F5 (FFIV) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue reached $731 million, up 7% year-over-year, driven by 12% product revenue growth and 27% systems revenue growth, with strong innovation in hybrid multicloud and AI-driven solutions.

• Non-GAAP EPS was $3.42, up 18% year-over-year and above guidance; GAAP net income was $146 million ($2.48/share), up from $119 million ($2.00/share) in the prior year.

• Cash and investments totaled $1.27 billion at quarter end, reflecting strong operating cash flow.

• International revenues accounted for 48.9% of total net revenues, with EMEA up 20% year-over-year.

• Continued innovation with the launch of the Application Delivery and Security Platform (ADSP) and new AI-driven features.

Financial highlights

• Q2 revenue: $731 million (7% YoY growth); product revenue: $337 million (12% YoY growth); systems revenue: $179 million (27% YoY growth); software revenue: $158 million (flat YoY).

• Global services revenue: $394 million (3% YoY growth); recurring revenue comprised 72% of total revenue.

• Non-GAAP gross margin: 83.1% (up 98 bps YoY); non-GAAP operating margin: 31.9% (up 103 bps YoY).

• Non-GAAP net income: $201 million; non-GAAP EPS: $3.42 (18% YoY growth).

• Cash and investments: $1.27 billion; deferred revenue: $1.92 billion (up 6% YoY); repurchased $125 million in shares.

Outlook and guidance

• Q3 FY25 revenue expected at $740-$760 million (8% YoY growth at midpoint); non-GAAP EPS $3.41-$3.53.

• FY25 revenue growth guidance raised to 6.5%-7.5%; non-GAAP EPS growth outlook raised to 8%-10%.

• FY25 software revenue growth expected to be at least 10%; non-GAAP gross margin guided to 83%-84%.

• At least 50% of annual free cash flow to be used for share repurchases.

• Management noted stabilization in macroeconomic conditions and continued improvement in customer demand.