F5 Announces Record Second Quarter
Results
SEATTLE--(BUSINESS WIRE)--April 25, 2000--F5 Networks,
Inc. (Nasdaq:FFIV - news), the leading provider of integrated
content delivery and traffic management solutions that improve the availability and scalability of
Internet infrastructure, today announced results for the second quarter of fiscal 2000, which ended
March 31, 2000.
Second Quarter Highlights:
Year-to-date net revenue increased 562 percent over the prior year and 23 percent sequentially
to $23.6 million for the second quarter.
Net income was $4.1 million, or $0.18 per diluted share, compared to a net loss of $(3.0) million
or $(0.45) per diluted share for the second quarter of 1999.
Cash flow from operations totaled $2.8 million in the quarter, $5.8 million year-to-date
Announced an OEM agreement with Dell Computer to sell F5's products
``Our second quarter results demonstrate that we are on track for a solid performance in 2000,'' said
Jeffrey S. Hussey, chairman, president and chief executive officer of F5 Networks. ``We continue to
execute on our strategies of investing in technology to anticipate our customers' needs and to grow our
customer base, expanding sales and marketing efforts globally, building on and enhancing our
relationships with strategic partners, leveraging the F5 brand and evaluating strategic acquisitions.''
Net revenue for the second quarter of fiscal 2000 totaled $23.6 million, up 527 percent from $3.8
million in the prior year second quarter, and up 23 percent from the first quarter. Net revenue growth
was driven by increased sales of all of the company's products, to both new and existing customers,
and by a significant increase in service revenue and sales internationally.
Net income was $4.1 million, or $.18 per diluted share, in the second quarter of fiscal 2000 compared
to a loss of $(3.0) million, or $(0.45) per share, in the prior-year second quarter. For the fiscal year to
date, net revenue totaled $42.8 million, up 562 percent from the first six months of fiscal 1999. Net
income for the first six months of fiscal 2000 totaled $8.4 million, or $0.36 per diluted share, compared
to $(5.2) million, or $(0.82) per diluted share in the prior-year same period.
``Sales growth momentum and strong margins have enabled F5 to sustain profitability despite a
continuing ramp-up in infrastructure to support our growth,'' added Mr. Hussey. ``We expect that F5
will deliver sequential quarterly sales growth in the low to mid teens, and continue to post profits and
positive cash flow in the second half of fiscal 2000.''
On April 5, 2000, F5 announced a major OEM agreement with server manufacturer Dell Computer to
bring to market F5 Networks' suite of products, commencing with the Company's BIG-IP software, on
Dell's PowerApp appliance server. This appliance server product will be targeted for service providers,
dot-coms, brick-to-click businesses and other organizations building out their Internet infrastructure.
During the second quarter, F5 announced that Carlton G. Amdahl was named Chief Technical Officer.
Mr. Amdahl brings more than 20 years of experience as a senior executive and consultant in the
computer and networking industry and will be instrumental in driving F5's technology to the next level.
F5 Networks is the leading provider of integrated Internet content delivery infrastructure and traffic
management solutions. The company's integrated suite of high-performance products automatically and
intelligently manage Internet traffic and content to improve the availability and performance of
mission-critical Internet servers and applications. F5 Networks helps companies avoid the risk of being
burdened with ill-performing networks that do not meet end user expectations, while enabling network
administrators to boost the control and predictability of their infrastructure. F5 Networks' products are
designed to provide a new level of fault tolerance by shielding users from system failure; optimizing
response times to user requests and data flow; and cost-effectively managing an organization's Internet
infrastructure. The company is headquartered in Seattle, Washington, and has offices in Atlanta,
Boston, Chicago, Dallas, Columbus, Los Angeles, New York, San Francisco, Toronto, Washington,
D.C., Australia, Hong Kong, Japan, The Netherlands, Singapore, Sweden and the United Kingdom. F5
Networks is located on the web at www.f5.com.
