|
|
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Washington
|
|
91-1714307
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common stock, no par value
|
FFIV
|
NASDAQ Global Select Market
|
Large Accelerated Filer
|
|
☑
|
|
Accelerated Filer
|
|
☐
|
Non-accelerated Filer
|
|
☐ (Do not check if a smaller reporting company)
|
|
Smaller Reporting Company
|
|
☐
|
|
|
|
|
Emerging Growth Company
|
|
☐
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Page
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
|
June 30,
2019 |
|
September 30,
2018 |
||||
ASSETS
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
688,350
|
|
|
$
|
424,707
|
|
Short-term investments
|
|
298,137
|
|
|
614,705
|
|
||
Accounts receivable, net of allowances of $2,562 and $2,040
|
|
320,465
|
|
|
295,352
|
|
||
Inventories
|
|
36,009
|
|
|
30,568
|
|
||
Other current assets
|
|
161,940
|
|
|
52,326
|
|
||
Total current assets
|
|
1,504,901
|
|
|
1,417,658
|
|
||
Property and equipment, net
|
|
226,002
|
|
|
145,042
|
|
||
Long-term investments
|
|
161,619
|
|
|
411,184
|
|
||
Deferred tax assets
|
|
25,079
|
|
|
33,441
|
|
||
Goodwill
|
|
1,065,379
|
|
|
555,965
|
|
||
Other assets, net
|
|
194,295
|
|
|
42,186
|
|
||
Total assets
|
|
$
|
3,177,275
|
|
|
$
|
2,605,476
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
55,630
|
|
|
$
|
57,757
|
|
Accrued liabilities
|
|
213,195
|
|
|
180,979
|
|
||
Deferred revenue
|
|
803,241
|
|
|
715,697
|
|
||
Total current liabilities
|
|
1,072,066
|
|
|
954,433
|
|
||
Other long-term liabilities
|
|
117,804
|
|
|
65,892
|
|
||
Deferred revenue, long-term
|
|
363,271
|
|
|
299,624
|
|
||
Deferred tax liabilities
|
|
352
|
|
|
35
|
|
||
Total long-term liabilities
|
|
481,427
|
|
|
365,551
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
||||
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, no par value; 200,000 shares authorized, 60,129 and 60,215 shares issued and outstanding
|
|
98,722
|
|
|
20,427
|
|
||
Accumulated other comprehensive loss
|
|
(18,193
|
)
|
|
(22,178
|
)
|
||
Retained earnings
|
|
1,543,253
|
|
|
1,287,243
|
|
||
Total shareholders’ equity
|
|
1,623,782
|
|
|
1,285,492
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
3,177,275
|
|
|
$
|
2,605,476
|
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenues
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
$
|
248,929
|
|
|
$
|
238,835
|
|
|
$
|
720,665
|
|
|
$
|
703,696
|
|
Services
|
|
314,465
|
|
|
303,368
|
|
|
931,394
|
|
|
895,002
|
|
||||
Total
|
|
563,394
|
|
|
542,203
|
|
|
1,652,059
|
|
|
1,598,698
|
|
||||
Cost of net revenues
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
44,336
|
|
|
45,164
|
|
|
130,293
|
|
|
132,556
|
|
||||
Services
|
|
46,431
|
|
|
45,845
|
|
|
135,366
|
|
|
135,485
|
|
||||
Total
|
|
90,767
|
|
|
91,009
|
|
|
265,659
|
|
|
268,041
|
|
||||
Gross profit
|
|
472,627
|
|
|
451,194
|
|
|
1,386,400
|
|
|
1,330,657
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
195,852
|
|
|
165,806
|
|
|
531,065
|
|
|
503,710
|
|
||||
Research and development
|
|
116,894
|
|
|
94,061
|
|
|
305,246
|
|
|
271,006
|
|
||||
General and administrative
|
|
57,141
|
|
|
39,374
|
|
|
146,340
|
|
|
118,634
|
|
||||
Total
|
|
369,887
|
|
|
299,241
|
|
|
982,651
|
|
|
893,350
|
|
||||
Income from operations
|
|
102,740
|
|
|
151,953
|
|
|
403,749
|
|
|
437,307
|
|
||||
Other income, net
|
|
4,722
|
|
|
2,259
|
|
|
19,251
|
|
|
7,194
|
|
||||
Income before income taxes
|
|
107,462
|
|
|
154,212
|
|
|
423,000
|
|
|
444,501
|
|
||||
Provision for income taxes
|
|
21,557
|
|
|
31,469
|
|
|
90,103
|
|
|
123,693
|
|
||||
Net income
|
|
$
|
85,905
|
|
|
$
|
122,743
|
|
|
$
|
332,897
|
|
|
$
|
320,808
|
|
Net income per share — basic
|
|
$
|
1.43
|
|
|
$
|
2.01
|
|
|
$
|
5.55
|
|
|
$
|
5.21
|
|
Weighted average shares — basic
|
|
59,981
|
|
|
60,970
|
|
|
59,963
|
|
|
61,531
|
|
||||
Net income per share — diluted
|
|
$
|
1.43
|
|
|
$
|
1.99
|
|
|
$
|
5.51
|
|
|
$
|
5.16
|
|
Weighted average shares — diluted
|
|
60,196
|
|
|
61,633
|
|
|
60,372
|
|
|
62,214
|
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
|
$
|
85,905
|
|
|
$
|
122,743
|
|
|
$
|
332,897
|
|
|
$
|
320,808
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
|
118
|
|
|
(1,441
|
)
|
|
61
|
|
|
(896
|
)
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on securities, net of taxes of $197 and $177 for the three months ended June 30, 2019 and 2018, respectively, and $940 and $(1,010) for the nine months ended June 30, 2019 and 2018, respectively
|
|
918
|
|
|
436
|
|
|
3,811
|
|
|
(3,100
|
)
|
||||
Reclassification adjustment for realized losses included in net income, net of taxes of $(35) and $0 for the three months ended June 30, 2019 and 2018, respectively, and $(35) and $(4) for the nine months ended June 30, 2019 and 2018, respectively
|
|
112
|
|
|
1
|
|
|
113
|
|
|
10
|
|
||||
Net change in unrealized gains (losses) on available-for-sale securities, net of tax
|
|
1,030
|
|
|
437
|
|
|
3,924
|
|
|
(3,090
|
)
|
||||
Total other comprehensive income (loss)
