Benzinga  Jul 25  Comment 
F5 Networks (NASDAQ: FFIV) unveils its next round of earnings Wednesday. Get prepared with Benzinga's ultimate preview for F5 Networks' Q3 earnings. Earnings and Revenue Based on management's projections, F5 Networks analysts model for...
Benzinga  Jul 19  Comment 
The emergence of cloud computing is posing a risk to F5 Networks, Inc. (NASDAQ: FFIV), as its core market suffers due to public cloud migrations, according to Morgan Stanley.  The Analyst Analyst James Faucette downgraded F5 Networks from...
Yahoo  Jun 21  Comment 
Let’s talk about the popular F5 Networks Inc (NASDAQ:FFIV). The company’s shares led the NasdaqGS gainers with a relatively large price hike in the past couple of weeks. With manyRead More...
Benzinga  Jun 19  Comment 
The year-to-date rally in F5 Networks, Inc. (NASDAQ: FFIV) has made one analyst at Citigroup wary about further upside. The Analyst Analyst Jim Suva downgraded the stock from Buy to Neutral, but raised his price target from $170 to $190,...
Benzinga  Apr 25  Comment 
On Wednesday, F5 Networks (NASDAQ: FFIV) will release its latest earnings report. Decipher the announcement with Benzinga's help. Earnings and Revenue Based on F5 Networks management projections, analysts predict EPS of $2.27 on revenue of...


F5 Networks (NASDAQ: FFIV) sells computer software and hardware that run servers, data storage devices, and network-based computer programs faster and more securely. F5's products are typically bought by Fortune 1000-sized companies in the telecommunications, financial services, technology, manufacturing and transportation industries, as well as the government. As these institutions grow more and more dependent on computer networks for sharing information, they have a greater demand for network-related software. While the need for network-related software is increasing, though, the fact that F5 attends to the IT needs of companies in a limited number of industries makes it susceptible to the market trends that affects these industries; the write-downs occurring in the financial industry, for example, tend to make big banks cut back on spending; if a bank already has a version of F5's software installed, then it does not upgrade to the newer version. In addition to companies based in the United States, F5 sells its software to large corporations around the world. International sales account for around 44% of F5's total revenues.[1] As more and more foreign companies become Fortune 1000-sized, the international markets represent a direction of growth once the application delivery networking market matures in the United States. The company earned $653 million in revenue and $92 million in net income in 2009.[2]

Company Overview


F5's products distribute internet traffic across multiple servers while making them appear to be a single server, speeding up web applications over a network, and protecting critical web applications from attacks. The BIG-IP application delivery controller (the company's core product) account for 91% of total product revenues. In addition to the BIG-IP system, F5 sells complementary products that provide secure remote access to corporate networks and speed up the access to corporate applications over the internet. These products account for less than 10% of revenue.

Sales and Revenues[4]

The primary customers for F5's products are large enterprises. F5 sells to these enterprises via distributors, value-added resellers (VARs) and systems integrators. Ingram Micro and Avnet Technologies are F5's major distributors, accounting for 10.5% and 15.4% of the company's revenues, respectively.[5] VARs sell F5's products to their end-users as well, but also provide network design, installation and testing services to the customers. System integrators are usually enterprise software vendors such as Microsoft, Oracle and SAP that integrate F5's products into their own software. In addition to these distribution channels, F5 employs a sales team that directly sells its products to their end-users.

Business Growth

FY 2009 (ended September 30, 2009)[2]

  • Net revenue increased less than 1% to $653 million. Revenue from products fell 10.2% to $407 million while revenue from services increased 25% to $247 million.
  • Net income increased 23% to $92 million.

Trends and Forces

The momentum towards centralized servers and the use of network-based applications, such as Web Services and Voice over IP, increases the demand for F5’s products

On average, network-based applications had taken up 40% of all application usage time. For companies and other large institutions, common network-based applications include e-mail and security software, word processing, spreadsheet and database applications, virtual desktop tools, and customer relations management software. An employee's work done on these applications is very important to the functioning of a company, so the company needs ways to make network traffic as efficient as possible. F5’s core product addresses this need by directing network traffic so that a company's servers can perform more important tasks, such as relaying information from a database or processing a customer's request. Therefore, as more and more corporate operations, from data storage to communication to customer relations management, are done electronically, the demand for F5’s BIG-IP controller and its complementary software suite will grow. .

