FFIV 10-K & 10-Q changes, risk factors and insider trading
F5, Inc. · Nasdaq · Computer Communications Equipment · CIK 1048695 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows”
Largest changes
“As a result of the Cyber Incident and market forces beyond our control, the cost of our insurance may increase substantially, and we may not be able to obtain additional or comparable insurance coverage on commercially reasonable terms. In addition, governmental authorities investigating the Cyber Incident may seek to impose undertakings, injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, materially increase our software development and related expenses or otherwise require us to alter how we operate our business. …”see in full comparison
“We have not seen any evidence of modification to our software supply chain, including our source code and our build release pipelines. We have confirmed that the threat actor exfiltrated files from our BIG-IP product development environment and engineering knowledge management platform. …”see in full comparison
“The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows”see in full comparison
The markets we serve are rapidly evolving and highly competitive, and we expect competition to persist and intensify in the future. As we expand our reach and role into a broader set of multicloud solutions, the companies that we consider competitors evolves as well. In addition to server load balancing, traffic management, and other functions normally associated with application delivery, our suite of solutions has expanded our addressable market into security, and policy management, where we compete with a number of companies focused on niche areas of application security. Similarly, as we continue building AI functionality into our offerings, we expect competition to increase in the future, from established competitors and new market entrants, as AI technologies are integrated into the markets in which we compete.see in full comparison
“We may expend significant costs and expenses related to the Cyber Incident including in connection with our investigations, and to address the damage to our reputation, customer, employee and partner relations. If we are unable to maintain the trust of our current and prospective customers and partners, or our personnel continue to have to devote significant time to the Cyber Incident, our business, market share, results of operations and financial condition could be negatively affected.”see in full comparison
“Further, our Distributed Cloud Services infrastructure is dependent on our IT systems and related software interfaces, including third-party cloud hosting providers, in order to maintain a reliable and consistent level of performance for our customers. If those systems experience an outage, fail, or are otherwise interrupted, or if our ability to connect to or interact with one or more networks is interrupted, platform services may function at a diminished level or not at all. …”see in full comparison
Full comparison: every changed paragraph (31)
•Security vulnerabilities or control failures in our IT infrastructure or multicloud application securitydelivery and deliverysecurity solutionsproducts and services as well as unforeseen product errors could have a material adverse impact on our businessbusiness, results of operations, financial condition and reputation;
•The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows;
•Our success depends on sales and continued innovation of our application securitydelivery and deliverysecurity product lines;
•Issues related to the development and use of artificial intelligence ("AI") could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm of our business;
•We may not be able to compete effectively in the application securitydelivery and deliverysecurity market; and
•Continued macroeconomicMacroeconomic downturns or uncertainties may harm our industry, business, and results of operations;
•Climate change and associated regulation may have an impact on our business.
Security vulnerabilities or control failures in our IT infrastructure or multicloud application securitydelivery and deliverysecurity products and services as well as unforeseen product errors could have a material adverse impact on our businessbusiness, results of operations, financial condition and reputation
In the ordinary course of business, we store sensitive data, including intellectual property, personal data, our proprietary business information and that of our customers, suppliers and business partners on our networks. In addition, we store sensitive data through cloud-based services that may be hosted by third parties and in data center infrastructure maintained by third parties. The secure maintenance of this information is critical to our operations and business strategy. Our IT infrastructure and those of our partners and customers are subject to the increasing threat of intrusions by a wide range of bad actors and malicious parties, including computer programmers, hackers or sophisticated nation-state and nation-state supported actors, or they may be compromised due to employee error or wrongful conduct, malfeasance, or other disruptions. Despite our security measures, and those of our third-party vendors, our IT infrastructure has experienced breaches or disruptionsdisruptions, including the Cyber Incident, and may be vulnerable in the future to breach, attacks or disruptions. If any breach or attackattack, including the Cyber Incident, compromises our IT infrastructure, creates system disruptions or slowdowns or exploits security vulnerabilities therein, the information stored on our networks or those of our customers could be accessed and modified, publicly disclosed, or lost or stolen, and we may be subject to liability to our customers, individuals, suppliers, business partners and others, and may suffer reputational and financial harm.
Our multicloud application securitydelivery and deliverysecurity products and services are used by our customers to manage their critical applications and data. Bad actors and other malicious parties, have in the past and may attempt in the future to exploit security vulnerabilities and control weaknesses in our internal IT infrastructure or cloud environments that support our SaaS-based and managed solutions and services as well as our products that may be deployed in a customer environment. Despite our efforts to harden our IT infrastructure, our securitydelivery and deliverysecurity products and services against these risks, those efforts may not be successful, and from time to time, those systems and products could be compromised. Threat actors can seek to exploit, among other things, known or unknown vulnerabilities and control weaknesses in technology included in our IT infrastructure, securitydelivery and deliverysecurity products and services, and failure to quickly identify, patch or mitigate security vulnerabilities or strengthen security controls could render our IT infrastructure, securitydelivery and deliverysecurity products and services susceptible to a cyber-attack which may subject the Company to liability to our customers, suppliers, business partners and others, as well as reputational and financial harm. Moreover, inadequate or incomplete security monitoring, logging, asset management, or internal reporting and escalation, or gaps in coverage of security tools in our environment, could impact our ability to detect and respond to threats early and efficiently, giving threat actors an opportunity to gain or maintain access to our environment undetected. Finally, we rely on a number of third parties who connect to our network or with whom we share data, to support our business and operations, and to the extent that these third parties have weaknesses or deficiencies in their security program or vulnerabilities, they present business, operational, reputational, financial and legal risk. If any one or more of these vendor'svendors' security is compromised, it could have similar consequences as if we experienced a security event ourselves.
Our products may also contain undetected errors, defects, or vulnerabilities when first introduced or as new versions are released. We have experienced these issues in the past in connection with new products and product upgrades. Our products also must successfully operate with products from other vendors. As our products and customer IT infrastructures become increasingly complex, customers may also experience unforeseen errors in implementing our products into their IT environments.environments or integrating them with other vendor products. We expect that these errors, defects, or vulnerabilities will be found from time to time in new or enhanced products after commencement of commercial shipments. Any of these may temporarily or permanently disable our end-customers’ networks, information technology infrastructure or other systems, or expose our end-customers’ networks to attacks or compromise from security threats. These problems may cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts, cause significant customer relations problems, result in legal claims or liability, and impact demand for our products and services. We may also be subject to liability claims for damages. We carry insurance policies covering these types of liabilities, but these policies may not provide sufficient protection should a claim be asserted. A material product liability claim may harm our business and results of operations.
Our products must successfully operate with products from other vendors. As a result, when problems occur in a network, it may be difficult to identify the source of the problem. The occurrence of software or hardware problems, whether caused by our products or another vendor’s products, may result in the delay or loss of market acceptance of our products. The occurrence of any of these problems may harm our business and results of operations.
Any errors, defectsdefects, control failures, or vulnerabilities in our products or IT infrastructureinfrastructure, including the Cyber Incident, could result in:
The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows
The Cyber Incident may harm our reputation, our customers, employee and partner relations and our operations and business. Customers may in the future defer purchasing or choose to cancel or not renew their agreements or subscriptions with us.
We may expend significant costs and expenses related to the Cyber Incident including in connection with our investigations, and to address the damage to our reputation, customer, employee and partner relations. If we are unable to maintain the trust of our current and prospective customers and partners, or our personnel continue to have to devote significant time to the Cyber Incident, our business, market share, results of operations and financial condition could be negatively affected.
As a result of the Cyber Incident and market forces beyond our control, the cost of our insurance may increase substantially, and we may not be able to obtain additional or comparable insurance coverage on commercially reasonable terms. In addition, governmental authorities investigating the Cyber Incident may seek to impose undertakings, injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, materially increase our software development and related expenses or otherwise require us to alter how we operate our business. Further, any legislative or regulatory changes adopted in reaction to the Cyber Incident could require us to make modifications to the operation of our business that could have an adverse effect or increase or accelerate our compliance costs.
We have not seen any evidence of modification to our software supply chain, including our source code and our build release pipelines. We have confirmed that the threat actor exfiltrated files from our BIG-IP product development environment and engineering knowledge management platform. The discovery of new or different information regarding the Cyber Incident, including with respect to its scope and impact on our systems, products or customers, could increase our costs and liabilities related to the Cyber Incident and result in further damage to our business, reputation, intellectual property, results of operations and financial condition. The Cyber Incident also may embolden other threat actors to further target our systems, which could result in additional harm to our business. We cannot ensure that our steps to secure our systems, our product development environments and protect the security and integrity of the products that we deliver will be successful to protect against threat actors or cyberattacks or perceived by existing and prospective customers as sufficient to address the harm caused by the Cyber Incident.
Many of our business processes depend upon our IT systems, the systems and processes of third parties, including cloud hosting service providers, and on interfaces with the systems of third parties. For example, our order entry system provides information to the systems of our contract manufacturers, which enables them to build and ship our products. If those systems fail or are interrupted, or if our ability to connect to or interact with one or more networks is interrupted, our processes may function at a diminished level or not at all. This could harm our ability to ship products or our ability to deliver cloud-based services,services used in our operations, which could harm our financial results.
Further, our Distributed Cloud Services infrastructure is dependent on our IT systems and related software interfaces, including third-party cloud hosting providers, in order to maintain a reliable and consistent level of performance for our customers. If those systems experience an outage, fail, or are otherwise interrupted, or if our ability to connect to or interact with one or more networks is interrupted, platform services may function at a diminished level or not at all. This could harm our ability to deliver services to our customers, which could harm our customers and our financial results.
