F5 Networks

The American company F5 Networks, Inc. works in the field of network application delivery (ADN), provides the ability to use virtual environments, cloud data processing and manage IT resources on demand.

Product Specialization

F5-based solutions are used in IT infrastructure projects for large state-owned companies and enterprises in the industrial, oil and gas and financial sectors.

Solutions of this type cover several areas of IT at once: information security, network infrastructure, corporate services and applications. Thanks to the full-proxy architecture and modern firewall modules, F5 products protect against the most current cross-site scripting, SQL injection, cookie positioning and various DDoS attacks, which ultimately ensures fault tolerance and security of business-critical services.

F5 products are used not only for balancing and managing incoming traffic, but also as Reverse Proxy (outbound traffic) for enterprise solutions of Microsoft Exchange, Lync and many others. Sharing these applications with F5 solutions increases their availability and security. In these solutions, such F5 functionality as two-factor authentication and protection of http (s) traffic (Web Application Firewall) is especially in demand. Hardware traffic processing on FPGA controllers in F5 products provides high performance even when using self-developed iRule rules, which are necessary for flexible adjustment of balancing rules and are applied on almost every project.

For customers with multiple distributed data centers, F5 Networks offers a Global Traffic Balancing and Management module that distributes user requests across customer data centers. The integration of this product with VMware Site Recovery Manager creates a fault-tolerant backup solution for data centers located in different cities or countries.

Performance indicators

2021: Revenue growth by 10%, to $2.6 billion, profit - $331.2 million

At the end of the fiscal year ended September 30, 2021, F5 Networks registered revenue of $2.6 billion against $2.35 billion a year earlier. Thus, there was an increase of 10%. Revenues from services during this time increased by 2% and reached $1.36 billion. Sales of products from the American vendor increased from $1.03 billion to $1.25 billion.

The company's annual revenues from the sale of software F5 Networks increased by 37% (to $500 million). Sales of systems increased by 12%, to $748 million. Subscriptions software added $391 million to the company's revenue against $257 million a year earlier. Sales of perpetual licenses for products during this time also increased - from $107 million to $109 million. The subscription business is growing at about 115% per year, sales in ON general - at 49% per year. At the same time, revenues from the supply of licenses fall by an average of 1% annually, if you take a three-year period of time.

Subscriptions account for 80% of software revenue at the end of 2021

F5 Networks net profit in fiscal 2021 amounted to $331.2 million, an increase from $307.4 million in profit in 2020.

Most of F5 Networks' revenue comes from corporate customers - 69% of the total, compared to 70% a year earlier. The share of orders from telecom operators decreased from 15% to 13%, and the share of state customers increased from 16% to 18%.

In the financial statements for 2021, it also follows that the fastest growing business at F5 Networks has become tools for protecting applications (App Security). The corresponding division for the year brought 35% of the revenue from the total against 32% in 2018. For the period 2019-2021. revenue in the direction of App Security grew by 38% per year.

According to F5 Networks CEO Francois Locoh-Don (François Locoh-Donou), the software brings the company 45% of product sales, and approximately 80% of software revenues come from subscriptions.^[1]

Business in Russia

2014: Growth in the staff of the development center in Tomsk

As of March 2014, the Moscow office of F5 Networks is 11 people, the development center in Tomsk is more than 100 people. The company Russia has one distributor - CompTek and more than 100 authorized partners. The status of gold partners of F5 Networks is held by Russian integrators,,,, IBS CTI Inline Technologies and. HP The status of IBM silver partners in Russia has and. CROC I-Teco

The most priority vertical markets for the company are telecom and finance, as well as the public sector. In total, at the beginning of 2014, F5 Networks implemented more than 150 projects in Russia and the CIS. According to company representatives, all Big Three operators, six of the Top 10 largest Russian banks, oil and gas industry enterprises and many other organizations use its solutions.

The head of the Russian division of F5 Networks, Sergei Pozdnyakov, told TAdviser that in the total structure of the company's revenue in Russia, about 30% of the turnover is accounted for by information security solutions, which are the fastest growing segment of the business, and the rest in approximately equal shares falls on solutions for application delivery and network load balancing.

