© Reuters. F5 Networks (FFIV) Shares Rise After Full-Year Outlook Improves
(Updated: January 30, 2024 at 6:57 am EST)
F5 Inc. (FFIV) reported its first-quarter results, beating average analyst estimates.
The company achieved net income of $692.6 million, a decrease of 1.1% year over year, but higher than the expected $684.8 million. Adjusted earnings per share came in at $3.43, significantly higher than last year's $2.47 and beating the forecast of $3.04.
In light of these results, F5 revised its adjusted earnings per share outlook for fiscal 2024, predicting growth of 6% to 8%, up from 5% to 7% previously estimated. This revision is due to a lower tax rate expected for the fiscal year.
The company's shares rose 9% in premarket trading Tuesday.
For the second quarter of fiscal 2024, F5 forecasts revenue in the range of $675 million to $695 million, with non-GAAP earnings projected between $2.79 and $2.91 per diluted share.
Analysts were expecting second-quarter revenue of $674.3 million and adjusted earnings per share of $2.97.
“Our team delivered strong results in the first quarter, including revenue near the high end and earnings per share above the high end of our guidance ranges,” said François Locoh-Donou, president and CEO of F5.
Analysts at Morgan Stanley raised the price target by $15, to $190 per share.
“The upside for Q1 is due to pricing benefits spreading across services, as well as some unexpected perpetual license picks by service providers. Stay EW, as some signs of stability in business spending are more encouraging, but the timing of the reacceleration remains uncertain,” the analysts said.
On the other hand, Evercore ISI analysts wonder: is this growth lasting?
“Although we believe investors will struggle with the performance trajectory of the s/w (perpetual vs. subscription) segment and its ability to maintain EBIT margins >30%.”
“The company appears to be on track for >$12.50 EPS in FY24 and probably close to $13.50-$14 in FY25; if they can execute this organically and the returns of capital remain favorable for shareholders, we believe the stock can continue to perform higher,” analysts. he said in a note.
