F5 Q1 2026 F5 Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 F5 Inc Earnings Call
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Also, today's conference is being recorded if anyone has any objections. Please disconnect at this time.
and I'll now turn the conference over to Miss Suzanne dulong
Thank you, ma'am. You may begin.
Hello and welcome. I'm Suzanne dong f5's vice president of investor relations. We're here to discuss our first quarter fiscal year 2026, Financial results, Franco do at 5, president and CEO, and Cooper, Warner fees, Executive, Vice, President, and CFO will be making for remarks on today's call.
Other members of the F5 executive team are also here to answer questions. During the Q&A session. Today's press release is available on our website at f5.com or an archived version of today's audio will be available through April 27th 2026.
We will post the slide deck. Accompanying today's webcast to our IR site following this call.
Operator: Good afternoon, and welcome to the F5 Inc. Q1 fiscal 2026 financial results conference call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Also, today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'll now turn the conference over to Ms. Suzanne DuLong. Thank you, ma'am. You may begin.
Operator: Good afternoon, and welcome to the F5 Inc. Q1 fiscal 2026 financial results conference call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Also, today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'll now turn the conference over to Ms. Suzanne DuLong. Thank you, ma'am. You may begin.
To access the replay of today's webcast by phone dial 877-660-6853 or 201-612-7415 and use meeting ID 1. 375 7533
The telephonic replay will be available through midnight Pacific time, January 28th, 2026, for addition information or follow-up questions. Please reach out to me directly at s do long f5.com our discussion today will contain forward-looking statements, which include words such as believe, anticipate expect and Target.
These forward-looking statements involve uncertainties and risks, that may cause actual results to differ materially from those expressed or implied by these statements.
We have summarized factors that may affect our results in the press release announcing our financial results and in detail in our SEC filings, in addition, we will reference non-gaap metrics during today's discussion.
Please see our full gaap to non-gaap reconciliation. In today's press release and in the appendix of our earnings slide deck, please note, that F5 has no duty to update any information presented in this call.
We are very pleased to report strong view on results with 7%. Revenue growth driven by 11% product Revenue growth, our 6 consecutive quarter of double digit product growth,
This includes a robust 37% systems Revenue growth in the quarter.
Our growth continues to be fueled by verbal demand drivers, including hybrid multicloud adoption.
Scaling, AI investment and the demand for converged platforms.
Speaker #1: Good afternoon and welcome to the F5, Inc. first quarter fiscal 2026 financial results conference call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Our EMA region delivered, a particularly strong quarter.
And we are seeing momentum from emerging Trends, which may prove durable.
Regulations and mandates for resiliency and digital sovereignty are prompting customers to accelerate hybrid multi Cloud deployments driving increased demand for F5 Solutions.
Suzanne DuLong: Hello, and welcome. I'm Suzanne DuLong, F5's Vice President of Investor Relations. We're here to discuss our Q1 fiscal year 2026 financial results. François Locoh-Donou, F5's President and CEO, and Cooper Warner, F5's Executive Vice President and CFO, will be making prepared remarks on today's call. Other members of the F5 executive team are also here to answer questions during the Q&A session. Today's press release is available on our website at f5.com, where an archived version of today's audio will be available through 27 April 2026. We will post the slide deck accompanying today's webcast to our IR site following this call. To access the replay of today's webcast by phone, dial 877-660-6853 or 201-612-7415 and use meeting ID 13757533.
Suzanne DuLong: Hello, and welcome. I'm Suzanne DuLong, F5's Vice President of Investor Relations. We're here to discuss our Q1 fiscal year 2026 financial results. François Locoh-Donou, F5's President and CEO, and Cooper Warner, F5's Executive Vice President and CFO, will be making prepared remarks on today's call. Other members of the F5 executive team are also here to answer questions during the Q&A session. Today's press release is available on our website at f5.com, where an archived version of today's audio will be available through 27 April 2026. We will post the slide deck accompanying today's webcast to our IR site following this call. To access the replay of today's webcast by phone, dial 877-660-6853 or 201-612-7415 and use meeting ID 13757533.
We are especially pleased with our q1 results, given the uncertainty following the security incident, at the start of the quarter.
Our Global sales and support teams, mobilized rapidly, enabling customers to take action and get back to business quickly.
They manage more than 9,000 additional support, cases, and earn positive, customer feedback on our response efforts.
Speaker #2: Members of the F5 executive team are also here to answer questions during the Q&A session. Today's press release is available on our website at f5.com, where an archived version of today's audio will be available through April 27, 2026.
As a result, we experienced minimal demand disruption in q1.
In addition.
On expected positive, outcomes emerged, including customers, gaining a deeper understanding and appreciation of f5's critical role in their infrastructure and opportunities to strengthen relationships, including deeper engagement with cisos. We remain focused on protecting customers and earning their trust recognizing the responsibilities that come with our critical role.
Speaker #2: The telephonic replay will be available through midnight Pacific Time, January 28, 2026. For additional information or follow-up questions, please
Suzanne DuLong: The telephonic replay will be available through midnight Pacific Time, 28 January 2026. For additional information or follow-up questions, please reach out to me directly at s.dulong@f5.com. Our discussion today will contain forward-looking statements, which include words such as believe, anticipate, expect, and target. These forward-looking statements involve uncertainties and risks that may cause our actual results to differ materially from those expressed or implied by these statements. We have summarized factors that may affect our results in the press release announcing our financial results and in detail in our SEC filings. In addition, we will reference non-GAAP metrics during today's discussion. Please see our full GAAP to non-GAAP reconciliation in today's press release and in the appendix of our earnings slide deck. Please note that F5 has no duty to update any information presented in this call. I will now turn the call over to François.
