FFIV - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. And welcome to the F5 Networks Second Quarter Fiscal 2019 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions] Also, today's conference is being recorded. objection, at any time. has anyone please this disconnect If Ms. call I'll the to now turn over Suzanne DuLong. may you Ma'am begin.

Suzanne DuLong

available and copy Executive Suzanne call hand also will of of A be website today's members or available of Locoh-Donou, on the Time is the CEO; of archived today's our Investor today's during I'm making be to Relations. Pelzer, Welcome. fX.com release of DuLong, today's through portion call. Pacific executive XXX-XXX-XXXX midnight Q&A also Francois XXX-XXX-XXXX. tomorrow, answer FX's FX's an where discussion prepared A through replay remarks the of President XXXX. questions at call. XX CFO, FX President on press April and dialing be Vice Vice on available July President Frank will version FX's Other XX, will and are team by

please directly or me reach follow-up to additional For questions, information out s.dulong@fX.com. at

presented which as our to or actual will the these call differ in statements risks that by cause this contain may results the are information Our target. Factors our expect, SEC from affect those and that materially financial involve may uncertainties words statements. call. forward-looking results believe, in includes turn release our forward-looking summarized With results I'll discussion These and over implied detail anticipate, and today statements, Please that in press to expressed FX such any duty to update announcing note described that, filings. our in Francois. has no

Francois Locoh-Donou

consuming detail. XX% growth in will vehicles, including cloud. leading the majority last and months. over Frank WAF we're agreements. the multi-cloud cloud public and offerings, and conversations services, Security the XX are growth the made more Increasingly, strongest in I'll resource declined results including our talk results we've software in growth quarter's you Thank drivers to deployment are strong Thank leveraging drivers model mitigation today. flagship remarks. review to with they down license customer both the the speak in briefly on-prem Systems our us our to before software software my detail X% enterprise area. afternoon, and the public quarter. in our consuming in and you, business be of I Suzanne, Customers line from subscriptions everyone. shifts good revenue new later the market, in With and joining quarter, delivering and to software to continues our for our handing Advanced for vast are bot revenues in

As carefully expected, a seeing we use are case to and and timing mentality, as being some with of evaluated, cases certain opportunities systems such growth emerging high-performance of segments and see in That in cloud-first customers use market the elongations continue deal investment hardware a markets. result. we are as said, adopting security

robust X% business Services Our in produce customer delivered world-class scores. quarter satisfaction and margins to gross while continues the maintaining growth

the need solution capabilities most customers' FX responsive reliable and become their recognize for has sophisticated as services environment Our critical increasingly differentiate they and to from support application continue providers.

We strong consistently rates. attach are achieving XX%-plus

attach points basis Americas quarter. XXX In fact the for the rate in increased the

we of pleased very we transition at greater NGINX. Day subscription Frank as Frank? our results both see the our as begin we detail we augmented a for March slow and and In topics QX to transition. I'll growth the we're reviews discussed summary, in recently with XXXX, complete quarter. our percentage we after progress platform, Progress seeing the as in offerings. launched time, to Analyst we our service that As in and our third be services contribution to other Services, Cloud as-a-service Investor of outlook FX over expect software rates to are do higher will from and acquisition our speak

Frank Pelzer

Thank Francois and everyone. good afternoon, you,

growth strong we and solid in the revenue quarter. delivered noted, Francois As EPS

to of XX% $X.XX range was share. total for $X.XX up GAAP revenue million guided flat quarter EPS per year-over-year our million. $XXX above to Second revenue. million of product million was of $XXX per of and revenue within Non-GAAP $XXX approximately EPS year-over-year was $X.XX and $X.XX of per $XXX share. of QX was X% share accounted guidance our approximately

represented and On year-over-year year-over-year QX, XX% was total from total X% for As revenue. QX year-over-year product total revenue year-over-year and of and Systems and roughly for America's year-over-year accounted $XXX year-over-year and approximately overall XX% flat made Services X% XX% X% million percent revenue, of of was XX basis grew represented revenue and François XX% regional represented X% of software grew revenue. revenue in revenue grew of as of approximately revenue. grew down mentioned, of product up and sequentially. EMEA product of XX% a a accounted revenue. up $XXX million XX% points of APAC revenue. approximately basis, revenue XX% flat

