F5 (FFIV) 8-K F5 Networks Announces Third Quarter Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:	Investor Relations
	John Eldridge
	(206) 272-6571
	j.eldridge@f5.com
	Public Relations
	Amber McCollom
	(206) 272-6850
	a.mccollom@f5.com

F5 Networks Announces Third Quarter Earnings

Revenue and earnings up sequentially on strong sales in North America and Asia-Pacific

SEATTLE, WA—July 23, 2003—F5 Networks, Inc. (NASDAQ: FFIV) today announced net income of $1.4 million ($0.05 per share) on revenue of $29.2 million for the third quarter of fiscal 2003, up from $0.8 million ($0.03 per share) on revenue of $28.0 million in the prior quarter. Both results exceeded the target ranges ($0.02 to $0.04 per share on revenue of $27.5 million to $29.0 million) set by management in the company’s April 23rd earnings release. In the third quarter of fiscal 2002 the company reported revenue of $27.1 million and a net loss of $4.3 million ($0.17 per share), including non-recurring expenses related to the discontinuation of its EDGE-FX™ cache business and the consolidation of operations.

F5 president and chief executive officer John McAdam said the company’s sequential revenue growth resulted from strong sales in North America and Asia-Pacific, up sharply from the prior quarter. “The growth of sales in North America was stronger in the third quarter than we had anticipated, with product sales up 12 percent from the second quarter,” McAdam said. “Internationally, sales in Asia-Pacific grew even faster, helping to offset seasonal slowness in Japan. From a product perspective, revenue increased sequentially across all product categories, with system sales representing 68 percent of total revenue and software sales accounting for 5 percent. We also saw sequential growth in service revenue, which represented 27 percent of total revenue.”

According to McAdam, the growth of North American revenue was fueled primarily by increased channel sales and a number of large enterprise wins. “As we continued to forge new relationships with some of the region’s largest resellers, we saw meaningful contributions from several of the new partners we signed up in prior quarters. In addition, we continued to build momentum in sales to global strategic accounts, which included four large wins totaling more than $2.5 million,” McAdam said.

Operationally, the company turned in a solid performance, reflected in several key metrics. Gross margin and operating expenses for the quarter were within the company’s target ranges. Days sales outstanding (DSO) fell to 63 days, and operating cash flow of $3.4 million helped boost cash, cash equivalents and investments to $96.8 million at June 30.

In a separate release issued today (http://www.f5.com/f5/news/press/), F5 also announced that it has acquired the assets of uRoam, Inc., a provider of Web-based remote access solutions, for $25 million in cash. Steve Coburn, F5’s senior vice president of finance and CFO, said he expects early sales of uRoam’s products in September but does not expect revenue from those sales to be material in the current quarter, ending September 30, 2003. For fiscal 2004, he said uRoam’s products could generate revenue in the range of $8 million to $12 million.

Including the effect of the acquisition, F5 has set a fourth quarter revenue target of $29.5 million to $30.5 million with earnings of $0.02 to $0.03 per diluted share.

Further details about third quarter results, the uRoam acquisition, and company guidance for the fourth quarter will be discussed in the company’s regularly scheduled conference call today at 1:30 p.m. PDT. The call in numbers: 800-547-2439 (US & Canada) and 706-634-1209 (International). The conference ID is: 1222474. To listen to the webcast, go to http://www.f5.com/f5/ir/calendar.html and click on the webcast image.

About F5 Networks

F5 Networks is the industry leader in Application Traffic Management, enabling enterprises and service providers to optimize any mission-critical application or web service, providing secure and predictable delivery of application traffic in an unpredictable environment. Through F5’s unique open iControl™ API, third party applications and network devices can take an active role in shaping network traffic, delivering application aware networks that allow customers to direct traffic based on their exact business requirements. Our solutions optimize the availability, security and speed of mission-critical servers and applications, including enterprise applications, web services, mobile IP applications, web publishing, content delivery, e-commerce, caching, firewalls and more. F5’s solutions are widely deployed in large enterprises, the top service providers, financial institutions, government agencies, healthcare, and portals throughout the world. The company is headquartered in Seattle, Washington, and has offices throughout North America, Europe, Japan and Asia Pacific. F5 Networks is located on the web at www.f5.com.

