F5, INC. Q2 FY2026 earnings

F5 reported revenue of $812 million for the second quarter of fiscal 2026, up 11% from $731 million in the year-ago quarter. Product revenue did the heavy lifting with 22% growth, the seventh straight quarter of double-digit product growth. Systems revenue rose 26% and software revenue rose 17%, while services revenue, the largest single line, grew 2%. Management credits rising demand across hybrid multicloud, security, and AI inference workloads rather than pricing.

Gross profit followed the top line. GAAP gross profit was $661 million against $590 million a year ago, and gross margin was 81.4% compared with 80.7%. GAAP income from operations was $179 million versus $159 million, giving operating margin of 22.1% against 21.7%. Non-GAAP income from operations reached $274 million at a 33.8% margin, compared with $233 million at 31.9%. GAAP net income was $148 million, or $2.58 per diluted share, compared with $146 million, or $2.48. Net income grew 1.5% while operating income grew 12.7%, so little of the operating leverage reached the bottom line. Non-GAAP net income was $223 million, or $3.90 per diluted share, up from $201 million, or $3.42.

Cost growth was broad. Sales and marketing expense rose 9.8%, research and development rose 10.6%, and general and administrative expense rose 19.6%. Management ties the G&A jump to higher personnel costs and to professional services work tied to the Cyber Incident, which also added to R&D. The prior-year six-month period carried $11.3 million of restructuring charges for a workforce reduction, while the current quarter had none of consequence.

Cash generation was the standout. Operating cash flow was $365.9 million in the quarter, up 42.6%, and $525.1 million for the first six months, up 14.3%. Capital expenditures were $18.3 million in the quarter, up 74.7%, and $28.1 million year to date, up 51.1%. F5 spent $401.1 million repurchasing stock in the first half. Deferred revenue reached $2.12 billion, up 10.2% from the prior-year quarter, and remaining performance obligations were $2.10 billion, up 10.5%. Days sales outstanding was 47 days. First-half revenue of $1.63 billion rose 9.1%, while first-half net income of $327.8 million rose 5.1%.

Leadership raised its outlook for the full fiscal year 2026, guiding revenue growth of 7% to 8% versus 5% to 6% previously and non-GAAP earnings of $16.25 to $16.55 per diluted share versus $15.65 to $16.05 previously. For the third quarter of fiscal 2026, the company is guiding to non-GAAP earnings of $3.91 to $4.03 per diluted share. It cannot reconcile forward non-GAAP figures to GAAP without unreasonable effort, citing items such as amortization, stock-based compensation, and tax variability.

Risks are familiar but not trivial. The Cyber Incident disclosed on October 15, 2025, in which a threat actor held long-term persistent access to F5 systems and exfiltrated files, continues to add professional services costs. Distributor concentration is high, with Customer A at 16.1% of net revenue and Customer B at 15.3% in the quarter. Management also points to supply chain constraints, rising memory and storage prices, tariffs and other duties, higher interest rates, foreign exchange swings, and geopolitical conflict as pressures that could hit results. Services growth of 2% and the wide spread between GAAP and non-GAAP profitability both deserve watching. The full-year raise points to durable demand; the open question is how much of it converts into GAAP earnings.