F5 (FFIV) 8-K F5 Networks Announces Fiscal Second Quarter Results Record quarterly revenue drives improving profitability

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:	Investor Relations
	John Eldridge
	(206) 272-6571
	j.eldridge@f5.com
	Public Relations
	Alane Moran
	(206) 272-6850
	a.moran@f5.com

F5 Networks Announces Fiscal Second Quarter Results
Record quarterly revenue drives improving profitability

SEATTLE, WA—April 21, 2004—F5 Networks today announced net income of $6.0 million ($0.16 per diluted share) on record revenue of $40.6 million for the second quarter of fiscal 2004, up from $3.8 million ($0.11 per diluted share) on revenue of $36.1 million in the first quarter. In the second quarter of fiscal 2003 the company reported net income of $0.8 million ($0.03 per diluted share) on revenue of $28.0 million.

F5 president and chief executive officer John McAdam said the company’s revenue growth was driven by strong international sales, which accounted for 45 percent of total revenue. “With the Japanese fiscal year ending in March, the second quarter is typically our strongest in Japan and this quarter was no exception.”

In terms of mix, McAdam said both product and service revenue grew sequentially and were up sharply from the second quarter a year ago. “Product revenue, which increased 46 percent year over year, reflects growing demand for our core traffic management products and our FirePass SSL VPN appliances, which accounted for 9 percent of product revenue. In addition, we continue to see improving earnings leverage in our business model, with our operating margin at 14 percent, up from 11 percent in the prior quarter. Service revenue, which grew 42 percent year over year, points to our increasing penetration of the enterprise market and the high rate of service contract renewal in our installed base.”

As the company has expanded its share of the enterprise market, McAdam said customers have increasingly recognized the central importance of application traffic management in ensuring the delivery of mission-critical applications to any point in their networks and improving application performance. “A growing number of enterprise customers also see BIG-IP and its position in the network as an ideal platform for additional functionality. As a result, I’m very excited about the upcoming release of our next-generation application traffic management products, which will add new functionality to BIG-IP and deliver major performance improvements in Layer 4/7 processing and SSL acceleration.”

To ensure a solid financial foundation for its product and business development programs, McAdam said the company continued to strengthen its balance sheet during the quarter. Days sales outstanding (DSO) fell to 42 days, contributing to positive cash flow of $10.2 million from operations. At March 31, 2004, the company had $227 million in cash, cash equivalents, and investments.

For the third quarter of fiscal 2004, McAdam said management believes the company will continue to grow sequentially and has set a target range of $42 million to $44 million in revenue with net income of $0.18 to $0.20 per share.

About F5 Networks

F5 Networks keeps IP-based traffic flowing and business information always available to any user from any device, anywhere in the world. Our products ensure secure and reliable access to servers and the applications that run on them. F5 also provides tools to automate communications between applications and the network, eliminating tedious, manual processes.

As the pioneers of intelligent load balancing, F5’s continued innovations help businesses optimize and protect their IT investments. Our mission is to ensure the availability, scalability, performance, and security of IT resources that enterprises require to successfully do business. The company is headquartered in Seattle, Washington with offices worldwide. For more information go to www.f5.com.

Forward Looking Statements

Statements in this press release concerning the upcoming release of our next generation products and the functionality and performance improvements of those products, continued sequential growth, target revenue and net income 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 F5, 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 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 F5’s annual report on Form 10-K for the fiscal year ended September 30, 2003, and other public filings with the Securities and Exchange Commission.

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F5 Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

	March 31,			September 30,
	2004			2003
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	22,162		$	10,351
Short-term investments		108,656			34,527
Accounts receivable, net of allowances of $3,736 and $3,049		19,158			19,325
Inventories		1,905			762
Other current assets		5,275			4,779
Total current assets		157,156			69,744
Restricted cash		6,183			6,000
Property and equipment, net		10,272			10,079
Long-term investments		96,450			34,132
Goodwill		24,188			24,188
Other assets, net		3,727			4,030
Total assets	$	297,976		$	148,173
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	5,397		$	3,714
Accrued liabilities		13,678			13,148
Deferred revenue		24,502			19,147
Total current liabilities		43,577			36,009
Other long-term liabilities		1,744			1,584
Deferred tax liability		454			151
Total long-term liabilities		2,198			1,735
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 34,168 and 27,403 shares issued and outstanding		273,263			141,709
Unearned compensation		—			(10	)
Accumulated other comprehensive income		647			195
Accumulated deficit		(21,709	)		(31,465	)
Total shareholders’ equity		252,201			110,429
Total liabilities and shareholders’ equity	$	297,976		$	148,173

F5 Networks, Inc.
Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)

	Three months ended				Six months ended
	March 31,				March 31,
	2004		2003		2004		2003
Net revenues
Products	$	29,720	$	20,338	$	56,096	$	39,839
Services		10,927		7,679		20,632		15,234
Total net revenues		40,647		28,017		76,728		55,073
Cost of net revenues:
Products		6,799		4,203		12,648		8,260
Services		2,626		2,275		5,088		4,436
Total cost of net revenues		9,425		6,478		17,736		12,696
Gross profit		31,222		21,539		58,992		42,377
Operating expenses
Sales and marketing		15,920		13,061		30,874		25,820
Research and development		5,900		4,886		11,344		9,281
General and administrative		3,855		2,900		7,202		6,250
Amortization of unearned compensation		—		5		10		71
Total operating expenses		25,675		20,852		49,430		41,422
Income from operations		5,547		687		9,562		955
Other income, net		808		312		992		774
Income before income taxes		6,355		999		10,554		1,729
Provision for income taxes		400		184		798		394
Net income	$	5,955	$	815	$	9,756	$	1,335
Net income per share – basic	$	0.18	$	0.03	$	0.31	$	0.05
Weighted average shares – basic		33,768		26,164		31,953		26,022
Net income per share – diluted	$	0.16	$	0.03	$	0.28	$	0.05
Weighted average shares – diluted		36,946		27,494		35,074		27,230