Looking XX% at XX%. bookings vertical. our Enterprise represented product accounted Service bookings. customers for providers by of

in of revenue, Arrow X% and some XX%. Federal. Tech U.S. In from for impact for bookings, shutdown of from QX, we product Ingram Micro, Data, which each and the accounted modest XX% than accounted of government quarter distributors. three which including Our government business XX% had the reflected total representing greater XX%

operating line gross $XXX were were expenses gross to Non-GAAP QX Non-GAAP million. in expectations. results. operating margin our XX.X%. turn with now expenses $XXX million. was XX%, operating Let's was GAAP margin GAAP in

margin operating margin was non-GAAP in was operating and XX.X% XX.X%, our with GAAP Our line in QX expectations.

quarter Our was GAAP rate tax the effective for XX.X%.

rate tax effective XX.X%. non-GAAP Our was

year-over-year planned Approximately Capital in XX% increased approximately XXX up of increase balance were billion. hire the relates quarter continue and million, people million over of the at at to as XXX. end $XXX.XX at end new from cash QX, quarter average our prior QX over days. the in totaling we the the In and Downtown as shares in expenditures facility share the our quarter end. at DSO XXX,XXX flow was to an per to Seattle. was employees, quarter $X.XX of sheet. the quarter we of to Deferred million. adoption of out of X,XXX investments research contributed generated of for $XX price up build the sales million. XX aggressively which $X.X half our $XXX repurchased sequentially approximately including areas, & for Inventory $XX.X to from growth the we quarter stock continue revenue as We ended we operations, $XXX billion to common total year the development. a with cash In Turning QX,

we of share please my stated, Now metrics. operating today reference let fiscal 'XX. in for guidance any note the transaction. all are with me of the comments Also, that closed, are with progress our pleased opportunities otherwise with our from impact in making revenue the the transition growth and software not market guidance Unless position we guidance our or cost QX the in excludes to our and remain Overall, for confident non-GAAP business. NGINX

we with We security. increasing the trend environments well also long-term and multi-cloud towards demand aligned believe are for application

we QX million. customers this of flexibility range addition, ever-evolving the subscription agility seeing consumption in and for $XXX architectures. of provide offerings as million $XXX they are mind, ELA In With with better targeting their and to we revenue software are 'XX traction in increasing

of remain year We tax effective We range XX% will provided full previously anticipate to XX% expect fluctuation some the approximately expenses rate of the gross our the quarter-to-quarter. for $XXX to estimate million fiscal we million. to year in $XXX margins for XX.X%. We XX% operating with

assets. expense to million approximately Downtown share-based have deal to In compensation the our to in several the related announced of expect million QX cost move the Our from includes initial of The of approximately occurred expenditures FX weeks we move that Capital over $XX we in in calendar last quarter, per corporate $XXX earnings $X.XX headquarter move summer. purchase the This expect we close we any million expected impact in target Tower the or to previously for year. transaction tangible $X.X cost second and the quarter, our included continue million to of guidance. and $XXX revenue are expect is share. reiterate in phase the of $XX but this to Seattle. million not complete $X.XX NGINX range I'll range amortization to the

any the expect immaterial turn call will be Francois? to we when will over the report details impact contribution and quarter that, our Francois. provide I to expect We revenue results. With in back quarter QX

Francois Locoh-Donou

before Thank we highlighting you, move Frank. business I'll quarter Q&A. trends minutes wins on the spend few just the we're to a the some from customer in seeing and

our on XX% first software Focusing growth.

We software growth are vectors. three across accelerating

where First, deploy the more packaged This security multi-cloud security as in for the even critical. is demand capitalizing demand particularly public including applications applications, we for on customer as cloud customers true software. are is significant capabilities

In blocking overall is software our drive and share to continue account our particular, of cases use a our to rate array security increasing capabilities to business. for of continue higher result, traffic machine-generated a threats. As monitoring who face and an growth customers and anti-bot appealing product

seeing also new access, cases zero including privileged emerge, stuffing security use trust. credential are user and We

