- Total Revenue: $865 million, up 11% year-over-year.
- Product Revenue: $463 million, increased 19% year-over-year.
- Services Revenue: $402 million, grew 3% year-over-year.
- Systems Revenue: $240 million, up 32% over Q3 FY25.
- Software Revenue: $223 million, grew 7% year-over-year.
- Subscription-based Software Revenue: $201 million, up 9% year-on-year.
- Perpetual License Software Revenue: $22 million, down 4% year-over-year.
- Recurring Revenue Contribution: 69% of total Q3 revenue.
- GAAP Gross Margin: 82.2%.
- Non-GAAP Gross Margin: 84.2%.
- GAAP Operating Margin: 24.7%.
- Non-GAAP Operating Margin: 35%.
- GAAP Net Income: $208 million or $3.62 per share.
- Non-GAAP Net Income: $272 million or $4.73 per share, reflecting 14% EPS growth.
- Cash Flow from Operations: $316 million.
- Free Cash Flow: $281 million.
- Deferred Revenue: $2.19 billion, up 12% from the year ago period.
- Share Repurchase: $100 million worth of shares at an average price of $299 per share.
- Employee Count: Approximately 6,600 employees.
- Q4 Revenue Guidance: $870 million to $890 million, reflecting just under 9% year-over-year growth at the midpoint.
- FY26 Revenue Growth Outlook: Approximately 9% to 10%, up from prior outlook of 7% to 8%.
- FY26 Non-GAAP EPS Guidance: $17.21 to $17.33, up from prior range of $16.25 to $16.55.
Release Date: July 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- F5 Inc FFIV reported 19% product revenue growth, contributing to an overall 11% total revenue growth for the quarter.
- The company has experienced eight consecutive quarters of double-digit product growth, indicating strong market alignment.
- F5 Inc (FFIV) is capitalizing on the growing demand for application security and delivery, driven by the rise of AI-powered applications.
- The company is strategically positioned at the intersection of hybrid multi-cloud adoption, expanding threat landscapes, and AI inference inflection.
- F5 Inc (FFIV) raised its fiscal year 2026 revenue growth outlook to approximately 9% to 10%, up from the previous 7% to 8%.
Negative Points
- APAC revenue was down 11% year-over-year, indicating regional challenges despite overall growth.
- The company faces a dynamic pricing environment for memory and storage components, which could impact future gross margins.
- F5 Inc (FFIV) is not updating its FY27 gross margin guidance due to uncertainties in component cost fluctuations.
- The renewal cohort from 2023 was not strong, impacting software revenue growth expectations for the current year.
- There is a potential risk of increased component costs, which could affect future financial performance.
Q & A Highlights
Q: Can you provide an update on the growth of AI-related revenues and customer base?
A: Francois Locoh-Donou, CEO, explained that while they have seen a 50% growth in AI-related customer base, this doesn't directly translate to revenue growth. The company has surpassed the $50 million revenue mark in AI use cases, with strong momentum in AI data delivery and AI security. The number of AI security customers grew 100% in the quarter, driven by demand for best-in-class security for AI models and applications.
Q: What factors are driving the shift towards higher-performing systems, and is this trend sustainable?
A: Edward Werner, CFO, noted that the demand for higher-performing systems is driven by expansion use cases, digital sovereignty, and AI-driven workloads. Customers are quickly provisioning higher-performance units to support these initiatives, which carry higher gross margins. This trend is expected to continue as these dynamics are still relatively early in their development.
Q: How do you view the growth trajectory for software versus systems revenue, and when might software growth accelerate?
A: Edward Werner, CFO, stated that the software pipeline looks strong, with growth expected to accelerate in fiscal 2027 due to a stronger renewal cohort and the completion of a transition in their SaaS and Managed Service business. This is expected to drive double-digit software growth next year.
Q: What impact is the iSeries refresh having, and how is the Mythos effect influencing customer behavior?
A: Edward Werner, CFO, reported that the iSeries refresh is proceeding as expected, with orderly and consistent activity. The Mythos effect is prompting customers to address technology debt and vulnerabilities, leading to increased refresh activity. Francois Locoh-Donou, CEO, added that the Mythos effect is also driving demand for runtime security, with strong uptake of their AI-powered Web Application Firewall.
Q: How do you view the sustainability of system growth post-refresh cycle, and what are the secular drivers?
A: Edward Werner, CFO, believes that growth will remain healthy post-refresh cycle due to new projects like digital sovereignty and AI-driven performance needs. Competitive takeouts and post-quantum crypto considerations could also drive earlier adoption of the next product cycle, supporting continued growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