Customers are transitioning to a hybrid computing environment utilizing various cloud-based software and services accessed via various smart client devices. Pricing and delivery models are evolving and our competitors are developing and deploying cloud-based services for customers. In addition, new cloud infrastructures are enabling the emergence of new competitors including large cloud providers who offer their own application securitydelivery and deliverysecurity functionality as well as smaller companies targeting the growing numbers of "born in the cloud" applications. We devote significant resources to develop and deploy our cloud-based and SaaS software and services strategies. While we believe our expertise and investments in software and infrastructure for cloud-based services provides us with a strong foundation to compete, it is uncertain whether our strategies will continue to attract the customers or generate the revenue required to be successful. In addition to software development costs, we are incurring costs to build and maintain infrastructure to support cloud-computing and SaaS services to secure our customers’ data. These costs may reduce the gross and operating margins we have previously achieved. Whether we are successful in this new business model depends on our execution in a number of areas, including:
•economic uncertainty around the world, including continuedgeopolitical, trade, economic uncertaintyand asdiplomatic arelations may result of sovereign debt issues in Europeregulatory, operational, and cost challenges to our global operations; and
In addition, the impact of Brexit on EU-UK political, trade, economic and diplomatic relations continues to be uncertain and such impact may not be fully realized for several years or more. Continued uncertainty and friction may result in regulatory, operational, and cost challenges to our UK and global operations.
Our inability to successfully operate and integrate newly-acquired businesses appropriately, effectively and in a timely manner, or to retain key personnel of any acquired business, could have a material adverse effect on our ability to take advantage of further growth in demand for application securitydelivery and deliverysecurity solutions and other advances in technology, as well as on our revenues, gross margins and expenses.
Our continued success depends on our ability to identify and develop new software and systems products and new features for our existing software and systems products, to meet the demands of these changes, and the acceptance of those products and features by our existing and target customers. In addition, our software and systems products must interoperate with our end customers’ IT infrastructure, including the rapid adoption of AI-enabled software and systems, expanding use of the cloud and hybrid cloud environments, which often have different specifications, deploy products from multiple vendors, and utilize multiple protocol standards. Our customers’ IT infrastructure is becoming more complex and we may be reliant on orchestration and interoperability with third party vendors on whom we are reliant for testing and support of new software and systems product versions and configurations. If we are unable to identify, develop and deploy new software and systems products and new product features on a timely basis, our business and results of operations may be harmed.
Our success depends on sales and continued innovation of our application securitydelivery and deliverysecurity product lines
We expect to derive a significant portion of our net revenues from the sale of our cloud, software and hardware application securitydelivery and deliverysecurity product lines in the future. Implementation of our strategy depends upon these products being able to solve critical network availability, performance and security problems for our customers. If our products are unable to solve these problems for our customers or if we are unable to sustain the high levels of innovation in product feature sets needed to maintain leadership in what will continue to be a competitive market environment, our business and results of operations will be harmed.
A substantial portion of our business depends on the demand for information technology by large enterprise customers and service providers. We are dependent upon the overall economic health of our current and prospective customers. International, national, regional and local economic conditions, such as recessionary economic cycles, protracted economic slowdown or further deterioration of the economy could adversely impact demand for our products. Demand for our products and services depends substantially upon the general demand for application securitydelivery and deliverysecurity solutions, which fluctuates based on numerous factors, including capital spending levels and growth of our current and prospective customers, as well as general economic conditions. Moreover, the purchase of our products is often discretionary and may involve a significant commitment of capital and other resources. Future economic projections for the information technology sector are uncertain as companies continue to reassess their spending for technology projects and embrace a range of consumption models from physical systems to software, SaaS-based and managed services solutions. As a result, spending priorities for our current and future customers may vary and demand for our products and services may be impacted. In addition, customer buying patterns are changing over time and more customers seek to rent software on a subscription basis and to reduce their total cost of ownership. These evolving business models could lead to changes in demand and licensing strategies, which could have a material adverse effect on our business, results of operations and financial condition.
We may not be able to compete effectively in the application securitydelivery and deliverysecurity market
The markets we serve are rapidly evolving and highly competitive, and we expect competition to persist and intensify in the future. As we expand our reach and role into a broader set of multicloud solutions, the companies that we consider competitors evolves as well. In addition to server load balancing, traffic management, and other functions normally associated with application delivery, our suite of solutions has expanded our addressable market into security, and policy management, where we compete with a number of companies focused on niche areas of application security. Similarly, as we continue building AI functionality into our offerings, we expect competition to increase in the future, from established competitors and new market entrants, as AI technologies are integrated into the markets in which we compete.
We are a party to lawsuits in the normal course of our business. Litigation in general, and intellectual property and securities litigation in particular, can be expensive, lengthy and disruptive to normal business operations. Further, we could face litigation in connection with the Cyber Incident. Moreover, the results of complex legal proceedings are difficult to predict. Responding to lawsuits has been, and will likely continue to be, expensive and time-consuming for us. An unfavorable resolution of these lawsuits could adversely affect our business, results of operations or financial condition.
Management's Discussion & Analysis (MD&A)
Removed heading “Global Services”
Removed heading “Flexible Consumption Program”
Removed heading “Contract Acquisition Costs”
Largest changes
Sales and Marketing. Sales and marketing expenses consist of personnel costs, including the salaries,see in full comparisoncommissionscommissions, stock-based compensation, and related benefits of our sales and marketingstaff,personnel, the costs of our marketing programs, including public relations, advertising and trade shows, travel, facilities, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses. Sales and marketing expensedecreasedincreased$45.9$28.2 million, or5.2%3.4% in fiscal year20242025 from the prioryear, as compared to a year-over-year decrease of $48.4 million, or 5.2% in fiscal 2023.year. Thedecreaseincrease in sales and marketing expense for fiscal year20242025 was primarily due toaandecreaseincrease of$34.8$20.6 million in personnelcosts, largely driven by a reduction in workforce as part of the third quarter of fiscal 2023 restructuring plan.costs. Sales and marketing headcount at the end of fiscal year20242025decreasedincreased to2,1652,186 from2,1702,165 at the end of fiscal year2023.2024. Infiscaladdition,yeartechnology2023,expenditures to support the sales and marketingexpenseorganizationincludedincreaseda decrease of $18.4$6.5 million inpersonnel costs, as well as a decrease of $13.2 million in marketing spend as part of cost reductions implemented by management. Sales and marketing headcount at the end offiscal year2023 decreased to 2,1702025 from2,500 attheendpriorof fiscal year 2022. Sales and marketing expense included stock-based compensation expense of $84.5 million, $96.5 million and $104.3 million for fiscal years 2024, 2023 and 2022, respectively.year.
Research and Development. Research and development expenses consist of personnel costs, including thesee in full comparisonsalariessalaries, stock-based compensation, and related benefits of our product development personnel, prototype materials and other expenses related to the development of new and improved products,facilitiestechnology costs, including cloud hosting and software licenses expenses, facilities, depreciation and amortization expenses. Research and development expensedecreasedincreased$50.2$49.7 million, or9.3%10.1% in fiscal year20242025 from the prioryear, and remained relatively flat year-over-year in fiscal 2023.year. Thedecreaseincrease in research and development expense for fiscal year20242025 was primarily due toaandecreaseincrease of$36.7$31.4 million in personnelcosts,costs.largelyIndrivenaddition,bytechnologyreductionscostsintoworkforce as part ofsupport thefirst quarter of fiscal 2024 and third quarter of fiscal 2023 restructuring plans. Researchresearch and developmentheadcountorganizationatincreasedthe$18.9endmillionofin fiscal year2024 decreased to 2,0372025 from2,095 attheendpriorof fiscal year 2023, and decreased to 2,095 from 2,170 at the end of fiscal year 2022. Research and development expense included stock-based compensation expense of $60.3 million, $69.4 million and $71.8 million for fiscal years 2024, 2023 and 2022, respectively.year.
“On October 15, 2025, we disclosed information about a Cyber Incident in which a highly sophisticated nation-state threat actor had gained unauthorized long-term, persistent access to certain Company systems, and exfiltrated certain files, some of which contained certain portions of our BIG-IP source code and information about undisclosed vulnerabilities that our engineering teams were working on in BIG-IP. …”see in full comparison
Restructuring charges. In the first and fourth fiscal quarters of 2025, and the first fiscal quarter of 2024,see in full comparisonand the first and third fiscal quarters of 2023,we completed restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability. As a result of the first and fourth quarters of fiscal 2025 restructuring initiatives, we recorded charges of $11.3 million and $14.3 million, net of adjustments, related to reductions in workforce that are reflected in our results for fiscal 2025. As a result of the first quarter of fiscal 2024 restructuring initiative, we recorded a charge of $8.7 million, net of adjustments, related to a reduction in workforce that is reflected in our results for fiscal 2024.As a result of the first and third fiscal quarters of 2023 restructuring initiatives, we recorded charges of $8.7 million and $56.7 million, respectively, related to a reduction in workforce and exit of leased space that is reflected in our results for fiscal 2023.