The telephonic replay will be available through midnight Pacific Time, 28 January 2026. For additional information or follow-up questions, please reach out to me directly at s.dulong@f5.com. Our discussion today will contain forward-looking statements, which include words such as believe, anticipate, expect, and target. These forward-looking statements involve uncertainties and risks that may cause our actual results to differ materially from those expressed or implied by these statements. We have summarized factors that may affect our results in the press release announcing our financial results and in detail in our SEC filings. In addition, we will reference non-GAAP metrics during today's discussion. Please see our full GAAP to non-GAAP reconciliation in today's press release and in the appendix of our earnings slide deck. Please note that F5 has no duty to update any information presented in this call. I will now turn the call over to François.
We are hyper focused on 3 areas.
Further investing in the security of our operations, including security automation.
Speaker #2: Reach out to me directly at s.dulong@f5.com. Also, today's conference is being—we will—our discussion today will contain forward-looking statements, which include words such as 'believe,' 'anticipate,' 'expect,' and 'target.'
Enhancing the security of our products and development environments.
And supporting the broader security Community by sharing our learnings and Innovations.
Speaker #2: These forward-looking statements involve uncertainties and risks that may cause our actual results to differ materially from those expressed or implied by these statements. We have summarized factors that may affect our results in the press release announcing our financial results, and in detail in our SEC filings.
Such as introducing endpoint detection and response or EDR capabilities to Perimeter devices.
As we look ahead, we see 3 forces reshaping customer, infrastructure decisions and they are all accelerating simultaneously.
Speaker #2: In addition, we will reference non-GAAP metrics during today's discussion. Please see our full GAAP to non-GAAP reconciliation in today's press release and in the appendix of our earnings slide deck.
The first is hybrid multicloud.
Workloads now spend on premises private cloud and multiple public clouds.
Speaker #2: Please note that F5 has no duty to update any information presented in this call. I will now turn the call over to Francois.
Operating model as a result.
Speaker #3: Thank you, Suzanne, and hello everyone. We are very pleased to report strong Q1 results, with 7% revenue growth driven by 11% product revenue growth—our sixth consecutive quarter of double-digit product growth.
François Locoh-Donou: Thank you, Suzanne, and hello, everyone. We are very pleased to report strong Q1 results with 7% revenue growth, driven by 11% product revenue growth, our 6th consecutive quarter of double-digit product growth. This includes a robust 37% systems revenue growth in the quarter. Our growth continues to be fueled by durable demand drivers, including Hybrid Multi-Cloud adoption, scaling AI investment, and the demand for converged platforms. Our EMEA region delivered a particularly strong quarter, and we are seeing momentum from emerging trends, which may prove durable. Regulations and mandates for resiliency and digital sovereignty are prompting customers to accelerate Hybrid Multi-Cloud deployments, driving increased demand for F5 solutions. We are especially pleased with our Q1 results, given the uncertainty following the security incident at the start of the quarter.
François Locoh-Donou: Thank you, Suzanne, and hello, everyone. We are very pleased to report strong Q1 results with 7% revenue growth, driven by 11% product revenue growth, our 6th consecutive quarter of double-digit product growth. This includes a robust 37% systems revenue growth in the quarter. Our growth continues to be fueled by durable demand drivers, including Hybrid Multi-Cloud adoption, scaling AI investment, and the demand for converged platforms. Our EMEA region delivered a particularly strong quarter, and we are seeing momentum from emerging trends, which may prove durable. Regulations and mandates for resiliency and digital sovereignty are prompting customers to accelerate Hybrid Multi-Cloud deployments, driving increased demand for F5 solutions. We are especially pleased with our Q1 results, given the uncertainty following the security incident at the start of the quarter.
The second is Enterprise AI.
Customers are shifting from general purpose systems to AI Centric data centers.
Speaker #3: This includes a robust 37% systems revenue growth in the quarter. Our growth continues to be fueled by durable demand drivers, including hybrid multicloud adoption, scaling AI investment, and the demand for converged platforms.
These environments require far higher levels of data movement and compute and these new requirements are putting real pressure on networking storage and application delivery layers.
Speaker #3: Our EMEA region delivered a particularly strong quarter, and we are seeing momentum from emerging trends which may prove durable. Regulations and mandates for resiliency and digital sovereignty are prompting customers to accelerate hybrid multicloud deployments, driving increased demand for F5 solutions.
Finally organizations. Are replacing fragmented Point products with converge platforms because complexity now directly impacts performance uptime and risk.
Consolidation is no longer simply a cost exercise.
It is how customers simplify operations and improve resilience.
I will double click on the first trend.
Speaker #3: We are especially pleased with our Q1 results, given the uncertainty following the security incident at the start of the quarter. Our global sales and support teams mobilized rapidly, enabling customers to take action and get back to business quickly.
Hybrid multicloud adoption has been driven by Enterprises need for flexibility cost efficiency, vendor lock in prevention and data gravity.
Today drivers like regulations.