|
|
1,148
|
|
|
(1,004
|
)
|
|
3,985
|
|
|
(3,986
|
)
|
||||
Comprehensive income
|
|
$
|
87,053
|
|
|
$
|
121,739
|
|
|
$
|
336,882
|
|
|
$
|
316,822
|
|
|
|
Common Stock
|
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings |
|
Total
Shareholders’ Equity |
|||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||
|
|
Three months ended June 30, 2018
|
|||||||||||||||||
Balances, March 31, 2018
|
|
61,115
|
|
|
$
|
21,120
|
|
|
$
|
(20,980
|
)
|
|
$
|
1,226,474
|
|
|
$
|
1,226,614
|
|
Issuance of stock under employee stock purchase plan
|
|
282
|
|
|
28,900
|
|
|
—
|
|
|
—
|
|
|
28,900
|
|
||||
Issuance of restricted stock
|
|
324
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Repurchase of common stock
|
|
(903
|
)
|
|
(68,751
|
)
|
|
—
|
|
|
(81,267
|
)
|
|
(150,018
|
)
|
||||
Stock-based compensation
|
|
—
|
|
|
38,739
|
|
|
—
|
|
|
—
|
|
|
38,739
|
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122,743
|
|
|
122,743
|
|
||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(1,003
|
)
|
|
—
|
|
|
(1,003
|
)
|
||||
Balances, June 30, 2018
|
|
60,818
|
|
|
$
|
20,008
|
|
|
$
|
(21,983
|
)
|
|
$
|
1,267,950
|
|
|
$
|
1,265,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Three months ended June 30, 2019
|
|||||||||||||||||
Balances, March 31, 2019
|
|
59,695
|
|
|
$
|
29,401
|
|
|
$
|
(19,341
|
)
|
|
$
|
1,457,348
|
|
|
$
|
1,467,408
|
|
Exercise of employee stock options
|
|
1
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Issuance of stock under employee stock purchase plan
|
|
199
|
|
|
26,539
|
|
|
—
|
|
|
—
|
|
|
26,539
|
|
||||
Issuance of restricted stock
|
|
234
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation
|
|
—
|
|
|
42,766
|
|
|
—
|
|
|
—
|
|
|
42,766
|
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85,905
|
|
|
85,905
|
|
||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
1,148
|
|
|
—
|
|
|
1,148
|
|
||||
Balances, June 30, 2019
|
|
60,129
|
|
|
$
|
98,722
|
|
|
$
|
(18,193
|
)
|
|
$
|
1,543,253
|
|
|
$
|
1,623,782
|
|
|
|
Common Stock
|
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings |
|
Total
Shareholders’ Equity |
|||||||||||
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||
|
|
(In thousands)
|
|||||||||||||||||
|
|
Nine months ended June 30, 2018
|
|||||||||||||||||
Balances, September 30, 2017
|
|
62,594
|
|
|
$
|
17,627
|
|
|
$
|
(17,997
|
)
|
|
$
|
1,229,762
|
|
|
$
|
1,229,392
|
|
Exercise of employee stock options
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Issuance of stock under employee stock purchase plan
|
|
475
|
|
|
48,815
|
|
|
—
|
|
|
—
|
|
|
48,815
|
|
||||
Issuance of restricted stock
|
|
959
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Repurchase of common stock
|
|
(3,211
|
)
|
|
(167,444
|
)
|
|
—
|
|
|
(282,620
|
)
|
|
(450,064
|
)
|
||||
Stock-based compensation
|
|
—
|
|
|
121,007
|
|
|
—
|
|
|
—
|
|
|
121,007
|
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
320,808
|
|
|
320,808
|
|
||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(3,986
|
)
|
|
—
|
|
|
(3,986
|
)
|
||||
Balances, June 30, 2018
|
|
60,818
|
|
|
$
|
20,008
|
|
|
$
|
(21,983
|
)
|
|
$
|
1,267,950
|
|
|
$
|
1,265,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Nine months ended June 30, 2019
|
|||||||||||||||||
Balances, September 30, 2018
|
|
60,215
|
|
|
$
|
20,427
|
|
|
$
|
(22,178
|
)
|
|
$
|
1,287,243
|
|
|
$
|
1,285,492
|
|
Cumulative effect adjustment from adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,048
|
|
|
36,048
|
|
||||
Exercise of employee stock options
|
|
1
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Issuance of stock under employee stock purchase plan
|
|
334
|
|
|
45,439
|
|
|
—
|
|
|
—
|
|
|
45,439
|
|
||||
Issuance of restricted stock
|
|
765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Repurchase of common stock
|
|
(1,186
|
)
|
|
(88,110
|
)
|
|
—
|
|
|
(112,935
|
)
|
|
(201,045
|
)
|
||||
Stock-based compensation
|
|
—
|
|
|
120,950
|
|
|
—
|
|
|
—
|
|
|
120,950
|
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
332,897
|
|
|
332,897
|
|
||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
3,985
|
|
|
—
|
|
|
3,985
|
|
||||
Balances, June 30, 2019
|
|
60,129
|
|
|
$
|
98,722
|
|
|
$
|
(18,193
|
)
|
|
$
|
1,543,253
|
|
|
$
|
1,623,782
|
|
|
|
Nine months ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
332,897
|
|
|
$
|
320,808
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Realized loss on disposition of assets and investments
|
|
606
|
|
|
64
|
|
||
Stock-based compensation
|
|
119,182
|
|
|
121,007
|
|
||
Provisions for doubtful accounts and sales returns
|
|
65
|
|
|
1,494
|
|
||
Depreciation and amortization
|
|
46,645
|
|
|
44,081
|
|
||
Deferred income taxes
|
|
10,171
|
|
|
19,241
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(16,249
|
)
|
|
(6,945
|
)
|
||
Inventories
|
|
(5,441
|
)
|
|
(1,488
|
)
|
||
Other current assets
|
|
(54,381
|
)
|
|
11,590
|
|
||
Other assets
|
|
(8,785
|
)
|
|
(68
|
)
|
||
Accounts payable and accrued liabilities
