Exhibit 99.1
FINAL TRANSCRIPT
THOMSON STREETEVENTS(SM)
FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
EVENT DATE/TIME: JUL. 20. 2006 / 4:30PM ET
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
CORPORATE PARTICIPANTS
JOHN ELDRIDGE
F5 Networks - Director of IR
ANDY REINLAND
F5 Networks - SVP, CFO
JOHN MCADAM
F5 Networks - President, CEO
JOHN RODRIGUEZ
F5 Networks - SVP, Chief Accounting Officer
DAN MATTE
F5 Networks - SVP of Marketing
KARL TRIEBES
F5 Networks - SVP of Product Development, CTO
CONFERENCE CALL PARTICIPANTS
SAM WILSON
JMP Securities - Analyst
RYAN HUTCHINSON
W.R. Hambrecht - Analyst
JIONG SHAO
Lehman Brothers - Analyst
TROY JENSEN
Piper Jaffray - Analyst
REANJEANNIE CHAUNDRA-THOMPSON (PH)
- - Analyst
ERIK SUPPIGER
Pacific Growth Equities - Analyst
MATT ROBINSON
Ferris, Baker Watts - Analyst
KEN MUTH
Baird US Equity Research - Analyst
ALEX HENDERSON
Citigroup Global Markets - Analyst
JOANNA MAKRIS
Adams Harkness & Hill - Analyst
EHUD GELBLUM
JP Morgan - Analyst
GABE LOWY
Blaylock & Co. - Analyst
BRENT BRACELIN
Pacific Crest Securities - Analyst
KRISTI HIME (PH)
- - Analyst
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
RUSS KEEFE (PH)
- - Analyst
MANNY RECAREY
Kaufman Brothers - Analyst
PRESENTATION
OPERATOR
Welcome to F5 third-quarter financial results. All parties will be on a
listen-only mode until the question and answer session. Today's call is being
recorded. If you have any objections, please disconnect.
I'd now like to turn the call over to Mr. John Eldridge, Director of Investor
Relations. Thank you, sir, you may begin.
JOHN ELDRIDGE - F5 Networks - Director of IR
Thank you. Good afternoon and welcome to our third quarter conference call. The
speakers on today's call are John McAdam, President and CEO, Andy Reinland,
Senior VP and Chief Financial Officer, John Rodriguez, Senior VP and Chief
Accounting Officer, Julian Eames, Senior VP of Business Operations and Global
Services, Tom Hull, Senior VP of Worldwide Sales, Dan Matte, Senior VP of
Marketing, and Karl Triebes, Senior VP of Product Development and CTO, are also
with us and will be on hand to answer questions following our prepared comments.
If you don't have a copy of today's press release, it is available on our
website, www.f5.com. In addition, you can access an archived version of today's
live webcast in the events calendar page of our website through October 25th.
From 4:30 p.m. today until 5 p.m. Pacific time July 21st, you can also listen to
a telephone replay at 866-494-3185 or 203-369-1752. Pass code is F5 earnings.
Before I begin, I want to remind you that today's discussion contains
forward-looking statements which include words such as "believe," "anticipate,"
"expect" and "target." These forward-looking statements involve risks and
uncertainties that may cause our actual results to differ materially from those
expressed or implied by these statements. Factors that may affect our results
are summarized in our quarterly release and described in detail in our SEC
filings. Please note that F5 has no duty to update any information presented in
this call.
If you have any questions following today's call, please direct them to me at
206-272-6571. Now I'll turn the call over to Andy Reinland.
ANDY REINLAND - F5 Networks - SVP, CFO
Thank you, John. In the third quarter of fiscal 2006, F5 achieved revenue of
100.1 million, above our target range of 96 to 98 million. Our book-to-bill
ratio was greater than one. Overall, revenue grew $6 million, a quarterly
increase of over 6%. Year over year, revenue was up 27 million or 37%. The
Americas represented 57% of total revenue, EMEA accounted for 20%, A-PAC
accounted for 13%, and Japan 10%. Japan revenue was down sequentially as
expected, decreasing 29% quarter over quarter.
Security revenue, including approximately 1.8 million from our Application
Security products, was 7.2 million. This compares to 8 million in the prior
quarter and represented 7% of total revenue. Revenue from our WAN optimization
and acceleration products was 5.4 million compared to 1.4 million in the prior
quarter. Year to date, revenue from these products totaled 7.6 million. Product
revenue was 77% of total mix and service revenue was 23%. Deferred revenue
increased 5.6 million sequentially to a total of 53.5 million.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
During Q3, we had two greater than 10% distributors, Ingro Micro, which
accounted for 14.5% of total revenue, and GE Access, which accounted for 12%.
As we announced on May 22nd, F5's board initiated an inquiry into the Company's
stock option grant practices. This inquiry is being conducted by a special
committee of the board, which is being assisted by independent legal and
financial experts. Legal and accounting fees related to this inquiry added
approximately 1.8 million in unanticipated operating expenses during Q3.
Due to the fact that the special committee's review is ongoing, we have not
included financial statements in our Q3 release and we do not expect to file our
10-Q within the required time. That leaves few financial details we are at
liberty to discuss until the special committee's review has been completed and
appropriate adjustments, if any, have been determined.
Without disclosing actual numbers, which may change as a result of any
subsequent restatement, I can say that during the third quarter, we achieved pro
forma gross margin and pro forma EPS within the target ranges we provided on our
second-quarter conference call. As a reminder, these pro forma numbers exclude
the effects of stock-based compensation.
On the balance sheet, accounts receivable DSO ended the period at 51 days
compared to 50 days in the prior quarter. Consistent with our guidance,
inventories increased to 7.9 million from 3 million in the prior quarter
reflecting our transition to Rojas compliant products for the European Union. At
quarter end, we had 453 million in cash and investments. We ended the quarter
with approximately 1,010 full-time employees, an increase of 40 employees over
the prior quarter.
Now for outlook. For the fourth quarter, we feel confident about our ability to
continue to grow our business sequentially. As a result, we have set a target
revenue range of 104 to 106 million. Although we can't provide guidance on
operating expenses in Q4, we do expect to incur additional costs of 4 to 5
million related to our ongoing options inquiry.
