F5 (FFIV) 8-K F5 Networks Announces Results for Third Quarter of Fiscal 2012

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 Results for Third Quarter of Fiscal 2012

SEATTLE, WA—July 18, 2012— For the third quarter of fiscal 2012, F5 Networks, Inc. (NASDAQ: FFIV) announced revenue of $352.6 million, up 3.8 percent from $339.6 million in the prior quarter and 21.3 percent from $290.7 million in the third quarter of fiscal 2011.

GAAP net income was $72.3 million ($0.91 per diluted share), compared to $68.6 million ($0.86 per diluted share) in the prior quarter and $62.5 million ($0.77 per diluted share) in the third quarter a year ago.

Excluding the impact of stock-based compensation, amortization of purchased intangible assets and acquisition-related charges and related tax effects, non-GAAP net income for the third quarter was $90.6 million ($1.14 per diluted share), compared to $87.1 million ($1.09 per diluted share) in the prior quarter and $79.4 million ($0.97 per diluted share) in the third quarter of last year.

A reconciliation of GAAP net income to non-GAAP net income is included on the attached Consolidated Statements of Operations.

“During the third quarter, F5’s revenue and earnings continued to grow sequentially and year over year despite a more cautious spending environment,” said John McAdam, F5 president and chief executive officer. “Overall, revenue growth slowed in Q3, but revenue by region was generally consistent with historical patterns; 57 percent for the Americas (primarily the United States) and 43 percent for EMEA and APJ, with EMEA contributing 21 percent of the total.

“As in the prior quarter, our security offerings were a key driver of product sales and accounted for a growing percentage of total revenue. In addition, we saw continued strong uptake of VIPRION 2400 along with increasing adoption of TMOS version 11.

“During the next six to nine months we are on track to deliver several new products, including a refresh of our BIG-IP appliance family, new policy enforcement capability for service providers and an eight-blade VIPRION chassis.

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“Meanwhile, we are continuing to strengthen our organization and our financial position. In the third quarter, we added 100 employees, increased deferred revenue to $434 million and generated $113 million in cash from operations. After repurchasing 425,088 shares of our outstanding common stock we ended the quarter with $1.1 billion in cash and investments.”

In light of the cautious spending environment in the current global economy, McAdam said management has set a revenue goal of $360 million to $370 million with a GAAP earnings target of $0.90 to $0.93 per diluted share for the fourth quarter of fiscal 2012, ending September 30. Excluding the impact of stock-based compensation, amortization of purchased intangible assets and acquisition-related charges and related tax effects, the company’s non-GAAP earnings target is $1.16 to $1.19 per diluted share.

A reconciliation of the company’s expected GAAP and non-GAAP earnings is provided in the following table:

	Three months ended September 30, 2012
Reconciliation of Expected Non-GAAP Fourth Quarter Earnings	Low			High
Net income	$	72.1		$	74.5
Stock-based compensation expense	$	27.0		$	27.0
Amortization of purchased intangible assets	$	1.7		$	1.7
Acquisition-related charges	$	—		$	—
Tax effects related to above items	$	(8.1	)	$	(8.1	)
Non-GAAP net income excluding stock-based compensation expense and amortization of purchased intangible assets	$	92.7		$	95.1
Net income per share—diluted	$	0.90		$	0.93
Non-GAAP net income per share—diluted	$	1.16		$	1.19

About F5 Networks

F5 Networks, Inc., the global leader in Application Delivery Networking (ADN), helps the world’s largest enterprises and service providers realize the full value of virtualization, cloud computing, and on-demand IT. F5^® solutions help integrate disparate technologies to provide greater control of the infrastructure, improve application delivery and data management, and give users seamless, secure, and accelerated access to applications from their corporate desktops and smart devices. An open architectural framework enables F5 customers to apply business policies at “strategic points of control” across the IT infrastructure and into the public cloud. F5 products give customers the agility they need to align IT with changing business conditions, deploy scalable solutions on demand, and manage mobile access to data and services. Enterprises, service and cloud providers, and leading online companies worldwide rely on F5 to optimize their IT investments and drive business forward. For more information, go towww.f5.com.

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You can also follow @f5networks on Twitter or visit us on Facebook for more information about F5, its partners, and technology. For a complete listing of F5 community sites, please visitwww.f5.com/news-press-events/web-media/community.html.

