Revenue
[in $ Millions]
Gross Margin
[in %]
Operating Margin
[in %]
Net Income
[in $ Millions]
653.1
650.2
525.7
77
78
77
77
78
25
23
91.5
77.0
74.3
394.0
281.4
19
19
66.0
15
46.9
05
06
07
08
09
05
06
07
08
09
05
06
07
08
09
05
06
07
08
09
Deferred Revenue
[in $ Millions]
DSO
[in days]
Cash Flow from Operations
[in $ Millions]
Cash, Equivalents & Investments
[in $ Millions]
183.1
57
55
51
51
145.0
47
202.0
193.7
169.7
574.4
492.2
474.8
451.3
125.4
365.0
85.0
100.5
60.3
39.3
05
06
07
08
09
05
06
07
08
09
05
06
07
08
09
05
06
07
08
09
Selected Financial Data
[in thousands]
Net Revenues
Gross Profit
Operating Expenses
Income from Operations
Net Income
Cash, Equivalents & Investments
Long-Term Debt
2005
- restated -
$ 281,410
$ 216,226
$ 146,868
$ 69,358
$ 46,902
$ 365,015
$
0
2006
2007
2008
2009
$ 394,049
$ 305,896
$ 215,758
$ 90,138
$ 66,005
$ 492,176
$
0
$ 525,667
$ 650,173
$ 653,079
$ 407,343
$ 501,155
$ 510,353
$ 307,841
$ 401,841
$ 388,429
$ 99,502
$ 77,000
$
$
99,314
74,331
$ 121,924
$
91,535
$ 474,831
$ 451,272
$ 574,422
$
0
$
0
$
0
About F5 Networks
F5 Networks is the global leader in Application Delivery Networking (ADN), focused on ensuring the secure, reliable, and fast delivery of applications. F5’s flexible architectural
framework enables community-driven innovation that helps organizations enhance IT agility and dynamically deliver services that generate true business value. F5’s vision of
unified application and data delivery offers customers an unprecedented level of choice in how they deploy ADN solutions. It redefines the management of application, server,
storage, and network resources, streamlining application delivery and reducing costs. Global enterprise organizations, service and cloud providers, and Web 2.0 content
providers trust F5 to keep their business moving forward. For more information, go to www.f5.com.
Photography: Karen Mason-Blair.
Fiscal 2009 was a challenging year by any standard—for
F5 and for the global economy. While concerns about
the economy linger, we met our challenges head-on and
emerged a leaner, stronger company, better equipped
to meet the challenges of the coming year and to take
advantage of emerging opportunities in the changing
economic and technology landscape.
John McAdam
President & Chief Executive Officer
F5 Networks
Slowdown and
Recovery
Despite signs of an impending economic meltdown, fiscal 2009 got off to
a promising start for F5.
Through most of the first quarter, business was
further improved our operating margin, and our
solid, and we believed we were squarely on track to
GAAP and non-GAAP earnings came in significantly
achieve our 24th consecutive quarter of sequential
above our target ranges.
revenue growth. That ended abruptly in the second
half of December as many large deals froze and
customers suddenly stopped spending. As a result,
first quarter revenue was below revenue in the prior
quarter, and both revenue and earnings were well
below our internal targets.
Facing the prospect of an even steeper downturn,
we scaled back our workforce by approximately
6 percent in January, reduced operating expenses
across the board, and reset expectations for the
second quarter. Following what appeared to be
a relatively normal January, sales stalled again in
February, and a resurgence of sales in March was
insufficient to offset the February weakness. For the
second quarter in a row, results came in below our
revenue and earnings targets.
As we moved into the third quarter, we experienced
a resumption of more normal spending patterns
Throughout the fourth quarter, business continued
to improve as customers began rolling out new
projects and moving ahead with projects they had
deferred. As a result, we achieved our highest
quarterly revenue to date and ended fiscal 2009
with annual revenue up slightly from the prior
year. During the fourth quarter, we also won the
largest single contract in the company’s history: a
$35 million order for products and services, which
was not included in the quarter’s record revenue1.
Reflecting both our strong revenue growth and
continued careful management of operating
expenses, our operating margin moved above
31 percent in the fourth quarter, and our GAAP
and non-GAAP earnings were both well above
our targets.