In their the company. application our International to other on combination we access. energy security applications network at a policy example, secure quarter, during Advanced FX application words, deployed WAF access As secured an an and of with their are manager FX They an policy. selected

maintenance. rigs provides third highly For plants FX oil systems oil on their doing access and systems to for example, secure parties

year and ELA from vector in second are which customers ELAs flexibility provide manage comes public transition as clouds. our The and consumption accelerating using the environments. our software to models, last subscription leverage they introduced to Increasingly, customers were multi-cloud technology growth

we the and quarter. quarter, to number the value the first that closed opportunities of During in three compared times near

dollars have sales overall third are are ELAs we force the important still for ELA While robust quarter pipeline. and tool small, relatively our a an

gaming to an services X Advanced needed an As API replaced ELA DDoS, WAF bad want. we the model, the customer an needed and to multi-cloud consumption security when to ELA the protect deploy Using we company. flexibility deploy and with gave QX, example, during customer application bots they capabilities where actors. online and an security the The the vendors games' and other flexibility closed layer

secure second The to This pivoting came upgraded selected as high-performance ensure the public flexibility digital an customer FX multi-cloud to our as same The bot They both Virtual siloed Application we network often their native an work FX BIG-IQ. Edition airline can transformation Firewall from cloud also security and both example This deployment a approach. scale. preferred Application using consumer undergoing ELA Advanced example of They ELA FX's Firewall. customer their and work teams from the with Web teams. with an and protection. as needs within to to well an BIG-IP interesting mitigation the as Web application credential offers organization loyalty stuffing across are how successfully

combination complex software in is increasingly advanced deployments. accelerating which management, with of growth central and for vector sprawling our environments facing and third customers capabilities The orchestration automation, resonate an

In unlocking fact, and new our spend. is deployments to unify simplify ability

For BIG-IQ the instance, quarter, are manage a business. operate global come customer had a deployment estate the to had of speed year purchase during solution their infrastructure of for deploying at They instances. their infrastructure last BIG-IP automate to manage of we The help to FX looking global BIG-IQ processor U.S. payment of now them large and BIG-IP. to hundreds their

continue look will drive we the half As catalysts. with we toward growth back software of we believe number of XXXX, a to

solutions First, scenarios. we SaaS minutes. we FX offering security in environments from applications existing native availability, modern free SaaS applications within FX-as-a-Service SaaS of with is deployment FX Later high emerging our number strong support DNS cloud running including with customer deliver on services designed the easily container-based designed year, configured Services to include this already platform that of and and top Cloud we'll in enterprise-grade trials. and first in QX, abilities, a provisioned service, protect launched to more enterprise-grade are threats. These a XX-day set, Launched service it. have even basic

digital model a continued contemplate their consumption it ELA, environment. new providing cases. we software launching additional high-grade license to response customers entitlement use in and as means even and we're and cloud are when more from catalyst hardware this With an that new Customers are transformation to portability businesses. flexibility is have Another for ELA migrating for their growth software for what ELA they protects asked they high-grade a

this what services. We for have excited multi-cloud future model application already pipeline developed means about and we are new

NGINX. Finally, we acquisition confident our in are enabled opportunities by increasingly of the

CIO very the acquisition in close our the FX the reaction Together, the initial internal bridge calendar the integration developers solutions the freedom both the In well. about NGINX to requisite ability control dev to see and across very positive giving weeks since as FX going is NetOps We application to continue and announcements, expect Customers combination from ops. the been and provide offer strong initial and has potential satisfy able and quarter. what to second all divide NGINX are the between they while be of the theaters that will to to innovate. excited planning

FX's We NGINX' complementarity the by platform and cloud are excited native services between controller. app

in As a family maintaining offering a product result, larger one total using the offering. addressable the ops across Super-NetOps NGINX' CEO, cases. resources traction When new the team set move Robertson, services. in This cloud-first we're momentum dev approach. providing engineering post-close increasingly used a we in a market The cloud software is and of FX cases both personas. leader that under multi-cloud capabilities expect that team is most to will opening our and a perhaps address under evidence my NGINX NGINX path to converge will customers remarks application and additional the converged the are span expect with brand broader significant to and native current increase FX customer mentioned getting become closed, a accelerate NGINX I to taking use we our Gus demonstrable product solution on and to

well. as are We

in Q&A. go begin management. Organizations solution of customers provider automation, consistent, actually more I'll complicated value operating our environments, sizes all are with that As multiple things across contemplate we speak complexity FX's and and learning before multiple to FX's policies, our to central quickly make increases. environments work environment-agnostic briefly orchestration and service to business simplify proposition that

areas or of We continue business. providers' NFV, new in network our function virtualization, service to solutions drive

We DNS and firewall and wins portions DDoS, providers' wireline CGNAT wirelined we in growth and are see MSO with include deals networks, of ramping. securing wins Recent and carriers services. DNS

firewalls. from web In addition, we are emerge opportunities also managed application seeing

on to mobile are our majority We will portions operators we the with there FX. focused of and radio and of be continue towards opportunities increased network, the XG conversations spend confident near-term while spectrum to about XG core see spending continue moves the for have the that we