François Locoh-Donou: Our global sales and support teams mobilized rapidly, enabling customers to take action and get back to business quickly. They managed more than 9,000 additional support cases and earned positive customer feedback on our response efforts. As a result, we experienced minimal demand disruption in Q1. In addition, unexpected positive outcomes emerged, including customers gaining a deeper understanding and appreciation of F5's critical role in their infrastructure and opportunities to strengthen relationships, including deeper engagement with CISOs. We remain focused on protecting customers and earning their trust, recognizing the responsibilities that come with our critical role. We are hyper-focused on three areas: further investing in the security of our operations, including security automation, enhancing the security of our products and development environments, and supporting the broader security community by sharing our learnings and innovations, such as introducing endpoint detection and response or EDR capabilities to perimeter devices...
Our global sales and support teams mobilized rapidly, enabling customers to take action and get back to business quickly. They managed more than 9,000 additional support cases and earned positive customer feedback on our response efforts. As a result, we experienced minimal demand disruption in Q1. In addition, unexpected positive outcomes emerged, including customers gaining a deeper understanding and appreciation of F5's critical role in their infrastructure and opportunities to strengthen relationships, including deeper engagement with CISOs. We remain focused on protecting customers and earning their trust, recognizing the responsibilities that come with our critical role. We are hyper-focused on three areas: further investing in the security of our operations, including security automation, enhancing the security of our products and development environments, and supporting the broader security community by sharing our learnings and innovations, such as introducing endpoint detection and response or EDR capabilities to perimeter devices...
Including mistu gdpr and donor.
Speaker #3: They managed more than 9,000 additional support cases and earned positive customer feedback on our response efforts. As a result, we experienced minimal demand disruption in Q1.
Are accelerating hybrid multi Cloud adoption by imposing greater resilience and digital sovereignty requirements, especially outside the US.
Organizations are also modernizing infrastructures to enhance security performance, efficiency.
Speaker #3: In addition, unexpected positive outcomes emerged, including customers gaining a deeper understanding and appreciation of F5's critical role in their infrastructure, and opportunities to strengthen relationships, including deeper engagement with CISOs.
They are repatriating sensitive workloads to ensure compliance and deploying Advanced ADC and API Security Solutions.
These Trends underscore why hybrid multicloud is the leading operating model.
F5 is purpose-built to lead in the space.
Speaker #3: We remain focused on protecting customers and earning their trust, recognizing the responsibilities that come with our critical role. We are hyper-focused on three areas: further investing in the security of our operations, including security automation; enhancing the security of our products and development environments; and supporting—by sharing our learnings and the broader security community—innovations such as introducing endpoint detection and response, or EDR, capabilities to perimeter devices.
Our unmatched ability to provide complete delivery and security for every app, the employable anywhere, and in any form factor.
Sets us apart.
With a platform architected for hybrid, multicloud is no surprise that customers are turning to F5 to secure and scale their environment.
Let me share a few examples of some hybrid multi, Cloud winds from q1.
F5 is powering the hybrid multi-class strategy for a regional banking leader.
Speaker #3: As we look ahead, we see three forces reshaping customer infrastructure decisions, and they are all accelerating simultaneously. The first is hybrid multicloud. Workloads now span on-premises, private cloud, and multiple public clouds.
François Locoh-Donou: As we look ahead, we see three forces reshaping customer infrastructure decisions, and they are all accelerating simultaneously. The first is hybrid multicloud. Workloads now span on-premises, private cloud, and multiple public clouds. Customers want flexibility without lock-in, and hybrid multicloud has become the dominant operating model as a result. The second is enterprise AI. Customers are shifting from general-purpose systems to AI-centric data centers. These environments require far higher levels of data movement and compute, and these new requirements are putting real pressure on networking, storage, and application delivery layers. Finally, organizations are replacing fragmented point products with converged platforms because complexity now directly impacts performance, uptime, and risk. Consolidation is no longer simply a cost exercise. It is how customers simplify operations and improve resilience. I will double-click on the first trend.
As we look ahead, we see three forces reshaping customer infrastructure decisions, and they are all accelerating simultaneously. The first is hybrid multicloud. Workloads now span on-premises, private cloud, and multiple public clouds. Customers want flexibility without lock-in, and hybrid multicloud has become the dominant operating model as a result. The second is enterprise AI. Customers are shifting from general-purpose systems to AI-centric data centers. These environments require far higher levels of data movement and compute, and these new requirements are putting real pressure on networking, storage, and application delivery layers. Finally, organizations are replacing fragmented point products with converged platforms because complexity now directly impacts performance, uptime, and risk. Consolidation is no longer simply a cost exercise. It is how customers simplify operations and improve resilience. I will double-click on the first trend.
The customer needed more capacity and a modern application infrastructure for digital banking services, and AI based application development.
F5 is building an AI ready infrastructure with enhanced security using big IP for automated and simplified operations.
Speaker #3: Customers want flexibility without lock-in, and hybrid multicloud has become the dominant operating model as a result. The second is enterprise AI. Customers are shifting from general-purpose systems to AI-centric data centers.
Engine X for cloud, native performance and distributed cloud services for bot defense and develop mitigation.
Second, the media and internet provider selected, F5 to standardized, application delivery across its on premises and Cloud environments.
Speaker #3: These environments require far higher levels of data movement and compute, and these new requirements are putting pressure on storage and application delivery layers. Finally, organizations are replacing fragmented point products with converged platforms.
