F5 Networks Unveils $1 Billion Stock Buyback Plan

Shares of F5 Networks jump on plans to buy back $1 billion of its stock - less than a day after Elliott Management says it has taken a stake in the company.
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Shares of F5 Networks  (FFIV) - Get Report jumped on Monday after the networking software company said it plans to repurchase $1 billion worth of stock through fiscal 2022, less than a day after activist Elliott Management announced it has taken a stake in the company.

Seattle-based F5 said Monday that its buyback plan includes the accelerated repurchase of $500 million worth of stock in fiscal 2021. F5 has a market value of approximately $8.8 billion.

“As shown in our recent results, we have reached an inflection point in our transformation story where operating margins are poised to expand and revenue will accelerate, leading to sustainable double-digit non-GAAP EPS growth,” said CEO Francois Locoh-Donou.

The announcement follows on the heels of reports that Elliott Management has taken an undisclosed stake in the company. According to The Wall Street Journal, F5 and Elliott has been in discussions in recent weeks about ways to boost F5's  lagging stock.

The exact size of Elliott’s stake was not immediately known, though it falls below the 5% threshold that would require regulatory disclosure, the Journal said. 

Founded in the mid-1990s, F5 Networks is a so-called applications-services company, working behind the scenes to make sure apps like Netflix  (NFLX) - Get Report are secure and perform smoothly.

The company said it targets double-digit adjusted earnings per share growth over the next two years and revenue growth (compound annual growth rate) of 6% to 7%, including software revenue growth CAGR of 35% to 40%. 

F5's announcement comes ahead of its analyst and investor gathering scheduled for Nov. 18.

Shares of F5 were up 7.28% at $154.88 in trading on Monday. The stock had gained 3.4% year to date through Friday,