Statements in this press release concerning future activities under F5's strategic alliance agreements,
continued development of F5's product portfolio and future enhancements to F5's products, continued
growth in the market for Internet traffic and content management solutions, and other statements
which are not historical facts are forward-looking statements, Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the company, or industry results, to be materially different form any
future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others: the company's limited operating history; variability of the
company's operating results; market acceptance of the company's Internet traffic operating results;
market acceptance of the company's Internet traffic and content management products; the company's
timely development of new products and features; the company's ability to manage its growth; the
company's ability to maintain and develop distribution relationships; competition in the Internet traffic
and content market; the company's ability to expand in the international markets; unpredictability of the
company's sales cycle and other risk factors referenced in the company's public filings with the
Securities and Exchange Commission (SEC). In particular, see the section entitled ``Risk Factors'' in
the company's annual report on Form 10-K filed with the SEC on December 28, 1999.
F5 Networks, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three months ended Six months ended
March 31, March 31,
------------------- -----------------
2000 1999 2000 1999
------------------- -----------------
(unaudited)
Net revenues:
Products $18,532 $ 3,146 $34,814 $ 5,428
Services 5,072 616 7,963 1,029
------- ------- ------- -------
Total net revenue 23,604 3,762 42,777 6,457
------- ------- ------- -------
Cost of net revenues:
Products 5,053 825 9,677 1,449
Services 1,792 384 2,851 580
------- ------- ------- -------
Total cost of net
revenues 6,845 1,209 12,528 2,029
------- ------- ------- -------
Gross profit 16,759 2,553 30,249 4,428
------- ------- ------- -------
Operating expenses:
Sales and marketing 8,452 2,887 14,194 5,103
Research and development 2,761 1,324 4,986 2,345
General and administrative 1,748 666 3,226 1,191
Amortization of unearned
compensation 470 670 1,013 1,038
------- ------- ------- -------
Total operating
expenses 13,431 5,547 23,419 9,677
------- ------- ------- -------
Income (loss) from
operations 3,328 (2,994) 6,830 (5,249)
Interest income, net 818 31 1,559 89
------- ------- ------- -------
Net income (loss) $4,146 $(2,963) $ 8,389 $(5,160)
------- ------- ------- -------
Net income (loss) per
share - basic $ 0.20 $(0.45) $ 0.40 $ (0.82)
------- ------- ------- -------
Weighted average
shares - basic 21,198 6,555 20,811 6,297
------- ------- ------- -------
Net income (loss) per
share - diluted $ 0.18 $(0.45) $ 0.36 $ (0.82)
------- ------- ------- -------
Weighted average
shares - diluted 23,105 6,555 23,092 6,297
------- ------- ------- -------
F5 Networks, Inc.
Consolidated Balance Sheets
(in thousands)
March 31, September 30,
2000 1999
----------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $61,225 $24,797
Restricted cash 3,079 3,013
Accounts receivable, net
of allowances of $900 and $826 21,147 10,353
Inventories 1,566 618
Other current assets 1,804 981
-------- --------
Total current assets 88,821 39,762
-------- --------
Property and equipment, net 5,273 2,834
Other assets, net 295 250
-------- --------
Total assets $94,389 $42,846
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,792 $ 2,700
Accrued liabilities 4,255 3,808
Deferred revenue 9,903 4,365
-------- --------
Total current liabilities 18,950 10,873
-------- --------
Commitments
Shareholders' equity:
Common stock, no par value;
100,000 shares authorized,
21,271 and 18,161 shares
issued and outstanding 79,557 45,760
Note receivable from shareholder (563) (750)
Accumulated other
comprehensive income (loss) 77 (3)
Unearned compensation (2,219) (3,232)
Accumulated deficit (1,413) (9,802)
-------- --------
Total shareholders' equity 75,439 31,973
-------- --------
Total liabilities
and shareholders' equity $ 94,389 $ 42,846
-------- --------
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