Throughout the year, our services organization
among our customers that continued through the
continued to be a strong contributor to revenue and
quarter and enabled us to achieve revenue above
earnings while maintaining customer satisfaction
our guided range. Our efforts to reduce expenses
levels above 90 percent.
1 Products purchased under this contract will ship throughout fiscal 2010 and service revenue, representing approximately half of the contract value,
will be amortized over five years. Although this was the largest single order the company has received, many other customers made cumulative
purchases during the year that totaled more than $10 million.
Product Momentum
Most of the weakness we encountered in the first
half of fiscal 2009 and much of the improvement
we experienced in the second half can be attributed
multiple functions, such as BIG-IP Application Security
Manager and WebAccelerator, at performance levels
needed for large Telco applications and projects such
as data center consolidation.
to economic conditions. However, our recovery
Since the introduction of TMOS in 2004, our
in the second half of the year was also driven by
development of tightly integrated hardware and
customer demand for our new products, reflected in
software has resulted in a broad line of products
the strong sequential growth of product revenue
designed to meet the wide ranging needs of large
in the fourth quarter.
Despite overall weakness in the first half, sales of
VIPRION, our chassis-based Application Delivery
Controller, ramped steadily throughout the first
three quarters of fiscal 2009 and were especially
strong in the fourth quarter. Designed to scale from
one to four 4-processor blades, VIPRION delivers
industry-leading performance, flexibility, and high
availability to handle the increasingly complex and
demanding needs of the largest content and service
providers. During fiscal 2010, we anticipate that
VIPRION will continue to be a significant driver of
product revenue growth.
In April 2009 we released TMOS version 10.0, a
major upgrade of our full-proxy traffic management
operating system. Along with significant performance
and scalability enhancements, TMOS v.10.0 included
more than 130 new features, many of them
developed in response to customer requests and
feedback posted at DevCentral, our online user
community. The majority of these features and
othernew functionality in TMOS v.10.0 address the
dynamic nature and increasing complexity of evolving
data center architectures shaped by the growing
trend toward virtualization and cloud computing.
At the same time we released TMOS v.10.0, we
introduced BIG-IP 8900, the high-end of our
BIG-IP family of stand-alone Application Delivery
organizations. Both our BIG-IP Application Delivery
Controllers and our ARX family of data delivery
controllers are strategically deployed in data centers
where all traffic entering and leaving the data center
passes through them. Dynamically aware of and
responsive to the needs of users and applications,
changing conditions in the network, and the
demands of other network devices and resources,
they collectively make F5 the strategic point of
control in the data center, optimizing the delivery
of applications and data regardless of changing
workloads.
With the release of TMOS v.10.0 and the completion
of our BIG-IP platform refresh, we have continued
to widen our technology lead and strengthen our
competitive position. Over the next 24 months
our product roadmap includes numerous software
and hardware upgrades as well as a number of new
product roll-outs. Near-term releases include TMOS
version 10.1, with enhanced WAN Optimization
capability and access policy management, and
the PUMA II blade for VIPRION, which will double
current performance to deliver throughput and
scalability for the most demanding applications.
Further out, we will deliver the first of our “Turbo”
appliances, code-named Apollo, which will
double the Layer 4 performance of our high-end
Application Delivery Controllers.
Controllers, designed specifically to leverage the new
Although sales of ARX continued to lag expectations,
features, functions, and performance characteristics
we saw steady progress over the year, and we
of TMOS v.10.0. The roll-out of BIG-IP 8900 marked
remain confident in the long-term potential of
the completion of our BIG-IP platform refresh that
ARX to become a significant part of our product
began with the introduction of new entry-level
portfolio. During fiscal 2009, we continued to invest
products, BIG-IP 1600 and BIG-IP 3600, in July 2008.
in the development of the technology and created
Like VIPRION, BIG-IP 8900 allows customers to run
an overlay sales force of ARX specialists. In addition,
we have recently created a number of incentives
On Balance, a Solid Year
Despite the challenges posed by the global
economy, F5 made significant progress on many
fronts during fiscal 2009: we successfully managed
through the downturn and emerged with the
highest quarterly run-rate and the strongest balance
sheet in the company’s history; we launched
major new products that will continue to drive our
growth in fiscal 2010; we continued to gain share
in the Application Delivery Controller market; and
we continued to expand our addressable market
through the introduction of new functionality that
further strengthens our position as the strategic
control point in the data center.