According to Sergey Pozdnyakov, by 2014 the growth rate of F5 Networks business in Russia and the CIS was three-digit. The Russian mission is tasked with preserving them in the near future.

In 2014, the staff of the F5 Networks development center in Russia, located in Tomsk, should increase by about 30%, Sergey Pozdnyakov, regional director for Eastern Europe, Russia and the CIS, told TAdviser in March. According to him, the number of developers of the center as of the beginning of 2014 is about 110 people.

Russian programmers of the company participate in the global development of F5 Networks products, acting as part of project teams together with colleagues from development centers located in other countries, he says.

Unlike the development centers of many other vendors, the F5 Networks center does not localize its products in Russia: the company explains that in the case of their products this is not required, since they are used by IT specialists, not end users.

The development center in Tomsk was opened in 2004. Sergey Pozdnyakov told TAdviser that it was created on the basis of a company that had previously acquired a small regional software development startup with a staff of 8 people, and then it was acquired by F5 Networks. Then "like a snowball, the number of developers of the center began to grow," he adds.

Tomsk Development Center F5 Networks is one of the largest for the company at the global level. In addition to it, the largest in terms of the state are centers located in the United States and in Israel.

F5 Networks, Regional Director for Eastern Europe, Russia and the CIS, added that, unlike many IT developers, his company does not have development centers in China and India and does not plan to open them in these countries.

"Development in these countries is mainly carried out by those for whom it is very important that it costs less there, and we look primarily at quality. I do not want to say that the development in these countries is of poor quality, it's just that our company is quite conservative in this regard, "says Sergey Pozdnyakov

Company history

2023:5% staff cut

On April 19, 2023, F5 Networks, which develops solutions for ensuring the security, performance and availability of web applications, announced a restructuring that will reduce headcount by about 9%.

Organizational changes were announced by F5 CEO Francois Locoh-Don (François Locoh-Donou). According to him, in the context of a difficult macroeconomic situation, crisis and high inflation, F5 Networks has already taken a number of measures to adapt the business to new realities. In particular, operational budgets were reduced and the pace of hiring new employees was reduced. In addition, I had to consolidate office space and minimize business trips. These actions allowed us to gain some time and better assess market prospects. After analyzing the situation, management came to the conclusion that it was necessary to reduce the staff.

F5 Networks announces restructuring

It is now clear that rising interest rates, geopolitical developments, and macroeconomic uncertainty have dramatically affected our customers "spending patterns. We don't believe this environment will continue, but we also don't know what the "new normality" will look like when it comes. Because of this uncertainty, we must take measures to reduce costs without jeopardizing growth prospects, Loko-Don wrote.

As part of the restructuring, 623 positions will be abolished. In addition, in 2023, the payment of a bonus to the CEO is canceled, and the amount of annual cash bonuses of the executive management is reduced by 70%. In addition to this, the format of a number of internal events of the company will be revised - they are planned to be held in a virtual space. Travel budgets will also be further reduced and other expenses will be reduced.^[2]

2021

Purchase of Threat Stack software developer for $68 million

In mid-September 2021, F5 Networks bought Threat Stack. The transaction amount amounted to $68 million. Over the past three years, F5 Networks has spent more than $2 billion to absorb various projects in the development of cloud software, as well as cybersecurity solutions. Read more here.

Purchase of Volterra, which offers peripheral computing as a service

In early January 2021, F5 Networks announced the acquisition of Volterra for $500 million. The buyer will pay most of this amount ($440 million) with his own funds, and the remaining share ($60 million) with his own shares. It is planned to close the deal in the first quarter of 2021. Read more here.

2020: Revenue growth from software business

In fiscal 2020, F5 Networks recorded revenue of $2.35 billion against $2.24 billion a year earlier. Most of the revenues - $1.32 billion - the companies brought services and all kinds of services. In 2019, the manufacturer of information security solutions earned $1.26 billion from this business.

As for the sales of F5 Networks products, in fiscal 2020 they exceeded $1 billion and reached $1.03 billion. For comparison: the turnover in the product direction a year earlier was measured at $985.6 million.

Net profit of F5 Networks decreased from $427.7 million in fiscal 2019 to $307.4 million a year later. This decline in the company was associated with large expenses, including the payment of remuneration on shares ($202 million), the purchase of assets ($56 million) and the closure of some projects ($17 million).