|
|
37,932
|
|
|
(16,423
|
)
|
||
Deferred revenue
|
|
79,113
|
|
|
63,402
|
|
||
Net cash provided by operating activities
|
|
541,755
|
|
|
556,763
|
|
||
Investing activities
|
|
|
|
|
||||
Purchases of investments
|
|
(210,109
|
)
|
|
(499,084
|
)
|
||
Maturities of investments
|
|
507,804
|
|
|
295,479
|
|
||
Sales of investments
|
|
276,278
|
|
|
10,748
|
|
||
Cash provided by sale of fixed asset
|
|
—
|
|
|
1,000
|
|
||
Acquisition of businesses, net of cash acquired
|
|
(611,550
|
)
|
|
—
|
|
||
Purchases of property and equipment
|
|
(83,008
|
)
|
|
(36,074
|
)
|
||
Net cash used in investing activities
|
|
(120,585
|
)
|
|
(227,931
|
)
|
||
Financing activities
|
|
|
|
|
||||
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan
|
|
45,455
|
|
|
48,818
|
|
||
Repurchase of common stock
|
|
(201,045
|
)
|
|
(450,064
|
)
|
||
Net cash used in financing activities
|
|
(155,590
|
)
|
|
(401,246
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
265,580
|
|
|
(72,414
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
(111
|
)
|
|
(1,588
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
425,894
|
|
|
674,452
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
691,363
|
|
|
$
|
600,450
|
|
Supplemental disclosures of non-cash activities
|
|
|
|
|
||||
Capitalized leasehold improvements paid directly by landlord
|
|
$
|
34,487
|
|
|
$
|
—
|
|
•
|
Identify the contract(s) with a customer. Evidence of a contract generally consists of a purchase order issued pursuant to the terms and conditions of a distributor, reseller or end user agreement.
|
•
|
Identify the performance obligations in the contract. Performance obligations are explicitly identified in the Company's contracts and include hardware-based software, software-only solutions, cloud-based subscription services as well as a broad range of service performance obligations including consulting, training, installation and maintenance.
|
•
|
Determine the transaction price. The purchase price stated in an agreed upon purchase order is generally representative of the transaction price. The Company offers several programs in which customers are eligible for certain levels of rebates if certain conditions are met. When determining the transaction price, the Company considers the effects of any variable consideration.
|
•
|
Allocate the transaction price to the performance obligations in the contract. The transaction price in a contract is allocated based upon the relative standalone selling price of each distinct performance obligation identified in the contract.
|
•
|
Recognize revenue when (or as) the entity satisfies a performance obligation. The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring control of promised products and services to a customer.
|
|
|
June 30,
|
|
June 30,
|
||||
|
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
|
$
|
688,350
|
|
|
$
|
599,268
|
|
Restricted cash included in other assets, net
|
|
3,013
|
|
|
1,182
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
691,363
|
|
|
$
|
600,450
|
|
(1)
|
50% of the annual equity grant vests in equal quarterly increments and 50% is subject to the Company achieving specified annual performance goals.
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
85,905
|
|
|
$
|
122,743
|
|
|
$
|
332,897
|
|
|
$
|
320,808
|
|
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding — basic
|
|
59,981
|
|
|
60,970
|
|
|
59,963
|
|
|
61,531
|
|
||||
Dilutive effect of common shares from stock options and restricted stock units
|
|
215
|
|
|
663
|
|
|
409
|
|
|
683
|
|
||||
Weighted average shares outstanding — diluted
|
|
60,196
|
|
|
61,633
|
|
|
60,372
|
|
|
62,214
|
|
||||
Basic net income per share
|
|
$
|
1.43
|
|
|
$
|
2.01
|
|
|
$
|
5.55
|
|
|
$
|
5.21
|
|
Diluted net income per share
|
|
$
|
1.43
|
|
|
$
|
1.99
|
|
|
$
|
5.51
|
|
|
$
|
5.16
|
|
|
Ending Balance as of September 30, 2018 (ASC 605)
|
|
ASC 606 Adjustments
|
|
Beginning Balance as of October 1, 2018
(ASC 606)
|
||||||
Assets
|
|
|
|
|
|
||||||
Other current assets1
|
$
|
52,326
|
|
|
$
|
50,558
|
|
|
$
|
102,884
|
|
Other assets, net1
|
$
|
42,186
|
|
|
$
|
59,676
|
|
|
$
|
101,862
|
|
Deferred tax assets
|
$
|
33,441
|
|
|
$
|
(7,902
|
)
|
|
$
|
25,539
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
||||||
Deferred revenue
|
$
|
715,697
|
|
|
$
|
35,464
|
|
|
$
|
751,161
|
|
Deferred revenue, long-term
|
$
|
299,624
|
|
|
$
|
32,614
|
|
|
$
|
332,238
|
|
Retained earnings2
|
$
|
1,287,243
|
|
|
$
|
36,048
|
|
|
$
|
1,323,291
|
|
|
|
|
|
|
|
(1)
|
Upon the adoption of ASC 606, capitalized contract acquisition costs and unbilled accounts receivable are reported as part of other current assets and other assets, net.
|
(2)
|
The net increase to retained earnings of $36.0 million was primarily related to the capitalization of contract acquisition costs of $54.6 million, partially offset by a decrease of $8.8 million due to changes in deferred revenue and a decrease of $7.9 million from the impact on deferred income taxes.
