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 Third Quarter of Fiscal 2007
Board of Directors Approves Two-for-One Forward Stock Split
SEATTLE, WA—July 25, 2007—For the third quarter of fiscal 2007, ended June 30, F5 Networks announced revenue of $132.4 million, up 4 percent from $127.6 million in the prior quarter and 32 percent from $100.1 million in the third quarter of fiscal 2006. Net income was $21.8 million ($0.51 per diluted share), compared to $20.0 million ($0.47 per diluted share) in the prior quarter and $17.0 million ($0.41 per diluted share) in the third quarter a year ago.
Representing the company’s 18th consecutive quarter of sequential revenue growth, results were within the company’s guided revenue range and above its published earnings target. According to F5 president and chief executive officer, John McAdam, bookings outpaced revenue during the quarter, resulting in a positive book-to-bill at quarter-end.
In addition to solid revenue and earnings growth, the company continued to strengthen its balance sheet during the third quarter. Deferred revenue, principally from service maintenance contracts, grew 11% compared to the prior period to $83.2 million. Cash flow from operations was $38.2 million, and the company ended the quarter with $633 million in cash and investments.
Commenting on the current quarter, McAdam said he believes F5 is positioned for a strong finish to fiscal 2007. “For a variety of reasons, including seasonal strength in North America, Japan and the U.S. Federal market, Q4 is typically our strongest quarter. We also expect to begin seeing a significant return on the investments we made in expanding our sales organization during the first half of the year.”
For the fourth quarter of fiscal 2007, ending September 30, McAdam said management has set a revenue goal of $142 million to $144 million with an earnings target of $0.53 to $0.55 per diluted share.

 

 

Two-for-One Forward Stock Split
F5 also announced today that its Board of Directors has approved a two-for-one forward stock split of the Company’s common stock. This stock split will be effected by the issuance of a dividend of one share of F5 common stock for every share of its common stock issued and outstanding as of the record date of August 10, 2007. New shares of F5 common stock resulting from the stock split will be issued by F5 transfer agent, American Stock Transfer, and F5 common stock will begin trading on the Nasdaq Global Select Market on a split-adjusted basis on August 20, 2007. Following the stock split, F5 will have approximately 84.2 million shares issued and outstanding, based on the number of shares outstanding as of July 23, 2007. Reflecting the effect of the stock split, managements earnings guidance of $0.53 to $0.55 per diluted share referenced above translates to $0.27 to $0.28 per diluted share on a post split basis. In addition, F5 will amend its articles of incorporation to increase its authorized number of shares of common stock from 100 million shares to 200 million shares concurrent with the stock split.
If a shareholder is contemplating a sale of F5 shares between the record date and the payment date, he or she should consult a broker regarding entitlement to the split shares.
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)
                 
    June 30,     September 30,  
    2007     2006  
Assets
                
 
                
Current assets
                
Cash and cash equivalents
   $ 48,040     $ 37,746  
Short-term investments
     345,899       336,427  
Accounts receivable, net of allowances of $2,578 and $2,858
     77,693       62,750  
Inventories
     9,278       5,763  
Deferred tax assets
     4,503       4,682  
Other current assets
     19,627       15,607  
 
            
Total current assets
     505,040       462,975  
 
            
 
                
Restricted cash
     3,946       3,929  
Property and equipment, net
     33,307       29,951  
Long-term investments
     238,818       118,003  
Deferred tax assets
     10,889       18,657  
Goodwill
     81,701       81,701  
Other assets, net
     13,109       14,295  
 
            
Total assets
   $ 886,810     $ 729,511  
 
            
 
                
Liabilities and Shareholders’ Equity
                
 
                
Current liabilities
                
Accounts payable
   $ 23,225     $ 13,174  
Accrued liabilities
     30,008       31,583  
Deferred revenue
     73,425       54,880  
 
            
Total current liabilities
     126,658       99,637  
 
            
 
                
Other long-term liabilities
     8,488       7,976  
Deferred revenue, long-term
     9,824       5,440  
 
            
Total long-term liabilities
     18,312       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, 41,956 and 40,778 shares issued and outstanding
     583,349       521,791  
Accumulated other comprehensive loss
     (1,332 )     (1,038 )
Retained earnings
     159,823       95,705  
 
            
Total shareholders’ equity
     741,840       616,458  
 
            
Total liabilities and shareholders’ equity
   $ 886,810     $ 729,511  
 
            

 

 

F5 Networks, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
                                 
    Three months ended     Nine months ended  
    June 30,     June 30,  
    2007     2006     2007     2006  
Net revenues
                                
Products
   $ 97,751     $ 77,192     $ 285,939     $ 218,558  
Services
     34,674       22,937       94,121       63,774  
 
                        
Total
     132,425       100,129       380,060       282,332  
 
                                
Cost of net revenues (1)
                                
Products
     20,770       15,869       60,411       45,903  
Services
     8,867       6,649       24,565       17,469  
 
                        
Total
     29,637       22,518       84,976       63,372  
 
                        
Gross Profit
     102,788       77,611       295,084       218,960  
 
                                
Operating expenses (1)
                                
Sales and marketing
     45,158       32,364       127,390       92,391  
Research and development
     17,476       12,517       49,101       35,271  
General and administrative
     12,375       10,175       38,060       24,720  
 
                        
Total
     75,009       55,056       214,551       152,382  
 
                        
 
                                
Income from operations
     27,779       22,555       80,533       66,578  
Other income, net
     7,175       4,759       20,836       11,606  
 
                        
Income before income taxes
     34,954       27,314       101,369       78,184  
Provision for income taxes
     13,145       10,349       37,251       29,931  
 
                        
Net Income
   $ 21,809     $ 16,965     $ 64,118     $ 48,253  
 
                        
 
                                
Net income per share - basic
   $ 0.52     $ 0.42     $ 1.55     $ 1.21  
 
                        
Weighted average shares - basic
     41,807       40,553       41,417       39,942  
 
                        
 
                                
Net income per share - diluted
   $ 0.51     $ 0.41     $ 1.51     $ 1.16  
 
                        
Weighted average shares - diluted
     42,655       41,659       42,416       41,426  
 
                        
 
(1) Includes stock-based compensation as follows:                        
 
                                
Cost of net revenues
   $ 622     $ 385     $ 1,815     $ 1,083  
Sales and marketing
     4,040       2,289       11,877       6,578  
Research and development
     2,562       1,622       7,541       4,600  
General and administrative
     3,349       1,457       9,774       4,335  
 
                        
 
   $ 10,573     $ 5,753     $ 31,007     $ 16,596