With F5, the customer uses, the same Ingress and security approach everywhere, its applications and AI Services run ensuring predictable, performance security and user experience.
Speaker #3: Because complexity now directly impacts performance, uptime, and risk. Consolidation is no longer simply a cost exercise; it is how customers simplify operations and improve resilience.
Teams can deploy or expand applications across environments without changing operational practices.
That provides a reliable foundation for scaling Ai and modern applications in a hybrid multicloud environment.
Speaker #3: I will double-click on the first trend. Hybrid multicloud adoption has been driven by enterprises' need for flexibility, cost efficiency, vendor lock-in prevention, and data gravity.
François Locoh-Donou: Hybrid multicloud adoption has been driven by enterprises' need for flexibility, cost efficiency, vendor lock-in prevention, and data gravity. Today, drivers like regulations, including NIS2, GDPR, and DORA, are accelerating hybrid multicloud adoption by imposing greater resilience and digital sovereignty requirements, especially outside the US. Organizations are also modernizing infrastructures to enhance security, performance, and efficiency. They are repatriating sensitive workloads to ensure compliance and deploying advanced ADC and API security solutions. These trends underscore why hybrid multicloud is the leading operating model. F5 is purpose-built to lead in this space. Our unmatched ability to provide complete delivery and security for every app, deployable anywhere and in any form factor, sets us apart. With a platform architected for hybrid multicloud, it is no surprise that customers are turning to F5 to secure and scale their environments. Let me share a few examples of some hybrid multicloud wins from Q1.
Hybrid multicloud adoption has been driven by enterprises' need for flexibility, cost efficiency, vendor lock-in prevention, and data gravity. Today, drivers like regulations, including NIS2, GDPR, and DORA, are accelerating hybrid multicloud adoption by imposing greater resilience and digital sovereignty requirements, especially outside the US. Organizations are also modernizing infrastructures to enhance security, performance, and efficiency. They are repatriating sensitive workloads to ensure compliance and deploying advanced ADC and API security solutions. These trends underscore why hybrid multicloud is the leading operating model. F5 is purpose-built to lead in this space. Our unmatched ability to provide complete delivery and security for every app, deployable anywhere and in any form factor, sets us apart. With a platform architected for hybrid multicloud, it is no surprise that customers are turning to F5 to secure and scale their environments. Let me share a few examples of some hybrid multicloud wins from Q1.
Finally, a large operator of veterinary clinics is leveraging F5 to strengthen the resilience of its hybrid optic. Cloud architecture.
Speaker #3: Today, drivers like regulations—including NIS2, GDPR, and DORA—are accelerating hybrid multicloud adoption by imposing greater resilience and digital sovereignty requirements, especially outside the US.
the customer needed to modernize their infrastructure and reduce risks tied to Cloud concentration and vendor lock in
F5 is delivering consistent, networking and security functions, and eliminating Cloud native dependencies.
Speaker #3: Organizations are also modernizing infrastructures to enhance security, performance, and efficiency. They are repatriating sensitive workloads to ensure compliance and deploying advanced ADC and API security solutions.
With F5, the customer is creating a durable foundation for future API and AI use cases.
Now, let us look more closely at AI.
AI related investment is scaling as Enterprises, prepare for increased network capacity and services to support Ai workloads, agentic Ai and inferencing demands.
Speaker #3: These trends underscore why hybrid multicloud is the leading operating model. F5 is purpose-built to lead in this space. Our unmatched ability to provide complete delivery and security for every app, deployable anywhere and in any form factor, sets us apart.
The resulting AI related demand is fueling growth across our portfolio.
AI is fundamentally transforming application behavior. And we are seeing 3 consistent patterns driving demand for F5 Solutions.
In AI data delivery.
Speaker #3: With a platform architected for hybrid multicloud, it is no surprise that customers are turning to F5 to secure and scale their environments. Let me share a few examples of some hybrid multicloud wins from Q1.
Multimodal data growth is pushing terabit scale ingestion.
With idle gpus costing, real money customers need sustained end to end High, throughput data pipelines across network storage and application delivery.
Speaker #3: F5 is powering the hybrid multicloud strategy for a regional banking leader. The customer needed more capacity and a modern application infrastructure for digital banking services, and AI-based application development.
François Locoh-Donou: F5 is powering the hybrid multi-cloud strategy for a regional banking leader. The customer needed more capacity and a modern application infrastructure for digital banking services and AI-based application development. F5 is building an AI-ready infrastructure with enhanced security using BIG-IP for automated and simplified operations, NGINX for cloud-native performance, and distributed cloud services for bot defense and DDoS mitigation. Second, a media and internet provider selected F5 to standardize application delivery across its on-premises and cloud environments. With F5, the customer uses the same ingress and security approach everywhere its applications and AI services run, ensuring predictable performance, security, and user experience. Teams can deploy or expand applications across environments without changing operational practices. This provides a reliable foundation for scaling AI and modern applications in a hybrid multi-cloud environment. Finally, a large operator of veterinary clinics is leveraging F5 to strengthen the resilience of its hybrid multi-cloud architecture.
