AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 05/11/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Core deployment integration, continued maintenance renewals on longer-lived assets and realized price increases together demonstrate an installed-base switching-cost advantage. Replacement difficulty is inferred from this combined evidence rather than directly measured.
durability · 2/4 · Multi-year renewal contributions and service-heavy non-cancelable commitments support persistence. They do not establish long-term insulation from alternatives, security failures or technological substitution.
customer dependency · 3/4 · Products function as core deployment components, while customers continue maintaining existing assets and renewing subscriptions. This demonstrates continuing reliance, without proving that every customer cannot switch.
erosion resilience · 2/4 · Systems and subscription demand continued growing after the disclosed incident, supporting indirect evidence of resilience. The actual breach and response costs offset that achievement; aggregate growth cannot establish retention of affected customers.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Maintenance revenue benefited from previously implemented price increases in fiscal 2023 and 2024, and systems revenue growth in fiscal 2025 included pricing increases. These are realized outcomes across multiple periods, although price effects are not isolated from demand.
retention · 3/4 · Maintenance renewals, longer asset use and subscription renewals contributing to growth across fiscal 2024 and 2025 demonstrate repeat demand. This assessment uses disclosed renewal activity, not a fabricated customer retention rate; new purchases also contributed.
margin resilience · 2/4 · Nine-month GAAP gross margin increased to 81.7% from 81.1%, while GAAP operating margin decreased to 24.3% from 24.6% with acquisition and incident expenses. This is mixed resilience; margins alone do not establish pricing power.
contractual freedom · 2/4 · Agreed purchase-order prices and non-standard consumption and multi-year contracts show negotiated term flexibility. Non-cancelable obligations provide protection, but systems orders can be canceled without significant penalty before fulfillment. Unilateral repricing authority is not disclosed.
Predictability97
5 consecutive published annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.42
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 4.92
- observedAnnualPeriods
- 5.00
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 64.95
- Current ratio (x)
- 1.56
- cashInterestPaid
- 0.00
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -1.33
- 3-year average SBC / revenue (%)
- 7.90
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 3/4 · Nine-month operating cash flow of $841.4 million funded $63.7 million of capital expenditure, $47.6 million of acquisitions and $501.1 million of repurchases including excise taxes while cash increased. This demonstrates funding discipline, not acquisition returns or buyback valuation skill. Stock compensation of $193.5 million and the 5.4 million-share plan authorization remain offsets.
incentive alignment · 2/4 · Actual performance awards use revenue, EPS and relative shareholder return, with disclosed clawback and trading safeguards. Service-based vesting and change-of-control RSU acceleration weaken alignment. Complete ownership and compliance evidence is missing.
execution · 2/4 · Systems growth, subscription sales and increased operating cash generation provide indirect operating evidence of execution. Long-term unauthorized access and $26.5 million of response costs are realized failures that offset these achievements. Successful integration of newer acquisitions is unestablished.
governance · 2/4 · The June 2026 board had nine independent members out of ten, and existing compensation safeguards support oversight. The actual breach and RSU acceleration provisions warrant a mixed assessment. Management's effective disclosure-controls conclusion does not demonstrate cybersecurity effectiveness.
Evidence
Systems integrators. We also market our products through strategic relationships with systems integrators who include our products as core components of application deployments or network-based solutions they deploy for their customers.
2025 Form 10-K, business: systems integrators · Filed 25/11/2025
Instead, they typically recommend and/or manage our products as a part of broader solutions supporting enterprise applications and internet facing systems that incorporate our technology for security, high availability, and enhanced performance.
2025 Form 10-K, business: deployment and management relationships · Filed 25/11/2025
The increase of $64.8 million in service revenue for fiscal year 2024 was the result of the renewal of maintenance agreements associated with perpetual offerings as customers continue to utilize their assets for longer periods of time, as well as the realization of price increases from prior periods.
2024 Form 10-K, MD&A: maintenance renewals, extended asset use and realized price increases · Filed 18/11/2024
The increase of $99.8 million in service revenue for fiscal year 2023 was the result of increased purchases or renewals of maintenance contracts driven by delayed purchase decisions in new product purchases by our install base and additions to our installed base of products.
