F5 (NASDAQ:FFIV) reported first-quarter fiscal 2026 results that management said reflected continued demand for application delivery and security as customers modernize infrastructure for hybrid multi-cloud and enterprise AI. The company also addressed progress made after a security incident disclosed earlier in the quarter, noting minimal disruption to demand and customer operations.
Quarterly performance and revenue mix
Revenue grew 7% year-over-year to $822 million, with an even split between product revenue ($410 million, up 11%) and services revenue ($412 million, up 4%), according to CFO Cooper Werner. Management highlighted that this marked the sixth consecutive quarter of double-digit product growth, with systems revenue up 37% to $218 million.
Recurring revenue contributed 69% of total revenue, defined as subscription-based revenue plus the maintenance portion of services revenue.
Regional and vertical trends
Werner said the company saw notable regional divergence in the quarter:
- Americas revenue grew 2% year-over-year and represented 53% of total revenue.
- EMEA revenue grew 24% year-over-year and represented 31% of total revenue.
- APAC revenue declined 1% year-over-year and represented 16% of total revenue.
CEO François Locoh-Donou tied the strength in EMEA to regulatory and “digital sovereignty” requirements that are accelerating hybrid multi-cloud deployments, citing frameworks including NIS2, GDPR, and DORA, and referencing additional regulation expected in coming years.
By vertical, enterprise customers represented 64% of product bookings, government customers represented 23% (including 8% from U.S. federal), and service providers represented 13%, Werner said. Locoh-Donou noted strength in U.S. federal business despite a government shutdown during the quarter, and said the company saw early AI use cases emerge within government.
Hybrid multi-cloud, AI, and platform consolidation as demand drivers
Management framed results around three “forces” reshaping infrastructure decisions: hybrid multi-cloud adoption, enterprise AI, and customer consolidation away from point products toward converged platforms. Locoh-Donou said hybrid multi-cloud has become the dominant operating model as workloads span on-premises, private cloud, and multiple public clouds, and that regulations and resiliency mandates are prompting customers—particularly outside the U.S.—to accelerate deployments.
On AI, Locoh-Donou said demand is emerging in three areas: AI data delivery, AI runtime security, and “AI factory” load balancing. He described an industry shift from AI model training toward putting AI applications into production, which increases requirements for hardened data pipelines, low-latency traffic management, and runtime security controls.
Locoh-Donou said F5 “added nearly as many AI customers” in the quarter as in all of fiscal 2025. In response to an analyst question, he said the company has not broken out AI revenue but indicated that known AI-related use cases contributed “single-digit” millions of dollars per quarter last year and “healthily in the double-digit” millions in the most recent quarter. He added that the mix has broadened from being heavily weighted toward data delivery to being “almost balanced” between data delivery and security, including early adoption of “AI guardrails.”
Locoh-Donou also highlighted what he described as customer momentum around the company’s Application Delivery and Security Platform (ADSP), which aims to combine traffic management with application and API security across environments, supported by policy management, analytics, and automation capabilities. He pointed to product initiatives such as BIG-IP version 21.0, support for the Model Context Protocol (MCP) and S3-related workloads for AI architectures, and extending API discovery capabilities to on-premises environments to address “shadow APIs.”
Security incident update and operational response
Locoh-Donou said the company was “especially pleased” with results given uncertainty following a security incident at the start of the quarter. He said F5’s teams mobilized rapidly, managing more than 9,000 additional support cases, and that the company experienced “minimal demand disruption” in the quarter.
On the Q&A, management said it was not aware of customers reporting breaches resulting from the incident. Locoh-Donou said customers upgraded quickly after patches were provided, adding that the share of customers on the latest software release increased from about 15% a year ago to “over 50%” currently. He also said he and other executives had increased engagement with CISOs and that customers expressed appreciation for the company’s response.
Margins, capital returns, and updated outlook
Werner reported GAAP gross margin of 81.5% and non-GAAP gross margin of 83.8%. GAAP operating margin was 26.0%, while non-GAAP operating margin was 38.2%, up 80 basis points year-over-year. GAAP net income was $180 million, or $3.10 per share, and non-GAAP net income was $259 million, or $4.45 per share, which Werner said represented 16% EPS growth year-over-year.
Cash flow from operations was $159 million, capital expenditures were $10 million, and cash and investments totaled approximately $1.22 billion at quarter end. Deferred revenue was $2.1 billion, up 6% year-over-year. F5 repurchased $300 million of shares during the quarter at an average price of $249 per share and ended the quarter with approximately 6,400 employees.
Based on first-quarter execution and pipeline trends, F5 raised its full-year fiscal 2026 outlook. Management now expects revenue growth of 5% to 6%, up from prior guidance of 0% to 4%, and projected mid-single-digit software revenue growth, double-digit systems revenue growth, and low single-digit services revenue growth.
Werner also guided to full-year non-GAAP gross margin of 82.5% to 83.5%, reflecting a modest reduction tied to anticipated higher product costs in the second half from rising memory prices. He said the company has taken supply chain actions—including increasing forecasts and volume requests, qualifying additional suppliers, and executing broker buys—to manage both pricing and potential supply risks, while noting longer-term uncertainty in the broader ecosystem.
F5 raised its full-year non-GAAP EPS outlook to $15.65 to $16.05 from $14.50 to $15.50, and increased its non-GAAP operating margin outlook to 34% to 35%. Werner said the company is also making “targeted investments” in areas such as sales capacity and product roadmap initiatives, including analytics and telemetry capabilities, to support growth beyond fiscal 2026.
For the second quarter, management guided to revenue of $770 million to $790 million, non-GAAP gross margin of 82.5% to 83%, non-GAAP operating expenses of $396 million to $408 million, and non-GAAP EPS of $3.34 to $3.46. Werner noted that operating margins are typically lowest in fiscal Q2 due to payroll tax resets and costs associated with a large customer event in March.
About F5 (NASDAQ:FFIV)
F5 Inc (NASDAQ:FFIV) specializes in application services and delivery networking, helping organizations ensure the availability, performance and security of their applications. The company’s core offerings include advanced load balancing, traffic management and application security solutions designed to optimize user experiences and protect against threats such as distributed denial-of-service (DDoS) attacks and web application exploits.
At the heart of F5’s product portfolio is the BIG-IP platform, which provides a suite of software modules for local and global traffic management, secure web application firewalling and DNS service delivery.