|
|
June 30, 2019
|
||||||||||||||
|
As Reported
(ASC 606)
|
|
Impacts Subsequent
to the Date of Adoption
|
|
Impacts on the
Date of Adoption
(October 1, 2018)
|
|
Without Adoption (ASC 605)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Other current assets
|
$
|
161,940
|
|
|
$
|
23,480
|
|
|
$
|
50,558
|
|
|
$
|
87,902
|
|
Other assets, net
|
$
|
194,295
|
|
|
$
|
11,714
|
|
|
$
|
59,676
|
|
|
$
|
122,905
|
|
Deferred tax assets
|
$
|
25,079
|
|
|
$
|
(1,961
|
)
|
|
$
|
(7,902
|
)
|
|
$
|
34,942
|
|
Total assets
|
$
|
3,177,275
|
|
|
$
|
33,233
|
|
|
$
|
102,332
|
|
|
$
|
3,041,710
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|||||||||
Accrued liabilities
|
$
|
213,195
|
|
|
$
|
4,916
|
|
|
$
|
—
|
|
|
$
|
208,279
|
|
Deferred revenue
|
$
|
803,241
|
|
|
$
|
11,589
|
|
|
$
|
35,464
|
|
|
$
|
756,188
|
|
Deferred revenue, long-term
|
$
|
363,271
|
|
|
$
|
(10,472
|
)
|
|
$
|
32,614
|
|
|
$
|
341,129
|
|
Total liabilities
|
$
|
1,553,493
|
|
|
$
|
6,033
|
|
|
$
|
68,078
|
|
|
$
|
1,479,382
|
|
Retained earnings
|
$
|
1,543,253
|
|
|
$
|
25,406
|
|
|
$
|
36,048
|
|
|
$
|
1,481,799
|
|
Total liabilities and shareholders' equity
|
$
|
3,177,275
|
|
|
$
|
31,439
|
|
|
$
|
104,126
|
|
|
$
|
3,041,710
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
||||||||||
|
As Reported
(ASC 606)
|
|
Effect of Adoption of ASC 606
|
|
Without Adoption (ASC 605)
|
||||||
Total net revenues
|
$
|
563,394
|
|
|
$
|
29,338
|
|
|
$
|
534,056
|
|
Total cost of net revenues
|
$
|
90,767
|
|
|
$
|
626
|
|
|
$
|
90,141
|
|
Gross profit
|
$
|
472,627
|
|
|
$
|
28,712
|
|
|
$
|
443,915
|
|
Total operating expenses
|
$
|
369,887
|
|
|
$
|
(1,352
|
)
|
|
$
|
371,239
|
|
Income before income taxes
|
$
|
107,462
|
|
|
$
|
30,064
|
|
|
$
|
77,398
|
|
Provision for income taxes
|
$
|
21,557
|
|
|
$
|
6,031
|
|
|
$
|
15,526
|
|
Net income
|
$
|
85,905
|
|
|
$
|
24,033
|
|
|
$
|
61,872
|
|
|
|
|
|
|
|
||||||
Net income per share — basic
|
$
|
1.43
|
|
|
$
|
0.40
|
|
|
$
|
1.03
|
|
Net income per share — diluted
|
$
|
1.43
|
|
|
$
|
0.40
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2019
|
||||||||||
|
As Reported
(ASC 606)
|
|
Effect of Adoption of ASC 606
|
|
Without Adoption (ASC 605)
|
||||||
Total net revenues
|
$
|
1,652,059
|
|
|
$
|
36,528
|
|
|
$
|
1,615,531
|
|
Total cost of net revenues
|
$
|
265,659
|
|
|
$
|
2,440
|
|
|
$
|
263,219
|
|
Gross profit
|
$
|
1,386,400
|
|
|
$
|
34,088
|
|
|
$
|
1,352,312
|
|
Total operating expenses
|
$
|
982,651
|
|
|
$
|
1,805
|
|
|
$
|
980,846
|
|
Income before income taxes
|
$
|
423,000
|
|
|
$
|
32,283
|
|
|
$
|
390,717
|
|
Provision for income taxes
|
$
|
90,103
|
|
|
$
|
6,877
|
|
|
$
|
83,226
|
|
Net income
|
$
|
332,897
|
|
|
$
|
25,406
|
|
|
$
|
307,491
|
|
|
|
|
|
|
|
||||||
Net income per share — basic
|
$
|
5.55
|
|
|
$
|
0.42
|
|
|
$
|
5.13
|
|
Net income per share — diluted
|
$
|
5.51
|
|
|
$
|
0.42
|
|
|
$
|
5.09
|
|
|
|
|
|
|
|
Balance, September 30, 2018
|
$
|
—
|
|
Impacts from adoption of ASC 606
|
$
|
54,608
|
|
Additional capitalized contract acquisition costs deferred
|
$
|
22,460
|
|
Amortization of capitalized contract acquisition costs
|
$
|
(21,380
|
)
|
Balance, June 30, 2019
|
$
|
55,688
|
|
Balance, September 30, 2018
|
$
|
—
|
|
Impacts from adoption of ASC 606
|
$
|
57,499
|
|
Revenue recognized during period but not yet billed
|
$
|
15,240
|
|
Contract asset net additions
|
$
|
50,159
|
|
Contract assets reclassified to accounts receivable
|
$
|
(29,386
|
)
|
Balance, June 30, 2019
|
$
|
93,512
|
|
Balance, September 30, 2018
|
$
|
1,015,321
|
|
Impacts from adoption of ASC 606
|
$
|
68,078
|
|
Amounts billed but not recognized as revenues
|
$
|
731,306
|
|
Revenues recognized related to the opening balance of deferred revenue
|
$
|
(648,193
|
)
|
Balance, June 30, 2019
|
$
|
1,166,512
|
|
|
2,019
|
|
2,020
|
|
Thereafter
|
|
Total
|
||||||||
Revenue expected to be recognized on remaining performance obligations
|
$
|
278,529
|
|
|
$
|
574,901
|
|
|
$
|
313,082
|
|
|
$
|
1,166,512
|
|
Assets acquired
|
|
||
Cash and cash equivalents
|
$
|
29,911
|
|
Fair value of tangible assets:
|
|
||
Accounts receivable
|
7,306
|
|
|
Other current assets
|
4,214
|
|
|
Property and equipment, net
|
1,822
|
|
|
Deferred tax assets
|
10,357
|
|
|
Intangible assets
|
89,300
