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F5 Networks Inc. Reports Operating Results (10-Q)

August 07, 2012 | About:
10qk

10qk

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F5 Networks Inc. (FFIV) filed Quarterly Report for the period ended 2012-06-30.

F5 Networks, Inc. has a market cap of $7.37 billion; its shares were traded at around $102.08 with a P/E ratio of 26.7 and P/S ratio of 6.4. F5 Networks, Inc. had an annual average earning growth of 28.8% over the past 5 years.

Highlight of Business Operations:

Two worldwide distributors of the Companys products accounted for 17.3% and 14.8% of total net revenue for the three month period ended June 30, 2012. Two worldwide distributors accounted for 17.3% and 14.2% of total net revenue for the nine month period ended June 30, 2012. Two worldwide distributors of the Companys products accounted for 16.4% and 10.6% of total net revenue for the three month period ended June 30, 2011. Two worldwide distributors accounted for 18.3% and 10.1% of total net revenue for the nine month period ended June 30, 2011. Two worldwide distributors accounted for 13.5% and 11.0% of the Companys accounts receivable as of June 30, 2012. Two worldwide distributors accounted for 15.7% and 11.1% of the Companys accounts receivable as of June 30, 2011. No other distributors accounted for more than 10% of total net revenue or receivables.

Net product revenues increased 15.5% and 16.1% for the three and nine months ended June 30, 2012, respectively, from the same periods in the prior year. The increase in net product revenues for the three and nine months ended June 30, 2012 was primarily due to an increase of $30.2 million and $90.0 million in sales of our ADN products from the same periods in the prior year, respectively. Sales of our ADN products represented 98.4% and 98.5% of product revenues for the three and nine months ended June 30, 2012, respectively, compared to 96.9% and 97.2% of product revenues for the three and nine months ended June 30, 2011, respectively.

Avnet Technology Solutions and Ingram Micro, two of our worldwide distributors, accounted for 17.3% and 14.8% of our total net revenue for the three months ended June 30, 2012, respectively. Avnet Technology Solutions and Ingram Micro accounted for 17.3% and 14.2% of our total net revenue for the nine months ended June 30, 2012, respectively. Avnet Technology Solutions and Ingram Micro accounted for 16.4% and 10.6% of our total net revenue for the three months ended June 30, 2011, respectively. Avnet Technology Solutions and Ingram Micro accounted for 18.3% and 10.1% of our total net revenue for the nine months ended June 30, 2011, respectively. Avnet Technology Solutions and Ingram Micro accounted for 11.0% and 13.5% of our accounts receivable as of June 30, 2012, respectively. Avnet Technology Solutions and Ingram Micro accounted for 11.1% and 15.7% of our accounts receivable as of June 30, 2011, respectively. No other distributors accounted for more than 10% of total net revenue or receivables.

Cost of net service revenues. Cost of net service revenues consist of the salaries and related benefits of our professional services staff, travel, facilities and depreciation expenses. For the three and nine months ended June 30, 2012, cost of net service revenues as a percentage of net service revenues were 17.7% and 17.8%, respectively, compared to 18.5% and 18.3% for the three and nine months ended June 30, 2011, respectively. Professional services headcount at the end of June 2012 increased to 619 from 498 at the end of June 2011. In addition, cost of net service revenues included stock-based compensation expense of $2.3 million and $6.7 million for the three and nine months ended June 30, 2012, respectively, compared to $2.0 million and $5.6 million for the same periods in the prior year, respectively.

Research and development. Research and development expenses consist of the salaries and related benefits for our product development personnel, prototype materials and other expenses related to the development of new and improved products, facilities and depreciation expenses. Research and development expenses increased 33.3% and 26.7% for the three and nine months ended June 30, 2012, respectively, from the comparable periods in the prior year. The increase in research and development expense was primarily due to an increase of $7.5 million and $18.6 million in personnel costs for the three and nine months ended June 30, 2012, respectively, from the comparable periods in the prior year. Research and development headcount at the end of June 2012 increased to 745 from 578 at the end of June 2011. In addition, research and development expense included year over year increases in computer equipment and software costs of $1.3 million and $3.4 million for the three and nine months ended June 30, 2012, respectively, to support the development of new and improved products. Research and development expense included stock-based compensation expense of $7.5 million and $19.8 million for the three and nine months ended June 30, 2012, respectively, compared to $5.9 million and $17.4 million for the same periods in the prior year, respectively. The increase in research and development expense also included costs associated with the integration and continued development of Traffix Systems products and technology. We expect research and development expenses to remain consistent as a percentage of net revenue in the foreseeable future.

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