In addition, we expect an increase of approximately 3 million in stock-based
compensation expense resulting from annual awards granted to non-executive
employees on July 1st. We estimate DSOs will be consistent with the quarter just
ended, around 50 days. We believe inventories will be between 5 and 7 million
and we expect to add between 40 and 60 employees during the quarter.
With that, I'll turn the call over to John McAdam.
JOHN MCADAM - F5 Networks - President, CEO
Thanks, Andy, and good afternoon, everyone. Before I comment on Q3 in some
detail, I want to draw your attention to a press release and the comments we
issued on the stock option inquiry. Given that the inquiry is still ongoing, we
will not be answering any questions related to that subject or providing any
more information than is in the press release.
I will now comment on Q3, give you some updates on the product road map and
comment on Q4 guidance. Business was strong across all our key geographic
markets. We saw sequential growth in all our major geographies except Japan. As
expected, Japan business was down sequentially from the prior quarter,
reflecting the seasonal weakness that characterizes the first quarter of Japan's
fiscal year.
However, the Japan year-over-year revenue growth was up 72% and exceeded our
internal expectations for the quarter. Our U.S. federal business was up
sequentially from last quarter but still remains at a relatively low percentage
of our overall business, accounting for approximately 3% of overall revenue.
U.S. enterprise and service provider business produced very solid sequential
growth combined with a very strong contribution from both EMEA and Asia-Pacific.
Our service business once more produced sequential growth as well as another
large increase in deferred revenue.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
From a product perspective, we saw a continued sequential growth from our core
BIG-IP TMOS platforms, strong sequential growth from our new WAN optimization
platforms and strong sequential growth from our TrafficShield application
firewall solution. The one product area which was disappointing last quarter was
with our FirePass SSL-VPN remote access solution which was down from the
previous quarter.
We continue to experience ongoing softness in the SSL-VPN market, especially
with IP replacement opportunities where customers still do not see a compelling
reason to switch architecture from IP SEC with any great urgency. We continue to
believe we have a very competitive offering with FirePass and indeed we
introduced some exciting new features with version 6 of FirePass last quarter.
Features like dynamic application tunnels and increased end-point security
checks were added to increase our competitiveness. Dynamic application tunnels
offer broad application interoperability, with applications without requiring
special administrative privileges on the client.
I now want to make some comment on our technology road map before commenting on
Q4 guidance. We are now in beta test phase with our new high-end platform, which
we will be naming the BIG-IP 8800 on announcement. The platform uses clustered
multiprocessing technology which is a key component of the Montreal architecture
and provides significant performance gains in all the key areas of Application
Delivery Networking. For example, our goal is to double the number of SSL
transactions per second available -- available on the current high end flagship
8400 system. This is particularly impressive given that the current 8400 is
already best in class from a competitive viewpoint.
We continue to believe that our TMOS or traffic management operating system
platform continues to give F5 solutions a clear competitive advantage. Our web
accelerator solution is the next offering that we plan to add as a software
module on the TMOS platform. This strategy of offering Application Delivery
Networking optimization and security modules on a single unified platform
continues to be well received by our customers and we expect to see similar
success with the WebAccelerator module that we have seen with other modules like
GTM, our Global Traffic Manager module, and ASM, our Application Security Module
based on TrafficShield.
As far as Q4 guidance is concerned, Andy provided our target revenue range which
will result in continued sequential growth in the final quarter of fiscal 2006.
In Q4, we tend to see some softness in EMEA, particularly in the first two
summer months, which we believe will result in flat to possibly slightly up
sequential -- sequential quarter in that geography. In previous years, we have
seen strong sequential growth in Japan in Q4, and we expect that trend to
continue this quarter. Also, North America, including federal, is forecasting
sequential growth this quarter as well as continued growth in Asia-Pacific. We
also expect to see another strong quarter in our services business given the
strong deferred revenue service backlog and the high contract renewal rates.
Finally, I want to take -- to thank the entire F5 team and our partners for
their continued support last quarter and with that we'll turn the call over for
Q & A.
QUESTIONS AND ANSWERS
OPERATOR
[OPERATOR INSTRUCTIONS] Our first question is from Sam Wilson. Your line is
open.
SAM WILSON - JMP Securities - Analyst
Hi. Good afternoon, everyone. I have two questions. First, on the financial
statements and the stock options issue. What would you expect the next milestone
to be? Would that be the audit committee reporting back to the Company their
results? And
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
then just a generic question. Can you just kind of give a view of the
competitive landscape as a change over the last quarter? Thank you.
JOHN MCADAM - F5 Networks - President, CEO
On the first one, basically the big milestone will be the report from the
independent committee. That's the big one. We don't have a time scale on that.
That's obviously independent and we're fully cooperating but no time scale.
On the second one, the competitive landscape, not much different from what we've
seen for frankly about a year. The two main competitors are Cisco and Sitrix. We
think we are in really great shape against them. The 8400, as I mentioned
before, is our flagship and our road map's in great shape so from that
perspective, we feel very, very good about it.
SAM WILSON - JMP Securities - Analyst
Terrific. Thank you very much, gentlemen.
JOHN ELDRIDGE - F5 Networks - Director of IR
Thank you.
OPERATOR
Ryan Hutchison, your line is open.
RYAN HUTCHINSON - W.R. Hambrecht - Analyst
Good afternoon, guys. Just a quick clarification and a question. On the pro
forma EPS that you provided for the current quarter, that was in line with the
guidance you provided, I guess, on last quarter's call. Does that include the --
the legal expenses of 1.8 million?
ANDY REINLAND - F5 Networks - SVP, CFO
Yes, it does.
RYAN HUTCHINSON - W.R. Hambrecht - Analyst
Okay. And in terms of the question here, on the whole WAN optimization market,
clearly you had very strong results here. Can you just talk about any large
deals you saw in the quarter, what your expectations are for next quarter in
terms of guidance and then just the overall opportunity given it appears that
this business has started to actually accelerate quite nicely.