F5 Networks revenue grows thanks to software business

According to F5 Networks CEO Francois Locoh-Don (François Locoh-Donou), the company "is confidently moving towards becoming software." Demand for multi-cloud content security and delivery products contributed to a 5 percent increase in annual revenue, he noted.

According to the materials that F5 Networks released along with the financial statements, the company's annual revenues from software sales rose 52% (to $365 million), while the volume of the service business grew by only 5%, and the supply of systems completely decreased by 10% in monetary terms.

Approximately 71% of F5 Networks' revenue in 2020 came from subscriptions, and the rest from sales of perpetual product licenses. In 2019, this ratio was 55% to 45%, respectively. About 65% of the vendor's income has become recurring.

Most of F5 Networks' revenue comes from corporate customers - 70% of the total, up from 61% a year earlier. The share of orders from telecom operators decreased from 17% to 15%, and the share of state customers - from 22% to 16%.^[3]

2019

Revenue growth to $2.24 billion

In fiscal 2019, F5 Networks raised $2.24 billion, up 4% from 2018. The reporting 12-month period was closed on September 30, 2019 calendar.

Most of the company's turnover is still occupied by services and services - they accounted for $1.26 billion in revenue at the end of the 2019 financial year against $1.2 billion a year earlier. Sales of products from the vendor also increased - from $960.1 million to $985.5 million.

F5 Networks 2019 financials

F5 Networks CEO Francois Locoh-Donou linked the rise in company sales to customer demand for continuous protection and application performance support technologies in private and public clouds as well as multi-cloud environments.

Based on the growth and interest in our new software products, SaaS and container solutions, it becomes clear that customers see F5 as a critical partner in the transition to multi-cloud architectures, he said after the publication of the financial statements.

In fiscal 2019, F5 Networks' net income declined to $427.7 million from $453.7 million a year earlier.

At the same time, the company says that amid the stagnation of the application delivery controller market, where F5 Networks is among the leaders, the manufacturer is investing in improving software and services. However, this transition will take some time.

Sales of F5 Networks network products have slowed down due to the fact that companies prefer public cloud services to their own data centers.

After the publication of the annual reports, the company's quotations slightly changed, despite the fact that the income of the information security manufacturer exceeded market expectations. Since the beginning of 2019, shares have fallen in price by 15%, and in the 12 months before the release of the report for fiscal year 2019, the value of securities decreased by 18%.^[4]

$1 billion purchase of Shape Security fraud prevention software developer

On December 19, 2019, F5 Networks announced the acquisition of Shape Security for $1 billion. The value of the transaction turned out to be rather big, given that for all the time the startup sold attracted a total of $183 million in investments, and in 2018 its revenue amounted to $70 million. Read more here.

How F5 Networks changed after buying Russian Nginx

On September 11, 2019, F5 Networks spoke about the changes in the company four months after the closure of the acquisition of the Russian Nginx.

According to Francois Locoh-Donou, President and CEO of F5 Networks, the company had practically no open source projects before the purchase of Nginx, but now everything has changed: F5 has increased its contribution to the Open Source community and began to share a large number of software sources. That's because F5 customers are "pushing for open source," he stated, speaking to developers and partners at the Nginx conference in Seattle on Sept. 11, 2019.

François Loco-Don

Someone here here can mark the day Nginx died, but let me assure you that Nginx is certainly the foundation of the F5 strategy, "Loko-Don said.

F5 continued to develop Nginx products, retaining its investment in the Nginx controller and improving major open projects. In addition, funds are allocated to create new monitoring and security solutions.

F5 Networks added and finalized several Nginx tools to help DevOps, NetOps and SecOps teams work collaboratively to deliver applications.^[5]

The Nginx Application Platform has been updated: four new versions of products have appeared that were developed to combine 13 tools within one software platform.

According to CRN, for several years F5 Networks has been focused on providing all application services - from the analysis phase to code delivery, regardless of where the application was created or deployed. This chosen path led the company to buy Nginx, which was just focused on creating application delivery software, the publication said.

Development of open source software and retraining of programmers. How F5 Networks changed after buying Russian Nginx

We are absolutely confident that we will be able to fulfill this mission thanks to and with the help of Nginx, "Francois Loko-Don said.