“The following discussion and analysis comparing our fiscal 2025 financial results to fiscal 2024 should be read in conjunction with our consolidated financial statements, related notes and risk factors included elsewhere in this Annual Report on Form 10-K. For discussion and analysis related to our financial results comparing fiscal 2024 to 2023, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2024, which was filed with the Securities and Exchange Commission on November 18, 2024.”see in full comparison
Full comparison: every changed paragraph (71)
F5 is a leadingglobal providerleader of multicloudin application securitydelivery and deliverysecurity solutions which enables its customers to deploy, operate, secure, optimize, and govern every application and API across on-premises architectures, in the cloud, and at the network edge. Our cloud, software, and hardware solutions enable our customers to develop,deliver deploy,fast, operate, secure,available, and governsecure applicationsdigital in any architecture, from on-premisesexperiences to thetheir publiccustomers cloud.at scale. Our enterprise-grade application services are available as cloud-based,hardware, software-as-a-service,software, SaaS, and software-only solutions optimized for hybrid, multicloud environments, with modules that can run independently, or as part of an integrated solution on our high-performance appliances. We market and sell our products primarily through multiple indirect sales channels in theour Americas; Europe, the Middle East, and Africa ("EMEA"); and the Asia Pacific region ("APAC"). regions. Enterprise customers (Fortune 1000 or Business Week Global 1000 companies) in the technology, telecommunications, financial services, transportation, education, manufacturing, and health care industries, along with government customers, and service providers continue to make up the largest percentage of our customer base.
•Revenues. Our revenue is derived from the sales of both global servicesproducts and products. Our global services revenue includes annual maintenance contracts, training and consulting services. The majority of our product revenues are derived from sales of our application securitydelivery and deliverysecurity solutions including our F5 BIG-IP software and systems, F5 NGINX software, and our F5 Distributed Cloud Services offerings. Our F5 BIG-IP software solutions are sold both on a subscription and perpetual license and a subscription basis. We sell F5 NGINX on a subscription basis.basis as deployable software or SaaS. F5 Distributed Cloud Services provides security, multicloud networking, and edge-based computing solutions and are offered on a subscription basis, under a unified software-as-a-serviceSaaS ("SaaS")platform and managed service platform. Our services revenue includes annual maintenance contracts, training and consulting services.
We monitor the sales mix of our revenues within each reporting period. We believe customer acceptance rates of our new products, feature enhancements and consumption models are indicators of future trends. We also consider overall revenue concentration by geographic region as an additional indicator of current and future trends. In fiscal 20232025, we benefited from improving customer demand, which began to stabilize and asimprove wefollowing entered fiscal 2024, continued customer budget constraints brought on bymacroeconomic uncertainties inat the macroeconomic environment led to delays in customer purchase decisions. The impact of these buying patterns led to softer demand for both our software and systems products and services. Over the coursestart of fiscal 2024, we have seen customer demand stabilizing, however, we will continue to closely monitor the macroeconomic environment and its impacts on our business.2024.
•Cost of revenues and gross margins. We strive to control our cost of revenues and thereby maintain our gross margins. Significant items impacting cost of revenues are hardware costs paid to our contract manufacturers, third-party software license fees, software-as-a-service infrastructuretechnology costs, including cloud hosting and software licenses expenses, amortization of developed technology and personnel and overhead expenses. In addition, factors such as sales price, product and services mix, inventory obsolescence, returns, component price increases, warranty costs, and global supply chain constraints could significantly impact our gross margins.
•Operating expenses. Operating expenses are substantially driven by personnel and related overhead expenses. Existing headcount and future hiring plans are the predominant factors in analyzing and forecasting future operating expense trends. Other significant operating expenses that we monitor include costs associated with cyber and enterprise-wide security, marketing and promotions, travel, professional fees, computertechnology costscosts, including cloud hosting and software licenses expenses, related to the development of new products and provision of services, facilities and depreciation expenses.
•Liquidity and cash flows. Our financial condition remains strong with significant cash and investments. The increase in cash and investments for fiscal year 20242025 was primarily due to cash provided by operating activities of $792.4$949.7 million, partially offset by $500.6$502.1 million of cash used for the repurchase of outstanding common stock under our stock repurchase programprogram, andincluding the payment of related excise taxes. In addition, $171.1 million of cash was used for the acquisition of businesses during fiscal 2025, and $43.3 million of cash was used for capital expenditures related to the expansion of our facilities to support our operations worldwide, as well as investments in technology, including cloud hosting and software licenses, and equipment purchases to support our core business activities. Going forward, we believe the primary driver of cash flows will continue to be net income from operations. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash. Additionally, on January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). WeOn haveJanuary the31, option to increase commitments under2025, the Revolving Credit Facility fromexpired. At the time to time, subject to certain conditions, by up to $150.0 million. As of September 30, 2024,expiration, there were no outstanding borrowings under the Revolving Credit Facility, and we had available borrowing capacity of $350.0 million.Facility.
•Balance sheet. We view cash, short-term and long-term investments, deferred revenue, accounts receivable balances and days sales outstanding as important indicators of our financial health. Deferred revenues continued to increase in fiscal 20242025 due to an increase in deferred subscription contracts, including SaaS and maintenance associated with licensed-based subscriptions, which includes sales as part of our FlexFlexible Consumption Program. Our days sales outstanding for the fourth quarter of fiscal year 20242025 was 47.46. Days sales outstanding is calculated by dividing ending accounts receivable by revenue per day for a given quarter.
Cyber Incident
On October 15, 2025, we disclosed information about a Cyber Incident in which a highly sophisticated nation-state threat actor had gained unauthorized long-term, persistent access to certain Company systems, and exfiltrated certain files, some of which contained certain portions of our BIG-IP source code and information about undisclosed vulnerabilities that our engineering teams were working on in BIG-IP. Upon identifying the threat, we immediately activated our incident response process and took extensive actions to contain the threat actor, which included engaging leading external cybersecurity experts. Our investigation, monitoring, and related activities related to the incident are ongoing. To date, we believe our containment actions have been successful, and since the initiation of these efforts, we have not observed any evidence of new unauthorized activity.
To date, we are not aware of any undisclosed critical or remote code vulnerabilities, and we are not aware of active exploitation of any undisclosed vulnerabilities within our products. Further, to date, we have no evidence of modification to our software supply chain, including our source code and our build and release pipelines. This assessment has been validated through independent reviews by leading cybersecurity research firms. We have no evidence that the threat actor accessed or modified the NGINX source code or product development environment, nor do we have evidence they accessed or modified our F5 Distributed Cloud Services or Silverline systems. In response to the incident, we have prioritized delivering reliable software release updates to address all undisclosed high vulnerabilities in BIG-IP source code, with a significant number of our largest customers having completed these updates with minimal disruption. We have, and will continue to prioritize steps to bolster our security posture in implementing further measures to strengthen our security environment and protect our customers.
To date, this incident has not had a material impact on our operations. As a result of the incident, we anticipate near-term disruption to our sales cycles with demand impacts more pronounced in the early part of the fiscal year and normalizing in the second half of the fiscal year 2026. These disruptions may also lead to a near term impact on our operating margin within fiscal year 2026. We expect to continue to incur additional professional services and other expenses associated with incident response during fiscal year 2026. As of the date of this filing these expenses were not material. See Note 12. Commitments and Contingencies in the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K for more information.
Critical Accounting Policies and Estimates
Revenue Recognition. The majority of our contracts with our customers include various combinations of our products and subscriptions and support. Our hardware products and software licenses are distinct from our subscriptions and support services as the customer can benefit from the product without these services and such services are separately identifiable within the contract. We account for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. The amount of consideration we expect to receive in exchange for delivering on the contract is allocated to each performance obligation based on its relative standalone selling price.
When estimating standalone selling price, we first consider the prices charged for a deliverable when sold separately. If the standalone selling price is not observable through past transactions, we estimate it based on our pricing model and our go-to-market strategy, which include factors such as target gross margins, the geographies in which our offerings were sold, and offering type (products or services). As our business offerings evolve over time, we may be required to modify our estimated standalone selling prices, and as a result the timing and classification of our revenue could be affected.
Revenue Recognition. We sell products through distributors, resellers, and directly to end users. Revenue related to our contracts with customers is recognized by following a five-step process:
•Identify the contract(s) with a customer. Evidence of a contract generally consists of a purchase order issued pursuant to the terms and conditions of a distributor, reseller or end user agreement.
•Identify the performance obligations in the contract. Performance obligations are identified in our contracts and include hardware, hardware-based software, software-only solutions, cloud-based subscription services as well as a broad range of service performance obligations including consulting, training, installation and maintenance.
•Determine the transaction price. The purchase price stated in an agreed upon purchase order is generally representative of the transaction price. We offer several programs in which customers are eligible for certain levels of rebates if certain conditions are met. When determining the transaction price, we consider the effects of any variable consideration.
•Allocate the transaction price to the performance obligations in the contract. The transaction price in a contract is allocated based upon the relative standalone selling price of each distinct performance obligation identified in the contract.
•Recognize revenue when (or as) the entity satisfies a performance obligation. We satisfy performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring control of promised products and services to a customer.
Revenue is recognized net of any taxes collected, which are subsequently remitted to governmental authorities. Shipping and handling fees charged to our customers are recognized as product revenue in the period shipped and the related costs for providing these services are recorded as a cost of sale.
The following is a description of the principal activities from which we generate revenue:
Product
Revenue from the sale of our hardware and perpetual software products is generally recognized at a point in time when the product has been fulfilled and the customer is obligated to pay for the product. We also offer several products by subscription, either through term-based license agreements or as SaaS offerings. Revenue for term-based license agreements is recognized at a point in time when we deliver the software license to the customer and the subscription term has commenced. For our SaaS offerings, revenue is recognized ratably as the services are provided. Hardware, including the software run on those devices is considered systems revenue. Perpetual or subscription software offerings that are, or have the ability to be deployed on a standalone basis, along with our SaaS offerings, are considered software revenue. When rights of return are present and we cannot estimate returns, revenue is recognized when such rights of return lapse. Payment terms to customers are generally net 30 days to net 60 days.
Global Services
Revenues for post-contract customer support ("PCS") are recognized on a straight-line basis over the service contract term. PCS includes a limited period of telephone support, updates, repair or replacement of any failed product or component that fails during the term of the agreement, bug fixes and rights to upgrades, when and if available. Consulting services are customarily billed at fixed hourly rates, plus out-of-pocket expenses, and revenues are recognized as the consulting is completed. Similarly, training revenue is recognized as the training is completed.