JOHN MCADAM - F5 Networks - President, CEO
Yes. We -- first of all, we agree the market has definitely got potential and we
think it's going to continue to accelerate in general. We did have a fairly
large deal in the quarter. We won't get into details on that. We won't talk
about particular projects, but we did have one. The pipeline is very strong.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
In terms of the forecast, we don't forecast by product for next quarter and in
fact given that this is quarter four, we're coming to the end of the year, we're
really not going to change our original guidance, which is clearly very
conservative of when we bought Swan Labs, we said we'd do 8 to 10 million. We're
obviously very close to that range. But we're not going to give any update on
that because it would effectively be an update on the product revenue.
RYAN HUTCHINSON - W.R. Hambrecht - Analyst
What was the U.S. government business as a
percentage of revenue this quarter then?
JOHN MCADAM - F5 Networks - President, CEO
It was about 3%.
ANDY REINLAND - F5 Networks - SVP, CFO
For federal was 3.
JOHN MCADAM - F5 Networks - President, CEO
For federal, U.S. federal.
RYAN HUTCHINSON - W.R. Hambrecht - Analyst
Thanks, guys.
JOHN ELDRIDGE - F5 Networks - Director of IR
Thank you.
OPERATOR
Thank you. Jiong Shao, your line is open.
JIONG SHAO - Lehman Brothers - Analyst
Thank you. I have a couple of questions as well. First, a follow-up on a prior
question. Is the EPS calculation last quarter include the $1.8 million? My
calculation -- rough calculation indicated that if you exclude that out, is that
a $0.03 difference? Is that --each would have been $0.03 higher? Was my
calculation, roughly, right?
ANDY REINLAND - F5 Networks - SVP, CFO
Roughly on a tax effective basis, yes, $0.03.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
JIONG SHAO - Lehman Brothers - Analyst
Okay. So -- okay. That's clear. And my first question is on -- on linearity. I
was hoping you could talk about what did you see as you went through the quarter
and especially in the last month of the quarter. Did you see any change in
overall demand? Is the demand accelerating or decelerating and any color you can
provide, that would be helpful.
ANDY REINLAND - F5 Networks - SVP, CFO
On the linearity, actually, this quarter we saw some improvement in the -- in
the third month so a little bit better, and we'll continue to put focus on that,
but it was actually better this time.
JIONG SHAO - Lehman Brothers - Analyst
Would you be able to say any -- what the last month -- the percentage of sales
in the last month of the quarter?
ANDY REINLAND - F5 Networks - SVP, CFO
Yes. Last quarter was around 50% and this quarter was 47.
JIONG SHAO - Lehman Brothers - Analyst
Okay, great. My last question is on the topic of share buyback. I know you
didn't say anything today, but -- but as you may know, for example, Juniper
could not report numbers as well yesterday but they did announce a share buyback
program. So I was wondering from your -- just philosophically, is there any
reason because of this investigation you cannot buy back shares? Is there any
particular reason or not?
JOHN MCADAM - F5 Networks - President, CEO
Regarding the buyback, and first of all it's worth reiterating that a strong
balance sheet is essential for us because we're competing against Cisco in the
Fortune 500 accounts. And also it does -- strong balance sheet with cash gives
us some flexibility if we need to make some strategic moves and I'm not by any
means implying that we're in the process of doing that. Now, having said that,
we did discuss the option of stock buyback at our last board meeting. We decided
to delay the decision right now while the inquiry was in place and we intend to
revisit that subject at the next scheduled board meeting.
JIONG SHAO - Lehman Brothers - Analyst
Which is when, John?
JOHN ELDRIDGE - F5 Networks - Director of IR
That's probably going to be in the October time scale.
JIONG SHAO - Lehman Brothers - Analyst
Okay. Thanks, guys.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
JOHN ELDRIDGE - F5 Networks - Director of IR
Thank you.
OPERATOR
Thank you. Troy Jensen, your line is open.
TROY JENSEN - Piper Jaffray - Analyst
Hey, thanks. Just a quick question. Can you give us any sense of maybe what the
BIG-IP 8400 contributed this quarter?
ANDY REINLAND - F5 Networks - SVP, CFO
You know, we're not going to break that out but I would characterize it to say
we have a good sales on the 8400.
JOHN MCADAM - F5 Networks - President, CEO
Yes, and our internal expectations but we don't break it out more than just
BIG-IP in general.
TROY JENSEN - Piper Jaffray - Analyst
Got it. That's fine. Let me ask this guys. Last quarter you provided a guidance
for revenues but you wanted to grow the backlog a little bit. Is your sense on
the backlog where you want it, John, or is it another quarter where we may see
our orders grow faster than we see revenues?
JOHN MCADAM - F5 Networks - President, CEO
Yeah, no. I think we're there in the backlog, actually. I don't know if we'd
want to grow it much more. I mean, you can sometimes get customer satisfaction
issues if you grow it too big so I think we're up around the number we would
expect to be.
TROY JENSEN - Piper Jaffray - Analyst
Got it. Keep up the good work, guys.
JOHN ELDRIDGE - F5 Networks - Director of IR
Thank you.
OPERATOR
Thank you. Reanjeannie Chaundra-Thompson, your line is open.
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REANJEANNIE CHAUNDRA-THOMPSON - - Analyst
Good afternoon. I just wondered if you could talk a little bit about the growth.
Do you see it more coming from market growth or some of the things you've done
with your channel programs in the past year?
JOHN MCADAM - F5 Networks - President, CEO
It's really both, actually. I mean the market -- if you look at the markets
we're in, we mentioned one -- one optimization is a pretty hot market right now.
We think our core market, which is Application Delivery Networking, is a BIG-IP
product line is a market that's going to keep growing for the future. But
meanwhile, we're continuing to add partners as we do that to take advantage of
the market markets so they're both linked together.
REANJEANNIE CHAUNDRA-THOMPSON - - Analyst
Great. Thanks. And just a follow-up question on the WAN optimization. Do you see
more coming from your WebAccelerator product or is it mostly WANJet?
JOHN MCADAM - F5 Networks - President, CEO
It's mostly WANJet but we do see WebAccelerator business as well but it's mostly
WANJet.
REANJEANNIE CHAUNDRA-THOMPSON - - Analyst
Okay. Great. Thanks so much.
