F5 Networks Q4 2025 slides: Revenue tops $3B, shares dip despite earnings beat

Introduction & Market Context

F5 Networks (NASDAQ:FFIV) reported strong fourth-quarter and full-year 2025 financial results on October 27, 2025, with revenue exceeding $3 billion for the first time in company history. Despite beating analyst expectations with non-GAAP earnings per share of $4.39 compared to the forecasted $3.97, the company’s stock fell 2.91% to $298.34 during regular trading hours, though it recovered 2.23% in aftermarket trading to $304.99.

The company’s presentation highlighted significant achievements across all business segments, with particular strength in systems revenue and continued expansion of its security offerings. However, the conservative outlook for fiscal year 2026, projecting revenue growth of only 0-4%, may have contributed to the mixed market reaction despite the strong results.

Quarterly Performance Highlights

F5 delivered impressive fourth-quarter results, with revenue reaching $810 million, an 8% increase from $747 million in the same quarter last year and exceeding analyst expectations of $794.86 million.

As shown in the following comprehensive financial results table, non-GAAP earnings per share grew 20% year-over-year to $4.39, while operating margin expanded to 37.0%:

The company’s performance was strong across all key metrics, with product revenue growing 19% year-over-year, systems revenue surging 31%, and software revenue increasing 9%. Non-GAAP gross margin improved by 80 basis points to 84.3%, while non-GAAP operating margin expanded by 160 basis points to 37.0%.

As illustrated in this performance highlights slide, F5 generated record free cash flow of $906 million in FY25, representing 19% growth year-over-year:

Detailed Financial Analysis

F5’s revenue mix shows balanced growth across its portfolio, with particularly strong performance in systems revenue. The company’s quarterly revenue reached $810 million in Q4 FY25, up from $747 million in Q4 FY24, with systems revenue growing 42% year-over-year.

The following chart breaks down the revenue mix across F5’s three main segments - Global Services, Systems, and Software - over the past five quarters:

Software revenue continues to shift toward subscription-based models, with 87% of Q4 FY25 software revenue coming from subscriptions. This transition supports F5’s strategy to build more predictable, recurring revenue streams.

As shown in the following chart of F5’s software revenue mix, subscription revenue reached $198 million in Q4 FY25:

The company’s recurring revenue now accounts for 72% of total revenue, providing greater stability and predictability to F5’s business model. This includes subscriptions, SaaS & managed services, and maintenance revenue.

F5’s margins continued to expand in Q4 FY25, with non-GAAP gross margin reaching 84.3%, up 138 basis points year-over-year, and non-GAAP operating margin increasing to 37.0%, up 255 basis points year-over-year.

The following chart illustrates the company’s margin improvement over the past five quarters:

This margin expansion has translated into strong earnings growth, with non-GAAP net income reaching $257 million in Q4 FY25, up from $217 million in Q4 FY24. Non-GAAP EPS grew 20% year-over-year to $4.39.

As shown in the following chart of non-GAAP net income and EPS trends:

Strategic Initiatives

F5 is focusing on three key strategic areas: application delivery, security, and AI applications. The company’s security-related revenue has grown to $1.2 billion, representing 39% of total revenue, highlighting the increasing importance of this segment to F5’s business.

The company is also addressing recent security challenges, with a three-pronged approach to its security incident response: containing the threat, delivering reliable software releases to address vulnerabilities, and raising the bar on security across all aspects of the business.

F5 continues to expand its customer base across various industries. The following slide highlights recent customer wins in the banking, investment management, and energy sectors:

The company is also positioning itself to capitalize on the growing AI market with solutions for AI data delivery, runtime security, and factory load balancing. As illustrated in the following slide, F5 is developing specific offerings to address the unique challenges of AI applications:

Forward-Looking Statements

Looking ahead to fiscal year 2026, F5 provided a more conservative outlook compared to its strong FY25 performance. The company projects revenue growth of 0% to 4%, non-GAAP gross margin of 83% to 83.5%, and non-GAAP operating margin of 33.5% to 34.5%.

The following table details F5’s FY26 outlook compared to FY25 actual results:

For the first quarter of fiscal year 2026, F5 expects revenue between $730 million and $780 million, with non-GAAP EPS ranging from $3.35 to $3.85.

The company identified several demand drivers for FY26, including hybrid multicloud adoption, data center reinvestment, enterprise AI infrastructure growth, systems refresh, accelerating systems demand beyond tech refresh, and SaaS and managed services growth.

F5 also reaffirmed its commitment to returning cash to shareholders, pledging to use at least 50% of its annual free cash flow for share repurchases. In FY25, the company repurchased $500 million in shares, representing 55% of its free cash flow. As of September 30, 2025, F5 had $922 million remaining under its authorized stock repurchase program.

Despite the strong performance in FY25, the more modest outlook for FY26 may have contributed to the initial negative market reaction following the earnings release. However, the aftermarket recovery suggests investors may be reassessing the company’s long-term growth prospects in the application delivery and security markets.

Full presentation:

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