Summary
F5 opened fiscal 2026 with $822.5 million in revenue for the quarter ended December 31, 2025, up 7.3% from the prior-year quarter. Gross profit rose 7.1% to $670.7 million, but gross margin slipped to 81.5% year over year. Operating income increased 4.4% to $214.2 million, while operating margin declined to 26.0% year over year. Net income grew 8.2% to $180.1 million, and diluted EPS rose to $3.10 year over year. On a non-GAAP basis, gross margin was 83.8%, operating margin was 38.2%, and diluted EPS was $4.45. The gap between GAAP and non-GAAP results reflects costs excluded from adjusted figures, including stock-based compensation, amortization, acquisition-related charges, and cyber incident costs.
The quarter included the sixth consecutive period of double-digit product revenue growth. Systems revenue grew and software revenue declined, while services revenue grew. Deferred revenue reached $2.06 billion, up 5.9% from the prior-year quarter, and remaining performance obligations were $2.10 billion, up 10.5%. Those balances point to a healthy base of maintenance and renewal contracts. The company also reported a days sales outstanding of 54, which it tracks as an indicator of financial health.
Operating cash flow was $159.2 million, down 21.5% from the prior-year quarter. Management attributed the decline to an increase in payments made in excess of cash received from customers. Capital expenditures were $9.7 million, up 20.4% from the prior-year quarter. The company continued to repurchase shares, which reduced cash and investments during the period.
Guidance frames the rest of the year. For the full fiscal year 2026, F5 raised its outlook to revenue growth of 5% to 6%, up from 0% to 4% previously. It expects non-GAAP operating margin of 34% to 35%, up from 33.5% to 34.5% previously. It targets non-GAAP diluted EPS of $15.65 to $16.05, up from $14.50 to $15.50 previously. For the second quarter of fiscal 2026, the company guides revenue of $770 million to $790 million and non-GAAP diluted EPS of $3.34 to $3.46. The full-year guidance is for fiscal 2026, while the revenue and EPS ranges are for the next quarter.
Risks remain. F5 disclosed on October 15, 2025 that a threat actor maintained long-term, persistent access to F5 systems and exfiltrated certain files. The company incurred cyber incident costs in the quarter, and the investigation and remediation added to operating expenses. Macroeconomic uncertainty, tariffs, supply chain shortages, and foreign exchange fluctuations could affect demand and costs. Customer concentration is high: Customer A accounted for 19.2% of total net revenue in the quarter and Customer B accounted for 15.5%. Those dependencies could amplify the impact of any single customer's spending changes.
The first quarter showed solid revenue growth and strong non-GAAP profitability. GAAP margins narrowed, and operating cash flow fell. The raised full-year guidance signals confidence in demand, but the software decline and cyber incident costs bear watching. Deferred revenue and RPO growth provide some visibility into future revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $822.5M | $810.1M | +1.5% | $766.5M | +7.3% |
| Gross profit | $670.7M | $666.2M | +0.7% | $626.0M | +7.1% |
| Gross margin | 81.5% | 82.2% | -0.7 pp | 81.7% | -0.1 pp |
| Research & development | $141.2M | $136.4M | +3.5% | $130.5M | +8.2% |
| Sales & marketing | $224.8M | $216.0M | +4.1% | $206.0M | +9.1% |
| General & administrative | $90.6M | $94.0M | -3.6% | $73.0M | +24.1% |
| Total operating expenses | $456.5M | $460.6M | -0.9% | $420.9M | +8.5% |
| Operating income (loss) | $214.2M | $205.7M | +4.1% | $205.1M | +4.4% |
| Operating margin | 26.0% | 25.4% | +0.6 pp | 26.8% | -0.7 pp |
| Net income (loss) | $180.1M | $190.5M | -5.5% | $166.4M | +8.2% |
| Net margin | 21.9% | 23.5% | -1.6 pp | 21.7% | +0.2 pp |
| Diluted EPS | $3.10 | $3.25 | -$0.15 | $2.82 | +$0.28 |
Risks
MD&A re-emphasises the October 15, 2025 Cyber Incident involving long-term persistent access and exfiltrated files. In FY2026 Q1, R&D expense included $5.6 million and G&A expense included $9.3 million of costs incurred in response to the incident, each up from the prior-year quarter.
Distributor concentration remains significant: Customer A accounted for 19.2% of total net revenue in FY2026 Q1 versus 16.2% in the prior-year quarter, while Customer B accounted for 15.5% versus 16.8%. Customer A also represented 16.1% of receivables at December 31, 2025.
FY2026 Q1 systems revenue increased 36.7% while software revenue decreased 8.1% versus the prior-year quarter, with the software decline primarily due to decreases in perpetual software sales. This shift changes the revenue mix and accompanied a gross margin decline of 0.1 pp and an operating margin decline of 0.7 pp.
Operating cash flow decreased 21.5% to $159.2 million in FY2026 Q1 from $202.8 million in the prior-year quarter. MD&A attributes the decline primarily to an increase in payments made in excess of cash received from customers.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from F5, INC.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.