JOHN MCADAM - F5 Networks - President, CEO
Thank you.
OPERATOR
Erik Suppiger, your line is open.
ERIK SUPPIGER - Pacific Growth Equities - Analyst
Good afternoon. Just a couple questions. First off, can we assume that at least
one transaction that you've identified as having date issues, can we assume
that's in fiscal 2001, since that's the date we're -- where your restatements
would start?
JOHN MCADAM - F5 Networks - President, CEO
Well, you know, I'm just not going to go into any assumptions. We're really
going to be pretty hold fast and firm on questions on this and I hope everybody
else is listening. That really we're not adding more, given that this is ongoing
to what we did in the press release.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
ERIK SUPPIGER - Pacific Growth Equities - Analyst
Can you talk generically, just as to why -- why you would need to restate or why
anybody would need to restate so many years if -- you know, if there's an event
- -- one-day event or, you know, a single event?
JOHN RODRIGUEZ - F5 Networks - SVP, Chief Accounting Officer
Erik, this is John Rodriguez. If there's an event where you have a problem with
the measurement date, you would amortize that expense over the related vesting
period and all those years would be affected. In addition then, any balance
sheet would likely be restated as well for any change in a P&L in a prior year.
ERIK SUPPIGER - Pacific Growth Equities - Analyst
Okay. Then just on the competitive front. Net Scaler's reached probably roughly
a quarter of your size at this point. Are you seeing them with -- with greater
frequency, or you had said that competitive dynamics haven't changed but they're
growing arguably faster in light of their acquisition. Can you talk a little bit
about how frequently you're seeing them and what changes there might be on that
front?
JOHN MCADAM - F5 Networks - President, CEO
We haven't seen many changes at all.
DAN MATTE - F5 Networks - SVP of Marketing
This is Dan. I think last quarter on their call yesterday they said that they
did about $16 million on the Net Scaler product. So it's growing modestly over
there. In terms of what we're seeing in the field in engagements, certainly
nowhere outside of North America, and within North America, we see them on
occasion. But as John said earlier, really no change in the competitive
landscape and when we do engage with them we fare very, very well, thank you.
ERIK SUPPIGER - Pacific Growth Equities - Analyst
Very good, thank you.
JOHN MCADAM - F5 Networks - President, CEO
Thank you.
OPERATOR
Thank you. Matt Robinson, your line is open.
MATT ROBINSON - Ferris, Baker Watts - Analyst
First, I missed the service provider percentage. Can you give me that? And then
I've got a couple follow-ups.
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ANDY REINLAND - F5 Networks - SVP, CFO
Yes, we didn't -- 19%. We didn't give it but it was 19%.
MATT ROBINSON - Ferris, Baker Watts - Analyst
That must be why I missed it. Okay. What's the -- what's the population of
DevCentral up to at this point?
ANDY REINLAND - F5 Networks - SVP, CFO
DevCentral's up to about 9,000 -- just over 9,500 at this point.
MATT ROBINSON - Ferris, Baker Watts - Analyst
Okay. And this -- the success you've had with the acquisition, are you -- is
that really a function of the -- your sales force getting fully engaged and
basically the cycle time for that to ramp, or have you -- or would you say it's
markets -- market awareness for more cyclical reasons?
JOHN MCADAM - F5 Networks - President, CEO
Probably the sales force engaged, getting the whole system integrated into the
company. That's probably the big factor.
MATT ROBINSON - Ferris, Baker Watts - Analyst
And this -- with this 8800 multiprocessor scalability, do you envision that
expanding? Are there new applications that you could reach with that kind of
capability that you haven't been able to reach before, or is it just the ability
to run more applications?
ANDY REINLAND - F5 Networks - SVP, CFO
Yes. There are a couple of different things in play there. One is looking at
some of the large service providers and the types of things that they want to do
in their environment, being able to divvy the device up between multiple
customers being one thing. But more importantly and on a broad scale, adding the
enterprise into it as well. Really what it comes down to is how many decisions
can you make per second? And people are using this prime real estate to -- to
apply these decisions for lots of different outcomes.
Acceleration, better security, better availability, so on and so forth across
lots of different applications. So what we see in the market place and I think
what's demonstrated by things like the population of DevCentral is that the more
decision-making power we can provide to people, the more things they soak up
with it and they just become more and more creative in how they utilize the
products.
ERIK SUPPIGER - Pacific Growth Equities - Analyst
Thanks.
ANDY REINLAND - F5 Networks - SVP, CFO
Thank you.
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OPERATOR
Thank you. Ken Muth, your line is open.
KEN MUTH - Baird US Equity Research - Analyst
Hi. On the TrafficShield side, what do you think it takes to kind of get that to
be a more important contributor to the revenue line?
JOHN MCADAM - F5 Networks - President, CEO
I think we're doing a numbers thing from a development perspective and maybe
Karl can talk about that in a second. But we're seeing it as a really, really
important leverage of our core BIG-IP business now. So our role as a module, the
actual -- the price of it is relatively low in the big mix. It's driving a lot
of the BIG-IP business. So I wouldn't underestimate that because it's a very,
very significant differentiator. But in terms of making it easier to sell and
install, Karl can talk about that.
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
Right. So with the -- with the ASM and the TrafficShield product in general,
what we found out is that deployment-wise, setting the policy's the most complex
part of this, setting these different security policies, and what we've been
doing is focusing on simplification of the policies and having more granular
control so that not only the people that are security experts in the company can
help manage the TrafficShield ASM modules but also just the network
administrators and really providing another layer of abstraction so there's been
a lot of focus to policy generation, to performance as well as integration into
some of the base features of the BIG-IP to help provide, as Dan was referring
to, the consolidation of security, acceleration and availability.
KEN MUTH - Baird US Equity Research - Analyst
Okay. And then the last question on the 8800, when would you expect that to
start having revenue contribution?
JOHN MCADAM - F5 Networks - President, CEO
Well, we haven't given an announcement date on it. It's in beta phase.
KEN MUTH - Baird US Equity Research - Analyst
Okay.
