F5 (FFIV) Q3 2026 earnings summary

Executive summary

• Achieved 11% year-over-year revenue growth in Q3 FY26, driven by 19% product revenue growth and strong demand for application delivery and security solutions, especially in AI and hybrid multi-cloud environments.

• Eight consecutive quarters of double-digit product growth, reflecting expanding relevance due to AI-driven application complexity and security needs.

• Raised FY26 revenue growth outlook to 9%-10%, up from 7%-8%, reflecting durable demand tailwinds and robust execution.

• Significant customer wins across energy, government, telecom, healthcare, and AI sectors, highlighting competitive displacements and platform consolidation.

• Completed the acquisition of SurePath AI, Inc. to enhance AI security platform capabilities.

Financial highlights

• Q3 FY26 revenue reached $865 million, up 11% YoY; product revenue $463 million (+19% YoY), systems revenue $240 million (+32% YoY), software revenue $223 million (+7% YoY), and services revenue $402 million (+3% YoY).

• Recurring revenue sources contributed 69% of Q3 revenue; 90% of software revenue from subscriptions.

• GAAP gross margin 82.2%, non-GAAP gross margin 84.2%; GAAP operating margin 24.7%, non-GAAP 35%.

• GAAP net income $208 million ($3.62/share); non-GAAP net income $272 million ($4.73/share), both up year-over-year.

• Cash and investments $1.63 billion at quarter-end; free cash flow $281 million for Q3, $841 million for nine months.

Outlook and guidance

• Q4 FY26 revenue expected between $870 million and $890 million; non-GAAP EPS between $4.14 and $4.26.

• FY26 revenue growth outlook raised to 9%-10%; non-GAAP EPS expected at $17.21-$17.33.

• FY26 non-GAAP gross margin expected at 83.5%-84%; non-GAAP operating margin 34.5%-35.5%.

• Full-year share repurchases to be at least 50% of free cash flow.

• Management expects continued strong cash flows driven by net income from operations.