Flexible Consumption Program
We enter into certain contracts with customers, including flexible consumption programs and multi-year subscriptions, with non-standard terms and conditions. Management assesses contractual terms in these agreements to identify and evaluate performance obligations. Management allocates consideration to each performance obligation based on relative fair value using standalone selling price and recognizes associated revenue as control is transferred to the customer.
Contract Acquisition Costs
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions on the initial PCS for hardware, perpetual software, and for term-based license subscription offerings are deferred and then amortized as an expense on a straight-line basis over the period of benefit. Sales commissions on SaaS subscription offerings are deferred and then amortized as an expense on a straight-line basis over the period of benefit. Management has determined the period of benefit to be 4.5 years for initial PCS on hardware and perpetual software offerings, and 3 to 5 years for subscription offerings.
Impact of Current Macroeconomic Conditions
Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on customer behavior. Uncertain economic conditions, including inflation, tariffs and other duties, higher interest rates, slower growth, fluctuations in foreign exchange rates, and other changes in economic conditions, may adversely affect our results of operations and financial performance. For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see Part I, Item 1A titled “"Risk Factors.”"
The following discussion and analysis comparing our fiscal 2025 financial results to fiscal 2024 should be read in conjunction with our consolidated financial statements, related notes and risk factors included elsewhere in this Annual Report on Form 10-K. For discussion and analysis related to our financial results comparing fiscal 2024 to 2023, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2024, which was filed with the Securities and Exchange Commission on November 18, 2024.
The following discussion and analysis should be read in conjunction with our consolidated financial statements, related notes and risk factors included elsewhere in this Annual Report on Form 10-K.
Net Revenues. Total net revenues increased 0.1% in fiscal year 2024 from fiscal year 2023, compared to an increase of 4.4% in fiscal year 2023 from the prior year. Overall revenue growth for the year ended September 30, 2024 was due to an increase in service revenue driven by continued growth in maintenance contract renewals, partially offset by a decrease in product revenue. International revenues represented 47.1%, 47.1% and 44.8% of net revenues in fiscal years 2024, 2023 and 2022, respectively.
Net Product Revenues. Net product revenues decreasedincreased 4.6%18.5% in fiscal year 20242025 from fiscal year 2023,2024. compared to anThe increase of 1.3% in fiscal year 2023 from the prior year. The decrease of $61.8$235.8 million in net product revenues for fiscal year 20242025 was due to a decrease in systems sales, partially offset by an increase in softwarerevenues revenueassociated primarilywith fromsystems packagedand software sales. The increase of $17.5$168.2 million inand net$67.6 productmillion, revenues for fiscal year 2023 was due to growth in systems revenue.respectively.
Net Service Revenues. Net service revenues increased 2.3% in fiscal year 2025 from fiscal year 2024. The increase of $36.1 million in service revenue for fiscal year 2025 was primarily the result of increased initial purchases and renewals of maintenance contracts.
Total systems revenue increased 31.3% in fiscal year 2025 from 2024 was primarily due to increases in customer demand and pricing increases on system offerings. Total systems revenue decreased 19.9% in fiscal year 2024 from 2023 primarily due to a lower level of shipments due to 2022 supply chain constrained demand fulfilled in 2023. Total software revenue was $803.1 million, $735.5 million, and $664.0 million for fiscal years 2025, 2024, and 2023, respectively. Total software revenue increased by 9.2% in fiscal year 2025 from 2024 primarily due to increases in renewals and initial purchases of subscription offerings. Total software revenue increased by 10.8% in fiscal year 2024 from 2023 primarily due to increases in renewals and initial purchases of subscription offerings. Total SaaS and managed services revenue did not account for 10% or more of total net revenues for any period presented.
Software Revenues. As a component of net product revenues, software revenues increased 10.8% in fiscal year 2024, and remained relatively flat in fiscal year 2023, compared from the prior year.
The following presents software revenue by consumption model (in thousands):
(1) Subscriptions revenue includes revenue from SaaS and managed services and term-based subscriptions.
Net Service Revenues. Net service revenues increased 4.4% in fiscal year 2024 from fiscal year 2023, compared to an increase of 7.2% in fiscal year 2023 from the prior year. The increase of $64.8 million in service revenue for fiscal year 2024 was the result of the renewal of maintenance agreements associated with perpetual offerings as customers continue to utilize their assets for longer periods of time, as well as the realization of price increases from prior periods. The increase of $99.8 million in service revenue for fiscal year 2023 was the result of increased purchases or renewals of maintenance contracts driven by delayed purchase decisions in new product purchases by our install base and additions to our installed base of products. In addition, we also began to see the benefits of price increases put in place in fiscal 2022.
The following distributor customers accounted for more than 10% of total net revenue:
The following distributor customers accounted for more than 10% of total receivables:
No otherend-user customers accounted for more than 10% of total net revenue or receivables. No other distributor customers accounted for more than 10% of total net revenue or receivables, other than those noted above.
Cost of Net Product Revenues. Cost of net product revenues consist of finished products purchased from our contract manufacturers, personnel costs, including the salaries, stock-based compensation, and related benefits of our personnel, manufacturing overhead, freight, warranty, provisions for excess and obsolete inventory, software-as-a-servicetechnology infrastructurecosts, costsincluding cloud hosting and software licenses expenses, facilities and depreciation expenses, and amortization expenses in connection with developed technology from acquisitions. Cost of net product revenues decreased to $336.2 million in fiscal year 2024, down 10.4% from the prior year, primarily due to a decrease in systems revenue. Cost of net product revenues increased to $375.2 million in fiscal year 2023, up 17.4% from the prior year, primarily due to systems productand software revenue growth. InThe addition,increase wewas continuedlargely tooffset experienceby componentan cost increases, expedite fees and other sourcing-related costsimprovement in fiscalproduct 2023.margins driven by a more favorable product mix.
Cost of Net Service Revenues. Cost of net service revenues consist of personnel costs, including the salaries, stock-based compensation, and related benefits of our professional services personnel, travel, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses. Cost of net service revenues increased $14.5 million, or 6.6% in fiscal year 2025 from the prior year. The increase in cost of net service revenues was primarily due to an increase in personnel costs.
Cost of Net Service Revenues. Cost of net service revenues consist of the salaries and related benefits of our professional services staff, travel, facilities and depreciation expenses. Cost of net service revenues as a percentage of net service revenues decreased to 14.3% in fiscal year 2024 compared to 14.8% in fiscal year 2023 and 16.0% in fiscal year 2022. Professional services headcount at the end of fiscal 2024 increased to 1,093 from 1,046 at the end of fiscal 2023. Professional services headcount at the end of fiscal year 2023 decreased to 1,046 from 1,091 at the end of fiscal 2022. In addition, cost of net service revenues included stock-based compensation expense of $22.7 million, $22.2 million and $21.9 million for fiscal years 2024, 2023 and 2022, respectively.
Sales and Marketing. Sales and marketing expenses consist of personnel costs, including the salaries, commissionscommissions, stock-based compensation, and related benefits of our sales and marketing staff,personnel, the costs of our marketing programs, including public relations, advertising and trade shows, travel, facilities, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses. Sales and marketing expense decreasedincreased $45.9$28.2 million, or 5.2%3.4% in fiscal year 20242025 from the prior year, as compared to a year-over-year decrease of $48.4 million, or 5.2% in fiscal 2023.year. The decreaseincrease in sales and marketing expense for fiscal year 20242025 was primarily due to aan decreaseincrease of $34.8$20.6 million in personnel costs, largely driven by a reduction in workforce as part of the third quarter of fiscal 2023 restructuring plan.costs. Sales and marketing headcount at the end of fiscal year 20242025 decreasedincreased to 2,1652,186 from 2,1702,165 at the end of fiscal year 2023.2024. In fiscaladdition, yeartechnology 2023,expenditures to support the sales and marketing expenseorganization includedincreased a decrease of $18.4$6.5 million in personnel costs, as well as a decrease of $13.2 million in marketing spend as part of cost reductions implemented by management. Sales and marketing headcount at the end of fiscal year 2023 decreased to 2,1702025 from 2,500 at the endprior of fiscal year 2022. Sales and marketing expense included stock-based compensation expense of $84.5 million, $96.5 million and $104.3 million for fiscal years 2024, 2023 and 2022, respectively.year.
Research and Development. Research and development expenses consist of personnel costs, including the salariessalaries, stock-based compensation, and related benefits of our product development personnel, prototype materials and other expenses related to the development of new and improved products, facilitiestechnology costs, including cloud hosting and software licenses expenses, facilities, depreciation and amortization expenses. Research and development expense decreasedincreased $50.2$49.7 million, or 9.3%10.1% in fiscal year 20242025 from the prior year, and remained relatively flat year-over-year in fiscal 2023.year. The decreaseincrease in research and development expense for fiscal year 20242025 was primarily due to aan decreaseincrease of $36.7$31.4 million in personnel costs,costs. largelyIn drivenaddition, bytechnology reductionscosts into workforce as part ofsupport the first quarter of fiscal 2024 and third quarter of fiscal 2023 restructuring plans. Researchresearch and development headcountorganization atincreased the$18.9 endmillion ofin fiscal year 2024 decreased to 2,0372025 from 2,095 at the endprior of fiscal year 2023, and decreased to 2,095 from 2,170 at the end of fiscal year 2022. Research and development expense included stock-based compensation expense of $60.3 million, $69.4 million and $71.8 million for fiscal years 2024, 2023 and 2022, respectively.year.