F5 is powering the hybrid multi-cloud strategy for a regional banking leader. The customer needed more capacity and a modern application infrastructure for digital banking services and AI-based application development. F5 is building an AI-ready infrastructure with enhanced security using BIG-IP for automated and simplified operations, NGINX for cloud-native performance, and distributed cloud services for bot defense and DDoS mitigation. Second, a media and internet provider selected F5 to standardize application delivery across its on-premises and cloud environments. With F5, the customer uses the same ingress and security approach everywhere its applications and AI services run, ensuring predictable performance, security, and user experience. Teams can deploy or expand applications across environments without changing operational practices. This provides a reliable foundation for scaling AI and modern applications in a hybrid multi-cloud environment. Finally, a large operator of veterinary clinics is leveraging F5 to strengthen the resilience of its hybrid multi-cloud architecture.
Bottlenecks traditional infrastructure. Cannot handle.
In AI runtime security.
Speaker #3: Security using BIG-IP F5 is building an automated and simplified AI-ready infrastructure with enhanced operations, NGINX for cloud-native performance, and distributed cloud services for bot defense and DDoS mitigation.
customers are moving quickly on generative AI, but security, and compliance often become bottlenecks to deployment and Roi,
Agentic systems raised the stakes by accessing and acting on sensitive data, driving demand for stronger, runtime controls and guard rails.
Speaker #3: Second, a media and internet provider selected F5 to standardize application delivery across its on-premises and cloud environments. With F5, the customer uses the same ingress and security approach everywhere its applications and AI services run, ensuring predictable performance, security, and user experience.
F5. Safeguards AI applications API and models from abuse data leaks and attacks, like prompt injection.
We ensure visibility control and Trust.
Speaker #3: Teams can deploy or expand applications across environments without changing operational practices. This provides a reliable foundation for scaling AI and modern applications in a hybrid multicloud environment.
With our Q4, acquisition of calypso AI we enhanced our runtime security offerings with real-time threat. Defense. Red seeming models, and robust guard rails.
We are preventing prompt injections and ensuring models act as intended even under attack.
In AI Factory, load balancing.
Speaker #3: Finally, a large operator of veterinary clinics is leveraging F5 to strengthen the resilience of its hybrid multicloud architecture. The customer needed to modernize their infrastructure and reduce risks tied to cloud concentration and vendor lock-in.
François Locoh-Donou: The customer needed to modernize their infrastructure and reduce risks tied to cloud concentration and vendor lock-in. F5 is delivering consistent networking and security functions and eliminating cloud-native dependencies. With F5, the customer is creating a durable foundation for future API and AI use cases. Now, let us look more closely at AI. AI-related investment is scaling as enterprises prepare for increased network capacity and services to support AI workloads, agentic AI, and inferencing demands. The resulting AI-related demand is fueling growth across our portfolio. AI is fundamentally transforming application behavior, and we are seeing three consistent patterns driving demand for F5 solutions. In AI data delivery, multimodal data growth is pushing terabit scale ingestion. With idle GPUs costing real money, customers need sustained, end-to-end, high-throughput data pipelines across network, storage, and application delivery. BIG-IP solves the AI training and inference throughput bottlenecks traditional infrastructure cannot handle.
The customer needed to modernize their infrastructure and reduce risks tied to cloud concentration and vendor lock-in. F5 is delivering consistent networking and security functions and eliminating cloud-native dependencies. With F5, the customer is creating a durable foundation for future API and AI use cases. Now, let us look more closely at AI. AI-related investment is scaling as enterprises prepare for increased network capacity and services to support AI workloads, agentic AI, and inferencing demands. The resulting AI-related demand is fueling growth across our portfolio. AI is fundamentally transforming application behavior, and we are seeing three consistent patterns driving demand for F5 solutions. In AI data delivery, multimodal data growth is pushing terabit scale ingestion. With idle GPUs costing real money, customers need sustained, end-to-end, high-throughput data pipelines across network, storage, and application delivery. BIG-IP solves the AI training and inference throughput bottlenecks traditional infrastructure cannot handle.
As AI deployment scale Intelligent Traffic distribution across models clusters and gpus is critical creating new demand for load balancing across and within the AI Factory.
F5. Optimizes traffic and GPU utilisation.
Speaker #3: F5 is delivering consistent networking and security functions and eliminating cloud-native dependencies. With F5, the customer is creating a durable foundation for future API and AI use cases.
Increasing token. Throughput reducing time to force token and lowering per token costs.
These Trends highlight, a clear reality.
Speaker #3: Now, let us look more closely at AI. AI-related investment is scaling as enterprises prepare for increased network capacity and services to support AI workloads, agentic AI, and inferencing demands.
AI is accelerating demand for application, delivery and security areas where F5 excels
In q1, we added nearly as many AI customers as we did in all of FY, 25.
Speaker #3: The resulting AI-related demand is fueling growth across our portfolio. AI is fundamentally transforming application behavior, and we are seeing three consistent patterns driving demand for F5 solutions.
This growing demand is a testament to our layer 7 expertise and Decades of experience, connecting applications and users key differentiators in a rapidly evolving Market.
I will highlight a few of our AI wins from the quarter.
Speaker #3: In AI data delivery, multimodal data growth is pushing terabit-scale ingestion. With idle GPUs costing real money, customers need sustained end-to-end, high-throughput data pipelines across network, storage, and application delivery.
In an AI data delivery, use case 1 of the largest global technology oems is expanding in big IP infrastructure to support a new high bandwidth, AI data ingestion, use case.