During successfully to QX, with a American provider include expanded use our communications case we North security.

front-end and FX In with win the thanks expect access they as of and its network websites. all customers them deployed help leading network, We quarter their we our The which numerous are provider to Editions. is the as traffic was the where field stability to software more allowing internal another manageability This move This focused. provider customer our better solution this and efficiency with with contemplate while shareholders. with transition, discussions access during providing challenges customer from for XG We're secured to our provider to well, handle and experiences. a functionality achieve as reliability to for having customer and greater they with NFV WAF the become experiencing stack true users in systems greater increased manager communications consumer-facing also that through and unsatisfactory BIG-IQ. scale allowed motion service field dual was and BIG-IP sales connection, Virtual FX will closing, supporting now large my an for XG policy our also entire technicians partners, outages same them proposed delivering to team, technicians. remote

We are on journey this together.

continuous Our transformation customers' our embracing we to open that requires now digital we challenge. and will operator, of the Q&A. transformation business With call are that, a

Operator

Silverstein go question comes [Operator first Your line Paul ahead. Cowen. Please from from of Instructions]

open. is line Your

Paul Silverstein

it. appreciate I Thanks.

follow-up. similarly growth downtick rate going the got significant from better the from a you the been discuss your the unique six region, then an Can of regionally? first there quarter what's I've Frank, over have was one, in was quarter, strong First in was Americas. EMEA a past quarters. And there regional anything a on the uptick in growth part in perspective, And previous posting you there the

Frank Pelzer

Yes.

range. in last North specifically think had got I in I X% where Germany, I'll also year-on-year to flat And quarter, the Europe year-on-year. think to Brexit this up we saw was three this got where we some - America specifically And of think quarters in quarter, was rate go some deals. solid sort internationally, and we've - we the we've push growth a I softness region. now X% specifically around Europe growth Germany, Austria the concentrated for had uncertainty That think I U.K.

And with Overall, put months continued you had there result, we we than way we - challenges, as felt changes but lot we of some formation would've both in about recall, so a we we of the in have ago, in execution We in made We hoped in still progress perhaps Europe. Europe. that in progress Europe. less lot Paul, having progress uncertainty some Europe. XX if these in were - those made leadership a challenges the feel and on made are a with these we've our macro a backdrop of

so with. with performing think dealing we're over we're generally, And we're team what way that's the is happy But I and our - there. organized

I think lumpiness worry we've for of less our U.K. think region. good isn't Asia-Pacific, anything Generally, growth specific that the there the this Asia-Pacific And the bit and to also macro There expect in in was about trajectory a quarters, we little at we is bit business than of north, Germany. in but a had in then couple last cost quarter there. moment. the continue little we and that's that had we in to

Paul Silverstein

quarter, about government to related Hey, that than Brexit wasn't But adversely for want the otherwise impacting if been you a been has comment of why a change the there paperwork, presented you, from federal and last this manpower i.e. And rec issue the I to then uncertainty. think playing to before, challenge suppliers, an different with weakness. other Francois, you quarter you process wondering would federal the actually on would out was the one while, respect last just that, quarter devil's there government hanging comment, that? a no to rev And Brexit a I'm advocate, also standpoint. have to any now? there's made lack ask which quarter in that

Francois Locoh-Donou

for around some right. - to term. the European the that exit the been I you episodes would Paul, the has uncertainty this, few Union. when, be companies On very a happen around contingency months, there been all will make happen plans of have the the that in - and uncertainty of the trying last it. short Brexit, that would known has U.K. probably In increased. But would outcome And how you're folks guess number followed the But have what

So in the the wanted in saw they we folks last to wait because had decisions month be. quarter, the real U.K. in until of clarity on what the would they outcome push particular, out

that Specifically on if been didn't impact the lose the had have though any business the - really Even had was some there won that processed I reasonable in We ended it there us business we had could we was we government a wasn't quarter. the - but did think shutdown wasn't taken Fed, Fed. we the place. better some not quarter that The is quarter. for in in shutdown February, business the processed early

that thought had Fed. there quarter in is did that a overall, few we we So a reasonable in But come. have quarter come deals the could not the

Paul Silverstein

pass it I'll Thank you. right. All on.

Operator

from of Alex Your next question line KeyBanc. Kurtz from Please go the ahead. comes

line is Your open.

