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 Fourth Quarter and Fiscal 2007 Results
Annual revenue tops half-billion dollar mark on 33 percent growth
SEATTLE, WA—October 24, 2007—F5 Networks, Inc . (NASDAQ: FFIV) today announced revenue of $145.6 million for the fourth quarter of fiscal 2007, up 10 percent from $132.4 million in the prior quarter and 30 percent from $111.7 million in the fourth quarter of fiscal 2006. Fourth quarter net income of $12.9 million ($0.15 per diluted share) included a one-time charge of $14 million ($0.16 per diluted share) stemming from the company’s recent acquisition of Acopia Networks. Net income was $21.8 million ($.26 per diluted share) in the third quarter of 2007 and $17.8 million ($0.21 per diluted share) in the fourth quarter a year ago. For fiscal 2007, revenue was $525.7 million, up 33 percent from $394.0 million in fiscal 2006. Net income for the year was $77.0 million ($.90 per diluted share) compared to net income of $66.0 million ($0.80 per diluted share) in fiscal 2006.
F5 president and chief executive officer John McAdam said the company’s fourth consecutive year of strong revenue growth reflects the continuing strength of F5’s core business in the context of stepped-up organizational investments in fiscal 2007. “Excluding Acopia, our single biggest investment during the year, we added approximately 385 employees across the organization, the majority in sales and marketing, product development and service. We continue to believe that our investments in sales and marketing will have a significant impact on our revenue growth in the coming year and enable us to further expand our share of the growing application delivery networking market. Meanwhile, we are seeing returns on our investment in R&D in the delivery of market-expanding products like WANJet on TMOS, announced today, and in our progress toward the delivery of our next generation chassis platform code named Montreal by calendar year end. Equally important, our investments in our service business have enabled us to provide a growing array of services and to respond more quickly to customers’ needs. As a result, we believe F5 is well-positioned to extend its leadership in application delivery networking and to become a leader in the emerging file virtualization market through our newly acquired data solutions business.”
For the first quarter of fiscal 2008, McAdam said the company’s revenue target is $154 million to $156 million. Earnings for the first quarter are expected to be $0.20 to $0.21 per diluted share.

 

 

Analyst/Investor Meeting
On Friday, November 2, F5 Networks will hold a meeting for analysts and investors at the InterContinental The Barclay, 111 East 48th Street, New York, from 8:00am to noon. To register for this meeting, contact Carolyn Burkhardt (206.272.6590) or send email to analystmeeting@f5.com. The meeting will also be webcast live and an archived version will be available through Monday, November 5. The link for the live webcast and the archived version is http://www.f5.com/about/investor-relations/events-calendar.html.
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 16,000 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 file virtualization products and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve 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, but are not limited to: customer acceptance of our new traffic management, security, application delivery, WAN optimization and data solutions 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; the unpredictability of F5’s sales cycle; and and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission.

 

 

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.
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F5 Networks, Inc.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
                 
    September 30,     September 30,  
    2007     2006  
Assets
                
Current assets
                
Cash and cash equivalents
   $ 54,296     $ 37,746  
Short-term investments
     204,169       336,427  
Accounts receivable, net of allowances of $3,161 and $2,858
     91,774       62,750  
Inventories
     10,672       5,763  
Deferred tax assets
     5,305       4,682  
Other current assets
     20,434       15,607  
 
            
Total current assets
     386,650       462,975  
 
            
 
                
Restricted cash
     3,959       3,929  
Property and equipment, net
     36,024       29,951  
Long-term investments
     216,366       118,003  
Deferred tax assets
     38,036       18,657  
Goodwill
     233,997       81,701  
Other assets, net
     29,256       14,295  
 
            
Total assets
   $ 944,288     $ 729,511  
 
            
 
                
Liabilities and Shareholders’ Equity
                
 
                
Current liabilities
                
Accounts payable
   $ 25,525     $ 13,174  
Accrued liabilities
     39,990       31,583  
Deferred revenue
     87,895       54,880  
 
            
Total current liabilities
     153,410       99,637  
 
            
 
                
Other long-term liabilities
     7,679       7,976  
Deferred revenue, long-term
     12,622       5,440  
 
            
Total long-term liabilities
     20,301       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 84,379 and 81,556 shares issued and outstanding
     598,436       521,791  
Accumulated other comprehensive loss
     (564 )     (1,038 )
Retained earnings
     172,705       95,705  
 
            
Total shareholders’ equity
     770,577       616,458  
 
            
Total liabilities and shareholders’ equity
   $ 944,288     $ 729,511  
 
            

 

 

F5 Networks, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
                                 
    Three months ended     Twelve months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
Net revenues
                                
Products
   $ 106,982     $ 86,320     $ 392,921     $ 304,878  
Services
     38,625       25,397       132,746       89,171  
 
                        
Total
     145,607       111,717       525,667       394,049  
 
                                
Cost of net revenues (1)
                                
Products
     23,683       17,716       84,094       63,619  
Services
     9,665       7,065       34,230       24,534  
 
                        
Total
     33,348       24,781       118,324       88,153  
 
                        
Gross Profit
     112,259       86,936       407,343       305,896  
 
                                
Operating expenses (1)
                                
Sales and marketing
     48,165       35,087       175,555       127,478  
Research and development
     19,929       13,900       69,030       49,171  
General and administrative
     11,196       14,389       49,256       39,109  
In-process research and development
     14,000       —       14,000       —  
 
                        
Total
     93,290       63,376       307,841       215,758  
 
                        
 
                                
Income from operations
     18,969       23,560       99,502       90,138  
Other income, net
     7,355       5,825       28,191       17,431  
 
                        
Income before income taxes
     26,324       29,385       127,693       107,569  
Provision for income taxes
     13,442       11,633       50,693       41,564  
 
                        
Net Income
   $ 12,882     $ 17,752     $ 77,000     $ 66,005  
 
                        
 
                                
Net income per share — basic
   $ 0.15     $ 0.22     $ 0.93     $ 0.82  
 
                        
Weighted average shares — basic
     84,305       81,448       83,205       80,278  
 
                        
 
                                
Net income per share — diluted
   $ 0.15     $ 0.21     $ 0.90     $ 0.80  
 
                        
Weighted average shares — diluted
     85,792       83,290       85,137       83,020  
 
                        
 
                                
(1) Includes stock-based compensation as follows:
                                
Cost of net revenues
   $ 753     $ 576     $ 2,569     $ 1,660  
Sales and marketing
     3,906       3,488       15,784       10,066  
Research and development
     2,689       2,344       10,230       6,943  
General and administrative
     2,857       1,815       12,630       6,150  
 
                        
 
   $ 10,205     $ 8,223     $ 41,213     $ 24,819