Speaker #3: BigIP solves the AI training and inference throughput bottlenecks traditional infrastructure cannot handle. In AI runtime security, customers are moving quickly on generative AI, but security and compliance often become bottlenecks to deployment and ROI.
The customer is repatriating large amounts of iot data from the cloud to enable Ai and analytics workloads. F5 is modernizing their S3 data delivery, tier with big IP for ultra high performance.
François Locoh-Donou: In AI runtime security, customers are moving quickly on generative AI, but security and compliance often become bottlenecks to deployment and ROI. Agentic systems raise the stakes by accessing and acting on sensitive data, driving demand for stronger runtime controls and guardrails. F5 safeguards AI applications, APIs, and models from abuse, data leaks, and attacks like prompt injection. We ensure visibility, control, and trust. With our Q4 acquisition of CalypsoAI, we enhanced our runtime security offerings with real-time threat defense, red teaming models, and robust guardrails. We are preventing prompt injections and ensuring models act as intended, even under attack. In AI factory load balancing... As AI deployment scale, intelligent traffic distribution across models, clusters, and GPUs is critical, creating new demand for load balancing across and within the AI factory. F5 optimizes traffic and GPU utilization, increasing token throughput, reducing time to first token, and lowering per-token costs.
In AI runtime security, customers are moving quickly on generative AI, but security and compliance often become bottlenecks to deployment and ROI. Agentic systems raise the stakes by accessing and acting on sensitive data, driving demand for stronger runtime controls and guardrails. F5 safeguards AI applications, APIs, and models from abuse, data leaks, and attacks like prompt injection. We ensure visibility, control, and trust. With our Q4 acquisition of CalypsoAI, we enhanced our runtime security offerings with real-time threat defense, red teaming models, and robust guardrails. We are preventing prompt injections and ensuring models act as intended, even under attack. In AI factory load balancing... As AI deployment scale, intelligent traffic distribution across models, clusters, and GPUs is critical, creating new demand for load balancing across and within the AI factory. F5 optimizes traffic and GPU utilization, increasing token throughput, reducing time to first token, and lowering per-token costs.
Speaker #3: Agentic systems raise the stakes by accessing and acting on sensitive data, driving demand for stronger runtime controls and guardrails. F5 safeguards AI applications, APIs, and models from abuse, data leaks, and attacks like prompt injection.
We are also accelerating their internal large language model development, powering large-scale data ingestion. Into AI storage and pipelines. In AI runtime security. A Global Financial Services leader is leveraging F5 to integrate generative AI into its AI. Trust framework.
F5 ensuring security Regulatory Compliance and continuous access controls at scale.
Speaker #3: We ensure visibility, control, and our runtime security offerings with trust. With our Q4 acquisition of Calypso AI, we enhanced real-time threat defense, red teaming models, and robust guardrails.
5's, AI guardrails with programmable risk, based controls reinforced with continuous F5, AI read seam testing,
Is enhancing trust resilience and Regulatory radius across. Every AI interaction.
Speaker #3: We are preventing prompt injections and ensuring models act as intended even under attack. In AI factory load balancing, as AI deployments scale, intelligent traffic distribution across model clusters and GPUs is critical, creating new demand for load balancing across and within the AI factory.
F5's approach seamlessly integrates with the customer's existing identity, access management and governance systems and is providing Advanced protection against emerging threats, while delivering low latency performance.
And finally, in an AI Factory, load balancing win with a major energy and chemicals company. Our team successfully leveraged the tech refresh into an expanded AI use case.
Speaker #3: F5 optimizes traffic and GPU utilization, increasing token throughput, reducing time-to-first token, and lowering per-token costs. These trends highlight a clear reality: AI is accelerating demand for application delivery and security, areas where F5 excels.
The customer is shifting from public AI consumption to hosting private, AI models and needed a solution to reduce latency and prevent time outs.
François Locoh-Donou: These trends highlight a clear reality. AI is accelerating demand for application delivery and security, areas where F5 excels. In Q1, we added nearly as many AI customers as we did in all of FY 25. This growing demand is a testament to our Layer 7 expertise and decades of experience connecting applications and users, key differentiators in a rapidly evolving market. I will highlight a few of our AI wins from the quarter. In an AI data delivery use case, one of the largest global technology OEMs is expanding its BIG-IP infrastructure to support a new high-bandwidth AI data ingestion use case. The customer is repatriating large amounts of IoT data from the cloud to enable AI and analytics workloads. F5 is modernizing their S3 data delivery tier with BIG-IP for ultra-high performance.
These trends highlight a clear reality. AI is accelerating demand for application delivery and security, areas where F5 excels. In Q1, we added nearly as many AI customers as we did in all of FY 25. This growing demand is a testament to our Layer 7 expertise and decades of experience connecting applications and users, key differentiators in a rapidly evolving market. I will highlight a few of our AI wins from the quarter. In an AI data delivery use case, one of the largest global technology OEMs is expanding its BIG-IP infrastructure to support a new high-bandwidth AI data ingestion use case. The customer is repatriating large amounts of IoT data from the cloud to enable AI and analytics workloads. F5 is modernizing their S3 data delivery tier with BIG-IP for ultra-high performance.
F5 is ensuring faster more reliable AI responses with Hardware level handling of layer 4 traffic and SSL processing significantly, improving time to First token.
Speaker #3: In Q1, we added nearly as many AI customers as we did in all of FY25. This growing demand is a testament to our Layer 7 expertise and decades of experience connecting applications and users—key differentiators in a rapidly evolving market.