Forward Looking Statements

Statements in this press release concerning the continuing strength of F5’s business, sequential growth, the target revenue and earnings range, share amount and share price assumptions, demand for application delivery networking and storage virtualization products and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve risks and uncertainties, as well as assumptions and other factors that, if they do not fully materialize or prove correct, could 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, but are not limited to: customer acceptance of our new traffic management, security, application delivery, WAN optimization and storage virtualization offerings; the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; uncertain global economic conditions which may result in reduced customer demand for our products and services and changes in customer payment patterns; F5’s ability to sustain, develop and effectively utilize 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 international markets; the unpredictability of F5’s sales cycle; the share repurchase program; future prices of F5’s common stock; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. All forward-looking statements in this press release are based on information available as of the date hereof and qualified in their entirety by this cautionary statement. F5 assumes no obligation to revise or update these forward-looking statements.

Use of non-GAAP Financial Information

F5’s management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its products, services operations and certain costs of those operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. One such measure is net income excluding stock-based compensation, amortization of purchased intangible assets and

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acquisition-related charges, net of taxes, which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income excluding, as applicable, stock-based compensation, amortization of purchased intangible assets and acquisition-related charges. This measure of non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability. Stock-based compensation is a non-cash expense that F5 has accounted for since July 1, 2005 in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 Compensation—Stock Compensation (“FASB ASC Topic 718”). Amortization of intangible assets is a non-cash expense. Investors should note that the use of intangible assets contribute to revenues earned during the periods presented and will contribute to revenues in future periods. Acquisition-related expenses consist of professional services fees incurred in connection with acquisitions.

Management believes that non-GAAP net income per share provides useful supplemental information to management and investors regarding the performance of the company’s core business operations and facilitates comparisons to the company’s historical operating results. Although F5’s management finds this non-GAAP measure to be useful in evaluating the performance of the core business, management’s reliance on this measure is limited because items excluded from such measures could have a material effect on F5’s earnings and earnings per share calculated in accordance with GAAP. Therefore, F5’s management will use its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations when evaluating the performance of the company’s core business. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.

F5 believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company’s core business and which management uses in its own evaluation of the company’s performance. Investors are encouraged to look at GAAP results as the best measure of financial performance. However, while the GAAP results are more complete, the company provides investors this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into the company’s operational performance and financial results.

For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, please see the section in our Condensed Consolidated Statement of Operations entitled “GAAP to Non-GAAP Reconciliation.”

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F5 Networks, Inc.

Condensed Consolidated Balance Sheets

(unaudited, in thousands)

	June  30, 2012			September  30, 2011
Assets
Current assets
Cash and cash equivalents	$	195,607		$	216,784
Short-term investments		324,050			325,766
Accounts receivable, net of allowances of $3,016 and $2,898		193,705			165,676
Inventories		17,038			17,149
Deferred tax assets		8,702			8,391
Other current assets		43,785			29,907
Total current assets		782,887			763,673
Property and equipment, net		54,257			47,998
Long-term investments		587,342			470,203
Deferred tax assets		34,942			34,762
Goodwill		347,901			234,691
Other assets, net		30,737			17,222
Total assets	$	1,838,066		$	1,568,549
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	32,007		$	33,525
Accrued liabilities		69,708			67,902
Deferred revenue		344,925			270,880
Total current liabilities		446,640			372,307
Other long-term liabilities		20,314			18,388
Deferred revenue, long-term		88,944			72,418
Total long-term liabilities		109,258			90,806
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding		—			—
Common stock, no par value; 200,000 shares authorized 79,013 and 79,145 shares issued and outstanding		349,411			380,737
Accumulated other comprehensive loss		(5,833	)		(6,422	)
Retained earnings		938,590			731,121
Total shareholders' equity		1,282,168			1,105,436
Total liabilities and shareholders' equity	$	1,838,066		$	1,568,549

