Summary
F5 reported fiscal 2024 second quarter revenue of $681.35 million, down 3.1% from the prior-year quarter. Year-to-date revenue was $1.37 billion, down 2.1%. The CEO said revenue landed near the midpoint of guidance and earnings per share at the high end. Customers remain cautious and forecast largely flat IT budgets for calendar 2024. Software subscription renewals performed well, with total software revenue growth of 20% and subscription revenue growth of 28%. Systems revenue declined 32%, while global services revenue grew 5%. The mix shift is clear: software and services are carrying more of the load as systems hardware sales weaken. The quarter ended March 31, 2024. The company sells through indirect channels in the Americas, EMEA, and APAC.
GAAP gross profit was $540.24 million, down 1.3%, and gross margin was 79.3%, up 1.4 percentage points. Operating income rose 32.0% to $139.96 million, with operating margin at 20.5%, up 5.5 percentage points. Net income increased 46.2% to $119.02 million, and diluted EPS was $2.00, up 49.3%. For the first six months, net income was $257.40 million, up 67.3%, and diluted EPS was $4.32, up 70.1%. Non-GAAP net income was $173 million, or $2.91 per diluted share. The profit gains came even as revenue fell. Lower operating expenses helped. The company cut headcount and personnel costs across sales, marketing, and research and development. Restructuring charges also declined year over year.
Operating cash flow was $221.64 million in the quarter, up 57.3%, and $386.96 million for the first six months, up 29.6%. Capital expenditures were $9.46 million, down 11.5%, and $18.50 million year to date, down 22.2%. Deferred revenue was $1.81 billion, up 0.9% from the prior-year quarter. Remaining performance obligations were $1.80 billion, flat. The balance sheet remains strong. Deferred revenue growth came from maintenance renewal contracts on existing products. Flat RPO suggests backlog stability. Operating cash flow growth outpaced net income growth in the quarter. Capital expenditures remained modest. The company has no free cash flow figure in the release, so operating cash flow is the relevant cash measure.
For the third quarter of fiscal 2024, F5 guided revenue to $675 million to $695 million and non-GAAP earnings to $2.89 to $3.01 per diluted share. For the full fiscal year 2024, the company expects revenue growth that is flat to down 2% compared with fiscal 2023. That is consistent with its prior full-year outlook of flat to low-single-digit decline. F5 raised its full-year non-GAAP earnings per share outlook to growth of 7% to 9% from a prior range of 6% to 8%. The third-quarter revenue guide brackets the current quarter's $681.35 million. The full-year revenue outlook is unchanged in substance. The raised EPS outlook is the main positive revision.
Management pointed to a difficult demand backdrop. Customers are delaying purchase decisions amid macroeconomic uncertainty and budget constraints. The company said softer demand for software and systems is temporary and that stronger than normal maintenance renewals signal customers are extending contracts on existing products. Risks include supply chain disruptions, competitive pricing pressure, cybersecurity attacks, and execution on acquisitions and share repurchases. The MD&A notes that continued customer budget constraints brought delays in purchase decisions in fiscal 2023 and into the first half of fiscal 2024. That led to softer demand for software and systems products and services. Management believes the demand environment is temporary because demand stems from growth of applications and APIs. It also said the company is not losing to competitors or seeing architectural shifts. The company faces foreign currency swings and tax rate variability. The company will continue to monitor the macroeconomic environment and its impacts on the business.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $681.4M | $692.6M | -1.6% | $703.2M | -3.1% |
| Gross profit | $540.2M | $556.2M | -2.9% | $547.5M | -1.3% |
| Gross margin | 79.3% | 80.3% | -1.0 pp | 77.9% | +1.4 pp |
| Research & development | $122.2M | $119.6M | +2.2% | $141.4M | -13.6% |
| Sales & marketing | $210.8M | $198.9M | +6.0% | $233.1M | -9.6% |
| General & administrative | $67.2M | $64.7M | +3.8% | $67.0M | +0.2% |
| Total operating expenses | $400.3M | $391.7M | +2.2% | $441.5M | -9.3% |
| Operating income (loss) | $140.0M | $164.5M | -14.9% | $106.0M | +32.0% |
| Operating margin | 20.5% | 23.8% | -3.2 pp | 15.1% | +5.5 pp |
| Net income (loss) | $119.0M | $138.4M | -14.0% | $81.4M | +46.2% |
| Net margin | 17.5% | 20.0% | -2.5 pp | 11.6% | +5.9 pp |
| Diluted EPS | $2.00 | $2.32 | -$0.32 | $1.34 | +$0.66 |
Risks
Management states that continued customer budget constraints brought on by macroeconomic uncertainties led to delays in customer purchase decisions and softer demand for both software and systems products and services. Total net revenues decreased 3.1% for the quarter and 2.1% year to date, with net product revenues down 11.9% and 11.0% over the same periods.
Distributor concentration is significant and rising: Ingram Micro accounted for 18.6% of total net revenue for the quarter versus 16.5% in the prior-year quarter, and Synnex accounted for 16.5% versus 14.7%. On the receivables side, Ingram Micro was 13.4% and Synnex 15.8% as of March 31, 2024.
The company attributes weaker new product demand to customers extending maintenance contracts on existing perpetual assets rather than buying new products, producing stronger than normal maintenance renewals and a shift in revenue mix toward services. Management calls the current demand environment temporary but is monitoring the macroeconomic environment closely.
The company has an unconditional purchase commitment with a component supplier requiring $10 million of component inventory annually over a four-year term, with $20.0 million of total non-cancelable long-term purchase commitments outstanding as of March 31, 2024, plus a contractual obligation to purchase inventory components procured by its primary contract manufacturer under its annual build forecast.
Headcount fell across all major functions versus the prior year end, with sales and marketing down to 2,166 from 2,480, research and development down to 1,981 from 2,212, and general and administrative down to 881 from 972. Restructuring charges of $8.6 million were recorded in the first half of fiscal 2024 related to workforce reductions.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from F5, INC.'s SEC filings for Q2 FY2024 (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 1, 2026.