McAdam said management has set a revenue goal of $131 million to $133 million with an earnings target of $0.48 to $0.50 per diluted share.
About F5 Networks
F5 Networks is the global leader in Application Delivery Networking. F5 provides solutions that make applications secure, fast and available for everyone, helping organizations get the most out of their investment. By adding intelligence and manageability into the network to offload applications, F5 optimizes applications and allows them to work faster and consume fewer resources. F5’s extensible architecture intelligently integrates application optimization, protects the application and the network, and delivers application reliability — all on one universal platform. Over 10,000 organizations and service providers worldwide trust F5 to keep their applications running. 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 the continuing strength of F5’s business, sequential growth, the target revenue and earnings range, demand for application delivery networking 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, security, application delivery and WAN optimization 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 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 10-K for the fiscal year ended September 30, 2006, and other public filings with the Securities and Exchange Commission.
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F5 Networks, Inc.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
                 
    March 31,     September 30,  
    2007     2006  
Assets
                
Current assets
                
Cash and cash equivalents
   $ 46,834     $ 37,746  
Short-term investments
     384,426       336,427  
Accounts receivable, net of allowances of $2,809 and $2,858
     73,142       62,750  
Inventories
     7,915       5,763  
Deferred tax assets
     4,479       4,682  
Other current assets
     21,746       15,607  
 
            
Total current assets
     538,542       462,975  
 
            
 
                
Restricted cash
     4,147       3,929  
Property and equipment, net
     31,693       29,951  
Long-term investments
     154,834       118,003  
Deferred tax assets
     11,572       18,657  
Goodwill
     81,701       81,701  
Other assets, net
     13,611       14,295  
 
            
Total assets
   $ 836,100     $ 729,511  
 
            
 
                
Liabilities and Shareholders’ Equity
                
Current liabilities
                
Accounts payable
   $ 23,012     $ 13,174  
Accrued liabilities
     32,863       31,583  
Deferred revenue
     67,411       54,880  
 
            
Total current liabilities
     123,286       99,637  
 
            
 
                
Other long-term liabilities
     8,488       7,976  
Deferred revenue, long-term
     7,805       5,440  
 
            
Total long-term liabilities
     16,293       13,416  
 
            
 
                
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, 41,505 and 40,778 shares issued and outstanding
     559,435       521,791  
Accumulated other comprehensive loss
     (928 )     (1,038 )
Retained earnings
     138,014       95,705  
 
            
Total shareholders’ equity
     696,521       616,458  
 
            
Total liabilities and shareholders’ equity
   $ 836,100     $ 729,511  
 
            

 

 

F5 Networks, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
                                 
    Three Months Ended     Six Months Ended  
    March 31,     March 31,  
    2007     2006     2007     2006  
Net revenues
                                
Products
   $ 96,126     $ 72,775     $ 188,188     $ 141,366  
Services
     31,479       21,341       59,447       40,837  
 
                        
Total
     127,605       94,116       247,635       182,203  
 
                        
 
                                
Cost of net revenues (1)
                                
Products
     20,425       15,441       39,641       30,034  
Services
     8,390       5,846       15,698       10,820  
 
                        
Total
     28,815       21,287       55,339       40,854  
 
                        
Gross Profit
     98,790       72,829       192,296       141,349  
 
                                
Operating expenses (1)
                                
Sales and marketing
     43,177       31,162       82,232       60,027  
Research and development
     17,086       12,276       31,625       22,754  
General and administrative
     12,867       7,148       25,685       14,545  
 
                        
Total
     73,130       50,586       139,542       97,326  
 
                        
 
                                
Income from operations
     25,660       22,243       52,754       44,023  
Other income, net
     7,230       3,877       13,661       6,847  
 
                        
Income before income taxes
     32,890       26,120       66,415       50,870  
Provision for income taxes
     12,934       10,053       24,106       19,582  
 
                        
Net Income
   $ 19,956     $ 16,067     $ 42,309     $ 31,288  
 
                        
 
                                
Net income per share — basic
   $ 0.48     $ 0.40     $ 1.03     $ 0.79  
Weighted average shares — basic
     41,417       40,120       41,222       39,636  
 
                        
 
                                
Net income per share — diluted
   $ 0.47     $ 0.39     $ 1.00     $ 0.76  
Weighted average shares — diluted
     42,390       41,627       42,244       41,278  
 
                        
 
                                 
(1) Amounts include stock-based compensation, as follows:
                                
 
Cost of net revenues
   $ 584     $ 349     $ 1,193     $ 698  
Sales and marketing
     4,400       2,200       7,838       4,289  
Research and development
     2,651       1,535       4,979       2,978  
General and administrative
     4,070       1,508       6,425       2,878  
 
                        
 
   $ 11,705     $ 5,592     $ 20,435     $ 10,843