General and Administrative. General and administrative expenses consist of personnel costs, including the salaries, benefits and related costs of our executive, finance, information technology, human resource and legal personnel, third-party professional service fees, bad debt charges, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses. General and administrative expense increased $5.4$53.5 million, or 2.1%19.9% in fiscal year 20242025 from the prior year, as compared to a year-over-year decrease of $11.2 million, or 4.1% in fiscal 2023.year. The decreaseincrease in general and administrative expense for fiscal year 20242025 was primarily due to aan decreaseincrease of $6.5$25.8 million in feespersonnel paid for professional services.costs. General and administrative headcount at the end of fiscal year 20242025 increased to 875898 from 855875 at the end of fiscal year 2023.2024. In addition, fees paid for professional services increased $19.7 million in fiscal year 2023,2025 generalfrom andthe administrativeprior expenseyear, includedprimarily a decrease of $7.0 million in fees paiddue to outsideactivity consultants for legal, accounting and tax services. General and administrative headcount at the end of fiscal year 2023 decreasedrelated to 855 from 984 at the end of fiscal year 2022. General and administrative expense included stock-based compensation expense of $44.9 million, $41.1 million and $43.9 million for fiscal years 2024, 2023 and 2022, respectively.acquisitions.
Restructuring charges. In the first and fourth fiscal quarters of 2025, and the first fiscal quarter of 2024, and the first and third fiscal quarters of 2023, we completed restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability. As a result of the first and fourth quarters of fiscal 2025 restructuring initiatives, we recorded charges of $11.3 million and $14.3 million, net of adjustments, related to reductions in workforce that are reflected in our results for fiscal 2025. As a result of the first quarter of fiscal 2024 restructuring initiative, we recorded a charge of $8.7 million, net of adjustments, related to a reduction in workforce that is reflected in our results for fiscal 2024. As a result of the first and third fiscal quarters of 2023 restructuring initiatives, we recorded charges of $8.7 million and $56.7 million, respectively, related to a reduction in workforce and exit of leased space that is reflected in our results for fiscal 2023.
Other Income, Net. The change in other income, net for the fiscal year ended September 30, 2025 was primarily driven by interest income and expense, investment income, and foreign currency transaction gains and losses compared to the same periods in the prior year.
Other Income (Expense), Net. Other income (expense), net, consists primarily of interest income and expense and foreign currency transaction gains and losses. Other income (expense), net increased $23.5 million in fiscal year 2024, as compared to fiscal year 2023 and increased $31.8 million in fiscal year 2023, as compared to fiscal year 2022. The increase in other income (expense), net for fiscal year 2024 was primarily due to an increase in interest income of $16.8 million from our investments, and a decrease in interest expense of $3.2 million, compared to the prior year. In addition, foreign currency gains and losses improved by $2.1 million in fiscal year 2024, compared to the prior year. The increase in other income (expense), net for fiscal year 2023 as compared to fiscal year 2022 was primarily due to an increase in interest income of $16.5 million from our investments, and a decrease in interest expense of $5.5 million, compared to the prior year. In addition, foreign currency losses decreased $9.8 million for fiscal year 2023, compared to the prior year.
Provision for Income Taxes. We recorded ana 18.5%14.3% provision for income taxes for fiscal year 2024,2025, compared to 18.7%18.5% in fiscal year 2023 and 16.4% in fiscal year 2022.2024. The increasedecrease in effective tax rate from fiscal year 20222024 to 2023 and 20242025 is primarily due to the tax impact from stock-based compensation and tax reserves.
We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. In making these determinations we consider historical and projected taxable income, and ongoing prudent and feasible tax planning strategies in assessing the appropriateness of a valuation allowance. The net decrease in the valuation allowance of $4.3$5.4 million for fiscal year 2024 and net decrease of $2.2 million for fiscal year 20232025 was primarily related to tax net operating losses and credits incurred in certain foreign jurisdictions, and state tax carryforwards. Our net deferred tax assets as of September 30, 2024, 20232025 and 20222024 were $444.5 million and $358.8 million, $290.7 million, and $180.6 million, respectively.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The new legislation did not have a material impact for fiscal year 2025. The Company is currently evaluating the impact on future years but does not expect a material impact to the consolidated financial statements.
The Company operates in countries that have enacted, or have committed to enact, a minimum tax in accordance with the Organization for Economic Co-operation and Development’s Pillar Two framework. The Pillar Two legislation was effective for the Company starting fiscal year 2025 but did not have a material impact. The Company will continue to monitor for additional guidance but does not expect a material impact to the consolidated financial statements for future years.
Cash and cash equivalents, short-term investments and long-term investments totaled $1,360.0 million as of September 30, 2025, compared to $1,083.2 million as of September 30, 2024, compared to $808.4 million as of September 30, 2023, representing an increase of $274.8$276.8 million. The increase was primarily due to cash provided by operating activities of $792.4$949.7 million for fiscal 2024,2025, partially offset by cash used for the repurchase of outstanding common stock and the payment of related excise taxes of $500.6$502.1 million. In addition, $171.1 million of cash was used for the acquisition of businesses during fiscal 2025, and $43.3 million of cash was used for capital expenditures related to the expansion of our facilities to support our operations worldwide, as well as investments in technology, including cloud hosting and software licenses, and equipment purchases to support our core business activities. As of September 30, 2024,2025, 62.9%64.0% of our cash and cash equivalents and investment balances were outside of the U.S. The cash and cash equivalents and investment balances outside of the U.S. are subject to fluctuation based on the settlement of intercompany balances. In fiscal year 2023, the decrease to cash and cash equivalents, short-term investments and long-term investments from the prior year was primarily due to cash used for the repayment of the Term Loan Facility, including the outstanding principal balance of $350.0 million, and all accrued, but unpaid interest outstanding of $3.0 million. In addition, $350.0 million of cash was used for the repurchase of outstanding common stock during fiscal year 2023. The decrease was partially offset by cash provided by operating activities of $653.4 million. As of September 30, 2023, 62.8% of our cash and cash equivalents and investment balances were outside of the U.S.
Cash provided by operating activities during fiscal year 20242025 was $792.4$949.7 million compared to $653.4$792.4 million in fiscal year 2023 and $442.6 million in fiscal year 2022.2024. Cash provided by operating activities resulted primarily from cash generated from net income, after adjusting for non-cash charges such as stock-based compensation, depreciation and amortization charges and changes in operating assets and liabilities. Cash provided by operating activities for fiscal year 20242025 increased from the prior year primarily due to angrowth increaseof our business as reflected by increases in netcollections income,during asfiscal well2025, aspartially anoffset increaseby inhigher cash receivedexpenditure fromto customers.support our business growth.
What changed in the latest 10-Q
Risk Factors
New heading “Security vulnerabilities or control failures in our IT infrastructure or multicloud application delivery and security products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation”
New heading “Risks related to the development, deployment, and use of artificial intelligence ("AI") could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business”
Largest changes
“Risks related to the development, deployment, and use of artificial intelligence ("AI") could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business”see in full comparison
“Security vulnerabilities or control failures in our IT infrastructure or multicloud application delivery and security products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation”see in full comparison
“Additionally, AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies. There is a risk that AI technologies could automate or simplify functions currently performed by our application delivery and security solutions. If customers or investors believe that AI tools can replicate or replace aspects of our offerings, demand for our products and services could decline, and our competitive position could be weakened. …”see in full comparison
“While we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise. The rapid pace of AI development and the emergence of new regulations require us to commit substantial resources to ensure our AI-enabled products and services meet evolving legal and technical standards. The AI-related legal and regulatory landscape remains uncertain and may be inconsistent from jurisdiction to jurisdiction. …”see in full comparison
“•litigation, regulatory inquiries, or investigations that may be costly and harm our reputation.”see in full comparison
“In the ordinary course of business, we store sensitive data, including intellectual property, personal data, our proprietary business information and that of our customers, suppliers and business partners on our networks. In addition, we store sensitive data through cloud-based services that may be hosted by third parties and in data center infrastructure maintained by third parties. The secure maintenance of this information is critical to our operations and business strategy. …”see in full comparison
Full comparison: every changed paragraph (24)
There have been no material changes to our risk factors from those described in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, which was filed with the Securities and Exchange Commission on November 25, 2025.2025, except for those set forth below.
Security vulnerabilities or control failures in our IT infrastructure or multicloud application delivery and security products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation
In the ordinary course of business, we store sensitive data, including intellectual property, personal data, our proprietary business information and that of our customers, suppliers and business partners on our networks. In addition, we store sensitive data through cloud-based services that may be hosted by third parties and in data center infrastructure maintained by third parties. The secure maintenance of this information is critical to our operations and business strategy. Our IT infrastructure and those of our partners and customers are subject to the increasing threat of intrusions by a wide range of bad actors and malicious parties, including computer programmers, hackers or sophisticated nation-state and nation-state supported actors, or they may be compromised due to employee error or wrongful conduct, malfeasance, or other disruptions. Despite our security measures, and those of our third-party vendors, our IT infrastructure has experienced breaches or disruptions, including the Cyber Incident, and may be vulnerable in the future to breach, attacks or disruptions. If any breach or attack, including the Cyber Incident, compromises our IT infrastructure, creates system disruptions or slowdowns or exploits security vulnerabilities therein, the information stored on our networks or those of our customers could be accessed and modified, publicly disclosed, or lost or stolen, and we may be subject to liability to our customers, individuals, suppliers, business partners and others, and may suffer reputational and financial harm.