JOHN MCADAM - F5 Networks - President, CEO
It's going well. Typically we wouldn't announce in summer. I mean we typically
wouldn't do that. So that gives you some sort of clue as to what we're
targeting. But we haven't actually announced it.
KEN MUTH - Baird US Equity Research - Analyst
Okay. Thank you.
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FINAL TRANSCRIPT
JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
JOHN ELDRIDGE - F5 Networks - Director of IR
Thanks.
OPERATOR
Thank you. Alex Henderson, your line is open.
ALEX HENDERSON - Citigroup Global Markets - Analyst
Thanks. Hi, guys.
JOHN MCADAM - F5 Networks - President, CEO
Hi.
ALEX HENDERSON - Citigroup Global Markets - Analyst
So just to make sure I got the math right here. It looks like your order growth
was sequentially up double digits, am I reading that correctly? Given your book
to bill improved from below one to above one.
JOHN ELDRIDGE - F5 Networks - Director of IR
No. We didn't -- we didn't say that. Obviously we've grown revenue and we grew
our backlog. But it -- and we don't say what we've grown in the backlog.
ALEX HENDERSON - Citigroup Global Markets - Analyst
It seems pretty clear that your book to bill was solidly below one. You had
indicated something in the order of 3 or 4% below one before and now it's above
one. Isn't that book to bill somewhat better than you initially anticipated? I
thought your guidance last quarter was for the book to bill to go back to one,
not to above one.
JOHN MCADAM - F5 Networks - President, CEO
Well, yes, it was. Absolutely it was. We said assume a 96 to 98 million on a
book to bill of one and we produced 100.1 on a book to bill greater than one.
ALEX HENDERSON - Citigroup Global Markets - Analyst
All right. So on the competitive landscape, lots of noise around the Cisco
Blade, at the risk of beating a dead horse a little bit here. Have you had any
more opportunity to evaluate the -- the product? Have you gotten your hands on
it? Can you talk a little bit about the relative costs if you include not just
the cost of the Blade but the cost of a slot on a 60 -- 6500, how that compares
with your product? Just give us a little bit more color on what you're thinking
about the competitive implications of that product.
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FINAL TRANSCRIPT
JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
So I'll drop in just real quick on the competitive situation. We actually had
Neval done with an ace against one of -- actually one of our 6800 platforms, not
actually our high-end platform. And the customer evaluated both and actually
went with us because they said quote unquote that we delivered on our results.
And that's about as far as -- that was the exact quote from the customer. So we
don't have a Ace module in-house but again we've had one strong trial where we
went head to head with the thing. We don't have the results or numbers but that
was the comment we got back from the customer.
ALEX HENDERSON - Citigroup Global Markets - Analyst
And the pricing differential as you see it?
DAN MATTE - F5 Networks - SVP of Marketing
Yes, Alex, this is Dan. In terms of the pricing differential and, again,
thinking about things in terms of decisions per second, we far out-performed the
- -- huge advantage in the FI products to go with us. The other thing I would
comment on as well is we -- in terms of sourcing one internally, we've been
waiting for the 16-gig version to be available and that continues not to be
available. So we may back off our expectations and go with the 4 or the 8 and
start looking at those instead.
ALEX HENDERSON - Citigroup Global Markets - Analyst
And on the Net Scaler side. Can you talk a little about how you see the
continuing drive you have on hardware performance versus what you perceive to be
Net Scaler's capability to deliver on hardware improvements on their product,
particularly on a scalability basis?
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
Well, I mean Net Scaler's products are really basically off-the-shelf PCs and so
they're trying to take advantage of kind of that morse lock curve whereas we've
taken a very integrated approach to provide not only the back end processing but
up-front and hardware acceleration capabilities and to do this in different form
factors so we have -- so we have the 8800 coming here shortly, second half of
this year, and that involves elements of all three of those that we're taking
full advantage of having a full vertically integrated hardware design group and
of course the Montreal platform due out next year extends that even further to
provide capabilities that you just can't get off a service class PC.
ALEX HENDERSON - Citigroup Global Markets - Analyst
One last question then and I'll cede the floor. The deferred -- which I'm
assuming you're calling 8800 at this point.
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
Yes, that's right. Correct.
ALEX HENDERSON - Citigroup Global Markets - Analyst
The timing of the availability of that is still on schedule for, towards the
beginning of your new fiscal year?
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
The second half of this year is what we've been forecasting.
JOHN MCADAM - F5 Networks - President, CEO
That's what we've been seeing and it's on schedule for that.
ALEX HENDERSON - Citigroup Global Markets - Analyst
The second half of the calendar year, right? But the schedule hasn't changed at
all?
JOHN MCADAM - F5 Networks - President, CEO
No.
ALEX HENDERSON - Citigroup Global Markets - Analyst
Okay. Thanks.
OPERATOR
Thank you. Joanna Makris, your line is open.
JOANNA MAKRIS - Adams Harkness & Hill - Analyst
Hi there. Wondering what the timing is on the integration of WANJet into TMOS
and then secondly if maybe you can talk about some of the initial beta
applications and maybe you can talk broadly about the types of applications that
people are looking at with the 8800?
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
In terms of schedule for WANJet on top of TMOS, we have broadly been saying next
year. We've been clearly focused on integration of the WANJet features,
capabilities within the organization, within the sales teams, and F5
productization. But there's definitely plans for next year. And I'm not going to
pick a hat just yet but that's definitely on the road map.
JOHN MCADAM - F5 Networks - President, CEO
And just to avoid any confusion, WebAccelerator's going to be sooner.
KARL TRIEBES - F5 Networks - SVP of Product Development, CTO
Right. So we're actually -- WebAccelerator -- thank you for reminding me -- will
be available in the second half of this year, okay, as part of TMOS. In terms of
what our beta customers are doing, I mean they -- we have a number of betas
running right now and these -- we actually pick customers based on the types of
things that they -- they are doing and willing to work with us on in terms of
the features they are going to test and what we try to do is get a broad
cross-section of different features and different
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
network types, if you will, and application types. So we have customers that are
doing everything from stressing some of the core features, such as compression,
SSL, caching, to some of the -- to the other features like with the
WebAccelerator or some of our other modules that plug into it. So --
DAN MATTE - F5 Networks - SVP of Marketing
And Joanna, this is Dan. Specifically, some of the stuff we've been working on
with some of the outstanders are things like Sharepoint and web access with
Microsoft to tune WebAccelerator to have very precise settings to get the
maximum out of those applications right out of the box.