Alex Kurtz

been thinking years. we time? commentary vertical constructive a for couple last more the over demand the than the customers I the a sounded of around know start challenging of there period on overall from business faster changing you're Francois, growing Is Thanks. just maybe like perspective? something it for a these your of group providers, about Thanks service about becoming question. it's taking opportunity. Should

Francois Locoh-Donou

not would that now. conclude Alex, for I

XG we capacity providers, are more them with our But sort opportunities a this providers. cautious are the us. think cases we if North - NSD, service In upgrades two virtual opportunity our lot and quarter areas several though, service ahead service about rollout about that more still think I to better will America out, the overall, getting use with of radios are see for to I near-term in a quarters of QX. XG once couple We And providers meantime, look I and the and of still were middle solutions. providers happen the where seeing in the globally the spend this we're that we XG than of the felt with we're transition. specifically. in there service we at good of traction us use

in in So number they also our contribute a did cases. of software other but cases, things use also to and security, like use growth and on CGNAT as firewalls including well

doing come, will providers areas So quarters And that's out. hopefully few as are these well. the but two service we in said XG a

Alex Kurtz

for that. think you those XG talking team XG better here But of And works there could dollar Is better FX sense just be opportunity be a just know wasn't? you accounts. just a that clarify do and at a could to for the I it weren't opportunity? dollar

Francois Locoh-Donou

to that meaningful, meaningful We a the than of and that deployments. There give the well because what's edge, edge. processing more and could of and traffic that are XG, perhaps help slicing like fact this impact going and traffic, at that critical way of at these handle be are the a think of XG more to belief network they'll more to then the the catalyst lot have The so applications FX. us size and on a we're in around positioned happen sort teams scale very

Alex Kurtz

Thank you.

Operator

Your JPMorgan. comes Samik from go question next Please from ahead. line of Chatterjee

open. is line Your

Samik Chatterjee

more kind to you just there? you pause If it spending down of seeing to what of in seeing? wanted it about cloud? X%, in I that Or evaluating just of of primarily, them are kind seeing revenue you're just you're could Or move solutions? I Francois, elongation being evaluating clarify clarify, other potentially seeing you. kind some the a timing. is Thank you're the comments Is think, your mentioned system deal Hi. you

Francois Locoh-Donou

approval The - hardware large think in seeing or scrutinize that want from that, spend have phenomenon do to more. that enterprise software in what the the have a result, go software not first And there on cloud the It's Samik. adopt first, is the wouldn't And first they stance pause really as is that's their hardware customers as Hi, characterize a getting spending. more a elongated. are I cycles I for it as as we're to to go cloud lot that time referring I a processed, transaction on there team a organizations. project dynamics more go that and can decision But made has time the forward to scrutiny we That's to. it. those or approved is first, be what was a

Samik Chatterjee

Okay. just second a Got And it. quick one.

you the to and it you're have of well of they of deciding referred kind a - NGINX for that being a and I products, NGINX be seeing behavior controller cloud mean, available of of at offering and as before would offering? opting wait you product in look together kind it? You've to the quarter. Or kind controller for to converged deals what a are as the that the your mentioned - and wait at customers the native launch or factor of kind these them put you of the service in going as costumer kind asking even terms When kind looking you these rather are close

Francois Locoh-Donou

native FX milestone services your I a I the I But later first Services, an about developing. that think Yes, think, Software-as-a-Service specifically your is FX and Cloud is, think it's - important what talking so pretty has of been cloud quarter announcement so NGINX platform the FX offering FX between as was and catalyst question there Samik, Cloud about in because application see Services. I for which

The So not the the virtual NGINX are on that element brings to fairly it's ADC in that, of space. actually straightforward. the table portfolio

it's been what Gateway completely the server they've and to really are have those TAMs space doing market controller but native organically, FX. completely So technology, they built the what a a based API doing. have and app the NGINX is In platform controller And we server we in in hadn't that complementary been yet. our market new, app ADC adjacent web services for specifically, their on cloud virtual has was in been space that are launched really and

a more controller the their sophisticated initial easy in way headed say, of the - been there wanted it appeals the whereas to that is plans. dev we've integration a targeted, really fairly significant audience is that a enterprise two was so to that and buyer controller sense in control ops mainstream we're with between planning I would NGINX data where our the was an And complementarity stages

it. all of analytics that all our less very from so way users we're so dev controller momentum. But we're can offering to because it capability sophisticated is that is controller, capabilities maintain the controller want the market in use want larger and accelerate the start to that come we are market, with and what a to with the And course ops the port target going doing is NGINX combined of to NGINX customers, addressable it with that with the to the in the easy going sophisticated rapidly an we the

So we're of the pretty excited offering. about that combined acceleration potential

Samik Chatterjee

Okay. That Thank you. is clear. very Thanks, Francois.

