SEATTLE, WA— F5 Networks, Inc. (NASDAQ: FFIV) today announced net income of $1.4 million ($0.05 per share) on revenue of $29.2 million for the third quarter of fiscal 2003, up from $0.8 million ($0.03 per share) on revenue of $28.0 million in the prior quarter. Both results exceeded the target ranges ($0.02 to $0.04 per share on revenue of $27.5 million to $29.0 million) set by management in the company’s April 23rd earnings release. In the third quarter of fiscal 2002 the company reported revenue of $27.1 million and a net loss of $4.3 million ($0.17 per share), including non-recurring expenses related to the discontinuation of its EDGE-FX™ cache business and the consolidation of operations.
F5 president and chief executive officer John McAdam said the company’s sequential revenue growth resulted from strong sales in North America and Asia-Pacific, up sharply from the prior quarter. “The growth of sales in North America was stronger in the third quarter than we had anticipated, with product sales up 12 percent from the second quarter,” McAdam said. “Internationally, sales in Asia-Pacific grew even faster, helping to offset seasonal slowness in Japan. From a product perspective, revenue increased sequentially across all product categories, with system sales representing 68 percent of total revenue and software sales accounting for 5 percent. We also saw sequential growth in service revenue, which represented 27 percent of total revenue.”
According to McAdam, the growth of North American revenue was fueled primarily by increased channel sales and a number of large enterprise wins. “As we continued to forge new relationships with some of the region’s largest resellers, we saw meaningful contributions from several of the new partners we signed up in prior quarters. In addition, we continued to build momentum in sales to global strategic accounts, which included four large wins totaling more than $2.5 million,” McAdam said.
Operationally, the company turned in a solid performance, reflected in several key metrics. Gross margin and operating expenses for the quarter were within the company’s target ranges. Days sales outstanding (DSO) fell to 63 days, and operating cash flow of $3.4 million helped boost cash, cash equivalents and investments to $96.8 million at June 30.
In a separate release issued today (
http://www.f5.com/f5/news/press/), F5 also announced that it has acquired the assets of uRoam, Inc., a provider of Web-based remote access solutions, for $25 million in cash. Steve Coburn, F5’s senior vice president of finance and CFO, said he expects early sales of uRoam’s products in September but does not expect revenue from those sales to be material in the current quarter, ending September 30, 2003. For fiscal 2004, he said uRoam’s products could generate revenue in the range of $8 million to $12 million. Including the effect of the acquisition, F5 has set a fourth quarter revenue target of $29.5 million to $30.5 million with earnings of $0.02 to $0.03 per diluted share.
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About F5 NetworksF5 Networks is the industry leader in Application Traffic Management, enabling enterprises and service providers to optimize any mission-critical application or web service, providing secure and predictable delivery of application traffic in an unpredictable environment. Through F5’s unique open iControl™ API, third party applications and network devices can take an active role in shaping network traffic, delivering application aware networks that allow customers to direct traffic based on their exact business requirements. Our solutions optimize the availability, security and speed of mission-critical servers and applications, including enterprise applications, web services, mobile IP applications, web publishing, content delivery, e-commerce, caching, firewalls and more. F5’s solutions are widely deployed in large enterprises, the top service providers, financial institutions, government agencies, healthcare, and portals throughout the world. The company is headquartered in Seattle, Washington, and has offices throughout North America, Europe, Japan and Asia Pacific. F5 Networks is located on the web at
www.f5.com.
Forward Looking Statements
Statements in this press release concerning the contribution of uRoam’s products to revenue in the current quarter and fiscal 2004, the revenue, earnings and net income targets for the fourth quarter of fiscal 2003 and other statements that 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 from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the successful integration of uRoam’s products with F5’s products, the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; F5's ability to sustain or develop distribution relationships; F5's ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel; F5's ability to expand in the international markets and the unpredictability of F5's sales cycle. F5 has no duty to update any guidance provided. More information about potential risk factors that could affect F5's business and financial results is included in the Company's annual report on Form 10K for the fiscal year ended September 30, 2002, and other public filings with the Securities and Exchange Commission.
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