F5 Networks, Inc.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2012			2011			2012			2011
Net revenues
Products	$	207,118		$	179,327		$	608,837		$	524,529
Services		145,516			111,386			405,851			312,690
Total		352,634			290,713			1,014,688			837,219
Cost of net revenues (1)(2)
Products		34,482			31,803			101,350			94,840
Services		25,805			20,645			72,137			57,244
Total		60,287			52,448			173,487			152,084
Gross Profit		292,347			238,265			841,201			685,135
Operating expenses (1)(2)(3)
Sales and marketing		112,064			93,633			329,297			269,790
Research and development		46,985			35,245			129,675			102,358
General and administrative		23,298			21,126			67,760			61,656
Total		182,347			150,004			526,732			433,804
Income from operations		110,000			88,261			314,469			251,331
Other income, net		1,713			1,889			5,002			6,002
Income before income taxes		111,713			90,150			319,471			257,333
Provision for income taxes		39,377			27,601			112,002			83,546
Net Income	$	72,336		$	62,549		$	207,469		$	173,787
Net income per share—basic	$	0.91		$	0.77		$	2.62		$	2.15
Weighted average shares—basic		79,135			80,866			79,188			80,773
Net income per share—diluted	$	0.91		$	0.77		$	2.60		$	2.13
Weighted average shares—diluted		79,655			81,497			79,834			81,655
Non-GAAP Financial Measures
Net income as reported	$	72,336		$	62,549		$	207,469		$	173,787
Stock-based compensation expense (4)		23,537			22,907			69,005			67,613
Amortization of purchased intangible assets (5)		1,894			—			3,233			—
Acquisition-related charges (5)		—			—			750			—
Tax effects related to above items		(7,191	)		(6,078	)		(20,530	)		(18,336	)
Net income excluding stock-based compensation, amortization of purchased intangible assets and acquisition-related charges (non-GAAP)—diluted	$	90,576		$	79,378		$	259,927		$	223,064
Net income per share excluding stock-based compensation, amortization of purchased intangible assets and acquisition-related charges (non-GAAP)—diluted	$	1.14		$	0.97		$	3.26		$	2.73
Weighted average shares—diluted		79,655			81,497			79,834			81,655
(1)    Includes stock-based compensation as follows:
Cost of net revenues	$	2,706		$	2,398		$	7,828		$	6,793
Sales and marketing		8,537			8,834			26,945			25,926
Research and development		7,504			5,922			19,840			17,399
General and administrative		4,790			5,753			14,392			17,495
	$	23,537		$	22,907		$	69,005		$	67,613
(2)    Includes amortization of purchased intangible assets as follows:
Cost of net revenues	$	1,704		$	—		$	2,903		$	—
Sales and marketing		190			—			330			—
	$	1,894		$	—		$	3,233		$	—
(3)    Includes acquisition-related charges as follows:
General and administrative	$	—		$	—		$	750		$	—
	$	—		$	—		$	750		$	—

(4) Stock-based compensation is accounted for in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”)

(5) Beginning with the second quarter of fiscal 2012, the company will exclude amortization of purchased intangible assets and acquisition-related charges in addition to stock-based compensation expense as a non-GAAP financial measure

F5 Networks, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Nine Months Ended June 30,
	2012			2011
Operating activities
Net income	$	207,469		$	173,787
Adjustments to reconcile net income to net cash provided by operating activities:
Realized loss (gain) on disposition of assets and investments		552			(203	)
Stock-based compensation		69,005			67,613
Provisions for doubtful accounts and sales returns		1,061			453
Depreciation and amortization		24,987			15,715
Deferred income taxes		(1,057	)		(387	)
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable		(28,229	)		(43,062	)
Inventories		111			874
Other current assets		(13,852	)		8,452
Other assets		(244	)		(365	)
Accounts payable and accrued liabilities		(3,089	)		10,086
Deferred revenue		90,168			62,481
Net cash provided by operating activities		346,882			295,444
Investing activities
Purchases of investments		(780,493	)		(692,812	)
Maturities of investments		636,010			548,789
Sales of investments		24,519			80,977
Increase in restricted cash		(30	)		(406	)
Acquisition of intangible assets		(250	)		(80	)
Acquisition of businesses, net of cash acquired		(128,335	)		—
Purchases of property and equipment		(18,544	)		(20,544	)
Net cash used in investing activities		(267,123	)		(84,076	)
Financing activities
Excess tax benefit from stock-based compensation		9,426			20,221
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan		24,942			21,131
Repurchase of common stock		(134,776	)		(121,526	)
Net cash used in financing activities		(100,408	)		(80,174	)
Net (decrease) increase in cash and cash equivalents		(20,649	)		131,194
Effect of exchange rate changes on cash and cash equivalents		(528	)		(144	)
Cash and cash equivalents, beginning of period		216,784			168,754
Cash and cash equivalents, end of period	$	195,607		$	299,804