F5 Networks Q3FY25 slides: Revenue jumps 12%, raises full-year guidance

F5 Networks Inc (NASDAQ:FFIV) reported strong third-quarter fiscal year 2025 results on July 30, with revenue growth accelerating and the company raising its full-year outlook for the second consecutive quarter. The application delivery and security specialist saw broad-based growth across its product portfolio, with particularly strong performance in its systems business.

Quarterly Performance Highlights

F5 delivered total revenue of $780 million in Q3FY25, representing 12% year-over-year growth. This performance was driven by robust product revenue growth of 26%, with software revenue increasing 16% and systems revenue surging 39%. The company’s non-GAAP operating margin improved by 80 basis points year-over-year to 34.3%, while non-GAAP earnings per share grew 24% to $4.16.

As shown in the following performance highlights chart:

François Locoh-Donou, President and CEO, attributed the strong performance to growing demand for F5’s application delivery and security platform (ADSP) across various customer segments.

"We are seeing increasing adoption of our platform as organizations navigate the complexity of multicloud environments and seek to secure their applications against evolving threats," Locoh-Donou stated during the presentation.

The detailed GAAP and non-GAAP results comparison reveals consistent improvement across key financial metrics:

Strategic Initiatives

F5 is positioning itself as the provider of a unified application delivery and security platform, addressing what it describes as the "Ball (NYSE:BALL) of Fire" architecture that many organizations have ended up with - a complex web of multiple clouds, colocation facilities, and edge locations running various applications.

The company’s platform strategy is illustrated in this comprehensive diagram:

A key focus area for F5 is leveraging artificial intelligence in two distinct ways: AI for ADC (using AI to reduce operational complexity) and ADC for AI (applying delivery and security capabilities to enable AI-driven applications).

The company highlighted several AI-related innovations, including F5 AI Assistant for NetOps and SecOps teams, F5 AI Gateway for managing enterprise AI, and partnerships with technology providers like NVIDIA (NASDAQ:NVDA) and MinIO to advance AI application delivery solutions.

F5 secured several new AI-related customer wins in Q3, including AI data delivery for a government client and AI factory load balancing for an e-commerce company, demonstrating early traction in this strategic growth area.

Detailed Financial Analysis

F5’s revenue mix continues to evolve, with software and systems both showing strong growth while global services revenue increased modestly by 1% year-over-year:

The company’s software business is increasingly subscription-based, with 89% of Q3FY25 software revenue ($185 million out of $208 million) coming from subscriptions:

Recurring revenue, which includes subscriptions, SaaS, managed services, and maintenance, now represents 73% of total revenue ($572 million in Q3FY25), highlighting F5’s successful business model transition:

F5 maintained strong profitability with a non-GAAP gross margin of 83.1% and improved its non-GAAP operating margin to 34.3%, up 80 basis points year-over-year:

This operational efficiency translated into strong earnings growth, with non-GAAP net income increasing to $243 million and EPS growing 24% year-over-year to $4.16:

The company generated robust cash flow from operations of $282 million in Q3FY25, up significantly from $159 million in Q3FY24. F5 ended the quarter with $1,442 million in cash and investments, compared to $943 million a year earlier.

F5 continued its commitment to returning capital to shareholders, repurchasing $125 million in shares during Q3FY25 and maintaining its pledge to use at least 50% of annual free cash flow for share repurchases:

Forward-Looking Statements

Based on the strong Q3 performance and positive demand trends, F5 raised its full-year fiscal 2025 outlook. The company now expects approximately 9% total revenue growth for FY25, up from its previous guidance of 6.5% to 7.5%. Non-GAAP EPS growth is now projected at 14% to 15%, compared to the earlier forecast of 8% to 10%.

For the fourth quarter of fiscal 2025, F5 expects revenue between $780 million and $800 million, with non-GAAP EPS ranging from $3.87 to $3.99.

The comprehensive FY25 outlook is detailed in the following chart:

Cooper Werner, Chief Financial Officer, expressed confidence in the company’s outlook: "Our raised guidance reflects the strong demand we’re seeing across our portfolio, particularly in our systems business and subscription software offerings. We’re well-positioned to deliver sustainable growth while continuing to expand margins and return capital to shareholders."

F5’s stock closed at $299.24 on July 30, 2025, and was trading slightly lower at $298.00 in after-hours trading following the earnings release, despite the strong results and raised guidance.

The company’s performance in Q3FY25 represents an acceleration from the previous quarter, when F5 reported revenue of $731 million (7% year-over-year growth) and non-GAAP EPS of $3.42. With two consecutive quarters of raised guidance, F5 appears to be building momentum as it executes on its application delivery and security platform strategy.

Full presentation:

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