In addition to increased attention to open source software, other changes have occurred in F5 in connection with the takeover of the Russian developer. In particular, the company retrained more than 1000 of its programmers to work with Nginx solutions. Also, 128 new specialists were hired for Nginx.

By combining, F5 and Nginx are going to create a better and more simplified application service for their customers, Loko-Don said.

Together, we're going to take Nginx to the next level, "he added.

Juan Zamora, CEO of the consulting firm Hopla Software, says the merger of F5 and Nginx will give partners "the best of both worlds," and those who partner with Nginx will have access to new resources. Hopla has been a partner of Nginx for three years and has recently partnered with F5, CRN said in a September 12, 2019, release.

As of this date, F5 receives approximately 98% of revenue through partners. Nginx had a relatively new partner program, which was subsequently integrated with that of the F5, says F5 vice president of global partner sales Colleen McMillan.

Now in the channel program, Nginx partners can access all F5 products. The opposite is also true, and that allows us to scale. F5 partners now have another solution they can sell to customers. It's just another part of the whole story, "McMillan stated.

The Nginx team works closely with F5 employees, but also deal with their projects. Thus, a collaboration with ARM was launched to create ARM Neoverse tools for various applications and run them on Amazon EC2 A1 virtual machines in the Amazon Web Services (AWS) cloud.

Completion of Nginx acquisition

On May 10, 2019, it became known about the completion of the transaction on the acquisition by American the developer of systems for IT infrastructures enterprises F5 Networks of the company, Nginx the developer of the same open web origin servers Russian. More. here

Purchase of Russian Nginx for $670 million

On March 11, 2019, F5 Networks announced the acquisition of Nginx to merge NetOps and DevOps and provide customers with consistent application services across all environments. The transaction value is $670 million. Read more here.

2018

Revenue growth to $2.2 billion

In the 2018 fiscal year, which ended on September 30, 2018 calendar, F5 Networks sales amounted to $2.2 billion, increasing from $2.1 billion a year earlier due to the chosen exchange rate for cloud services.

The company earned $960 million on the sale of products, which is slightly less than a year ago ($964.7 million). Service revenue during this time increased from $1.1 billion to $1.2 billion.

F5 Networks financials

F5 Networks' annual net profit reached $453.79 million, while in 2017 it was measured at $420.76 million.

According to F5 Networks CEO Francois Locoh-Donou, the company has increased sales due to the demand for its software solutions that provide "critical applications and security services in emerging multi-cloud environments."

According to GeekWire, sales of F5 Networks network products have slowed down due to the fact that companies prefer public cloud services to their own data centers. At the same time, businesses still need network software and systems to deliver applications to manage their workloads in public clouds.

Under these conditions, F5 Networks is trying to rethink its activities, like many other manufacturers of enterprise computer solutions that have successfully worked over the past decade before cloud computing became the driving force, the portal notes.

Due to the change in business model, the staff of F5 Networks is decreasing. So, in July 2018, the company announced the liquidation of about 5% of working positions. In 2018, the vendor's restructuring expenses amounted to $18.4 million, the total costs (for sales organization, marketing, administrative and other purposes) exceeded $1.2 billion. A year earlier, total expenses were also high and measured at $1.17 billion.^[6]

5% staff reduction due to move to cloud computing

On July 25, 2018, F5 Networks reported a 5% reduction in headcount. The company is laying off employees amid a shift in the business model toward cloud computing.

According to F5 Networks, it is planned to eliminate 230 working positions, which are mainly related to information technology, product development, sales support and marketing. The main layoffs will fall on the United States. By July 2018, the company employs 4,475 people.

The cloud course leaves people out of work. F5 Networks fires 5% of state

At a conference on the publication of statements for the third fiscal quarter, F5 Networks CEO Francois Locoh-Donou called the personnel purge "restructuring" and noted that it is not being carried out to reduce costs, but as part of the company's global transition to the cloud business.

F5 Networks, like other tech companies, faces challenges from the growing spread of cloud computing. Amid the stagnation of the application delivery controller market, where F5 Networks is among the leaders, the company is investing in improving software and services. However, clouding migration will take some time and, as it turned out, will lead to layoffs.