|
|
|
Goodwill
|
509,414
|
|
|
Total assets acquired
|
$
|
652,324
|
|
Liabilities assumed
|
|
||
Accounts payable
|
$
|
(1,081
|
)
|
Deferred revenue
|
(4,000
|
)
|
|
Other liabilities
|
(4,035
|
)
|
|
Total liabilities assumed
|
$
|
(9,116
|
)
|
Net assets acquired
|
$
|
643,208
|
|
|
|
|
Estimated
|
||
|
Amount
|
|
Useful Life
|
||
Net tangible assets
|
$
|
44,494
|
|
|
—
|
Identifiable intangible assets:
|
|
|
|
||
Developed technologies
|
62,500
|
|
|
7 years
|
|
Customer relationships
|
12,000
|
|
|
15 years
|
|
Trade name
|
14,500
|
|
|
7 years
|
|
Non-competition agreements
|
300
|
|
|
2 years
|
|
Goodwill
|
509,414
|
|
|
—
|
|
Total purchase price
|
$
|
643,208
|
|
|
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenue
|
|
$
|
568,272
|
|
|
$
|
546,324
|
|
|
$
|
1,671,875
|
|
|
$
|
1,609,341
|
|
Net income
|
|
$
|
100,329
|
|
|
$
|
110,800
|
|
|
$
|
324,074
|
|
|
$
|
267,742
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
|
||||||||||||
|
|
Quoted Prices in
Active Markets for
Identical Securities
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value at June 30,
2019 |
||||||||
Cash equivalents
|
|
$
|
48,807
|
|
|
$
|
228,127
|
|
|
$
|
—
|
|
|
$
|
276,934
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities — certificates of deposits
|
|
—
|
|
|
734
|
|
|
—
|
|
|
734
|
|
||||
Available-for-sale securities — corporate bonds and notes
|
|
—
|
|
|
256,422
|
|
|
—
|
|
|
256,422
|
|
||||
Available-for-sale securities — municipal bonds and notes
|
|
—
|
|
|
13,054
|
|
|
—
|
|
|
13,054
|
|
||||
Available-for-sale securities — U.S. government securities
|
|
—
|
|
|
25,929
|
|
|
—
|
|
|
25,929
|
|
||||
Available-for-sale securities — U.S. government agency securities
|
|
—
|
|
|
1,998
|
|
|
—
|
|
|
1,998
|
|
||||
Long-term investments
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities — corporate bonds and notes
|
|
—
|
|
|
155,348
|
|
|
—
|
|
|
155,348
|
|
||||
Available-for-sale securities — municipal bonds and notes
|
|
—
|
|
|
3,776
|
|
|
—
|
|
|
3,776
|
|
||||
Available-for-sale securities — U.S. government agency securities
|
|
—
|
|
|
2,495
|
|
|
—
|
|
|
2,495
|
|
||||
Total
|
|
$
|
48,807
|
|
|
$
|
687,883
|
|
|
$
|
—
|
|
|
$
|
736,690
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
|
||||||||||||
|
|
Quoted Prices in
Active Markets for
Identical Securities
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value at
September 30,
2018
|
||||||||
Cash equivalents
|
|
$
|
41,468
|
|
|
$
|
13,118
|
|
|
$
|
—
|
|
|
$
|
54,586
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities — certificates of deposits
|
|
—
|
|
|
2,970
|
|
|
—
|
|
|
2,970
|
|
||||
Available-for-sale securities — corporate bonds and notes
|
|
—
|
|
|
393,750
|
|
|
—
|
|
|
393,750
|
|
||||
Available-for-sale securities — municipal bonds and notes
|
|
—
|
|
|
22,524
|
|
|
—
|
|
|
22,524
|
|
||||
Available-for-sale securities — U.S. government securities
|
|
—
|
|
|
120,078
|
|
|
—
|
|
|
120,078
|
|
||||
Available-for-sale securities — U.S. government agency securities
|
|
—
|
|
|
75,383
|
|
|
—
|
|
|
75,383
|
|
||||
Long-term investments
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities — corporate bonds and notes
|
|
—
|
|
|
367,710
|
|
|
—
|
|
|
367,710
|
|
||||
Available-for-sale securities — municipal bonds and notes
|
|
—
|
|
|
24,286
|
|
|
—
|
|
|
24,286
|
|
||||
Available-for-sale securities — U.S. government securities
|
|
—
|
|
|
12,771
|
|
|
—
|
|
|
12,771
|
|
||||
Available-for-sale securities — U.S. government agency securities
|
|
—
|
|
|
6,417
|
|
|
—
|
|
|
6,417
|
|
||||
Total
|
|
$
|
41,468
|
|
|
$
|
1,039,007
|
|
|
$
|
—
|
|
|
$
|
1,080,475
|
|
June 30, 2019
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Certificates of deposits
|
|
$
|
734
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
734
|
|
Corporate bonds and notes
|
|
256,471
|
|
|
238
|
|
|
(287
|
)
|
|
256,422
|
|
||||
Municipal bonds and notes
|
|
13,066
|
|
|
3
|
|
|
(15
|
)
|
|
13,054
|
|
||||
U.S. government securities
|
|
25,942
|
|
|
10
|
|
|
(23
|
)
|
|
25,929
|
|
||||
U.S. government agency securities
|
|
2,000
|
|
|
—
|
|
|
(2
|
)
|
|
1,998
|
|
||||
|
|
$
|
298,213
|
|
|
$
|
251
|
|
|
$
|
(327
|
)
|
|
$
|
298,137
|
|
September 30, 2018
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Certificates of deposits