Our multicloud application delivery and security products and services are used by our customers to manage their critical applications and data. Bad actors and other malicious parties, have in the past and may attempt in the future to exploit security vulnerabilities and control weaknesses in our internal IT infrastructure or cloud environments that support our SaaS-based and managed solutions and services as well as our products that may be deployed in a customer environment. Despite our efforts to harden our IT infrastructure, our delivery and security products and services against these risks, those efforts may not be successful, and from time to time, those systems and products could be compromised. Threat actors can seek to exploit, among other things, known or unknown vulnerabilities and control weaknesses in technology included in our IT infrastructure, delivery and security products and services, and failure to quickly identify, patch or mitigate security vulnerabilities or strengthen security controls could render our IT infrastructure, delivery and security products and services susceptible to a cyber-attack which may subject the Company to liability to our customers, suppliers, business partners and others, as well as reputational and financial harm. Moreover, inadequate or incomplete security monitoring, logging, asset management, or internal reporting and escalation, or gaps in coverage of security tools in our environment, could impact our ability to detect and respond to threats early and efficiently, giving threat actors an opportunity to gain or maintain access to our environment undetected. Finally, we rely on a number of third parties who connect to our network or with whom we share data, to support our business and operations, and to the extent that these third parties have weaknesses or deficiencies in their security program or vulnerabilities, they present business, operational, reputational, financial and legal risk. If any one or more of these vendors' security is compromised, it could have similar consequences as if we experienced a security event ourselves.
Our products may also contain undetected errors, defects, or vulnerabilities when first introduced or as new versions are released. We have experienced these issues in the past in connection with new products and product upgrades. Our products also must successfully operate with products from other vendors. As our products and customer IT infrastructures become increasingly complex, customers may also experience unforeseen errors in implementing our products into their IT environments or integrating them with other vendor products. We expect that these errors, defects, or vulnerabilities will be found from time to time in new or enhanced products after commencement of commercial shipments. Any of these may temporarily or permanently disable our end-customers’ networks, information technology infrastructure or other systems, or expose our end-customers’ networks to attacks or compromise from security threats. These problems may cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts, cause significant customer relations problems, result in legal claims or liability, and impact demand for our products and services. We may also be subject to liability claims for damages. We carry insurance policies covering these types of liabilities, but these policies may not provide sufficient protection should a claim be asserted. A material product liability claim may harm our business and results of operations.
Advances in AI capabilities, including increasingly sophisticated AI models and coding agents capable of autonomously creating, discovering and exploiting vulnerabilities and other security issues, are becoming more broadly accessible, including to nation-state actors and other well-resourced threat actors. These tools can enable faster identification and exploitation and more significant impact by threat actors, shortening the time to detect attacks and expanding the time and resources required to respond to them. These tools may be leveraged against the AI infrastructure of the Company and our third-party vendors, our multicloud application delivery and security products and services, and our other products. Threat actors may also target our AI models and supporting systems for our products and services in ways that we cannot yet anticipate.
Any errors, defects, control failures, or vulnerabilities in our products or IT infrastructure, including the Cyber Incident, could result in:
•expenditures of significant financial and product development resources in efforts to analyze, correct, eliminate, or work-around errors and defects or to address and eliminate vulnerabilities;
•remediation costs, such as liability for stolen assets or information, repairs or system damage;
•increased cybersecurity protection costs which may include systems and technology changes, training, and engagement of third party experts and consultants;
•increased insurance premiums;
•loss of existing or potential customers or channel partners;
•loss of proprietary information leading to lost competitive positioning and lost revenues;
•inaccessibility to certain data or systems necessary to operate the business;
•negative publicity and damage to our reputation;
•delayed or lost revenue;
•delay or failure to attain market acceptance or decrease in demand for our products and services;
•an increase in warranty claims compared with our historical experience, or an increased cost of servicing warranty claims, either of which would adversely affect our gross margins; and
•litigation, regulatory inquiries, or investigations that may be costly and harm our reputation.
Risks related to the development, deployment, and use of artificial intelligence ("AI") could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business
We currently incorporate AI technology in certain of our products and services and in our business operations and our research and development efforts in this area are ongoing. The development and deployment of AI involve inherent risks, technical challenges, and potential unintended consequences that could adversely affect our and our customers' adoption and use of these technologies. For example, AI solutions may use algorithms, datasets, or training methodologies that are incomplete, reflect biases, or contain other flaws or deficiencies.
Additionally, AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies. There is a risk that AI technologies could automate or simplify functions currently performed by our application delivery and security solutions. If customers or investors believe that AI tools can replicate or replace aspects of our offerings, demand for our products and services could decline, and our competitive position could be weakened. Market sentiment regarding AI's potential to disrupt the application delivery and security industry could negatively affect our stock price and business, regardless of whether such disruption actually materializes or impacts our competitive position.
While we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise. The rapid pace of AI development and the emergence of new regulations require us to commit substantial resources to ensure our AI-enabled products and services meet evolving legal and technical standards. The AI-related legal and regulatory landscape remains uncertain and may be inconsistent from jurisdiction to jurisdiction. Our obligations to comply with the evolving legal and regulatory landscape could entail significant costs or limit our ability to incorporate certain AI capabilities into our offerings.
AI-related issues, deficiencies and/or failures could (i) give rise to legal and/or regulatory action, including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new applications of existing data protection, privacy, intellectual property, and other laws; (ii) damage our reputation; or (iii) otherwise materially harm our business.
Management's Discussion & Analysis (MD&A)
Largest changes
“The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. …”see in full comparison
“The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These statements include, but are not limited to, statements about our plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and similar expressions. …”see in full comparison
•Liquidity and cash flows.see in full comparisonOurWe continue to maintain a strong financialconditionposition,remainscharacterizedstrongbywith significantsubstantial cash andinvestments.investment resources, which provide liquidity, support ongoing operations, and enable us to pursue strategic growth opportunities. The increase in cash and investments for the firstsixnine months of fiscal year 2026 was primarily due to cash provided by operating activities of$525.1$841.4 million, partially offset by purchases of property and equipment of$28.1$63.7million andmillion, cash used to repurchase outstanding common stock under our stock repurchase program, including excise taxes, of$401.1$501.1 million, and cash used in acquisition of a business of $47.6 million. Going forward, we believe the primary driver of cash flows will continue to be net income from operations. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash.
Cash provided by operating activities for the firstsee in full comparisonsixnine months of fiscal year 2026 resulted from net income of$327.8$536.0 million combined with changes in operating assets and liabilities, as adjusted for various non-cash items including stock-based compensation, deferred revenue, depreciation,impairment,and amortization charges. Cash provided by operating activities for the firstsixnine months of fiscal year 2026 increased from the comparable period in the prior year primarily due to growth of our business as reflected by increases in collections during thesixnine months endedMarchJune31,30, 2026.
Research and Development. Research and development expenses consist of personnel costs, including the salaries, stock-based compensation, and related benefits of our product development personnel, prototype materials, and other expenses related to the development of new and improved products, technology costs, including cloud hosting and software licenses expenses, facilities, depreciation, and amortization expenses. Research and development expenses increasedsee in full comparison$14.5$28.3 million, or10.6%20.8% for the three months endedMarchJune31,30, 2026 and increased$25.1$53.4 million, or9.4%13.2% for thesixnine months endedMarchJune31,30, 2026 from the comparable periods in the prior year. The increase in research and development expenses for the three andsixnine months endedMarchJune31,30, 2026 was primarily due to an increase inpersonneltechnology costs of$7.9$13.5 million and$8.6$22.7 million, respectively, and an increase intechnologypersonnel costs of$5.1$10.9 million and$9.2$19.5 million, respectively, from the comparable periods in the prior year. In addition, expenses for professional services increased$2.0$2.6 million and$7.6$10.2 million, driven by costs incurred in response to the Cyber Incident, for the three andsixnine months endedMarchJune31,30, 2026, respectively, from the comparable periods in the prior year.
General and Administrative. General and administrative expenses consist of personnel costs, including the salaries, benefits and related costs of our executive, finance, information technology, human resource, and legal personnel, third-party professional service fees, bad debt charges, costs associated with cyber and enterprise-wide security, technology costs, including cloud hosting and software licenses expenses, facilities, and depreciation expenses. General and administrative expenses increasedsee in full comparison$15.0$16.9 million, or19.6%21.5% for the three months endedMarchJune31,30, 2026 and increased$32.6$49.5 million, or21.8%21.7% for thesixnine months endedMarchJune31,30, 2026 from the comparable periods in the prior year. The increase in general and administrative expenses for the three andsixnine months endedMarchJune31,30, 2026 was primarily due to an increase in personnel costs of$7.6$11.7 million and$18.0$29.7 million, respectively, from the comparable periods in the prior year. In addition, expenses for professional services increased$5.5$3.2 million and$12.1$15.3 million, driven by costs incurred in response to the Cyber Incident, for the three andsixnine months endedMarchJune31,30, 2026, respectively, from the comparable periods in the prior year.
Full comparison: every changed paragraph (23)
The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These statements include, but are not limited to, statements about our plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances, such as statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, our product strategy and anticipated future products and capabilities, our objectives for future operations, and the impact of such assumptions on our financial condition and results of operations, and are generally identified by the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and similar expressions. These forward-looking statements are based on current information and expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, customer acceptance of offerings; disruptions to the global supply chain resulting in inability to source required parts for F5’s products or the ability to only do so at greatly increased prices thereby impacting our revenues and/or margins; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; F5’s ability to successfully integrate acquired businesses’ products with F5 technologies; the ability of F5’s sales professionals and distribution partners to sell new solutions and service offerings; the timely development, introduction and acceptance of additional new products and features by F5 or competitors; competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into F5’s markets, and new product and marketing initiatives by our competitors; increased sales discounts; the business impact of the acquisitions and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of completion of acquisitions; uncertain global economic conditions which may result in reduced customer demand for our products and services and changes in customer payment patterns; litigation involving patents, intellectual property, shareholder and other matters, and governmental investigations; potential security flaws in networks, products or services; cybersecurity attacks on networks, products or services; natural catastrophic events; a pandemic or epidemic; F5’s ability to sustain, develop and effectively utilize 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 international markets; the unpredictability of F5’s sales cycle; the ability of F5 to execute on our share repurchase program, including the timing of any repurchases; future prices of F5’s common stock; and other risks and uncertainties described more fully in Part II, Item 1A. "Risk Factors" herein, Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended September 30, 2025, and in other documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to revise or update any such forward-looking statements.
