Why Is F5 (FFIV) Down 4.7% Since Last Earnings Report?

It has been about a month since the last earnings report for F5 Networks (FFIV). Shares have lost about 4.7% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is F5 due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for F5, Inc. before we dive into how investors and analysts have reacted as of late.

F5 Q1 Earnings and Revenues Beat Estimates

F5 reported better-than-expected first-quarter fiscal 2026 results. FFIV reported first-quarter non-GAAP earnings per share (EPS) of $4.45, which surpassed the Zacks Consensus Estimate by 22.21% and came ahead of management’s guidance of $3.35-$3.85 (midpoint of $3.60). The bottom line increased 15.9% year over year.

F5’s revenues of $822 million for the first quarter beat the consensus mark by 8.22%. The top line rose 7% on a year-over-year basis. Revenues also came ahead of management’s guidance of $730-$780 million (midpoint of $755 million).

FFIV’s Q1 Details

Product revenues (49.9% of total revenues), which comprise the Software and Systems subdivisions, increased 11% year over year to $410 million. Our model estimates for the Product segment revenues were pegged at $355.4 million.

This growth was primarily driven by a robust 37% year-over-year jump in Systems revenues, which totaled $218 million. Systems accounted for 53% of total Product revenues, showing continued momentum due to demand for infrastructure upgrades. Our model estimates for the Systems revenues were pegged at $159.8 million.

Weaknesses across the Software sub-segment partially offset the benefits of Systems revenue growth. Software revenues declined 8% year over year to $192 million. Our model estimates for the Software revenues were pegged at $195.6 million.

Global Services revenues (50.1% of total revenues) grew 4% year over year to $412 million. Our model estimates for the Global Services segment revenues were pegged at $399.4 million.

Non-GAAP gross profit increased 7.2% year over year to $689 million. The non-GAAP gross margin for the quarter came in at 83.8%, down 10 basis points from the year-ago quarter’s 83.9%. Non-GAAP operating income soared 9.8% to $314 million, while the margin improved 80 basis points to 38.2%.

F5’s Balance Sheet & Cash Flow

F5 ended the December quarter with cash and short-term investments of $1.22 billion, down from $1.36 billion in the previous quarter. The company generated an operating cash flow of $159 million during the reported quarter.

In the fiscal first quarter, F5 repurchased shares worth $300 million.

F5 Initiates Q2 Guidance & Updates FY26 View

For the second quarter of fiscal 2026, F5 expects revenues between $770 million and $790 million. The company projected a non-GAAP EPS in the range of $3.34-$3.46 (midpoint $3.40) for the second quarter of fiscal 2026.

F5 raises guidance for fiscal 2026. The company now anticipates that its fiscal 2026 revenues will grow in the 5-6% range, up from the earlier band of 0-4%. Non-GAAP EPS is now projected between $15.65 and $16.05, up from the previous guidance range of $14.50-$15.50.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

At this time, F5 has a average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, F5 has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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F5, Inc. (FFIV): Free Stock Analysis Report

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