F5 (FFIV) Q1 2026 earnings summary

Executive summary

• Achieved Q1 FY26 revenue of $822 million, up 7% year-over-year, with product revenue growing 11% and systems revenue up 37%, marking the sixth consecutive quarter of double-digit product growth driven by hybrid multicloud, AI, and converged platforms.

• EMEA delivered exceptional 24% growth, with Americas up 2% and APAC down 1%; strong customer wins in banking, media, and healthcare.

• Minimal demand disruption from a security incident, with rapid response and positive customer feedback; $17.5 million in related costs incurred.

• Non-GAAP EPS increased 16% year-over-year to $4.45, and non-GAAP operating margin improved by 80bps to 38.2%.

• Q4 acquisition of CalypsoAI enhanced AI security offerings; launched BIG-IP version 21.0 with enhancements for AI workloads and API security.

Financial highlights

• Q1 revenue reached $822 million, split evenly between product and services; product revenue grew 11% to $410 million, services revenue grew 4% to $412 million.

• Systems revenue was $218 million, up 37% year-over-year; software revenue was $192 million, down 8% due to tough prior-year compare.

• Recurring revenue contributed 69% of total Q1 revenue, with 86% of software revenue from subscriptions.

• GAAP gross margin was 81.5%; non-GAAP gross margin was 83.8%.

• GAAP net income was $180 million ($3.10/share); non-GAAP net income was $259 million ($4.45/share), up 16% year-over-year.

• Cash and investments totaled $1.22 billion at quarter-end; cash flow from operations was $159 million.

• Deferred revenue was $2.1 billion, up 6% year-over-year.

Outlook and guidance

• FY 2026 revenue growth outlook raised to 5%-6% (from 0%-4%), with non-GAAP EPS guidance increased to $15.65-$16.05 (from $14.50-$15.50).

• Q2 revenue expected at $770-$790 million (approx. 7% growth at midpoint); Q2 non-GAAP EPS expected at $3.34-$3.46.

• Expect mid-single-digit software growth, double-digit systems growth, and low single-digit services growth for FY 2026.

• Committed to returning at least 50% of annual free cash flow to shareholders via share repurchases.