All of these examples highlight, how customers are building their AI infrastructure with F5?
Let's shift gears to the third Trend, converge, networking and security platforms.
Speaker #3: I will highlight a few of our AI wins from the quarter. In an AI data delivery use case, one of the largest global technology OEMs is expanding its BIG-IP infrastructure to support a new high-bandwidth AI data ingestion use case.
Growing hybrid multicloud complexity has customers desperate for ways to reduce costs and improve the performance of fragmented Point Solutions.
F5's application delivery and security platform or adsb?
Speaker #3: The customer is repatriating large amounts of IoT data from the cloud to enable AI and analytics workloads. F5 is modernizing their S3 data delivery tier with BIG-IP for ultra-high performance.
Is the first platform to unite high performance traffic management with Advanced application and API security across hybrid and multi-cloud environments.
Consolidate multiple Point Solutions in 1 uniform.
Speaker #3: We are also accelerating their internal large language model development, powering large-scale data ingestion into AI storage and pipelines. In AI runtime security, a global financial services leader is leveraging F5 to integrate generative AI into its AI trust framework.
François Locoh-Donou: We are also accelerating their internal large language model development, powering large-scale data ingestion into AI storage and pipelines. In AI runtime security, a global financial services leader is leveraging F5 to integrate Generative AI into its AI trust framework. F5 is ensuring security, regulatory compliance, and continuous access controls at scale. F5's AI Guardrails with programmable risk-based controls, reinforced with continuous F5 AI Red Team testing, is enhancing trust, resilience, and regulatory readiness across every AI interaction. F5's approach seamlessly integrates with a customer's existing identity, access management, and governance systems, and is providing advanced protection against emerging threats while delivering low latency performance. And finally, in an AI factory load balancing win with a major energy and chemicals company, our team successfully leveraged a tech refresh into an expanded AI use case.
We are also accelerating their internal large language model development, powering large-scale data ingestion into AI storage and pipelines. In AI runtime security, a global financial services leader is leveraging F5 to integrate Generative AI into its AI trust framework. F5 is ensuring security, regulatory compliance, and continuous access controls at scale. F5's AI Guardrails with programmable risk-based controls, reinforced with continuous F5 AI Red Team testing, is enhancing trust, resilience, and regulatory readiness across every AI interaction. F5's approach seamlessly integrates with a customer's existing identity, access management, and governance systems, and is providing advanced protection against emerging threats while delivering low latency performance. And finally, in an AI factory load balancing win with a major energy and chemicals company, our team successfully leveraged a tech refresh into an expanded AI use case.
Simplifying operations and reducing risk.
Adsp also delivers valuable exos capabilities for customers and policy management analytics and automation.
Speaker #3: F5 is ensuring security, regulatory compliance, and continuous access controls at scale. F5's AI guardrails, with programmable risk-based controls reinforced by continuous F5 AI red team testing, are enhancing trust, resilience, and regulatory readiness across every AI interaction.
Let me highlight a few. Q1 wins that demonstrate. How customers are adopting absb? Converging Solutions and simplifying operations?
In banking a long-standing big IP customer is modernizing its infrastructure. Consolidating networking application, delivery and security with F5.
The customer is modernizing its digital banking applications and needed increased capacity and improved resilience and comply. With Central Banking regulations,
Speaker #3: F5's approach seamlessly integrates with the customer's existing identity, access management, and governance systems, and is providing advanced protection against emerging threats while delivering low-latency performance.
Today, the customer is leveraging, a powerful combination of big IP engine X and distributed cloud services for traffic management W and dos protection.
Speaker #3: And finally, in an AI factory load balancing win with a major energy and chemicals company, our team successfully leveraged a tech refresh into an expanded AI use case.
A global consumer Products Company standardized on a converged, F5 platform to address governance and reliability concerns.
Speaker #3: The customer is shifting from public AI consumption to hosting private AI models and needed a solution to reduce latency and prevent timeouts. F5 is ensuring faster, more reliable AI responses with hardware-level handling of Layer 4 traffic and SSL processing, significantly improving time-to-first token.
François Locoh-Donou: The customer is shifting from public AI consumption to hosting private AI models and needed a solution to reduce latency and prevent timeouts. F5 is ensuring faster, more reliable AI responses with hardware-level handling of layer four traffic and SSL processing, significantly improving time to first token. All of these examples highlight how customers are building their AI infrastructure with F5. Let's shift gears to the third trend, converged networking and security platforms. Growing hybrid multi-cloud complexity has customers desperate for ways to reduce costs and improve the performance of fragmented point solutions. F5's application delivery and security platform, or ADSP, is the first platform to unite high-performance traffic management with advanced application and API security across hybrid and multi-cloud environments. ADSP converges security, scalability, and operational efficiency. It enables customers to consolidate multiple point solutions in one unified platform, simplifying operations and reducing risk.
The customer is shifting from public AI consumption to hosting private AI models and needed a solution to reduce latency and prevent timeouts. F5 is ensuring faster, more reliable AI responses with hardware-level handling of layer four traffic and SSL processing, significantly improving time to first token. All of these examples highlight how customers are building their AI infrastructure with F5. Let's shift gears to the third trend, converged networking and security platforms. Growing hybrid multi-cloud complexity has customers desperate for ways to reduce costs and improve the performance of fragmented point solutions. F5's application delivery and security platform, or ADSP, is the first platform to unite high-performance traffic management with advanced application and API security across hybrid and multi-cloud environments. ADSP converges security, scalability, and operational efficiency. It enables customers to consolidate multiple point solutions in one unified platform, simplifying operations and reducing risk.