IT software vendors such as F5 are especially vulnerable to the market volatility that affects their group of customers

The application delivery controller market has grown rapidly in the past few years because large institutions are beginning to realize the advantages of the network traffic load balancing and other functions that the controllers perform. As a result, even in a time of economic uncertainty, F5's revenue increased by a fraction of a percent in 2009.[2] However, it is likely that once the application delivery controller market matures (i.e. when most corporations have integrated these controllers into their IT systems), companies would no longer see the need to purchase additional application delivery controllers. This is especially true during times of recession, since IT is an easy place for companies to save money. For example, after a series of major write-downs, an investment bank that already has an application delivery controller installed would probably choose not to buy a newer version of the controller, whereas it would have if the write-downs had not occurred. If many banks suffer the same problem, then F5's revenue stream would be harmed.

The increasing demand of international companies for networking-related software represents a potential direction of growth and risk

Telecommunications, financial services, technology, manufacturing and transportation companies in emerging markets are growing rapidly. As foreign companies grow bigger, their demand for application delivery controllers also increases. Increasing operations in the international markets brings a series of risks, including fluctuating currency exchange rates (a rising dollar decreases reported earnings) and political instability in countries such as Thailand and Venezuela. Furthermore, F5 potentially faces IT-specific problems that Cisco has faced in the past years, such as being accused of providing the Chinese government with Internet website filtering technology.


F5's core product competes in the application delivery controller market (the Layer 4-7 market, referring to the “layer” of network services its products provide), with Cisco Systems (CSCO), Inc., Citrix Systems (CTXS), Inc., Nortel Networks (NT) Corporation, Juniper Networks (JNPR), Inc., Foundry Networks (FDRY) , Inc., and Radware (RDWR) . In this market, F5 has become the leader in recent years based on revenues, outcompeting Cisco. Because it has expanded into the markets of complementary products, however, the company also competes in the WAN optimization (with Riverbed Technology (RVBD) , Juniper, and Packeteer (PKTR) ), the SSL Virtual Private Network remote access (with Juniper, Citrix, Nokia (NOK), Nortel Networks (NT) and Symantec (SYMC) ), application firewalls (with Citrix) and file virtualization (EMC (EMC) , Network Appliance (NTAP) , Brocade and Cisco) markets. Compared to many of its competitors, F5 has a shorter company history (which translates into less time to develop better technology), and less financial, technical and marketing resources, as well as a smaller customer base. As a result, larger competitors can respond faster to emerging technologies, and sell their products for lower prices. However, F5 holds a significant advantage in the flexibility of its TMOS technology and the integration of its product suites.

Cisco Systems (CSCO): Cisco is F5’s biggest competitor, especially in the load balancing market segment. Cisco holds a significant advantage in the size of its distribution channels and its customer base. F5 has built partnerships with well-established enterprise software vendors to compete with Cisco’s size. The flexibility in F5’s products has enabled the company to outcompete Cisco.

Juniper Networks (JNPR): Juniper, with its partnership with Symantec, is an important competitor in the secure remote access market segment. The company also sells products in the WAN optimization and load balancing, but is not as large a competitor in these markets as Riverbed and Cisco, respectively, are.

Citrix Systems (CTXS): Citrix is a competitor in both the load balancing and WAN delivery market segments through its acquisitions of NetScaler and Orbital Data, respectively. The company’s revenues growth has slowed, but Citrix benefits from its strong enterprise customer base, and like F5, offers a strong portfolio of application networking software.

Riverbed Technology (RVBD): Riverbed is the market leader by revenue in the WAN application delivery market. The strength in the technology offered by Riverbed is a primary factor that has enabled it to capture market share.


  1. FFIV 2009 10-K "Customers" pg. 11
  2. 2.0 2.1 2.2 FFIV 2009 10-K "Selected Financial Data" pg. 29
  3. FFIV 2009 10-K "Products" pg. 8-11
  4. FFIV 2009 10-K "Sales and Marketing" pg. 11-12
  5. FFIV 2009 10-K "Results of Operations" pg. 35
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