Forward Looking Statements

Statements in this press release concerning the contribution of uRoam’s products to revenue in the current quarter and fiscal 2004, the revenue, earnings and net income targets for the fourth quarter of fiscal 2003 and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the successful integration of uRoam’s products with F5’s products, the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; F5’s ability to sustain or develop distribution relationships; F5’s

ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel; F5’s ability to expand in the international markets and the unpredictability of F5’s sales cycle. F5 has no duty to update any guidance provided. More information about potential risk factors that could affect F5’s business and financial results is included in the Company’s annual report on Form 10K for the fiscal year ended September 30, 2002, and other public filings with the Securities and Exchange Commission.

# # # #

F5 NETWORKS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

					JUNE 30,			SEPTEMBER 30,
					2003			2002
				ASSETS
Current assets
	Cash and cash equivalents				$	18,998		$	20,801
	Short-term investments					45,166			59,532
	Accounts receivable, net of allowances of $4,226 and $5,452					20,372			20,404
	Inventories					667			349
	Other current assets					4,373			4,713
		Total current assets				89,576			105,799
Restricted cash						6,000			6,000
Property and equipment, net						10,495			12,211
Long-term investments						32,680			1,346
Other assets, net						1,033			933
		Total assets			$	139,784		$	126,289
			LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
	Accounts payable				$	3,896		$	3,685
	Accrued liabilities					12,728			13,546
	Deferred revenue					17,423			14,058
		Total current liabilities				34,047			31,289
Long-term liabilities						1,506			1,315
Commitments and contingencies
Shareholders’ equity
	Preferred stock, no par value; 10,000 shares authorized, no shares outstanding					—			—
	Common stock, no par value; 100,000 shares authorized 26,905 and 25,730 shares issued and outstanding					137,647			128,876
Accumulated other comprehensive income (loss)						(582	)		454
Unearned compensation						(16	)		(93	)
Accumulated deficit						(32,818	)		(35,552	)
	Total shareholders’ equity					104,231			93,685
	Total liabilities and shareholders’ equity				$	139,784		$	126,289

F5 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

			THREE MONTHS ENDED					NINE MONTHS ENDED
			JUNE 30,					JUNE 30,
			2003		2002			2003		2002
Net revenues:
	Product		$	21,310	$	20,750		$	61,149	$	62,190
	Service			7,879		6,315			23,113		19,001
		Total net revenues		29,189		27,065			84,262		81,191
Cost of net revenues:
	Product			4,491		5,081			12,751		16,195
	Service			2,290		2,504			6,726		7,878
		Total cost of net revenues		6,781		7,585			19,477		24,073
	Gross profit			22,408		19,480			64,785		57,118
Operating expenses:
	Sales and marketing			13,593		13,256			39,413		37,519
	Research and development			4,810		4,785			14,091		13,673
	General and administrative			2,800		3,049			9,050		11,618
	Restructuring charges			—		2,771			—		2,771
	Amortization of unearned compensation			6		106			77		353
		Total operating expenses		21,209		23,967			62,631		65,934
Income (loss) from operations				1,199		(4,487	)		2,154		(8,816	)
Other income, net				352		287			1,126		1,065
Income (loss) before income taxes				1,551		(4,200	)		3,280		(7,751	)
Provision for income taxes				152		146			546		436
		Net income (loss)	$	1,399	$	(4,346	)	$	2,734	$	(8,187	)
Net income (loss) per share — basic			$	0.05	$	(0.17	)	$	0.10	$	(0.32	)
Weighted average shares — basic				26,638		25,537			26,227		25,206
Net income (loss) per share — diluted			$	0.05	$	(0.17	)	$	0.10	$	(0.32	)
Weighted average shares — diluted				28,467		25,537			27,525		25,206