OPERATOR
Thank you. Ehud Gelblum, your line is open.
EHUD GELBLUM - JP Morgan - Analyst
Hi, thank you. Just a couple quick questions if I could. Swan seems to be
obviously doing really well and John, clearly will get past your original
target. Is there any concentration in the customer base there? Is it
concentrated perhaps on a particular geography or in a particular vertical, or
is it selling pretty much across an entire large, very diverse customer base?
JOHN MCADAM - F5 Networks - President, CEO
Yes. It's been selling mainly in North America but that's normal when you do an
acquisition. It's obviously easier to ramp up. As we move into next quarter, we
expect it to be more widespread across the geographies.
EHUD GELBLUM - JP Morgan - Analyst
Okay. Great. Thanks. Going back to SSL-VPN for a moment. Can you give us a
little more color -- I know you spoke a little bit about it, but to understand
- -- you have a handle on how the market is doing around you? Is it not picking up
at all for any of your competitors and is it something that at a certain point
you'll give up on? Or how do you -- how do you decide how much capital to plow
into it? Juniper doesn't seem to be doing very well either. But do you have a
sense that this is worth putting your muscle behind or if it doesn't work,
that's okay. Whatever color you have.
JOHN MCADAM - F5 Networks - President, CEO
I'll pass it down to talk about the market and that's what your original -- in
general on the give up question. No, I don't think so. I -- first of all, we
really believe, even although there's been a number of courses where we are
expecting IP SEC change rate to increase that hasn't happened but there are
absolutely good reasons to move from IP SEC to SSL-VPN, especially if you have
any mobile requirements and we think over time that's going to happen and the IP
SEC market is a pretty strong market and Dan can comment on that. So that's one
thing.
The other thing is that from a technology perspective, a lot of the technology
that we have in FirePass is very, very much embedded in our product road map on
an integrated basis. So when we talk about SSL everywhere, where -- where we go
from the client rate through to service oriented architectures, FirePass is a
key component of that. So we don't -- we don't see any -- any concern about that
and in terms of the market, Dan can comment.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
DAN MATTE - F5 Networks - SVP of Marketing
Yes. In -- from calendar Q4 in '05 to calendar Q1 in '06, as reported by
Infonetics, the market grew roughly about 1% sequentially, just a hair under 1%.
So obviously from that perspective, and that pure SSL-VPN piece, we're not
seeing big, big movement there. But just to echo what John said. How this wraps
in with our overall road map and our other products, we -- we believe that this
will be an important part of our product portfolio for a long time to come.
EHUD GELBLUM - JP Morgan - Analyst
Right. Do you think -- technology speaking obviously it's very cool and you can
do a lot more things with it. Do you think there are there other reasons that
the market is strong that are not technology but just based on economically some
cost already and there's just perhaps there -- I don't know if there's
compatibility with something, I'm thinking VHS Betamax where the better
technology doesn't necessarily win?
DAN MATTE - F5 Networks - SVP of Marketing
I think definitely in terms of the subcosts piece and just people looking at --
I've got something -- it works, yeah, I've got some hiccups with it, some
problems. But maybe I'll -- I'm not -- it's not that urgent for me to move off
of it. Where we are seeing some people get that sense of urgency are situations
where they have focus on things like disaster recovery, things like spinning up
access in a hurry into their system. Where the traditional solutions are just
very, very painful to -- to try and accommodate that and SSL-VPN technology,
especially like FirePass, makes it very fast and easy.
EHUD GELBLUM - JP Morgan - Analyst
Right. Okay. One last question if I could. Software modules. I know we don't
really have a gross margin number to look at because of the impact of it all,
but how are the growth or sales of your software modules going?
ANDY REINLAND - F5 Networks - SVP, CFO
They're going well and -- in line with our expectations.
EHUD GELBLUM - JP Morgan - Analyst
Can you give us a metric? Are they up more this quarter than they were last?
ANDY REINLAND - F5 Networks - SVP, CFO
Quarter over quarter, yes. They were.
JOHN MCADAM - F5 Networks - President, CEO
Yes they were.
EHUD GELBLUM - JP Morgan - Analyst
Okay. So they've accelerated.
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FINAL TRANSCRIPT
JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
ANDY REINLAND - F5 Networks - SVP, CFO
Yes.
EHUD GELBLUM - JP Morgan - Analyst
Thanks so much.
OPERATOR
Thank you. Manny Recarey, your line is open.
MANNY RECAREY - Kaufman Brothers - Analyst
I just have one question. Talking about the WAN optimization market. Do you see
your growth -- did you -- do you think you're taking market share away from --
from competitors, or do you see it just kind of the overall growth of the
market?
JOHN MCADAM - F5 Networks - President, CEO
I'll answer it and then again Dan may want to give more detail. It's pretty
early to tell that. This is really -- I mean it's our third quarter of revenue
but it's really our second quarter of real ramp up and it's just so difficult to
say. What -- what we feel very good about is the competitiveness of the product.
So when we are competing against some of the strong players, they were doing
extremely well. I don't know if we're taking market share or not.
DAN MATTE - F5 Networks - SVP of Marketing
Yes. It's too early from that perspective. I'd say it's still -- the overall
market is increasing.
MANNY RECAREY - Kaufman Brothers - Analyst
Okay. Thanks.
OPERATOR
Thank you. Gabe Lowy, your line is open.
GABE LOWY - Blaylock & Co. - Analyst
Good morning -- good afternoon. It's mostly been answered. The only question is
any thoughts or comments on Microsoft's acquisition of Whale?
DAN MATTE - F5 Networks - SVP of Marketing
Yes, it was an interesting one, so Whale being the SSL-VPN piece that they
picked up recently. It was picked up just, of course, the name of the team
escapes me now, but the Isa Group, sorry. So it's an interesting combination
between the two. And I think
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
over the long term, when you sort of play the chess pieces out a little bit, it
could spell some interesting times for people who are in the terminal services
business and what's going on there. But anyway, so it's an interesting move by
Microsoft. Our partnership with them continues to be strong across many, many
fronts, so it hasn't impacted us in any way.