2024 Form 10-K, MD&A: fiscal 2023 maintenance demand · Filed 18/11/2024
In addition, we also began to see the benefits of price increases put in place in fiscal 2022.
2024 Form 10-K, MD&A: benefits from fiscal 2022 price increases · Filed 18/11/2024
Total software revenue increased by 9.2% in fiscal year 2025 from 2024 primarily due to increases in renewals and initial purchases of subscription offerings.
2025 Form 10-K, MD&A: fiscal 2025 subscription renewals and purchases · Filed 25/11/2025
Total software revenue increased by 10.8% in fiscal year 2024 from 2023 primarily due to increases in renewals and initial purchases of subscription offerings.
2025 Form 10-K, MD&A: fiscal 2024 subscription renewals and purchases · Filed 25/11/2025
670,652
Software revenue
Subscription
507,585
430,474
352,615
SaaS and managed services
175,641
193,201
203,326
Perpetual licenses
119,863
111,802
108,045
Total net product revenue
$
1,508,640
$
1,272,795
$
1,334,638
Percentage of net product revenues
Systems revenue
46.8
%
42.2
%
50.2
%
Software revenue
Subscription
33.7
33.8
26.4
SaaS and managed services
11.6
15.2
15.3
Perpetual licenses
7.9
8.8
8.1
Total net product revenue
100.0
%
100.0
%
100.0
%
Total systems revenue increased 31.3% in fiscal year 2025 from 2024 was primarily due to increases in customer demand and pricing increases on system offerings.
2025 Form 10-K, MD&A: systems revenue growth and pricing increases · Filed 25/11/2025
The composition of unsatisfied performance obligations consists mainly of deferred service revenue, and to a lesser extent, deferred product revenue, for which the Company has an obligation to perform, and has not yet recognized as revenue in the consolidated financial statements.
June 2026 Form 10-Q, revenue note: composition of remaining obligations · Filed 06/08/2026
As of June 30, 2026, the total non-cancelable remaining performance obligations under the Company's contracts with customers was $2.2 billion and the Company expects to recognize revenues on 58.8% of these remaining performance obligations over the next 12 months, 24.9% in year two, and the remaining balance thereafter.
June 2026 Form 10-Q, revenue note: non-cancelable customer obligations · Filed 06/08/2026
Our F5 BIG-IP offerings compete against Citrix and Broadcom.
2025 Form 10-K, competition: BIG-IP · Filed 25/11/2025
Our lightweight, agile, developer-friendly F5 NGINX offerings, which provide capabilities like optimizing Kubernetes traffic management and load balancing cloud-native and hybrid cloud applications compete against Amazon Web Services ("AWS"), Google Cloud Platform, Envoy, and HAProxy.
2025 Form 10-K, competition: NGINX · Filed 25/11/2025
Our agreements with our channel partners are not exclusive and do not prevent them from selling competitive products.
2025 Form 10-K, channel agreements: non-exclusivity · Filed 25/11/2025
These agreements typically have one-year terms with no obligation to renew, and typically do not provide for exclusive sales territories or minimum purchase requirements.
2025 Form 10-K, channel agreements: duration and purchase requirements · Filed 25/11/2025
Although we believe that the backlog orders are firm, purchase orders may be canceled by the customer prior to fulfillment without significant penalty.
2025 Form 10-K, backlog: cancellation rights · Filed 25/11/2025
Cyber Incident
On October 15, 2025, the Company disclosed a security incident, (referred to as the “Cyber Incident”) in which a threat actor maintained long-term, persistent access to F5 systems, and certain files were exfiltrated.
June 2026 Form 10-Q, contingencies: actual cyber incident · Filed 06/08/2026
The Company incurred $3.0 million and $26.5 million of costs in response to the Cyber Incident for the three and nine months ended June 30, 2026, respectively.
June 2026 Form 10-Q, contingencies: incident response costs · Filed 06/08/2026
There is a risk that AI technologies could automate or simplify functions currently performed by our application delivery and security solutions.
