F5 Software Strategy Helps Network Monitoring Firm Weather Pandemic

F5, reporting stronger-than-expected second-quarter earnings, said its move to become more of a software provider has helped it weather the pandemic.
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F5 Networks  (FFIV) - Get Report reported second-quarter results that topped estimates and provided upside guidance for the third quarter.

For the quarter ended March 31 the Seattle network-traffic-monitoring company reported adjusted earnings of $2.23 a share, a decline from $2.57 in the year-earlier period.

Analysts surveyed by FactSet were expecting the company to report earnings of $2 a share. 

Revenue rose 7% year over year to $585.6 million. Analysts were expecting $565.2 million. 

"As a result of transforming F5 to a more software-driven business, we have built greater resiliency into our business model," Chief Executive Francois Locoh-Donou said in a statement. 

"With 65% recurring revenue, $182 million in cash flow from operations and cash and investments totaling $1 billion at the end of our second quarter, we can weather the economic uncertainty resulting from the covid-19 pandemic and we are confident our multi-cloud vision, our investments, and our innovation are well aligned with both near- and longer-term customer demand."

That confidence is reflected in the company's third-quarter guidance. 

The company expects revenue to range between $555 million and $585 million in the quarter with earnings of $1.91 to $2.13 per share. 

Wall Street is expecting the company to report earnings of $2.04 a share on revenue of $571.3 million.

F5 reported increased demand for capacity as companies looked to scale their remote access capabilities to enable employees to work from home efficiently. 

At last check, shares of F5 rose 11% to $144.88. In 2020 through Monday's trading, the stock had been down 6.3%.