GABE LOWY - Blaylock & Co. - Analyst
Thank you.
OPERATOR
Thank you. Again if you'd like to ask a question, press star followed by one.
The next question is from Brent Bracelin. Your line is open.
BRENT BRACELIN - Pacific Crest Securities - Analyst
Thank you. I have another follow-up question on WANJet, I apologize here, but
obviously had to -- pretty good ramp there. You attribute some of it to some
large deals in the quarter but as you look at kind of your sales force, the
product, what would you attribute the -- the success in that business? Is it
having kind of the right architecture that you're having some success there, or
are you seeing success in bundling kind of BIG-IP with the Swan Labs, or was the
success solely on the kind of Swan Labs only deal?
JOHN MCADAM - F5 Networks - President, CEO
We've seen some good examples of bundling BIG-IP, definitely. With scenarios
where the competition would have to use BIG-IP or something like it with the
customer actually preferring BIG-IP, that gives you an opportunity. But this is
so early days.
BRENT BRACELIN - Pacific Crest Securities - Analyst
Sure.
JOHN MCADAM - F5 Networks - President, CEO
This is an issue that -- but I think there's going to be some -- some pool of
either product. It's also very, very similar in concept to the -- for the
channel and -- okay. It's -- it's across the WAN is a content of optimization
which of course we do in our core products and the data center with BIG-IP.
BRENT BRACELIN - Pacific Crest Securities - Analyst
And then shifting gears to the telecom market. I know you guys have had a pretty
big initiative on the wireline side. Have you guys seen any kind of ramp in the
wireline business yet? I know those lead times are pretty long, but any progress
report on the wireline side would be appreciated.
DAN MATTE - F5 Networks - SVP of Marketing
Sorry. This is Dan. Our engagements on the wireline side continue. I think the
types of deployments that we're seeing with them are fairly consistent in terms
of the types of gateways that we're being deployed with, some of the more
advanced voice over
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
IP services that they're deploying as well. So I think those -- those efforts
are -- are definitely giving us progress there. We're at 19% of revenue in terms
of our overall carrier stuff so we have yet to see that sort of really pull
away. But we're positive on it.
BRENT BRACELIN - Pacific Crest Securities - Analyst
So there was no -- you couldn't really comment on the magnitude of the change on
the wireline side this quarter versus last quarter?
DAN MATTE - F5 Networks - SVP of Marketing
No, no, not breaking down.
BRENT BRACELIN - Pacific Crest Securities - Analyst
Okay. Thank you.
OPERATOR
Thank you. Jiong Shao, your line is open.
JIONG SHAO - Lehman Brothers - Analyst
Hi. I got a couple quick follow-ups on the OpEx. Just for the -- for the June
quarter, could you talk about if you exclude the legal expense or the rest of
the OpEx sort of in line or better or worse vis-a-vis your guidance?
JOHN MCADAM - F5 Networks - President, CEO
No. We can't comment on that, I'm afraid. That's why we gave you the pro forma
and the range and we gave you the -- the extra, the cost that was included in
that pro forma number. But no more than that.
JIONG SHAO - Lehman Brothers - Analyst
Okay. Okay. Then -- then I was wondering, so for the -- for the September
quarter, the first clarification, the 4 to $5 million, that's the total legal
expense, not incremental, right? That first clarification.
ANDY REINLAND - F5 Networks - SVP, CFO
Now that -- that would be incremental -- oh, incremental from the 1.8?
JIONG SHAO - Lehman Brothers - Analyst
Right, right. It's not incremental from 1.8. That's just total.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
ANDY REINLAND - F5 Networks - SVP, CFO
No, that's just total. Legal and accounting fees related to the inquiry.
JIONG SHAO - Lehman Brothers - Analyst
Okay. Now, if you exclude that, I know in the past you -- you have always said
that you -- you aim to grow revenue faster than OpEx in general. Does that still
hold sort of as the guidance for the OpEx for next quarter?
ANDY REINLAND - F5 Networks - SVP, CFO
Generally the way we've managed the business over the last number of years is
going to continue and that's investing behind revenue, investing in the drivers
that we believe will grow the top line, and we'll continue to do that.
JOHN MCADAM - F5 Networks - President, CEO
We have no -- no intention of -- of changing our approach to the business over
the next few quarters.
JIONG SHAO - Lehman Brothers - Analyst
Okay. One last question is the follow-up on the service provider side. It looks
like your service provider, 19% again. That's a -- last quarter was 19% as well.
So this seems to be very strong but some of the other wireless vendors appear to
have seen some weaker results. Could you just talk about what -- what did you
see somewhat differently from what some of the other guys were seeing?
DAN MATTE - F5 Networks - SVP of Marketing
So this is Dan. I'm not sure in terms of what the other guys were seeing.
JIONG SHAO - Lehman Brothers - Analyst
The other wireless application guys. Let's say Openwave, for example, just pick
a company. Like sort of the -- the -- the wireless application vendors supplying
to the wireless service provider vertical. That vertical doesn't seem to be
particularly the strongest quarter but could you maybe comment on the wireless
vertical?
JOHN MCADAM - F5 Networks - President, CEO
[Inaudible], a big comparison with us. I mean, it's not obvious to -- I mean
what we've been doing in -- as we've seen in previous quarters but not much
change but progress as we've been having more focus on the service provider.
We're building more solutions. We're focusing in areas like set on the voice
over IP space, areas like that, mobile being the driver. So no big, big changes.
Obviously, a 19% was what it was last quarter so clearly there was growth but it
was still the same percentage. And some of the sales cycles are longer. So we're
going to keep the same strategy but we haven't seen any sales -- any major
difference in that opportunity.
JIONG SHAO - Lehman Brothers - Analyst
Okay. Thanks, guys.
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JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
JOHN MCADAM - F5 Networks - President, CEO
Thanks.
OPERATOR
Thank you. Alex Henderson, your line is open.
