F5 Networks reported another quarter of strong sales in Q3 2014 driven by rising customer adoption of its new product portfolio, the ‘Good, Better, Best’ pricing model, and the growing sales momentum of F5′s security and service provider business.
The solid revenue growth and profitability in Q3 2014 was driven by strong uptake of F5′s expanding array of systems and application services.
The company claims to have experienced a very strong increase in its business pipeline in Q3 which it believes will translate into growth in the current quarter as well as fiscal 2015.
More on Piper's upgrade of F5 (FFIV +3.1%): Analyst Troy Jensen joins William Blair's Jason Ader in reporting solid channel checks. Jensen's checks lead him to think FQ3 results (due on July 24) will be"at the upper end of guidance and above consensus," He also foresees F5 continuing its momentum in 2H, aided by new product launches, security strength, and pent-up service provider demand - soft telco bookings were partly responsible for F5's FQ2 warning. Application delivery controller rival Radware (RDWR +2%) appears to be rallying in sympathy.
A roundup of tech analyst ratings changes: 1) F5 (FFIV +2.8%) has received an upgrade to Overweight from Piper. 2) Yelp (YELP +4%) has been started at Buy by Needham. 3) 3) ServiceNow (NOW +4%) has been started at Strong Buy by Raymond James. 4) Quality Systems (QSII +7.9%) has been upgraded to Outperform by Baird. 5) Xilinx (XLNX +2.4%) has been upgraded to Buy by Citi.
Checks indicate F5's (FFIV +5.4%) sales performance improved in FQ3, as deals pushed out from FQ2 managed to close, says William Blair's Jason Ader in a note lifting shares. F5 partly blamed deal push-outs on its April FQ2 warning. Ader cautions he thinks FQ3 product sales growth will be negative Y/Y, thanks to a slowing application delivery controller (ADC) market. F5 is counting on an ADC efresh and new mobile and security offerings to boost growth. Deutsche is also making positive comments on F5, stating the company is set up for "a multi-quarter product revenue ramp in next-gen security and telco." FQ3 results are due on July 24.
A roundup of tech analyst ratings changes: 1) BlackBerry (BBRY) has been downgraded to Equalweight by Morgan Stanley. 2) Broadcom (BRCM) has been downgraded to Neutral by Lazard. 3) Marvell (MRVL) has been upgraded to Buy by Lazard. 4) F5 (FFIV) has been upgraded to Buy by Needham. 5) Avid (AVID) has been downgraded to Neutral by JPMorgan. 6) Solera (SLH) has been upgraded to Outperform by William Blair. BBRY -4.1%, adding to Friday's 27% drop. BRCM -0.6%. MRVL +1.4%. FFIV +2%.
A roundup of tech analyst ratings changes: 1) Sina (SINA -0.2%) has been upgraded to Hold by Maxim. 2) First Solar (FSLR +1%) has been upgraded to to Buy by Argus. 3) Vodafone (VOD +0.5%) has been upgraded to Buy by Deutsche. 4) American Superconductor (AMSC +10.3%) has been started at Buy by Ascendiant Capital. 5) F5 (FFIV +0.7%) has been upgraded to Outperform by Raymond James. 6) Move (MOVE +1%) has been started at Buy by B. Riley. 7) Sohu (SOHU -1.1%) has been upgraded to Neutral by HSBC. 8) Palo Alto Networks (PANW -2.2%) has been started at Perform by Oppenheimer. 9) Veeco (VECO -1.7%) has been started at Neutral by Wedbush.
F5's (FFIV) application delivery controller (ADC) share fell to 43% in Q1 from 48% a year earlier, and Citrix's (CTXS) rose to 25% from 16%, estimates UBS after going over calendar Q1 results and industry data from Dell'Oro. Citrix has been leveraging its new partnership with Cisco to gain ADC share; F5 is counting on a pending mid-range refresh to strengthen its hand. Meanwhile, Riverbed (RVBD) is believed to have seen its share of the WAN optimization hardware market fall to 40% from 43%, as F5 grew its share to 7%. Cisco (CSCO) is estimated to have a 19%-20% WAN optimization share, and a 23% security hardware share.
A few Cisco rivals and suppliers are up premarket after the networking giant beat estimates while reporting strong data center switch/server sales and service provider orders (albeit while cautioning the SP capex environment remains tough). Some others might move higher following the open. JNPR +3.6%. FFIV +3.2%. CIEN +3.9%. EZCH +1.2% - Cisco mentioned on its earnings call sales of its ASR 9000 edge routers, which EZchip supplies network processors for, were up 40%+ Y/Y.
Leveraging the Vyatta acquisition and its investments in its VCS networking fabric tech, Brocade (BRCD) is rolling out new hardware and software meant to enable more efficient networking resource use and advance its software-defined networking (SDN) vision. Among them are a software-based router and application delivery controller (the latter competes with FFIV) that can run on commodity hardware, new Ethernet hardware modules for data centers and carrier networks, and a VCS plugin for the OpenStack cloud infrastructure platform. Nautrally, Cisco and Juniper aren't standing still either. (PRs: I, II) (Network World)
Light FQ3 guidance isn't stopping F5 (FFIV +5%) from rallying in the wake of its FQ2 report; expectations were depressed thanks to the April 4 warning. On F5's earnings call, management insisted enterprise demand is healthy ahead of a mid-range application delivery controller (ADC) refresh and an update to F5's TMOS OS, even as U.S. telco and federal demand remains weak. Strong momentum was also claimed for F5's firewall and 4G infrastructure offerings. Nomura has upgraded shares to Buy, arguing "the market may be overstating the competitive risks to F5" from Citrix (CTXS - previous). Up in sympathy: RDWR +4%. RVBD +4.8%.
Tech guidance roundup: 1) Equinix (EQIX - earnings) expects Q2 revenue of $530M-$534M, below a consensus of $534.7M. 2013 revenue is expected to be greater than $2.2B vs. a consensus of $2.22B. 2) F5 (FFIV - earnings) expects FQ3 revenue of $355M-$365M and EPS of $1.06-$1.09, below a consensus of $369.7M and $1.06-$1.09. A new $200M stock buyback has been authorized. 3) Citrix (CTXS - earnings) expects Q2 revenue of $705M-$715M and EPS of $0.62-$0.63 vs. a consensus of $711.5M and $0.70. 2013 guidance is for revenue of $2.95B-$2.98B and EPS of $3.08-$3.11 vs. a consensus of $2.97B and $3.14. EQIX -11.5% AH. FFIV -0.4%. CTXS -9.9%.
Netgear (NTGR) -3.8% AH after resuming trading in the wake of its Q1 warning; shares are now about $1 above their 52-week low of $28.68. A couple of peers are down slightly in AH trading: FFIV -0.7%. ARUN -0.9%.
F5 Networks Inc provides Application Delivery Networking (ADN) technology that secures and optimizes the delivery of network-based applications and the security, performance and availability of servers, and other network resources.