|
|
$
|
2,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,970
|
|
Corporate bonds and notes
|
|
394,684
|
|
|
9
|
|
|
(943
|
)
|
|
393,750
|
|
||||
Municipal bonds and notes
|
|
22,588
|
|
|
1
|
|
|
(65
|
)
|
|
22,524
|
|
||||
U.S. government securities
|
|
120,283
|
|
|
—
|
|
|
(205
|
)
|
|
120,078
|
|
||||
U.S. government agency securities
|
|
75,587
|
|
|
—
|
|
|
(204
|
)
|
|
75,383
|
|
||||
|
|
$
|
616,112
|
|
|
$
|
10
|
|
|
$
|
(1,417
|
)
|
|
$
|
614,705
|
|
June 30, 2019
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate bonds and notes
|
|
$
|
154,893
|
|
|
$
|
590
|
|
|
$
|
(135
|
)
|
|
$
|
155,348
|
|
Municipal bonds and notes
|
|
3,776
|
|
|
8
|
|
|
(8
|
)
|
|
3,776
|
|
||||
U.S. government agency securities
|
|
2,500
|
|
|
—
|
|
|
(5
|
)
|
|
2,495
|
|
||||
|
|
$
|
161,169
|
|
|
$
|
598
|
|
|
$
|
(148
|
)
|
|
$
|
161,619
|
|
September 30, 2018
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate bonds and notes
|
|
$
|
370,377
|
|
|
$
|
25
|
|
|
$
|
(2,692
|
)
|
|
$
|
367,710
|
|
Municipal bonds and notes
|
|
24,468
|
|
|
—
|
|
|
(182
|
)
|
|
24,286
|
|
||||
U.S. government securities
|
|
12,956
|
|
|
—
|
|
|
(185
|
)
|
|
12,771
|
|
||||
U.S. government agency securities
|
|
6,500
|
|
|
—
|
|
|
(83
|
)
|
|
6,417
|
|
||||
|
|
$
|
414,301
|
|
|
$
|
25
|
|
|
$
|
(3,142
|
)
|
|
$
|
411,184
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
June 30, 2019
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Corporate bonds and notes
|
|
$
|
66,064
|
|
|
$
|
(70
|
)
|
|
$
|
165,970
|
|
|
$
|
(352
|
)
|
|
$
|
232,034
|
|
|
$
|
(422
|
)
|
Municipal bonds and notes
|
|
1,105
|
|
|
—
|
|
|
10,786
|
|
|
(23
|
)
|
|
11,891
|
|
|
(23
|
)
|
||||||
U.S. government securities
|
|
—
|
|
|
—
|
|
|
12,964
|
|
|
(23
|
)
|
|
12,964
|
|
|
(23
|
)
|
||||||
U.S. government agency securities
|
|
—
|
|
|
—
|
|
|
4,492
|
|
|
(7
|
)
|
|
4,492
|
|
|
(7
|
)
|
||||||
Total
|
|
$
|
67,169
|
|
|
$
|
(70
|
)
|
|
$
|
194,212
|
|
|
$
|
(405
|
)
|
|
$
|
261,381
|
|
|
$
|
(475
|
)
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
September 30, 2018
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Corporate bonds and notes
|
|
$
|
543,729
|
|
|
$
|
(1,800
|
)
|
|
$
|
152,097
|
|
|
$
|
(1,835
|
)
|
|
$
|
695,826
|
|
|
$
|
(3,635
|
)
|
Municipal bonds and notes
|
|
26,846
|
|
|
(123
|
)
|
|
14,363
|
|
|
(124
|
)
|
|
41,209
|
|
|
(247
|
)
|
||||||
U.S. government securities
|
|
103,470
|
|
|
(281
|
)
|
|
29,379
|
|
|
(109
|
)
|
|
132,849
|
|
|
(390
|
)
|
||||||
U.S. government agency securities
|
|
44,812
|
|
|
(110
|
)
|
|
36,987
|
|
|
(177
|
)
|
|
81,799
|
|
|
(287
|
)
|
||||||
Total
|
|
$
|
718,857
|
|
|
$
|
(2,314
|
)
|
|
$
|
232,826
|
|
|
$
|
(2,245
|
)
|
|
$
|
951,683
|
|
|
$
|
(4,559
|
)
|
|
|
June 30,
2019 |
|
September 30,
2018 |
||||
Finished goods
|
|
$
|
23,103
|
|
|
$
|
21,339
|
|
Raw materials
|
|
12,906
|
|
|
9,229
|
|
||
|
|
$
|
36,009
|
|
|
$
|
30,568
|
|
|
|
June 30,
2019 |
|
September 30,
2018 |
||||
Prepaid expenses
|
|
$
|
82,794
|
|
|
$
|
39,531
|
|
Unbilled accounts receivable
|
|
51,798
|
|
|
—
|
|
||
Other
|
|
27,348
|
|
|
12,795
|
|
||
|
|
$
|
161,940
|
|
|
$
|
52,326
|
|
|
|
June 30,
2019 |
|
September 30,
2018 |
||||
Intangible assets
|
|
$
|
113,389
|
|
|
$
|
31,259
|
|
Other
|
|
80,906
|
|
|
10,927
|
|
||
|
|
$
|
194,295
|
|
|
$
|
42,186
|
|
|
|
June 30,
2019 |
|
September 30,
2018 |
||||
Deferred rent
|
|
$
|
65,526
|
|
|
$
|
31,151
|
|
Income taxes payable
|
|
35,655
|
|
|
30,864
|
|
||
Other
|
|
16,623
|
|
|
3,877
|
|
||
|
|
$
|
117,804
|
|
|
$
|
65,892
|
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Americas:
|
|
|
|
|
|
|
|
|
||||||||
United States
|
|
$
|
273,273
|
|
|
$
|
275,011
|
|
|
$
|
820,061
|
|
|
$
|
805,594
|
|
Other
|
|
27,429
|
|
|
30,453
|
|
|
79,697
|
|
|
87,359
|
|
||||
Total Americas
|
|
300,702
|
|
|
305,464
|
|
|
899,758
|
|
|
892,953
|
|
||||
EMEA
|
|
132,806
|
|
|
130,821
|
|
|
418,339
|
|
|
406,712
|
|
||||
Asia Pacific1
|
|
129,886
|
|
|
105,918
|
|
|
333,962
|
|
|
299,033
|
|
||||
|
|
$
|
563,394
|
|
|
$
|
542,203
|
|
|
$
|
1,652,059
|
|
|
$
|
1,598,698
|
|
(1)
|
Beginning with the first quarter of fiscal 2019, revenue from Japan is now included with the APAC region. This change has been applied to all periods presented for comparability purposes.
