F5’s first quarter performance aligned with Wall Street’s expectations, as the company reported steady revenue growth and operating margin expansion. Management attributed these results primarily to strong customer demand for data center modernization, ongoing technology refresh cycles, and increased traction from hybrid multi-cloud deployments. CEO Francois Locoh-Donou emphasized that hardware systems revenue was supported by organizations updating aging infrastructure and preparing for artificial intelligence (AI) initiatives, while software revenue remained flat due to renewal seasonality. Locoh-Donou remarked that customers are “leveraging F5 to modernize their data centers, consolidate vendors, and prepare for AI.”
Is now the time to buy FFIV? Find out in our full research report (it’s free).
F5 (FFIV) Q1 CY2025 Highlights:
- Revenue: $731.1 million vs analyst estimates of $719.1 million (7.3% year-on-year growth, 1.7% beat)
- Adjusted EPS: $3.42 vs analyst estimates of $3.11 (10.1% beat)
- Adjusted Operating Income: $233.4 million vs analyst estimates of $227.6 million (31.9% margin, 2.5% beat)
- Revenue Guidance for Q2 CY2025 is $750 million at the midpoint, above analyst estimates of $737.9 million
- Adjusted EPS guidance for Q2 CY2025 is $3.47 at the midpoint, below analyst estimates of $3.55
- Operating Margin: 21.7%, up from 20.5% in the same quarter last year
- Billings: $707.5 million at quarter end, up 6.7% year on year
- Market Capitalization: $16.49 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions F5’s Q1 Earnings Call
- Tim Long (Barclays) asked about the drivers and sustainability of software and hardware growth; CFO Cooper Werner explained that software growth is heavily weighted to second-half renewals, while hardware momentum reflects both refresh cycles and preparation for AI, with no evidence of demand pull-forward.
- Ryan Koontz (Needham & Company) inquired about F5’s competitive displacement opportunity; CEO Francois Locoh-Donou described the company as being in early stages, with room for further expansion in both new and existing accounts as customers consolidate platforms.
- Amit Daryanani (Evercore) questioned why hardware growth is expected to slow in the second half; Locoh-Donou emphasized that guidance was set conservatively due to macro uncertainty, even though demand signals remain healthy.
- Samik Chatterjee (JPMorgan Chase) probed whether hardware demand was affected by tariff-related pull-ins; Locoh-Donou clarified there was no evidence of accelerated purchases for this reason, and Werner noted software perpetual revenue trends were in line with expectations.
- Tal Liani (Bank of America) asked why software growth depends so much on renewals versus new business, and about the timing for AI to become a more material revenue driver; Werner responded that the renewal base grows over time as new customers are added, while Locoh-Donou said AI-related revenue is starting to contribute but remains an emerging opportunity.
Catalysts in Upcoming Quarters
Over the coming quarters, the StockStory team will be watching (1) the pace and expansion rate of large software renewals, (2) continued momentum in hardware upgrades as the refresh cycle unfolds, and (3) uptake of the new Application Delivery and Security Platform and AI-driven features. Execution in competitive displacement and resilience to macroeconomic shifts will also be key performance indicators.
F5 currently trades at $286.66, up from $264.95 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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