F5 Networks Stands Up and Delivers
Apr 19th 2012 4:21PM
Updated Apr 19th 2012 4:26PM
Networking specialist F5 Networks (NAS: FFIV) is bucking the broad market sell-off today after it reported solid second-quarter earnings yesterday.
As a high-multiple stock, F5 is no stranger to volatility. Today, that's working in the company's favor, as shares popped by upwards of 11% on the results before settling into lower gains as the day progressed.
Revenue climbed 22.4% to $339.6 million, making way for a non-GAAP profit of $1.09 per share. The results were boosted by robust demand for F5's VIPRION platforms -- the company's family of application delivery controllers, or ADCs -- and Japan ended up being a particularly strong geographical segment with bookings growth.
Throughout the quarter, F5 repurchased about 404,000 shares of stock and closed out the period with just over $1 billion in cash and investments. In February, the company also completed its acquisition of Traffix Systems, a provider of Diameter signaling products.
Next quarter's revenue is expected to be between $350 million and $355 million, with non-GAAP earnings per share in the range of $1.12 to $1.14. Traffix Systems isn't expected to contribute much revenue next quarter.
CFO Andy Reinland said the quarter represented a return to "revenue acceleration" driven by healthy Telco sales, which was F5's strongest vertical in the second quarter, at 27% of revenue. CEO John McAdam also mentioned competition within the data center from Cisco Systems (NAS: CSCO) and Juniper Networks (NAS: JNPR) , although he's more concerned with Juniper.
Cisco continues to be assaulted on numerous niche fronts, including sectors like ADCs and WAN optimization. F5 keeps extending its lead of the ADC market at Cisco's expense, while Riverbed Technology (NAS: RVBD) is the king of WAN optimizers. F5's own WAN optimization offerings also compete with Riverbed.
F5 is leading the increasingly important ADC market, so its gains today are justified. I'm not the only one bullish on the company, as a handful of Street analysts have scrambled today to upgrade their ratings and price targets.
This networking specialist has plenty more upside from here, which is exactly why I've recently give it an outperform CAPScall.
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At the time this article was published Fool contributor Evan Niu owns shares of Riverbed Technology, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Riverbed Technology and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Riverbed Technology and writing covered calls on Riverbed Technology. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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