Operator

go line Badri of Sami from question next Please from Your ahead. comes Suisse. Credit

Your line is open.

Sami Badri

Great. Thank you.

on. had want is reach one you're single commendable, I a you the ramps thing sense margins. the revenue a to that given quarter then software commented and is going to looks happening a because operating that on specifically makes try very that exactly just just margin software just side, understand your idea this get It through think bit The we think non-GAAP margins, but walk pressure us I see is better the like, gross on you dramatically a to on a of now. on you sequential you on is aggressive can some is little and exactly quarter the want But watermarks So every basis, starting more, you just up what to cost what on. hirings expansion margin there

Frank Pelzer

Hi It's Frank. Sami.

It's we XX.X%. right what was said with that of with sort in Let expectations, XX% one. to our me actually start line

the we actual the scaled as side So it on business. exactly of were inherent in a lower Over come expected in than higher the was margin end long at we there the as is of growth we business the period to hardware range. time, software that board. But

about comes impacts as at that from back driver gross get about how component go we is as so product revenue it an of XXXX, talked our quarter. the some AIM for and of to into closer Horizon And as that make last is see in investment in we margin way this better and expected just say side. to it what expansion I'd in its software you to additional should X, we of But further we exactly even but start talked guidance a

Sami Badri

I And Got and more integrating there market in offerings. on one umbrella and then commentary of going to NGINX lot the the NGINX think it the and bringing it. NGINX, on - under unifying is thing

and anything element dynamics cannibalistic one the other to of that of there there any be the from your of everybody kind if narrative, Is all NGINX type brand to by be potentially that? there just cannibalistic was there a that is, any like question to integrating is and doing going revenue doing will could potentially of type streams? historical - Could ADC and this of use of illustrative dynamics revenue to or ADC, existing by all be FX stream could business? emerge follow-up that, with right together? services integrating NGINX this example to kind there an virtual to So by with cannibalism And market FX moving physical

Francois Locoh-Donou

don't Sami, to think the so. think that, we I is answer short

portability. cover just to consumption software provides why, support growing which IQ to license a of as from has direct not is in the on and automation centralized it's what part, has, at have our we're around rate of the orchestration, agreement platform our want to our one better part they been it do of allow well a Virtual them Editions, and so deployment, people clear, ADC, enterprise and ADC multiple already we that current Editions. of mode license and the to we we but ADC doing management be Edition flexible that that if that their introduction Virtual give Cloud from the go because with virtual go using infrastructure to wants And of very today our that their does applications, hardware So a - to NGINX

applications to look case The All cannibalization doing you NGINX their if case the things And than very it's that who logic a want capability an really of to area of capabilities of there. today, public addressing as it's things use you at deployed closer really ADC of of is that, of more on-prem we're the cloud. a folks augmentation are build use virtualized a cannibalization dev the environment. ADC in of their being how ops application do that deployment for and to balancing these built load or rather ops and of address or we the that well go isn't part either and new new growth new dev do much

Sami Badri

Got for much you very those it. Thank Got answers. it.

Operator

the from from comes go question Raymond Simon line next Your Leopold of ahead. James. Please

Your line is open.

Simon Leopold

do very Thanks Great. is One have simple, I million but quarter repurchase, did have acquisition. much pretty the in taking this for two. you share you $XXX the question.

plans I quarters your the million. to of And it buybacks, $XXX of revisit have we at on Want couple get a long-standing $XXX going a get a see think a quarter, to to been forward? given how in up a had the then of verticals. about want terms of Just million now pattern better follow around understanding share

Frank Pelzer

Sure, Simon.

automatic for may going it just us, do, opportunistic other to but not may that may as be program, changed acquisitions balance we're about canceling asset on for really repurchase our additional we discussed share So our It for we view a be very repurchases when or and hasn't point view It March share do strategic be as we activities. for cash additional so be talked going use and the XX we're about. of automatically our to opportunistically.

but talked the suspending about time, for share we automatic repurchase the going we're So additional be opportunistic we're share future. repurchases in the have to with