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Ingram Micro, Inc.
|
|
17.8
|
%
|
|
16.9
|
%
|
|
18.2
|
%
|
|
16.3
|
%
|
Tech Data
|
|
10.8
|
%
|
|
11.0
|
%
|
|
10.2
|
%
|
|
11.8
|
%
|
Arrow ECS 1
|
|
—
|
|
|
10.5
|
%
|
|
10.3
|
%
|
|
10.9
|
%
|
Synnex Corporation 1
|
|
—
|
|
|
11.4
|
%
|
|
—
|
|
|
11.2
|
%
|
Westcon Group, Inc.
|
|
10.0
|
%
|
|
10.1
|
%
|
|
10.3
|
%
|
|
10.4
|
%
|
(1)
|
Arrow ECS accounted for under 10% of total net revenue for the three months ended June 30, 2019. Synnex Corporation accounted for under 10% of total net revenue for the three and nine months ended June 30, 2019.
|
|
|
June 30,
2019 |
|
September 30,
2018 |
||||
United States
|
|
$
|
198,902
|
|
|
$
|
126,790
|
|
EMEA
|
|
12,405
|
|
|
12,538
|
|
||
Other countries
|
|
14,695
|
|
|
5,714
|
|
||
|
|
$
|
226,002
|
|
|
$
|
145,042
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Revenues. The majority of our revenues are derived from sales of our application delivery controller (ADC) products including our BIG-IP appliances and VIPRION chassis and related software modules and our software-only Virtual Editions; Local Traffic Manager (LTM), DNS Services (formerly Global Traffic Manager); Advanced Firewall Manager (AFM) and Policy Enforcement Manager (PEM), that leverage the unique performance characteristics of our hardware and software architecture; and products that incorporate acquired technology, including Application Security Manager (ASM) and Access Policy Manager (APM); and the WebSafe, MobileSafe, Secure Web Gateway and Silverline DDoS and Application security offerings which are sold to customers on a subscription basis. We also derive revenues from the sales of services including annual maintenance contracts, training and consulting services. We carefully monitor the sales mix of our revenues within each reporting period. We believe customer acceptance rates of our new products and feature enhancements are indicators of future trends. We also consider overall revenue concentration by customer and by geographic region as additional indicators of current and future trends.
|
•
|
Cost of revenues and gross margins. We strive to control our cost of revenues and thereby maintain our gross margins. Significant items impacting cost of revenues are hardware costs paid to our contract manufacturers, third-party software license fees, Silverline infrastructure, amortization of developed technology and personnel and overhead expenses. Our margins have remained relatively stable; however, factors such as sales price, product and services mix, inventory obsolescence, returns, component price increases and warranty costs could significantly impact our gross margins from quarter to quarter and represent significant indicators we monitor on a regular basis.
|
•
|
Operating expenses. Operating expenses are substantially driven by personnel and related overhead expenses. Existing headcount and future hiring plans are the predominant factors in analyzing and forecasting future operating expense trends. Other significant operating expenses that we monitor include marketing and promotions, travel, professional fees, computer costs related to the development of new products and provision of services, facilities and depreciation expenses.
|
•
|
Liquidity and cash flows. Our financial condition remains strong with significant cash and investments and no long term debt. The decrease in cash and investments for the first nine months of fiscal year 2019 was primarily due to $611.6 million in cash paid for the acquisition of Nginx in the third quarter of fiscal 2019, partially offset by cash provided by operating activities of $541.8 million. Going forward, we believe the primary driver of cash flows will be net income from operations. Capital expenditures of $83.0 million for the first nine months of fiscal year 2019 were primarily related to the expansion of our facilities to support our operations worldwide as well as investments in information technology infrastructure and equipment purchases to support our core business activities. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash.
|
•
|
Balance sheet. We view cash, short-term and long-term investments, deferred revenue, accounts receivable balances and days sales outstanding as important indicators of our financial health. Deferred revenues increased in the third quarter of fiscal year 2019 primarily due to growth in the amount of annual maintenance contracts purchased on new products and maintenance renewal contracts related to our existing product installation base. Our days sales outstanding for the third quarter of fiscal year 2019 was 51.
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
$
|
248,929
|
|
|
$
|
238,835
|
|
|
$
|
720,665
|
|
|
$
|
703,696
|
|
Services
|
|
314,465
|
|
|
303,368
|
|
|
931,394
|
|
|
895,002
|
|
||||
Total
|
|
$
|
563,394
|
|
|
$
|
542,203
|
|
|
$
|
1,652,059
|
|
|
$
|
1,598,698
|
|
Percentage of net revenues
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
44.2
|
%
|
|
44.0
|
%
|
|
43.6
|
%
|
|
44.0
|
%
|
||||
Services
|
|
55.8
|
|
|
56.0
|
|
|
56.4
|
|
|
56.0
|
|
||||
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Ingram Micro, Inc.
|
|
17.8
|
%
|
|
16.9
|
%
|
|
18.2
|
%
|
|
16.3
|
%
|
Tech Data
|
|
10.8
|
%
|
|
11.0
|
%
|
|
10.2
|
%
|
|
11.8
|
%
|
Arrow ECS 1
|
|
—
|
|
|
10.5
|
%
|
|
10.3
|
%
|
|
10.9
|
%
|
Synnex Corporation 1
|
|
—
|
|
|
11.4
|
%
|
|
—
|
|
|
11.2
|
%
|
Westcon Group, Inc.
|
|
10.0
|
%
|
|
10.1
|
%
|
|
10.3
|
%
|
|
10.4
|
%
|
(1)
|
Arrow ECS accounted for under 10% of total net revenue for the three months ended June 30, 2019. Synnex Corporation accounted for under 10% of total net revenue for the three and nine months ended June 30, 2019.
|
|
June 30,
2019 |
|
September 30, 2018
|
||
Ingram Micro, Inc.
|
15.5
|
%
|
|
16.6
|
%
|
Westcon Group, Inc.
