F5, Inc. 10-Q Summary: Quarter Ended March 31, 2026
Business Context and Reporting Period
This summary covers F5, Inc.'s (FFIV) Form 10-Q for the quarterly period ended March 31, 2026 (Fiscal Q2 2026). F5 is a global leader in application delivery and security solutions, offering hardware, software, and SaaS solutions for hybrid and multicloud environments. The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 6 Months 2026 | YTD 6 Months 2025 |
|---|---|---|---|---|
| Net Revenues | $811.7M | $731.1M | $1.63B | $1.50B |
| Gross Profit | $660.8M | $590.2M | $1.33B | $1.22B |
| Gross Margin | 81.4% | 80.7% | 81.5% | 81.2% |
| Operating Income | $179.0M | $158.9M | $393.2M | $364.0M |
| Net Income | $147.8M | $145.5M | $327.8M | $312.0M |
| Diluted EPS | $2.58 | $2.48 | $5.68 | $5.30 |
| Operating Cash Flow (6mo) | $525.1M | |||
| Cash & Equivalents (End of Period) | $1.44B | |||
| Deferred Revenue | $2.12B |
Material Changes vs. Prior Period
- Revenue Growth: Total net revenues increased 11.0% year-over-year (YoY) for the quarter and 9.1% for the six-month period. Product revenue grew 21.7% YoY, driven by a 26.2% increase in systems revenue and a 16.7% increase in software revenue. Service revenue grew modestly by 1.8%.
- Expense Increases: Operating expenses rose 11.7% YoY for the quarter. Sales and marketing expenses increased 9.8%, and R&D expenses increased 10.6%. General and administrative expenses rose 19.6%.
- Cyber Incident Costs: The company incurred $6.0 million in costs related to a cyber incident in the quarter and $23.5 million for the six-month period. These costs impacted R&D and G&A expenses.
- Share Repurchases: The company repurchased $100.0 million of common stock in the quarter and $401.1 million for the six-month period. As of March 31, 2026, $522.4 million remained authorized under the repurchase program.
- Acquisitions: In September 2025, F5 acquired CalypsoAI Corp. for $145.2 million to enhance AI security capabilities. The pro forma impact was not material for the periods presented.
Guidance, Outlook, and Risks
- Cyber Incident: A security incident disclosed in October 2025 involved long-term persistent access and data exfiltration. The company is incurring significant legal and professional service costs, which may continue in future periods. Some costs may be recoverable via insurance.
- Legal Proceedings:
- Lynwood Investment: A copyright dispute regarding NGINX software is ongoing in the District Court following a partial remand by the Ninth Circuit Court of Appeals.
- Securities Litigation: A putative class action lawsuit filed in December 2025 alleges false statements regarding cybersecurity capabilities. Two derivative lawsuits were also filed in February 2026.
- Liquidity: Management believes current cash balances and operating cash flows are sufficient to meet liquidity needs. The company has no outstanding borrowings under its expired $350 million revolving credit facility.
- Remaining Performance Obligations: As of March 31, 2026, total non-cancelable remaining performance obligations were $2.1 billion, with 59.9% expected to be recognized in the next 12 months.
Investor Verification Checklist
- Cyber Incident Impact: Verify the total estimated cost of the October 2025 cyber incident and the likelihood of insurance recoveries.
- Legal Exposure: Monitor the status of the Lynwood NGINX copyright litigation and the new securities class action regarding cybersecurity claims.
- Revenue Mix: Confirm the sustainability of the 26.2% growth in systems revenue versus the slower 1.8% growth in services revenue.
- Share Count: Note the reduction in weighted average shares outstanding due to aggressive buybacks ($401M in 6 months) and its impact on future EPS.
- Deferred Revenue: Review the $2.1 billion deferred revenue balance as a leading indicator for future recurring revenue recognition.