F5, Inc. FFIV delivered better-than-expected second-quarter fiscal 2026 results. FFIV reported second-quarter non-GAAP earnings per share (EPS) of $3.90, which surpassed the Zacks Consensus Estimate by 12.44% and came ahead of management’s guidance of $3.34-$3.46 (midpoint of $3.40). The bottom line increased 14% year over year.
F5’s revenues of $812 million for the second quarter beat the consensus mark by 3.49%. The top line rose 11% on a year-over-year basis. Revenues also came ahead of management’s guidance range of $770-$790 million (midpoint of $780 million).
F5’s second-quarter results benefited from robust demand tied to infrastructure modernization and higher security needs. The company produced a record free cash flow of $348 million, underscoring the operating leverage embedded in its model.
F5, Inc. Price, Consensus and EPS Surprise
F5, Inc. price-consensus-eps-surprise-chart | F5, Inc. Quote
FFIV’s Q2 Segment-Wise Revenue Details
Product revenues (50.6% of total revenue) climbed 22% year over year to $411 million, supported by continued strength in Systems. Systems revenues increased 26% to $226 million, reflecting customers upgrading to higher-performance and higher-capacity platforms as they modernize data centers for resiliency, sovereignty requirements and AI readiness. Our model estimates for the Product segment and Systems sub-segment revenues were pegged at $381.1 million and $199.6 million, respectively.
Management characterized the cycle as “refresh plus,” where refresh activity also becomes a moment to attach new use cases and expand wallet share. On the earnings call, the company cited instances where customers broadened projects beyond replacements into AI-related deployments and pointed to increased competitive displacement as enterprises consolidate around fewer, more capable platforms.
Software revenues grew 17% to $184 million, with subscriptions remaining the dominant contributor. Subscription-based software revenues totaled $165 million, representing 90% of software revenues, while perpetual license software was $19 million. Our model estimates for Software revenues were pegged at $181.5 million.
While Systems has been the faster-growing piece recently, the company emphasized that software performance is largely shaped by subscription renewals and expansion within the installed base. On the call, management reiterated that software growth can look uneven quarter to quarter due to the renewal cycle, even as attach and consumption trends remain constructive.
Global Services revenues (49.4% of total revenues) grew 2% year over year to $401 million. Our model estimates for the Global Services segment revenues were pegged at $399.9 million.
FFIV’s Solid Profitability & Operating Discipline
F5’s profitability profile remained solid despite ongoing hardware-related input volatility. GAAP gross margin expanded 70 basis points to 81.4%, and non-GAAP gross margin increased by 60 basis points to 83.7%. GAAP operating margin improved by 40 basis points to 22.1%, while non-GAAP operating margin increased by 190 basis points to 33.8%.
The company also highlighted disciplined spending. Management flagged higher component costs, particularly memory, as a modeling factor that could pressure gross margin sequentially later in the year, but indicated it continues to balance pricing actions and discount discipline to help offset cost inflation.
F5’s Balance Sheet & Cash Flow
F5 ended the March 2026 quarter with cash and short-term investments of $1.44 billion, up from $1.22 billion in the previous quarter.
Cash generation was a clear highlight in the second quarter. FFIV produced $366 million in cash flow from operations and reported free cash flow of $348 million, supported by strong collections and profitability. In the first half of fiscal 2026, the company generated operating and free cash flows of $525 million and $497 million, respectively.
F5 repurchased $100 million of stock during the quarter and $401 million in the first half of fiscal 2026. At the end of the second quarter, the company had $522 million remaining under its authorization.
FFIV Lifts 2026 Outlook as Demand Signals Improve
Management raised its full-year fiscal 2026 outlook following strong execution and improved visibility. FFIV now expects revenue growth of 7% to 8%, up from the prior 5%-6% range, and increased its non-GAAP earnings outlook to the $16.25-$16.55 per share band from the $15.65-$16.05 range.
For the third quarter of fiscal 2026, F5 guided revenues in the range of $820-$840 million and non-GAAP earnings in the band of $3.91-$4.03 per share. Executives tied the outlook to three demand drivers: accelerating hybrid multi-cloud adoption, an expanding threat landscape and an inflection in AI inference.
During the call, management added that AI-related use cases generated about $50 million in sales in the first half of the fiscal year and that the company is approaching 100 customers using F5 in those AI deployments.
FFIV’s Zacks Rank and Other Stocks to Consider
Currently, F5 carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Micron Technology MU, Broadcom AVGO and NVIDIA NVDA. Micron Technology and Broadcom each sport a Zacks Rank #1 (Strong Buy) at present, while NVIDIA carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has been revised upward by a penny to $58.36 per share in the past 30 days, suggesting an increase of 604% from fiscal 2025’s reported figure. Micron Technology shares have surged 76.7% year to date (YTD).
The Zacks Consensus Estimate for Broadcom’s fiscal 2026 earnings has moved northward by 9 cents to $11.45 per share over the past 30 days and calls for a year-over-year jump of 67.9%. Broadcom shares have soared 15.5% YTD.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has moved upward by 3 cents to $8.06 per share in the past 30 days, implying a year-over-year improvement of approximately 69%. NVIDIA shares have risen 14.3% YTD.
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