|
10.0
|
%
|
|
—
|
|
Arrow ECS
|
—
|
|
|
—
|
|
Synnex Corporation
|
—
|
|
|
10.3
|
%
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Cost of net revenues and Gross Margin
|
|
|
|
|
|
|
|
|||||||||
Products
|
|
$
|
44,336
|
|
|
$
|
45,164
|
|
|
$
|
130,293
|
|
|
$
|
132,556
|
|
Services
|
|
46,431
|
|
|
45,845
|
|
|
135,366
|
|
|
135,485
|
|
||||
Total
|
|
90,767
|
|
|
91,009
|
|
|
265,659
|
|
|
268,041
|
|
||||
Gross profit
|
|
$
|
472,627
|
|
|
$
|
451,194
|
|
|
$
|
1,386,400
|
|
|
$
|
1,330,657
|
|
Percentage of net revenues and Gross Margin (as a percentage of related net revenue)
|
||||||||||||||||
Products
|
|
17.8
|
%
|
|
18.9
|
%
|
|
18.1
|
%
|
|
18.8
|
%
|
||||
Services
|
|
14.8
|
|
|
15.1
|
|
|
14.5
|
|
|
15.1
|
|
||||
Total
|
|
16.1
|
|
|
16.8
|
|
|
16.1
|
|
|
16.8
|
|
||||
Gross profit
|
|
83.9
|
%
|
|
83.2
|
%
|
|
83.9
|
%
|
|
83.2
|
%
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
$
|
195,852
|
|
|
$
|
165,806
|
|
|
$
|
531,065
|
|
|
$
|
503,710
|
|
Research and development
|
|
116,894
|
|
|
94,061
|
|
|
305,246
|
|
|
271,006
|
|
||||
General and administrative
|
|
57,141
|
|
|
39,374
|
|
|
146,340
|
|
|
118,634
|
|
||||
Total
|
|
$
|
369,887
|
|
|
$
|
299,241
|
|
|
$
|
982,651
|
|
|
$
|
893,350
|
|
Operating expenses (as a percentage of net revenue)
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
34.8
|
%
|
|
30.6
|
%
|
|
32.1
|
%
|
|
31.5
|
%
|
||||
Research and development
|
|
20.7
|
|
|
17.3
|
|
|
18.5
|
|
|
17.0
|
|
||||
General and administrative
|
|
10.2
|
|
|
7.3
|
|
|
8.9
|
|
|
7.4
|
|
||||
Total
|
|
65.7
|
%
|
|
55.2
|
%
|
|
59.5
|
%
|
|
55.9
|
%
|
|
|
Three months ended
June 30, |
|
Nine months ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Other income and income taxes
|
|
|
|
|
|
|
|
|
||||||||
Income from operations
|
|
$
|
102,740
|
|
|
$
|
151,953
|
|
|
$
|
403,749
|
|
|
$
|
437,307
|
|
Other income, net
|
|
4,722
|
|
|
2,259
|
|
|
19,251
|
|
|
7,194
|
|
||||
Income before income taxes
|
|
107,462
|
|
|
154,212
|
|
|
423,000
|
|
|
444,501
|
|
||||
Provision for income taxes
|
|
21,557
|
|
|
31,469
|
|
|
90,103
|
|
|
123,693
|
|
||||
Net income
|
|
$
|
85,905
|
|
|
$
|
122,743
|
|
|
$
|
332,897
|
|
|
$
|
320,808
|
|
Other income and income taxes (as percentage of net revenue)
|
||||||||||||||||
Income from operations
|
|
18.2
|
%
|
|
28.0
|
%
|
|
24.4
|
%
|
|
27.4
|
%
|
||||
Other income, net
|
|
0.8
|
|
|
0.4
|
|
|
1.2
|
|
|
0.4
|
|
||||
Income before income taxes
|
|
19.0
|
|
|
28.4
|
|
|
25.6
|
|
|
27.8
|
|
||||
Provision for income taxes
|
|
3.8
|
|
|
5.8
|
|
|
5.5
|
|
|
7.7
|
|
||||
Net income
|
|
15.2
|
%
|
|
22.6
|
%
|
|
20.1
|
%
|
|
20.1
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares
Purchased
per the Publicly
Announced Plan
|
|
Approximate Dollar
Value of Shares
that May Yet be
Purchased
Under the Plan
|
||||||
October 1, 2018 — October 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,573,571
|
|
November 1, 2018 — November 30, 2018
|
|
561,951
|
|
|
$
|
177.97
|
|
|
561,951
|
|
|
$
|
1,473,560
|
|
December 1, 2018 — December 31, 2018
|
|
6,807
|
|
|
$
|
150.01
|
|
|
6,807
|
|
|
$
|
1,472,539
|
|
|
|
|
|
|
|
|
|
|
||||||
January 1, 2019 — January 31, 2019
|
|
617,123
|
|
|
$
|
162.06
|
|
|
617,123
|
|
|
$
|
1,372,527
|
|
February 1, 2019 — February 28, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,372,527
|
|
March 1, 2019 — March 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,372,527
|
|
|
|
|
|
|
|
|
|
|
||||||
April 1, 2019 — April 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,372,527
|
|
May 1, 2019 — May 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,372,527
|
|
June 1, 2019 — June 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,372,527
|
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
|
Exhibit Description
|
|
|
|
|
10.1*
|
—
|
|
|
|
|
|
|
31.1*
|
—
|
|
|
|
|
|
|
31.2*
|
—
|
|
|
|
|
|
|
32.1*
|
—
|
|
|
|
|
|
|
101.INS*
|
—
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
|
|
101.SCH*
|
—
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL*
|
—
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF*
|
—
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB*
|
—
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE*
|
—
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
|
F5 NETWORKS, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ FRANCIS J. PELZER
|
|
|
|
Francis J. Pelzer
|
|
|
|
Executive Vice President,
|
|
|
|
Chief Financial Officer
|
|
|
|
(principal financial officer and principal accounting officer)
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of F5 Networks, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and
|
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 2, 2019
|
|
|
/s/ FRANÇOIS LOCOH-DONOU
|
|
François Locoh-Donou
|
|
Chief Executive Officer and President
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of F5 Networks, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and
|
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 2, 2019
|
|
|
/s/ FRANCIS J. PELZER
|
|
Francis J. Pelzer
|
|
Executive Vice President,
|
|
Chief Financial Officer
|
|
(principal financial officer and principal accounting officer)
|
Date:
|
August 2, 2019
|
|
|
/s/ FRANÇOIS LOCOH-DONOU
|
|
François Locoh-Donou
|
|
Chief Executive Officer and President
|
|
|
|
/s/ FRANCIS J. PELZER
|
|
Francis J. Pelzer
|
|
Executive Vice President and Chief Financial Officer
|
|
(principal financial officer and principal accounting officer)
|