Simon Leopold

'XX, remarks, just $XXX Thanks. telco impression during prepared over your surprised And a observed quarter had about of prior fiscal in to you pleasantly million had results $XX-ish much in versus were this that quarter. kind we back the of million getting Francois, the the I trend

the an in at surprised expected be March would if improvement, was in we outlook, look offsetting quarter? there on said business And by than And you elaborate but mix? trends was what you What the unpleasant what it? weaker were the you the aspect I surprise the that so understand maybe about quarter, if telco pleasantly of

Francois Locoh-Donou

Hey, Simon.

think done last part I in I'll we I again, the Fed. in What thought there done better of of your we the the Europe. could than a question. I than dynamic had anticipated kind with that was weaker was we thought. of more was have month because and But shutdown. And weaker expected the last was the the So of I little start quarter the said could've I would've bit quarter we think as in

pleasantly As it service providers, wasn't relates I necessarily to surprised.

service the lumpy. that I we too of service providers were weak. were quarter, felt to perhaps point think strong to provider segment particularly And our interpretation the naturally what first because was is, trying in is I

out segment for provider And we that line to. are the still being space of But dynamics I provider because talked the in service I am to in so FX. the the cautious historical came numbers point wanted transition quarters that for think more that service mix back we we've about next to few with said,

Simon Leopold

what's from the over And quarters? few for your behavior expectation the Europe next

Francois Locoh-Donou

I we've to our continue My very the own we made. make expectation with on progress internal changes execution think good is,

grow and grown have we think Europe. we've bit continue confident the made around I to specifically would in little has I But U.K. hiring the leadership Chad cautions the Europe, our there. a very changes with Head have we seen. Whalen, upon in based of and Sales, be what of place been we've we've and Germany, about in have the team our and overall, we've formation that had expectation Global that resources So of confident the very

Simon Leopold

taking for you the Thank Great. questions.

Operator

Genovese from Partners. go next Your comes of question from ahead. line MKM Please Michael

line Your open. is

Michael Genovese

in Francois, those the gave to today. Horizon to applicable just much. are acquired And post-NGINX check guidance. very wanted guideposts the and be and and hi, when see X checking going you I presentation after if Thanks still go to NGINX back

Francois Locoh-Donou

they Mike. are. Yes, Hi,

Michael Genovese

this in in faster I should dilution revenue that of post-acquisition for speaking, generally make we're but want the model factoring the just growth, we to and little sure a So EPS. correctly. year, acquisition bit next year bit a little

Francois Locoh-Donou

correct. That's

Michael Genovese

Thank you. me. for all That's Okay.

Operator

comes Hall ahead. go next from line Rod Your of Please Sachs. from question Goldman

open. Your line is

Rod Hall

line, Thanks wanted particularly start I off question. the I to OpEx guess guys. for had I Hi, with Yeah. R&D. two. the

little continue multiyear see bit, We look period, a a over creeping and especially we've if up to R&D we just NGINX. bought

more a Should you So to line R&D anticipate that a while to then of that grow integrate continue forward. And need I wondering that, push in have do stabilize to continues I'm just that. for follow-up or a much think products sales R&D the to to spend percentage quarters? as we and you to how does a few

Frank Pelzer

Rod. Hi,

investment the on opportunity pick is you'll acquisition a think of NGINX because up fairly opportunity there. for additional line both want the the accelerate to market. over There port that. been Same front big in space. security more they've see on the opportunities application what us. want few I NGINX specifically to They the or the we the catalyze investment have to of going API to make big capabilities in to into resources want the server beyond didn't It's the little us, the a NGINX, We platform We there. R&D and fully doing capitalize accelerate quarters space. next in We're the management organic to quickly. a capitalize of that case on

increasingly on-prem more software-managed And the civil services also cloud. offerings for of continue strong So all in We've traction to half and security is, of line and software security offerings our and our and services course, market services. more moving in in in managed know, and security as own you cloud security services to things XXXX, the investments. first should both of then are going our these to we security, pick had in make very up. And

opportunities. and investments going XX% all press gone we've to offerings X so revised that exciting They of Horizon through. with XX% between guidance those for said, we have a operating all profit X. That considered ahead of were just some when and got of being - And those we're gave Horizon

that's So expect. accounted we of into all should what

Rod Hall

off? next So and just come in Just back that, you to are stabilizes? saying Or that then it quarters, you're ought idea creeps what of to we peak François, - it us be you give couple trajectory, clarify thinking? the on does some can up up creep it

Francois Locoh-Donou

think giving next I to XX% range for for We're I into it essentially X. guidance it think year, stabilizes XX%, Horizon that get but stabilizes. specific not