June 2026 Form 10-Q, risk factors: potential AI substitution · Filed 06/08/2026
Three Months Ended June 30, Nine Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Cost of net revenues and gross profit Products $ 93,498 $ 88,782 $ 276,659 $ 252,905 Services 60,066 59,846 179,590 177,192 Total 153,564 148,628 456,249 430,097 Gross profit $ 711,513 $ 631,742 $ 2,042,993 $ 1,847,885 Percentage of net revenues and gross margin (as a percentage of related net revenue) Products 20.2 % 22.8 % 21.6 % 23.1 % Services 14.9 15.3 14.8 15.0 Total 17.8 19.0 18.3 18.9 Gross margin 82.2 % 81.0 % 81.7 % 81.1 % 25 Table of Contents Cost of Net Product Revenues.
June 2026 Form 10-Q, MD&A: gross margins · Filed 06/08/2026
GAAP income from operations and operating margin
$
213,267
24.7
%
$
196,317
25.2
%
$
606,472
24.3
%
$
560,296
24.6
%
Adjustments to income from operations and operating margin:
Stock-based compensation
$
65,534
7.6
%
$
57,451
7.4
%
$
193,535
7.7
%
$
174,243
7.6
%
Amortization and impairment of purchased intangible assets
9,619
1.1
%
10,250
1.3
%
32,523
1.3
%
30,488
1.3
%
Facility-exit costs
1,224
0.1
%
1,243
0.2
%
3,077
0.1
%
6,727
0.3
%
Acquisition-related charges
10,064
1.2
%
2,032
0.3
%
28,902
1.2
%
3,937
0.2
%
Cyber incident costs
2,978
0.3
%
—
—
26,503
1.1
%
—
—
Restructuring charges
(30)
0.0
%
—
—
(388)
July 2026 earnings release filed with SEC: GAAP operating margins and expenses · Filed 27/07/2026
The purchase price stated in an agreed upon purchase order is generally representative of the transaction price.
2025 Form 10-K, revenue recognition: agreed purchase-order prices · Filed 25/11/2025
Flexible Consumption Program
The Company enters into certain contracts with customers, including flexible consumption programs and multi-year subscriptions, with non-standard terms and conditions.
2025 Form 10-K, revenue recognition: flexible consumption and multi-year contracts · Filed 25/11/2025
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Nine Months Ended June 30, 2026 2025 Operating activities Net income $ 536,017 $ 501,887 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 193,535 174,243 Depreciation and amortization 72,613 67,608 Non-cash operating lease costs 22,377 23,727 Deferred income taxes (38,644) (56,308) Other (3,300) 3,918 Changes in operating assets and liabilities (excluding effects of the acquisition of businesses): Accounts receivable (14,262) 26,834 Inventories (49,661) 9,458 Other current assets (101,005) (54,523) Other assets 5,618 (68,332) Accounts payable and accrued liabilities 50,995 (19,031) Deferred revenue 192,266 159,003 Lease liabilities (25,176) (26,886) Net cash provided by operating activities 841,373 741,598 Investing activities Purchases of investments (4,850) (4,400) Maturities of investments 402 — Sales of investments 1,575 — Acquisition of businesses, net of cash acquired (47,619) (24,170) Purchases of property and equipment (63,705) (27,119) Net cash used in investing activities (114,197) (55,689) Financing activities Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan 59,596 59,018 Payments for repurchase of common stock, including excise taxes (501,109) (377,077) Taxes paid related to net share settlement of equity awards (22,664) (19,601) Net cash used in financing activities (464,177) (337,660) Net increase in cash, cash equivalents and restricted cash 262,999 348,249 Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,375) 2,442 Cash, cash equivalents and restricted cash, beginning of period 1,346,368 1,078,340 Cash, cash equivalents and restricted cash, end of period $ 1,607,992 $ 1,429,031 Supplemental disclosures of cash flow information Cash paid for amounts included in the measurement of operating lease liabilities $ 31,490 $ 34,121 Supplemental disclosures of non-cash activities Right-of-use assets obtained in exchange for lease obligations $ 15,744 $ 37,198 The accompanying notes are an integral part of these consolidated financial statements.