The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These statements include, but are not limited to, statements about our plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and similar expressions. These forward-looking statements are based on current information and expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part II, Item 1A. "Risk Factors" herein and in other documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to revise or update any such forward-looking statements.
•Revenues. Our revenue is derived from the sales of both products and services. The majority of our product revenues are derived from sales of our application delivery and security solutions including our F5 BIG-IP software and systems, F5 NGINX software, and our F5 Distributed Cloud Services offerings. Our F5 BIG-IP software solutions are sold both on a subscription and perpetual license basis. We sell F5 NGINX on a subscription basis as deployable software or SaaS. F5 Distributed Cloud Services provides security, multicloud networking, and edge-based computing solutions and are offered on a subscription basis, under a unified SaaS platform and managed service platform. Our services revenue includes annual maintenance contracts, training and consulting services.
•Cost of revenues and gross margins. We strive to control our cost of revenues and thereby maintain our gross margins. Significant items impacting cost of revenues are hardware costs paid to our contract manufacturers, personnel costs, including the salaries, stock-based compensation and related benefits of our personnel, technology costs, including third-party cloud hosting and related services, depreciation of cloud infrastructure costs, software licenses expenses, and amortization expense in connection with developed technology from acquisitions. In addition, factors such as sales price, product and services mix, inventory obsolescence, returns, component price increases, warranty costs, and global supply chain constraints could significantly impact our gross margins.
•Liquidity and cash flows. OurWe continue to maintain a strong financial conditionposition, remainscharacterized strongby with significantsubstantial cash and investments.investment resources, which provide liquidity, support ongoing operations, and enable us to pursue strategic growth opportunities. The increase in cash and investments for the first sixnine months of fiscal year 2026 was primarily due to cash provided by operating activities of $525.1$841.4 million, partially offset by purchases of property and equipment of $28.1$63.7 million andmillion, cash used to repurchase outstanding common stock under our stock repurchase program, including excise taxes, of $401.1$501.1 million, and cash used in acquisition of a business of $47.6 million. Going forward, we believe the primary driver of cash flows will continue to be net income from operations. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash.
•Balance sheet. We view cash, short-term and long-term investments, deferred revenue, and accounts receivable balances, and days sales outstandingbalances as important indicators of our financial health. Deferred revenues increased to $2.1$2.2 billion as of MarchJune 31,30, 2026 from $2.0 billion as of September 30, 2025 primarily due to an increase in maintenance contracts related to strong systems shipments, in addition to an increase in deferred revenue associated with our subscription offerings. Our days sales outstanding for the second quarter of fiscal year 2026 was 47. Days sales outstanding is calculated by dividing ending accounts receivable by revenue per day for a given quarter.
Net Product Revenues. Net product revenues increased 21.7%19.0% and 16.3%17.3% for the three and sixnine months ended MarchJune 31,30, 2026, respectively, from the comparable periods in the prior year. The increase in net product revenues for the three and sixnine months ended MarchJune 31,30, 2026 was due to an increase in revenues associated with systems and software.
Net Service Revenues. Net service revenues increased 1.8%2.7% and 2.7% for the three and sixnine months ended MarchJune 31,30, 2026, respectively, from the comparable periods in the prior year. The increase in net service revenues for the three and sixnine months ended MarchJune 31,30, 2026 was primarily the result of increased purchasessales of maintenance contracts.
Total systems revenue increased 26.2%32.4% and 31.1%31.6% for the three and sixnine months ended MarchJune 31,30, 2026, respectively, from the comparable periods in the prior year. The increase in systems revenue was primarily due to increases in customer demand. Total software revenue increased 16.7%7.4% and 2.6%4.3% for the three and sixnine months ended MarchJune 31,30, 2026, respectively, from the comparable periods in the prior year. The increase in software revenue was primarily due to increasesincreased insales of subscription offerings.
Cost of Net Product Revenues. Cost of net product revenues consist of finished products purchased from our contract manufacturers, personnel costs, including the salaries, stock-based compensation, and related benefits of our personnel, manufacturing overhead, freight, warranty, provisions for excess and obsolete inventory, technology costs, including third-party cloud hosting and related services, depreciation of cloud infrastructure, software licenses expenses, facilities and depreciation expenses, and amortization expenses in connection with developed technology from acquisitions. Cost of net product revenues increased $9.6$4.7 million, or 11.8%5.3% for the three months ended MarchJune 31,30, 2026 and increased $19.0$23.8 million, or 11.6%9.4% for the sixnine months ended MarchJune 31,30, 2026 from the comparable periods in the prior year primarily due to systems revenue growth.
Cost of Net Service Revenues. Cost of net service revenues consist of personnel costs, including the salaries, stock-based compensation, and related benefits of our professional services personnel, travel, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses. Cost of net service revenues increased $0.3$0.2 million, or 0.6%0.4% for the three months ended MarchJune 31,30, 2026 and increased $2.2$2.4 million, or 1.9%1.4% for the sixnine months ended MarchJune 31,30, 2026 from the comparable periods in the prior year. The increase in cost of net service revenues was primarily due to an increase in personnel and technology costs.
Sales and Marketing. Sales and marketing expenses consist of personnel costs, including the salaries, commissions, stock-based compensation, and related benefits of our sales and marketing personnel, the costs of our marketing programs, including public relations, advertising and trade shows, travel, facilities, technology costs, including cloud hosting and software licenses expenses, facilities, and depreciation expenses. Sales and marketing expenses increased $21.4$17.6 million, or 9.8%8.0% for the three months ended MarchJune 31,30, 2026 and increased $40.1$57.7 million, or 9.5%9.0% for the sixnine months ended MarchJune 31,30, 2026 from the comparable periods in the prior year. The increase in sales and marketing expense for the three and sixnine months ended MarchJune 31,30, 2026 was primarily due to an increase of $18.9$13.5 million and $33.5$47.0 million, respectively, in personnel costs from the comparable periods in the prior year.
Research and Development. Research and development expenses consist of personnel costs, including the salaries, stock-based compensation, and related benefits of our product development personnel, prototype materials, and other expenses related to the development of new and improved products, technology costs, including cloud hosting and software licenses expenses, facilities, depreciation, and amortization expenses. Research and development expenses increased $14.5$28.3 million, or 10.6%20.8% for the three months ended MarchJune 31,30, 2026 and increased $25.1$53.4 million, or 9.4%13.2% for the sixnine months ended MarchJune 31,30, 2026 from the comparable periods in the prior year. The increase in research and development expenses for the three and sixnine months ended MarchJune 31,30, 2026 was primarily due to an increase in personneltechnology costs of $7.9$13.5 million and $8.6$22.7 million, respectively, and an increase in technologypersonnel costs of $5.1$10.9 million and $9.2$19.5 million, respectively, from the comparable periods in the prior year. In addition, expenses for professional services increased $2.0$2.6 million and $7.6$10.2 million, driven by costs incurred in response to the Cyber Incident, for the three and sixnine months ended MarchJune 31,30, 2026, respectively, from the comparable periods in the prior year.
General and Administrative. General and administrative expenses consist of personnel costs, including the salaries, benefits and related costs of our executive, finance, information technology, human resource, and legal personnel, third-party professional service fees, bad debt charges, costs associated with cyber and enterprise-wide security, technology costs, including cloud hosting and software licenses expenses, facilities, and depreciation expenses. General and administrative expenses increased $15.0$16.9 million, or 19.6%21.5% for the three months ended MarchJune 31,30, 2026 and increased $32.6$49.5 million, or 21.8%21.7% for the sixnine months ended MarchJune 31,30, 2026 from the comparable periods in the prior year. The increase in general and administrative expenses for the three and sixnine months ended MarchJune 31,30, 2026 was primarily due to an increase in personnel costs of $7.6$11.7 million and $18.0$29.7 million, respectively, from the comparable periods in the prior year. In addition, expenses for professional services increased $5.5$3.2 million and $12.1$15.3 million, driven by costs incurred in response to the Cyber Incident, for the three and sixnine months ended MarchJune 31,30, 2026, respectively, from the comparable periods in the prior year.
Restructuring Charges. In the first fiscal quarter of 2025, we completed a restructuring plan to align strategic and financial objectives and optimize resources for long term growth. As a result of our restructuring initiative, we recorded charges of $11.3 million, net of adjustments, related to a reduction in workforce that is reflected in our results for the sixnine months ended MarchJune 31,30, 2025.
Other Income, Net. The change in other income, net for the three and sixnine months ended MarchJune 31,30, 2026 compared to the same periods in the prior year was primarily driven by interest income and expense, investment income, and foreign currency transaction gains and losses.
Provision for Income Taxes. We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. In making these determinations we consider historical and projected taxable income, and ongoing prudent and feasible tax planning strategies in assessing the appropriateness of a valuation allowance. Our net deferred tax assets at MarchJune 31,30, 2026 and September 30, 2025 were $465.5$485.2 million and $444.5 million, respectively. The net deferred tax assets include valuation allowances of $34.8 million and $34.3 million as of MarchJune 31,30, 2026 and September 30, 2025, respectively, which are primarily related to certain state and foreign net operating losses and tax credit carryforwards.
