Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you update us on the competitive landscape and your win rate, particularly with disruptions at some of your competitors?
A: Francois Locoh-Donou, President and CEO of F5, Inc., mentioned that the momentum against competitors has accelerated, particularly in traditional ADC spaces. F5 continues to see strong traction, consolidating multiple capabilities and replacing competitors in large enterprises globally.
Q: Regarding AI and load balancing, will F5 focus on enterprise use cases, or will it also involve larger data centers experiencing significant CapEx activity?
A: Francois Locoh-Donou explained that F5's AI-related use cases would primarily be in enterprises, especially those running their own large-scale language models and needing high-capacity load balancing for data ingestion. He highlighted that AI workloads would likely be distributed and heavily reliant on APIs, emphasizing the importance of API security.
Q: How sustainable is the momentum in software subscription revenue, and what are the expectations for perpetual revenue going forward?
A: Francis J. Pelzer, CFO, noted fluctuations in software revenue, with a recent dip in perpetual deals expected. He emphasized the strength in subscription revenue, particularly from renewals, and projected that subscription revenue would likely remain a high percentage of total software revenue.
Q: Can you discuss the implications of a potential reacceleration in application growth in cloud environments and the impact of the HashiCorp acquisition?
A: Francois Locoh-Donou discussed that an increase in application deployments could lead to greater demand for F5’s services, particularly in automation and multi-cloud networking. He noted that F5 and HashiCorp are complementary, and he does not foresee significant impacts from the acquisition on F5’s operations.
Q: What is driving the macro cautiousness among your customers, and how is it affecting deal advancements?
A: Francois Locoh-Donou indicated that the macro environment has remained stable with no significant changes in customer spending appetite. He observed more caution in CapEx, particularly in hardware, due to the macro environment but not directly related to foreign exchange or AI prioritization.
Q: With the strong renewals expected in the second half, can you quantify this and discuss changes in subscription durations?
A: Francis J. Pelzer highlighted the strong pipeline and renewals expected in the second half, particularly in Q4, based on the timing of deals from three years ago. He confirmed that subscription durations have not changed, typically spanning three years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