In September 2017, F5 Networks announced it was downsizing, but did not disclose the number of workers affected. Then the company stated that the decline in the number of jobs is due to the optimization of resources towards more growing business areas.

We are very much focused on turning the F5 into the market leader in multi-cycle applications. As a result, you have to sacrifice inherited from the past, which is less important for the future of the company, "said Francois Loko-Don.

F5 Networks will spend $23-25 million on staff cuts - mainly to pay compensation to dismissed employees. In addition, the vendor will close the office in Massachusetts.^[7]

2017: Revenue growth 5% to $2.1 billion

In fiscal 2017, F5 Networks saw a nearly 5% increase in revenue and a 15% increase in profit. The company's revenues turned out to be the largest in its history, despite the stagnation of the key market.

During the reporting 12-month period, closed on September 30, 2017, F5 Networks sales reached $2.1 billion against $2 billion a year earlier. Net income rose from $365.9 million to $420.8 million.

F5 Networks earns record earnings

We ended the 2017 fiscal year with strong results, recording record profit and revenue figures in the fourth quarter and for the entire year, "comments Francois Locoh-Donou, President and CEO of F5 Networks. - We're excited about the meaningful role we play to help customers address application deployment challenges in local and multi-cloud environments.

In fiscal 2017, the volume of F5 Networks' service business exceeded $1.1 billion against $1.05 billion in 2016. The company earned $964 million on the sale of products, which is about $20 million more than a year ago.

According to Forbes magazine, amid the stagnation of the application delivery controller (ADC) market, which F5 Networks specializes in, the company is investing in improving software and services, but the transition to new technologies will take some time. At the same time, the service direction is becoming more and more important for the company due to a significant increase in the customer base.

As the pace of implementation of ADC solutions has decreased, this may continue to put price pressure on the company's equipment. The manufacturer itself noted a high interest in iSeries products and security solutions.

Along with the publication of the financial statements, F5 Networks announced an increase of $1 billion in the share buyback program, which was launched back in October 2010. In 2017, the company bought back shares of $600 million.^[8]

2015

Revenue + 11%, profits rising

In fiscal 2015, F5 Networks reported revenue of $1.92 billion, up 11% from $1.73 billion the previous year.

GAAP net income in fiscal 2015 was $365 million, compared to $311.2 million in fiscal 2014.

Non-GAAP net income in fiscal 2015 was $480.3 million, compared to $413 million in fiscal 2014.

"With volatile macroeconomics, F5 has managed to show steady growth and profitability," said Manny Rivelo, President and CEO of F5. - Record values for annual revenue and gross profit led to a 17% increase in GAAP net income for the year. Speaking of performance in the regions, it is worth noting that the United States and the EMEA region showed the highest performance and stable revenue growth in the fourth quarter. Overall financial performance was reduced by weak sales in Latin America, Canada and Japan. "

"Sales software continued to grow as a percentage of our product mix, reflecting increasing demand for our ON Virtual Edition and Good-Better-Best bundled offerings and increased sales Silverline SaaS of our cloud offerings and other subscription-based services. These trends reflect our success in meeting demand for that hybrid solutions can be centrally deployed and managed locally and in cloud environments, and we look forward to further growth throughout the 2016 fiscal year. "

"In addition, we hope that the launch of new products and sales incentive initiatives supported by the strengths of our relationship with partners, including the recent partnership with FireEye, will expand our target market and increase our sales throughout the year. At the same time, we expect that their overall effect will be realized gradually and strengthened in the second half of the year. "

"Over the past few years, we have seen a seasonal weakening of financial performance in the first quarter, after which growth begins throughout the year. In addition, uncertainty in the macroeconomic environment has an impact on our forecasts for the first quarter of fiscal year 2016. "

In relation to the first quarter of 2016 fiscal year, which ends on December 31, 2015, the company set a goal to receive revenue in the range from $480 million to $490 million.

First chapter change in 15 years

On April 22, 2015, it became known about the first change in the head of F5 Networks in 15 years. The reorganization of the top management of the company takes place in the context of the difficulties faced by the manufacturer in the market.^[9]

On July 1, 2015, Manuel Rivelo will take over as President and CEO of F5 Networks, replacing John McAdam, who has led the company since July 2000. After his departure from the leadership role, McAdam will become chairman of the board of directors of F5 Networks instead of Al Higginson. The latter will remain on the board as the lead independent director.

