F5, INC. 10-Q Summary: Quarter Ended June 30, 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026, for F5, Inc., a global leader in application delivery and security solutions. The company operates as a single reportable segment, offering hardware, software, and SaaS solutions optimized for hybrid and multicloud environments. The filing is a Form 10-Q for the third quarter of fiscal year 2026.
Key Financial Metrics
| Metric | Q3 2026 (3 Months) | Q3 2025 (3 Months) | YTD 2026 (9 Months) | YTD 2025 (9 Months) |
|---|---|---|---|---|
| Net Revenues | $865.1 million | $780.4 million | $2,499.2 million | $2,278.0 million |
| Gross Profit | $711.5 million | $631.7 million | $2,043.0 million | $1,847.9 million |
| Gross Margin | 82.2% | 81.0% | 81.7% | 81.1% |
| Operating Income | $213.3 million | $196.3 million | $606.5 million | $560.3 million |
| Net Income | $208.2 million | $189.9 million | $536.0 million | $501.9 million |
| Diluted EPS | $3.62 | $3.25 | $9.29 | $8.54 |
| Cash from Operations (YTD) | $841.4 million (2026) vs $741.6 million (2025) | |||
| Cash & Equivalents (End of Period) | $1.61 billion | |||
| Deferred Revenue | $2.19 billion (Total) |
Material Changes vs. Prior Period
- Revenue Growth: Net revenues increased 10.9% year-over-year for the quarter and 9.7% year-over-year for the nine-month period. Product revenue grew 19.0% (quarter) and 17.3% (YTD), driven by a 32.4% increase in systems revenue and a 7.4% increase in software revenue.
- Expense Increases: Operating expenses rose 14.4% for the quarter and 11.6% YTD. Research and Development (R&D) expenses increased 20.8% (quarter) and 13.2% (YTD), partly due to $10.2 million in professional service costs related to the Cyber Incident. General and Administrative (G&A) expenses increased 21.5% (quarter) and 21.7% (YTD), also impacted by Cyber Incident response costs.
- Acquisitions: The company acquired SurePath AI, Inc. for $50.1 million in June 2026 to enhance its AI Security Platform. In the prior fiscal year, CalypsoAI Corp. was acquired for $145.2 million.
- Share Repurchases: The company repurchased $100.0 million of common stock in the quarter and $500.0 million YTD. As of June 30, 2026, $422.4 million remained authorized under the repurchase program.
Outlook, Risks, and Unusual Items
- Cyber Incident: Following a security incident disclosed in October 2025, the company incurred $3.0 million in costs for the quarter and $26.5 million YTD. Insurance recoveries of $5.3 million were recorded in other income for the same periods. The company expects to incur additional legal and professional expenses in future periods.
- Legal Proceedings: The company is defending a putative securities class action filed in December 2025 alleging false statements regarding cybersecurity capabilities. Additionally, the long-standing NGINX intellectual property litigation with Lynwood Investment CY Limited remains in discovery regarding a remanded copyright claim.
- Remaining Performance Obligations: As of June 30, 2026, total non-cancelable remaining performance obligations were $2.2 billion. The company expects to recognize 58.8% of this amount over the next 12 months.
- Risk Factors: Management highlights risks related to AI development, potential security vulnerabilities in products, global supply chain constraints, and geopolitical uncertainties.
Investor Verification Checklist
- Verify the trajectory of revenue growth in the "Systems" segment, which drove the majority of product revenue increases.
- Monitor the total cost of the October 2025 Cyber Incident, including future legal fees, insurance claim resolutions, and potential customer churn.
- Review the status of the putative securities class action and the NGINX IP litigation for potential settlement costs or adverse rulings.
- Assess the impact of increased R&D and G&A spending on future operating margins, specifically distinguishing between strategic investment and incident-related costs.
- Confirm the sustainability of the 82% gross margin given the mix shift toward higher-margin software and services versus hardware.