F5 Networks, Inc. (FFIV), a multi-cloud application security and delivery company delivered stellar fourth-quarter results driven by robust software and systems demand. Following the news, shares jumped 4.5% in the extended trading session on October 26.
The company reported earnings of $3.01 per share, up 23.9% compared to the prior-year period and much higher than Street estimates of $2.75 per share.
Further, quarterly revenue climbed 11% year-over-year to $682 million and also beat analyst estimates of $672.2 million. Both of the company’s Products and Services segments contributed equally towards the revenue growth.
Notably, software revenue contributed 45% of Products revenue, of which 80% was generated from software subscriptions, which reflects the continued progress towards F5’s target of transforming to a software-based business model.
On an annual basis, FY21 earnings grew 15.4% to $10.81 per share, and revenue increased 11% to $2.60 billion. (See Insiders’ Hot Stocks on TipRanks)
Commenting on the solid quarterly results, Francois Locoh-Donou, President and CEO of F5, said, “Skyrocketing application usage and heightened security awareness are driving strong demand for F5 solutions on-premises, in the cloud, and across multiple clouds. Our expanded solutions portfolio and vision for enabling Adaptive Applications puts us at the intersection of these strong and sustainable secular trends and positions F5 for continued strong revenue and earnings growth.”
Based on the continued business momentum, F5 forecasts Q1FY22 revenue to be in the range of $665 – $685 million compared to the consensus estimate of $667.23 million. Earnings are projected in the range of $2.71 – $2.83 per share, while the consensus estimate is pegged at $2.76 per share.
For the full year of fiscal 2022, F5 expects revenue growth of 8% – 9%, including software revenue growth of 35% – 40%.
Yesterday, Colliers Securities analyst Catharine Trebnick reiterated a Buy rating on the stock with a price target of $245, implying 20.2% upside potential to current levels.
In F5’s Q4 preview, Trebnick said, “Our conversations with Chief Information Security Officer(CISOs) and resellers suggest the company continues to penetrate into their customer base with NGINX and Shape Security solutions. This period we noted an uptick year-over-year in infrastructure spending from Utilities, Federal and, State and Local Government and Education (SLED) segments. In particular, resellers saw an uptick in F5 winning Symantec/Blue Coat WAFs business.”
The analyst expected the company to report revenue in line with and earnings above her expectations. Also, the Q1FY22 forecast was expected in line with consensus estimates.
Overall, the stock commands a Strong Buy consensus rating based on 9 Buys and 2 Holds. The average F5 Networks price target of $244.55 implies 19.9% upside potential to current levels. Shares have gained 49.6% over the past year.
Moreover, F5 Networks scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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