Cash and cash equivalents, short-term investmentsinvestments, and long-term investments totaled $1,463.6$1,627.8 million as of MarchJune 31,30, 2026, compared to $1,360.0 million as of September 30, 2025, representing an increase of $103.6$267.8 million. The increase was primarily due to cash provided by operating activities of $525.1$841.4 million for the sixnine months ended MarchJune 31,30, 2026, partially offset by cash used for the repurchase of common stock, including excise taxes, during the sixnine months ended MarchJune 31,30, 2026 of $401.1$501.1 million.
Cash provided by operating activities for the first sixnine months of fiscal year 2026 resulted from net income of $327.8$536.0 million combined with changes in operating assets and liabilities, as adjusted for various non-cash items including stock-based compensation, deferred revenue, depreciation, impairment, and amortization charges. Cash provided by operating activities for the first sixnine months of fiscal year 2026 increased from the comparable period in the prior year primarily due to growth of our business as reflected by increases in collections during the sixnine months ended MarchJune 31,30, 2026.
Cash used in investing activities was $29.2$114.2 million for the sixnine months ended MarchJune 31,30, 2026, compared to cash used in investing activities of $30.6$55.7 million for the same period in the prior year. Investing activities include purchases, sales and maturities of long-term investments, business acquisitions, and capital expenditures. The amount of cash used in investing activities for the sixnine months ended MarchJune 31,30, 2026 was primarily the result of $28.1$47.6 million used in the acquisition of a business and $63.7 million in capital expenditures related to maintaining our operations worldwide.
Cash used in financing activities was $396.3$464.2 million for the sixnine months ended MarchJune 31,30, 2026, compared to cash used in financing activities of $244.3$337.7 million for the same period in the prior year. Our financing activities for the sixnine months ended MarchJune 31,30, 2026 primarily consisted of $401.1$501.1 million of cash used to repurchase shares of common stock and the payment of related excise taxes. In addition, $18.1$22.7 million in cash was used for taxes related to net share settlement of equity awards. Cash used in financing activities was partially offset by cash received from the exercise of employee stock options and stock purchases under our employee stock purchase plan of $22.9$59.6 million.
As of MarchJune 31,30, 2026, our principal commitments consisted of obligations outstanding under operating leases and purchase obligations with one of our component suppliers.
In October 2022, we entered into an unconditional purchase commitment with one of our suppliers for the delivery of systems components. Under the terms of the agreement, we are obligated to purchase $10.0 million of component inventory annually, with a total committed amount of $40.0 million over a four-year term. As of MarchJune 31,30, 2026, we had no remaining purchase commitments under the fourth year of the agreement. We did not have any non-cancelable long-term purchase commitments outstanding as of MarchJune 31,30, 2026.
FFIV insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 21 filings (10 insiders, 9 trade dates, 39,408 shares, about $14.7M; 19 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -39,408 (purchases minus sales); net value about -$14.7M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-14 | Montoya Michael F |
Open-market sale |
80 | $414.18 | $33.1K |
| 2026-09-14 | Montoya Michael F |
Open-market sale |
440 | $413.31 | $181.9K |
| 2026-09-14 | Montoya Michael F |
Open-market sale |
1,173 | $411.50 | $482.7K |
| 2026-09-14 | Montoya Michael F |
Open-market sale |
277 | $410.37 | $113.7K |
| 2026-09-14 | Montoya Michael F |
Open-market sale |
240 | $408.96 | $98.2K |
| 2026-09-14 | Montoya Michael F |
Open-market sale |
1,296 | $406.24 | $526.5K |
| 2026-09-14 | Montoya Michael F |
Open-market sale |
920 | $412.38 | $379.4K |
| 2026-09-14 | Maddison John Anthony |
Open-market sale |
204 | $406.24 | $82.9K |
| 2026-08-05 | Fountain Thomas Dean |
Open-market sale |
1,208 | $414.63 | $500.9K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
996 | $412.90 | $411.2K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
40 | $416.83 | $16.7K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
200 | $415.97 | $83.2K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
284 | $415.03 | $117.9K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
200 | $409.68 | $81.9K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
1,100 | $410.94 | $452.0K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
642 | $411.82 | $264.4K |
| 2026-08-05 | Locoh-Donou Francois |
Open-market sale |
320 | $414.10 | $132.5K |
| 2026-08-03 | Whalen Chad Michael |
Open-market sale |
703 | $404.86 | $284.6K |
| 2026-08-03 | Werner Edward Cooper |
Open-market sale |
599 | $405.92 | $243.1K |
| 2026-08-03 | Okeke Angelique M |
Open-market sale |
515 | $404.49 | $208.3K |
| 2026-08-03 | Maddison John Anthony |
Open-market sale |
1,000 | $405.85 | $405.9K |
| 2026-08-03 | Anand Kunal |
Open-market sale |
392 | $404.63 | $158.6K |
| 2026-08-01 | Whalen Chad Michael |
Shares withheld for tax |
911 | $402.57 | $366.7K |
| 2026-08-01 | Whalen Chad Michael |
Option exercise |
2,318 | — | — |
| 2026-08-01 | Werner Edward Cooper |
Shares withheld for tax |
388 | $402.57 | $156.2K |
| 2026-08-01 | Werner Edward Cooper |
Option exercise |
987 | — | — |
| 2026-08-01 | Okeke Angelique M |
Shares withheld for tax |
415 | $402.57 | $167.1K |
| 2026-08-01 | Okeke Angelique M |
Option exercise |
1,060 | — | — |
| 2026-08-01 | Montoya Michael F |
Option exercise | 2,136 | — | — |
| 2026-08-01 | Montoya Michael F |
Shares withheld for tax | 840 | $402.57 | $338.2K |
| 2026-08-01 | Maddison John Anthony |
Shares withheld for tax |
250 | $402.57 | $100.6K |
| 2026-08-01 | Maddison John Anthony |
Option exercise |
454 | — | — |
| 2026-08-01 | Locoh-Donou Francois |
Option exercise | 6,233 | — | — |
| 2026-08-01 | Locoh-Donou Francois |
Shares withheld for tax | 2,451 | $402.57 | $986.7K |
| 2026-08-01 | Fountain Thomas Dean |
Shares withheld for tax | 1,492 | $402.57 | $600.6K |
| 2026-08-01 | Fountain Thomas Dean |
Option exercise | 2,700 | — | — |
| 2026-08-01 | Anand Kunal |
Option exercise |
1,290 | — | — |
| 2026-08-01 | Anand Kunal |
Shares withheld for tax |
506 | $402.57 | $203.7K |
| 2026-07-30 | Mehta Nikhil Ramesh |
Open-market sale | 943 | $387.07 | $365.0K |
| 2026-07-30 | Mehta Nikhil Ramesh |
Open-market sale | 717 | $388.10 | $278.3K |
| 2026-07-30 | Mehta Nikhil Ramesh |
Open-market sale | 198 | $391.72 | $77.6K |
| 2026-07-30 | Mehta Nikhil Ramesh |
Open-market sale | 992 | $390.07 | $386.9K |
| 2026-07-30 | Mehta Nikhil Ramesh |
Open-market sale | 458 | $390.93 | $179.0K |
| 2026-07-30 | Mehta Nikhil Ramesh |
Open-market sale | 692 | $388.68 | $269.0K |
| 2026-06-10 | Buse Elizabeth |
Open-market sale | 214 | $398.53 | $85.3K |
| 2026-06-10 | Buse Elizabeth |
Open-market sale | 626 | $399.29 | $250.0K |
| 2026-06-10 | Buse Elizabeth |
Open-market sale | 120 | $400.58 | $48.1K |
| 2026-06-10 | Buse Elizabeth |
Open-market sale | 40 | $401.05 | $16.0K |
| 2026-06-02 | Werner Edward Cooper |
Open-market sale |
2,500 | $400.00 | $1.0M |
| 2026-05-08 | Whalen Chad Michael |
Open-market sale |
6,200 | $350.19 | $2.2M |
| 2026-05-08 | Werner Edward Cooper |
Open-market sale |
1,500 | $350.00 | $525.0K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
40 | $331.05 | $13.2K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
200 | $332.52 | $66.5K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
80 | $335.28 | $26.8K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
383 | $339.88 | $130.2K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
1,268 | $337.78 | $428.3K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
480 | $338.60 | $162.5K |
| 2026-05-05 | Locoh-Donou Francois |
Open-market sale |
1,332 | $336.92 | $448.8K |
| 2026-05-05 | Fountain Thomas Dean |
Open-market sale |
1,328 | $330.58 | $439.0K |
| 2026-05-04 | Whalen Chad Michael |
Open-market sale |
704 | $330.30 | $232.5K |
Well-known investors holding FFIV (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 925,632 | $385.0M | 0.13% | Added 36% |
| Millennium Management (Israel Englander) | 2026-06-30 | 370,682 | $154.2M | 0.1% | Added 240% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 242,125 | $100.7M | 0.15% | Reduced 50% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 160,688 | $66.8M | 0.16% | Reduced 1% |
| Two Sigma Investments | 2026-06-30 | 137,594 | $57.2M | 0.04% | Added 810% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 105,668 | $44.0M | 0.03% | Reduced 66% |
| Renaissance Technologies | 2026-06-30 | 30,274 | $12.6M | 0.02% | New position |
| D. E. Shaw & Co. | 2026-06-30 | 7,674 | $3.2M | 0.0% | Added 298% |
| Bridgewater Associates | 2026-06-30 | 4,662 | $1.3M | — | Sold out |
| Duquesne Family Office (Stanley Druckenmiller) | 2026-06-30 | 22,000 | $9.2K | 0.21% | New position |