Summary
F5 closed the third quarter of fiscal 2026 with revenue of $865 million, up 11% from $780 million a year earlier. Product revenue rose 19% and did the heavy lifting, with systems up 32% and software up 7%. Services added 3%. Management pointed to eight consecutive quarters of double-digit product growth and tied the streak to the mission-critical role F5 plays at the application delivery and security layer of hybrid multicloud and AI-driven infrastructure. The chief executive framed the threat landscape bluntly, saying AI has empowered attackers and compressed the time between vulnerability discovery and exploitation, and that F5 is answering with a continuous defense model.
GAAP gross profit reached $712 million, up from $632 million, and gross margin widened to 82.2% from 81.0%. Cost of product revenue rose 5.3% and cost of service revenue rose 0.4%, both slower than the top line. Operating expenses did not follow that pattern. Research and development rose 20.8%, general and administrative rose 21.5%, and sales and marketing rose 8.0%. GAAP operating income still climbed to $213 million from $196 million, but operating margin narrowed to 24.7% from 25.2%. Net income was $208 million, or $3.62 per diluted share, against $190 million and $3.25 in the prior-year quarter. Non-GAAP net income was $272 million, or $4.73 per diluted share, compared with $243 million and $4.16, and non-GAAP operating margin widened to 35.0% from 34.3%.
Cash generation held up. Operating cash flow was $316.2 million for the quarter, up 12.1% from $282.2 million, and $841.4 million for the first nine months, up 13.5%. Capital expenditures were $35.6 million in the quarter, up 317.2% from $8.5 million, and $63.7 million year to date. Deferred revenue ended the quarter at $2.19 billion, up 12.0% from $1.96 billion a year earlier, and remaining performance obligations reached $2.20 billion, up 10.0% from $2.00 billion. Management attributed the deferred revenue build to maintenance contracts tied to strong systems shipments and to subscription offerings. Cash and investments totaled $1,627.8 million as of June 30, 2026, up $267.8 million from $1,360.0 million as of September 30, 2025, helped by $501.1 million of share repurchases year to date.
Guidance moved higher. For the full fiscal year 2026, F5 now guides to revenue growth of approximately 9% to 10%, up from 7% to 8%, and non-GAAP earnings per share of $17.21 to $17.33, up from $16.25 to $16.55. For the fourth quarter of fiscal 2026, the company guides to non-GAAP earnings of $4.14 to $4.26 per diluted share. Those non-GAAP figures exclude amortization of intangible assets, share-based compensation, and several tax and one-time items, and the company does not reconcile them to GAAP on a forward-looking basis.
The risk list is familiar but real. The cyber incident disclosed on October 15, 2025 remains an open item, and professional services costs tied to the response lifted both research and development and general and administrative spending. Distributor concentration is heavy, with Customer B at 18.4% of total net revenue in the quarter and 23.1% year to date. Management also points to supply chain disruption, rising memory and storage costs, tariffs, pricing pressure, and competition. Year to date, revenue of $2.50 billion rose 9.7%, net income of $536.0 million rose 6.8%, and diluted EPS of $9.29 rose 8.8%.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $865.1M | $811.7M | +6.6% | $780.4M | +10.9% |
| Gross profit | $711.5M | $660.8M | +7.7% | $631.7M | +12.6% |
| Gross margin | 82.3% | 81.4% | +0.8 pp | 81.0% | +1.3 pp |
| Research & development | $164.7M | $151.0M | +9.0% | $136.3M | +20.8% |
| Sales & marketing | $238.0M | $239.4M | -0.6% | $220.4M | +8.0% |
| General & administrative | $95.6M | $91.6M | +4.3% | $78.7M | +21.5% |
| Total operating expenses | $498.2M | $481.8M | +3.4% | $435.4M | +14.4% |
| Operating income (loss) | $213.3M | $179.0M | +19.1% | $196.3M | +8.6% |
| Operating margin | 24.6% | 22.1% | +2.6 pp | 25.2% | -0.5 pp |
| Net income (loss) | $208.2M | $147.8M | +40.9% | $189.9M | +9.6% |
| Net margin | 24.1% | 18.2% | +5.9 pp | 24.3% | -0.3 pp |
| Diluted EPS | $3.62 | $2.58 | +$1.04 | $3.25 | +$0.37 |
Risks
The company disclosed a Cyber Incident on October 15, 2025 in which a threat actor maintained long-term, persistent access to F5 systems and exfiltrated certain files. MD&A states professional services costs rose $3.2 million in the quarter and $15.3 million year to date in G&A, and $2.6 million and $10.2 million in R&D, driven by costs incurred in response to the Cyber Incident.
The filing warns that AI technologies could automate or simplify functions currently performed by F5's application delivery and security solutions, and that if customers or investors believe AI tools can replicate or replace aspects of its offerings, demand could decline and its competitive position could be weakened. It also notes market sentiment about AI disruption could hurt the stock price regardless of whether disruption materializes.
Distributor Customer B accounted for 18.4% of total net revenue in the quarter and 23.1% year to date, and Customer A accounted for 16.4% of quarterly net revenue. Four distributor customers each represented more than 10% of total receivables as of June 30, 2026.
F5 states its multicloud application delivery and security products may contain undetected errors, defects, or vulnerabilities when introduced or as new versions are released, and that inadequate security monitoring, logging, or asset management could let threat actors maintain access undetected. It notes it has experienced these issues in the past and that remediation could raise warranty costs and adversely affect gross margins.
The filing highlights that the AI legal and regulatory landscape remains uncertain and may be inconsistent across jurisdictions, including proposed legislation in the European Union, and that compliance obligations could entail significant costs or limit F5's ability to incorporate certain AI capabilities into its offerings.
MD&A states that uncertain economic conditions, including inflation, tariffs and other duties, global supply chain shortages affecting component sourcing and pricing such as rising costs of memory and storage, higher interest rates, and ongoing geopolitical conflicts, may adversely affect results of operations and financial performance.
The forward-looking statement discussion identifies F5's ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel as a factor that could cause actual results to differ materially, alongside rising personnel costs across sales and marketing, R&D, and G&A.
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 Q3 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 1, 2026.