ALEX HENDERSON - Citigroup Global Markets - Analyst
Thanks. So just so that I can get a better handle on what happens beyond the
September quarter a little bit. The legal expenses you're talking about in the
September quarter, is it reasonable to assume that that's sort of an ongoing
quarterly run rate expense until this is resolved?
JOHN MCADAM - F5 Networks - President, CEO
No. We can't comment, no, Alex. We can only give you the quarter.
ALEX HENDERSON - Citigroup Global Markets - Analyst
I mean you put us in an awkward situation of -- of not knowing whether to deal
with this expense or not deal with it. It's obviously something that's not
forecastable from our perspective. So how -- how should we deal with it if we
don't -- is it -- ? Let me put it conceptually. Is it reasonable to think that
as long as this process continues that that's the rate of expense?
ANDY REINLAND - F5 Networks - SVP, CFO
Alex, we haven't disclosed how long we think that --
ALEX HENDERSON - Citigroup Global Markets - Analyst
I'm not asking that. I'm asking is it that -- is that a rate of expense that's
sort of a standard rate as long as it's going?
ANDY REINLAND - F5 Networks - SVP, CFO
We went out to the -- to the people involved with the professionals involved in
the investigation and asked them for the best estimate for one quarter only so
that's the only information we have on that.
ALEX HENDERSON - Citigroup Global Markets - Analyst
All right. So --
JOHN MCADAM - F5 Networks - President, CEO
It's the only information we have, Alex.
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ALEX HENDERSON - Citigroup Global Markets - Analyst
But presumably that's sort of the ongoing cost of associated with doing it on a
per quarter. Is that a reasonable way to think about this? I mean otherwise the
- -- you need to get the straight on the similar page here. And people need to
make some sort of decision on whether they're going to include or not include
that expense going forward and obviously you don't want to forecast it. So I'm
trying to give you an opportunity to give us at least some indication if that's
sort of a standard quarterly run rate?
JOHN MCADAM - F5 Networks - President, CEO
I understand where you're coming from.
ALEX HENDERSON - Citigroup Global Markets - Analyst
Just trying to get a handle on the way to think about it. You don't have to give
us guidance on it, just an angle on it.
JOHN MCADAM - F5 Networks - President, CEO
We get where you're coming from very clearly but we don't have the information.
ALEX HENDERSON - Citigroup Global Markets - Analyst
Okay. And then can you just refresh what you said about option costs as of July
1st? You made a comment which went by me in the -- when you were reading the
text earlier.
ANDY REINLAND - F5 Networks - SVP, CFO
Yes. I -- we expect for the quarter our run rate for stock-based compensation to
go up 3 million.
ALEX HENDERSON - Citigroup Global Markets - Analyst
To go up by 3 million or to 3 million?
ANDY REINLAND - F5 Networks - SVP, CFO
By 3 million.
ALEX HENDERSON - Citigroup Global Markets - Analyst
By 3 million.
ANDY REINLAND - F5 Networks - SVP, CFO
By 3 million, yes. We did an awards to non-executive employees on July 1st.
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ALEX HENDERSON - Citigroup Global Markets - Analyst
And so that is sort of an ongoing rate that we should step it up going out ad
infinitum sort of thing, right?
ANDY REINLAND - F5 Networks - SVP, CFO
Yes, it is.
ALEX HENDERSON - Citigroup Global Markets - Analyst
Just want to get clarity on that point. Thank you. Thank you.
OPERATOR
Thank you. Kristi Hime, your line is open.
KRISTI HIME - - Analyst
Hi. I apologize if I missed this before. I'm assuming you did not say when you
expect results of the special committee reviewing stock option grants to be
completed?
JOHN MCADAM - F5 Networks - President, CEO
That's correct. We don't have that information.
KRISTI HIME - - Analyst
Okay. And one follow-up. You identified one occasion on which the accounting
differed from the correct measurement date. You also said that was involving
certain employees, officers and directors. Could you say how many people you're
talking about?
JOHN MCADAM - F5 Networks - President, CEO
No, and I said at the beginning of this that we are absolutely not going to
comment any more information apart from what's in the press release, given that
the inquiry's ongoing.
KRISTI HIME - - Analyst
All right. Thanks.
JOHN ELDRIDGE - F5 Networks - Director of IR
Thank you.
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FINAL TRANSCRIPT
JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
OPERATOR
Thank you. Again, if you have a question, press star followed by one. The next
question is from Ehud Gelblum. Your line is open.
EHUD GELBLUM - JP Morgan - Analyst
Hi, a quick question for you. $45 million is a lot of money. Is that just,
especially for one quarter, is that just salaries for accountants, attorneys, et
cetera, or is that also accruing some for potential damages?
JOHN MCADAM - F5 Networks - President, CEO
No, it's the former.
EHUD GELBLUM - JP Morgan - Analyst
It's the former. It's the little people's salaries.
JOHN ELDRIDGE - F5 Networks - Director of IR
Operator, we're going to take one more question and that'll be it.
OPERATOR
Thank you. The next question is from Russ Keefe. Your line is open.
RUSS KEEFE - - Analyst
Yes, hi. In the -- in the WAN optimization market, who do you see as being sort
of the leaders within that market? Can you address that a little bit, please?
DAN MATTE - F5 Networks - SVP of Marketing
Sure. This is Dan. So it's interesting looking at some of the people that are
private players out there, folks such as Riverback that are out there. Of
course, Juniper picked up Parabit a while back. We see them as well. But I think
the most interesting piece of it is really that, just how wide open the market
is in general. So whether it's sort of a small private companies looking at the
coverage that they're providing or some of the more established players out
there. It's still very much a green field opportunity for everybody.
JOHN ELDRIDGE - F5 Networks - Director of IR
Okay. Thank you all for joining us and if you have any follow-up questions,
please give me a call and we'll look forward to talking with you again next
quarter.
JOHN MCADAM - F5 Networks - President, CEO
Thank you.
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(C) 2006 Thomson Financial. Republished with permission. No part of this
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FINAL TRANSCRIPT
JUL. 20. 2006 / 4:30PM, FFIV - Q3 2006 F5 NETWORKS EARNINGS CONFERENCE CALL
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