June 2026 Form 10-Q, consolidated cash-flow statement · Filed 06/08/2026
The 2026 Plan authorizes the issuance of up to 5.4 million shares of the Company's common stock, which includes 1.9 million shares that remained available for issuance under the Plan and were transferred to the 2026 Plan.
June 2026 Form 10-Q, equity incentive plans: authorized share issuance · Filed 06/08/2026
The Company's Talent and Compensation Committee has adopted a set of metrics for the performance stock awards, including (1) 50% of the annual performance stock grant is based on achieving certain annual revenue targets; (2) 25% of the annual performance stock grant is based on achieving certain annual earnings per share targets; and (3) 25% of the annual performance stock grant is based on relative total shareholder return ("TSR") benchmarked to the S&P 500 index.
2025 Form 10-K, equity compensation: adopted performance metrics · Filed 25/11/2025
A portion of the aggregate number of RSUs issued to executive officers vest in equal quarterly increments, and a portion is subject to the Company achieving specified performance goals.
2025 Form 10-K, equity compensation: service and performance vesting · Filed 25/11/2025
Incentive-based compensation at risk if threshold performance metrics not achieved Executive compensation is reviewed annually by an independent compensation consultant retained by the Talent and Compensation Committee Stock ownership guidelines that encourage alignment with the interests of shareholders Incentive compensation clawback policy Shareholder engagement and annual advisory vote on named executive officer compensation Change of Control Agreements require a double-trigger event for cash severance 40 Fiscal Year 2025 Proxy Statement Table of Contents Executive Compensation What We Don’t Do No “golden parachute” excise tax reimbursement or gross-ups upon a change in control No hedging or pledging or otherwise engaging in short sales of common stock of the company No re-pricing of stock options No excessive perquisites No dividends/dividend equivalents paid on equity awards prior to vesting UPDATES TO THE COMPENSATION PROGRAM FOR FISCAL YEAR 2025 The Compensation Committee implemented a change to the short-term cash incentive program payout calculation for fiscal year 2025 to further align executive compensation with the creation of long-term shareholder value and expectations of our shareholders.
January 2026 proxy, executive compensation: existing safeguards · Filed 26/01/2026
acceleration of RSUs occurs upon a Change of Control regardless of whether employment
is terminated.
January 2026 proxy, executive compensation: change-of-control RSU acceleration · Filed 26/01/2026
With this appointment, F5’s board expands to 10 members, 9 of whom are independent.
June 2026 board appointment release filed with SEC: actual board independence · Filed 23/06/2026
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026 and, based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2026.
June 2026 Form 10-Q, controls and procedures: management conclusion · Filed 06/08/2026
24 Table of Contents The following presents net product revenues by systems and software: Three Months Ended June 30, Nine Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Net product revenues Systems revenue $ 239,519 $ 180,855 $ 684,264 $ 519,968 Software revenue 223,310 207,983 599,363 574,563 Total net product revenue $ 462,829 $ 388,838 $ 1,283,627 $ 1,094,531 Percentage of net product revenues Systems revenue 51.8 % 46.5 % 53.3 % 47.5 % Software revenue 48.2 53.5 46.7 52.5 Total net product revenue 100.0 % 100.0 % 100.0 % 100.0 % Total systems revenue increased 32.4% and 31.6% for the three and nine months ended June 30, 2026, respectively, from the comparable periods in the prior year.
June 2026 Form 10-Q, MD&A: systems and software revenue · Filed 06/08/2026
The increase in software revenue was primarily due to increased sales of subscription offerings.
June 2026 Form 10-Q, MD&A: subscription sales contribution · Filed 06/08/2026
The increase in systems revenue was primarily due to increases in customer demand.
June 2026 Form 10-Q, MD&A: systems customer demand · Filed 06/08/2026
With the F5 ADSP, we aim to leverage the full strength of our broad portfolio with capabilities to enhance security, scalability, and operational efficiency while enabling key capabilities such as policy management, analytics, and automation.
2025 Form 10-K, strategy: intended ADSP benefits · Filed 25/11/2025
