“F5’s acquisition of
“We believe every organization can benefit from the agility and flexibility enabled by modern technologies without compromising on security, manageability, and reliability,” continued Locoh-Donou. “The combined company will enable every customer—from the app developer to the network engineer to the security specialist—with the tools they need to ensure their apps are available and secure across every platform, from the enterprise data center to private and public clouds.”
F5 will enhance NGINX’s current offerings with F5 security solutions and
will integrate F5 cloud-native innovations with NGINX’s software load
balancing technology, accelerating F5’s time to market of application
services for modern, containerized applications. F5 will also leverage
its global sales force, channel infrastructure, and partner ecosystem to
scale
“NGINX and F5 share the same mission and vision. We both believe
applications are at the heart of driving digital transformation. And we
both believe that an end-to-end application infrastructure—one that
spans from code to customer—is needed to deliver apps across a
multi-cloud environment,” said
NGINX’s thriving open source community was one of the most attractive
elements of this combination, and F5 recognizes the trust that the user
community has in NGINX’s technology. Open source is a core part of F5’s
multi-cloud strategy and a driver for F5’s next phase of innovation. As
such, F5 is committed to continued innovation and increasing investment
in the
Upon closing of the acquisition, F5 will maintain the NGINX brand.
Transaction Details
The acquisition of
F5 provided the following regarding its Horizon 1 (fiscal year 2019 to
fiscal year 2020) outlook, following the completion of the
Analyst and Investor Meeting |
Post-NGINX Acquisition |
|||
Total Revenue Growth | Low-to-mid single-digit growth | Mid-single-digit growth | ||
Software1 Revenue Growth | 30%-35%+ growth | 35%-40%+ growth | ||
Software1 as a % of Product Revenue | Mid 20s% | 25%-30% | ||
Non-GAAP Gross Margin | ~85% | ~85% | ||
Non-GAAP Operating Margin | 35%-37% | 33%-35% | ||
Non-GAAP EPS | Mid-to-high single-digit growth | Low single-digit growth |
1 |
Software includes standalone Virtual Editions, including subscriptions & utility, and as a Service offerings | |
All forward-looking non-GAAP measures included in the outlook exclude
estimates for amortization of intangible assets, share-based
compensation expenses, significant effects of tax legislation and
judicial or administrative interpretation of tax regulations, including
the impact of income tax reform, non-recurring income tax adjustments,
valuation allowance on deferred tax assets, and the income tax effect of
non-GAAP exclusions, and do not include the impact of any restructuring
charges, facility exit costs, or other non-recurring charges that may
occur in the period. F5 is unable to provide a reconciliation of
non-GAAP guidance measures to corresponding
F5 intends to fund the transaction through cash on its balance sheet. In conjunction with the transaction, the Company is suspending its common stock share repurchase program. The Company will continue to evaluate market conditions and other factors including F5’s capital requirements in determining when and whether to continue such program and the levels of such program. The program does not require the purchase of any minimum number of shares and the program may be modified, suspended, or discontinued at any time.
The acquisition has been approved by the boards of directors of both F5
and
Foros acted as financial advisor and
Investor Conference Call Details
F5 will host a live webcast and conference call to discuss the
transaction beginning at
To participate in the live call via telephone in the
Additional Information
About F5
F5 (NASDAQ: FFIV) gives the world’s largest businesses, service providers, governments, and consumer brands the freedom to securely deliver every app, anywhere—with confidence. F5 delivers cloud and security application services that enable organizations to embrace the infrastructure they choose without sacrificing speed and control. For more information, go to f5.com. You can also follow @f5networks on Twitter or visit us on LinkedIn and Facebook for more information about F5, its partners, and technologies.
About
F5 is a trademark or service mark of
F5 Forward-Looking Statements
This press release contains forward-looking statements including, among
other things, statements regarding the continuing strength and momentum
of F5's business, future financial performance, sequential growth,
projected revenues including target revenue and earnings ranges, income,
earnings per share, share amount and share price assumptions, share
repurchases, demand for application delivery networking, application
delivery services, security, and software products, expectations
regarding future services and products, expectations regarding future
customers, markets and the benefits of products, and other statements
that are not historical facts and which are forward-looking statements.
These forward-looking statements are subject to the safe harbor
provisions created by the Private Securities Litigation Reform Act of
1995. Actual results could differ materially from those projected in the
forward-looking statements as a result of certain risk factors. Such
forward-looking statements involve risks and uncertainties, as well as
assumptions and other factors that, if they do not fully materialize or
prove correct, could cause the actual results, performance or
achievements of the company, or industry results, to be materially
different from any future results, performance or achievements expressed
or implied by such forward-looking statements. Such factors include, but
are not limited to: customer acceptance of our new traffic management,
security, application delivery, optimization, and software and F5aaS
offerings; the timely development, introduction and acceptance of
additional new products and features by F5 or its competitors;
competitive factors, including but not limited to pricing pressures,
industry consolidation, entry of new competitors into F5's markets, and
new product and marketing initiatives by our competitors; increased
sales discounts; the business impact of the acquisition of
GAAP to non-GAAP Reconciliation
F5’s management evaluates and makes operating decisions using various
operating measures. These measures are generally based on the revenues
of its products, services operations and certain costs of those
operations, such as cost of revenues, research and development, sales
and marketing and general and administrative expenses. One such measure
is net income excluding stock-based compensation, amortization of
purchased intangible assets, acquisition-related charges, net of taxes,
and certain non-recurring tax expenses and benefits, which is a non-GAAP
financial measure under Section 101 of Regulation G under the Securities
Exchange Act of 1934, as amended. This measure consists of GAAP net
income excluding, as applicable, stock-based compensation, amortization
of purchased intangible assets, litigation expense, restructuring
charges, facility exit costs, gain on sale of patents, non-recurring tax
expenses and benefits, and acquisition-related charges. This measure of
non-GAAP net income is adjusted by the amount of additional taxes or tax
benefit that the company would accrue if it used non-GAAP results
instead of GAAP results to calculate the company's tax liability.
Stock-based compensation is a non-cash expense that F5 has accounted for
since
Management believes that non-GAAP net income per share provides useful supplemental information to management and investors regarding the performance of the company’s core business operations and facilitates comparisons to the company's historical operating results. Although F5’s management finds this non-GAAP measure to be useful in evaluating the performance of the core business, management's reliance on this measure is limited because items excluded from such measures could have a material effect on F5's earnings and earnings per share calculated in accordance with GAAP. Therefore, F5's management will use its non-GAAP earnings and earnings per share measures, in conjunction with GAAP earnings and earnings per share measures, to address these limitations when evaluating the performance of the company's core business. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.
F5 believes that presenting its non-GAAP measures of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company's core business and is used by management in its own evaluation of the company's performance. Investors are encouraged to look at GAAP results as the best measure of financial performance. However, while the GAAP results are more complete, the company provides investors these supplemental measures since, with reconciliation to GAAP, it may provide additional insight into the company's operational performance and financial results.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190311005806/en/
(206)
272-7494
n.misner@f5.com
Investor Relations
(206)
272-7049
s.dulong@f5.com
Marketing
(415) 706-1804
NGINX@pancomm.com
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