July 1, 2015, Manuel Rivelo will take over as President and CEO of F5 Networks

Manuel Rivelo joined F5 Networks in October 2011. Since then, he has been responsible for the strategic development of the company, product management and the development of a global marketing strategy. Rivelo, who previously held a number of leadership positions at Cisco, helped F5 Networks expand its business beyond the company's traditional data center solutions.

During the 15-year leadership of John McAdam, the annual revenue of F5 Networks increased from $108.6 million to $1.7 billion, and the value of the companies' shares jumped more than four times. However, with increasing competition from cloud providers F5 Networks, it has become harder to seek out large contracts. Adjusting to the market situation, the company released a new line of products, launched a multi-level pricing program and made a winning bet on information security solutions, notes The Wall Street Journal.^[10]

"Over the past decade, F5 has established itself as a leading provider of services that deliver applications quickly and reliably across IP networks anytime, anywhere," says Manuel Rivelo. "At this important time for F5, I look forward to working with management and the rest of the company's team to strengthen its leadership, expand its market presence and build a long success story."

On the day of the announcement of the change of CEO of F5 Networks, John McAdam said that the high dollar exchange rate against world currencies negatively affected the company's activities in Europe, the Middle East, Africa and the Asia-Pacific region in January-March 2015.

2014: Revenue + 17 %

In fiscal year 2014, the company's revenue was $1.73 billion, up 17% from $1.48 billion in fiscal year 2013.

GAAP net income for the year was $311.2 million, compared to $277.3 million in fiscal 2013.

In fiscal 2014, non-GAAP net income was $413 million, compared to $362.9 million in fiscal 2013.

F5 products are used to deploy mobile, cloud, and virtual services. F5 solutions help combine individual technologies to provide effective infrastructure control, improved application delivery and data management, and provide users with access to applications from enterprise computers and other devices. An open structural template allows F5 customers to embed business policy in the "strategic checkpoints" of the IT infrastructure, as well as in the public cloud environment.

BIG-IP from F5 is a family of products that combine many functions on one unified platform - firewall capabilities, secure remote access services, WAN optimization, and web application acceleration technologies.

In 2014, F5 helps companies transparently scale cloud, data center, and Software Defined Networks (SDN) infrastructure to deliver applications successfully to anyone, anywhere, and anytime. F5 solutions enable the most complete use of information technology in companies thanks to an open and extensible platform.

In fiscal year Q3 2014, F5 Networks' revenue was $440.3 million, up 5% from $420 million in the previous quarter and up 19% from $370.3 million in fiscal year Q3 2013.

GAAP net income left $79.5 million compared to $69.6 million in the previous quarter and $68.2 million in the III sq. a year ago.

"We saw strong sales performance across all regions and vertical market segments excluding the Japanese market. EMEA continued to show strength and growth in sales volumes for the fourth consecutive quarter, "said John McAdam, President and CEO of F5

In relation to Q4. 2014 the fiscal year, the company set the task of obtaining revenue in the range from $453 million to $463 million. In fact, these forecasts were exceeded. In November 2014, F5 Networks announced that in the fourth quarter of fiscal 2014, its revenue amounted to $465.3 million, which is 6% more than $440.3 million in the previous quarter and 18% more than $395.3 million in the fourth quarter of fiscal 2013.

GAAP net income in Q4 was $94 million compared to $79.5 million in Q3 2014 and $76.2 million in Q4 the previous year.

Excluding the impact of stock compensation and amortization of acquired intangible assets, non-GAAP net income in Q4 was $116.7 million, compared to $104.6 million in the previous quarter and $99.2 million in Q4 2013.

1996-2011

• 1996 - F5 Networks Foundation Year

• 1999 - F5 Stock Offering

• 2004 - TMOS implementation - the foundation for a comprehensive architectural platform that now runs all BIG-IP products

• 2005 - F5 becomes the absolute market leader in network application delivery, ahead of Cisco, according to Gartner estimates.

• 2011 - The company's annual revenue exceeded $1 billion

Notes