Rod Hall

quarter I back revenue, you level absolute revenue the I are When then you kind right thought at last you the you it'd after line, of providers, are back. And was I of said regards that mean the our with big you of my couple in mean a revenue. that, Okay. revenue that we get guys - calculations follow-up quarters telco if deterioration are, the from take was the concentrated, two impression revenue pretty had to they to to And right, that deterioration service were had ago. quarters guess

two why just Just projects? new snapped there would? that thought on carriers be or much you that us back revenue that that one there? wonder, any add you give came happened quickly give I you a delayed more any - So thought Was or would than terms on project color longer did what color could that back deteriorated in so it

Frank Pelzer

think - we're And mainstream. provider. would this we where down specific in we've road I around carriers Rod. not are pretty softness. the truly couple it was where the levels opportunity are would at comments we the Well, My related be projects quarter today good see concentrated XG months opportunity It levels to we the like was, overall to where of had and service - when that a the is XX have we the truly

Rod Hall

Francois. Thanks, Okay.

Operator

ahead. from Your of next from line Dougherty. comes Catharine go question Trebnick Please

open. is line Your

Catharine Trebnick

the - carriers, And service Because how tier my your to are as tracking Oh, as think think you you versus Any America? question. Asia ready implement are And Back with which have doing are far Thank taking you. good - then EMEA? thanks relationships top best do getting one? North XG? regions you do PAC provider. for position, where to faster you such in

Chad Whalen

is Catherine, this Hi Chad Whalen.

Catharine Trebnick

Hi.

Chad Whalen

think I are - how you?

Catharine Trebnick

Good.

Chad Whalen

software And is there enhanced service-provider of But what's launching. that in capacity importantly deep certain a APAC a first is forcing kind kind And America. a going isolated I of throughout offerings. the terms around been mac core America, to here stronger that they - is North theaters, function more in for some us, new the that's of seeing edge. there of for planning say we're I both would North a the From different mobile at we've lot as across doing countries in the motions for maybe of that they outside what include virtual our broadband, think is with perspective, interest which XG region we're And architectures spending in and are of movement service on opposed time the Europe. we're

say we're broad along. a Asia kind concentration perspective, and but furthest Pac would America from based, of it I probably North So seeing are

Catharine Trebnick

that typically [CGNAT] And see it I are especially different - - (sic) to you Are the combining up seeing any do comes other competitors level? it, area, when piece mean GNAT and Thanks. DPI? and this when you're with DDoS competing you in NFV you at of seeing who spring any

Chad Whalen

parts the of - carriers. in of Well, into the the providers from the globe, a many equipment kind are access key network

in and expecting Ericsson, has a continue a new Nokia, Samsung APCJ that impression to made we're and pretty is EMEA. so And in marketable

seeing of transitioning Networks in typically time, has terms around software that new see the been players Affirmed But that we're the the XG. entrants and some are in we have space side, on the them some for XG more. seen In it's same

Catharine Trebnick

right. Thank All you.

Operator

comes the of line Oppenheimer. from Please from ahead. Kidron go question Ittai next Your

open. is line Your

Unidentified Analyst

NGINX Hi. This on taking is Vinod for have the Thanks for another I Ittai. question. question.

does know, know Are be to that how adopting planning approach you're the you cloud go-to-market in I now You going projects, early their approach? converging NGINX native, integration with change? but it's and your

Francois Locoh-Donou

Vinod. Hi,

think sales and that we're to we're the most combination organization And we two has motion. going the deals enterprise the because the sales the with at. the high-end, have both touch to with deals, more is monetize able the sales scale as and going we low-end capabilities, be opportunities, motion accelerate high-touch which for We're going to that global things as say, Whalen's one of that to the NGINX well that sales their high-touch had an place we these that is inside with been, with I their going going to at as organization. NGINX of, that inside more acceleration in, I deals new larger in we going have complement integrate to space. access that as as increasing I part, in So of controller sales size think the of is excels to NGINX would integrate FX enterprise resources the we putting think, force, deals are into has to Chad around the capabilities approach are motion And well

And already motions. going going a so Chad both to these and to we've and we under about between collaboration that started organizations Both are to under the really we're to need single governance motions Whalen think think organizational very make umbrella smooth.

Unidentified Analyst

Great. Thanks the color. for

Operator

joining. have today's Thank you concludes And conference for today. that's time the for questions all call. we This

now may disconnect. You

F5 (FFIV) 24 Apr 192019 Q2 Earnings call transcript