Although it is unclear whether or how quickly
the broad economy will recover in fiscal 2010,
we believe we have taken the necessary steps to
position F5 for continued growth and improved
profitability throughout the year ahead.
On behalf of our board of directors, I want to thank
all of you—along with our customers, partners,
and employees—for your ongoing loyalty and
support of our efforts to build solid value for all of
our stakeholders.
John McAdam
President & Chief Executive Officer
November 15, 2009
to promote the sale of ARX by our core sales
organization and value-added resellers.
Expanding Partnerships
Throughout fiscal 2009 we continued to broaden
our technology partnerships with industry-leading
software vendors such as Microsoft, Oracle, SAP,
and VMware, working closely with them to ensure
that our products work seamlessly together and
that our technology roadmap is aligned with theirs.
At VMworld 2009, for example, we highlighted the
customer benefits of our collaboration with VMware
by jointly demonstrating the use of our products
to migrate a live virtualized application, and its
associated storage, from an internal data center to
an external cloud securely and with no downtime
or user disruption. In fiscal 2009, our cooperative
development and marketing programs with all of
our technology partners helped drive well over
half our sales, including many of our biggest wins.
For fiscal 2010, we have an even more ambitious
agenda of development and marketing programs
tied to an array of new product introductions by
each of these partners.
During fiscal 2009, we also continued to broaden
our partnerships with major hardware vendors
who resell our products. In January we joined HP’s
ProCurve ONE alliance, a select group of vendors
that provide best-of-breed solutions around HP’s
enterprise switches. In addition, we have begun
working more closely with HP’s TSG server group
and with EDS, which recently added VIPRION to its
product portfolio. Toward the end of the year, our
long-time partner Dell, the largest reseller of F5
products in North America, began ramping efforts
to resell our products in Europe, the Middle East
and Africa. We also have a number of new initiatives
with IBM focusing on virtualization and large
enterprise applications.
Board of Directors
Shareholders’ Information
Annual Shareholders Meeting
March 11, 2010 11:00 a.m.
Location: 333 Elliott Ave West
Seattle, WA 98119
Parking: Corporate Headquarters
Corporate Headquarters
401 Elliott Ave West
Seattle, WA 98119
206.272.5555
NASDAQ Listing
NASDAQ Symbol – FFIV
Investor Relations
206.272.6677
info@f5.com
www.f5.com
Independent Accountants
PricewaterhouseCoopers LLP
Seattle, WA
Transfer Agent
American Stock Transfer
212.936.5100
Gary Ames
Retired President and
Chief Executive Officer of
MediaOne International
Deborah Bevier
Principal, DL Bevier Consulting LLC
Karl Guelich
Certified Public Accountant
Alan Higginson
John McAdam
Board Chair
Chairman, Hubspan, Inc.
President and
Chief Executive Officer
Scott Thompson
President, PayPal
Corporate Officers
John McAdam
Andy Reinland
John Rodriguez
Karl Triebes
Julian Eames
Mark Anderson
Dan Matte
Jeff Christianson
President and
Chief Executive Officer
Senior Vice President and
Chief Finance Officer
Senior Vice President and
Chief Accounting Officer
Senior Vice President
of Product Development
and Chief Technical Officer
Senior Vice President
of Business Operations
Senior Vice President
of Worldwide Sales
Senior Vice President
of Marketing and
Business Development
Senior Vice President
and General Counsel
The statements contained in this report that are not purely historical are forward-looking statements. These statements include, but are not limited to, statements about our
plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances. These statements are generally identified by the words
“expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions. These forward-looking statements are based on current information and
expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially and adversely from those expressed or implied by these forward-
looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading “Risk Factors” in the company’s
Form 10-K for fiscal 2009 and in other documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to revise or update any
such forward-looking statements.
© 2009 F5 Networks, Inc. All rights reserved.
www.f5.com
F5 Networks, Inc. 401 Elliott Avenue West, Seattle, WA 98119
888.882.4447
info@f5.com