F5 (FFIV) Q1 2026 earnings summary

Executive summary

• Achieved Q1 FY26 revenue of $822.5 million, up 7.3% year-over-year, with product revenue growing 11% and systems revenue up 37%, marking the sixth consecutive quarter of double-digit product growth driven by hybrid multicloud, AI, and converged platforms.

• Net income rose to $180.1 million (GAAP), an 8.2% increase, with diluted EPS of $3.10; non-GAAP net income was $259 million ($4.45/share), up 16% year-over-year.

• Growth was driven by hybrid multi-cloud adoption, scaling AI investments, and demand for converged platforms, with EMEA delivering exceptional 24% growth.

• Minimal demand disruption from a significant cyber incident in October 2025 due to rapid response and strong customer engagement, incurring $17.5 million in related costs.

• AI-related demand accelerated, with as many new AI customers added in Q1 as in all of FY25.

Financial highlights

• Q1 revenue reached $822.5 million, split evenly between product ($410.3 million, up 11.3%) and services revenue ($412.2 million, up 3.6%), with systems revenue up 36.7% to $218 million and software revenue down 8.1% to $192 million.

• Recurring revenue contributed 69% of total Q1 revenue, with 86% of software revenue from subscriptions.

• GAAP gross margin was 81.5%; non-GAAP gross margin was 83.8%.

• Cash and investments totaled $1.22 billion at quarter-end; cash flow from operations was $159–208 million.

• Deferred revenue was $2.1 billion, up 6% year-over-year.

Outlook and guidance

• FY26 revenue growth outlook raised to 5–6% (from 0–4%), with non-GAAP EPS guidance increased to $15.65–$16.05 (from $14.50–$15.50).

• Q2 FY26 revenue expected between $770–$790 million, with non-GAAP EPS of $3.34–$3.46.

• Expect mid-single-digit software revenue growth, double-digit systems revenue growth, and low single-digit services revenue growth for FY26.

• Full-year share repurchases to be at least 50% of free cash flow, with $300 million repurchased in Q1.

• Management anticipates ongoing investments in security and cloud solutions, while monitoring macroeconomic and geopolitical risks.