By expanding its use of engine X and refreshing. Its big IP footprint, the customer Consolidated application delivery and security controls ensuring consistent performance.
Finally, a foreign national law enforcement agency, selected a converged F5 platform to support its National open data initiative.
Speaker #3: All of these examples highlight how customers are building their AI infrastructure with F5. Let's shift gears to the third trend: converged networking and security platforms.
The customers desperate infrastructures, struggled with ransomware threats, High false, positive, and limited scalability.
F5's Converse solution, enabled. The agency to consolidate load balancing API, protection authentication and threat mitigation
Speaker #3: Growing hybrid multi-cloud complexity has customers desperate for ways to reduce costs and improve the performance of fragmented point solutions. F5's Application Delivery and Security Platform, or ADSP, is the first platform to unite high-performance traffic management with advanced application and API security across hybrid and multi-cloud environments.
and these are just a few of the examples of customers leveraging. F5's Converse platform to consolidate vendors, simplify operations and reduce risk.
F5 is unmatched in delivering complete application delivery and security across hybrid multicloud environments.
Speaker #3: ADSP converges security, scalability, and operational efficiency. It enables customers to consolidate multiple point solutions in one unified platform, simplifying operations and reducing risk. ADSP also delivers valuable XOPS capabilities for customers, like policy management, analytics, and automation.
Vision for unified converge platform is fueled by our commitment, to customer focused innovation.
And we are continuing to invest to create even greater value for our customers.
In November we launched F5, big IP version 21.0.
François Locoh-Donou: ADSP also delivers valuable xOps capabilities for customers like policy management, analytics, and automation. Let me highlight a few Q1 wins that demonstrate how customers are adopting ADSP, converging solutions, and simplifying operations. In banking, a long-standing BIG-IP customer is modernizing its infrastructure, consolidating networking, application delivery, and security with F5. The customer is modernizing its digital banking applications and needed increased capacity and improved resilience to comply with central banking regulations. Today, the customer is leveraging a powerful combination of BIG-IP, NGINX, and distributed cloud services for traffic management, WAF, and DDoS protection. A global consumer products company standardized on a converged F5 platform to address governance and reliability concerns. By expanding its use of NGINX and refreshing its BIG-IP footprint, the customer consolidated application delivery and security controls, ensuring consistent performance.
ADSP also delivers valuable xOps capabilities for customers like policy management, analytics, and automation. Let me highlight a few Q1 wins that demonstrate how customers are adopting ADSP, converging solutions, and simplifying operations. In banking, a long-standing BIG-IP customer is modernizing its infrastructure, consolidating networking, application delivery, and security with F5. The customer is modernizing its digital banking applications and needed increased capacity and improved resilience to comply with central banking regulations. Today, the customer is leveraging a powerful combination of BIG-IP, NGINX, and distributed cloud services for traffic management, WAF, and DDoS protection. A global consumer products company standardized on a converged F5 platform to address governance and reliability concerns. By expanding its use of NGINX and refreshing its BIG-IP footprint, the customer consolidated application delivery and security controls, ensuring consistent performance.
Scaling, the core for the most demanding AI workloads.
Speaker #3: Let me highlight a few Q1 wins that demonstrate how customers are adopting ADSP converging solutions and simplifying operations. In banking, a long-standing infrastructure, consolidating networking application BigIP customer is modernizing its delivery and security with F5.
This release delivers, the significant control, plane enhancements, required to handle the scale and complexity of modern traffic,
Crucially, we have applied this performance directly to AI delivery, introducing native support for the model context, protocol or mCP.
And F3.
Speaker #3: The customer is modernizing its digital banking applications and needed increased capacity and improved resilience to comply with central banking regulations. Today, the customer is leveraging a powerful combination of BIG-IP, NGINX, and distributed cloud services for traffic management, WAF, and DDoS protection.
This ensures that big AP is optimized for the high, throughput storage and retrieval workloads that are critical to AI architectures.
We are also bringing our Advanced API security to the data center.
1 of the primary challenges. Our customers face is the risk of Shadow API, endpoints that are active, but invisible within their private Networks.
Speaker #3: A global consumer products company standardized on a converged F5 platform to address governance and reliability concerns. By expanding its use of NGINX and refreshing its BIG-IP footprint, the customer consolidated application delivery and security controls, ensuring consistent performance.
We have now enabled. Our API Discovery engines to run locally in customer environments.
This means we can deliver the exact same recovery and security capabilities on premises that our customers already rely on, in F5, distributed cloud services.
This allows customers to maintain a consistent API security posture in any environment.
Speaker #3: Finally, a foreign national law enforcement agency selected a converged F5 platform to support its national open data initiative. The customer's disparate infrastructures struggled with ransomware threats, high false positives, and limited scalability.
François Locoh-Donou: Finally, a foreign national law enforcement agency selected a converged F5 platform to support its national open data initiative. The customer's disparate infrastructures struggled with ransomware threats, high false positive, and limited scalability. F5's converged solution enabled the agency to consolidate load balancing, API protection, authentication, and threat mitigation. And these are just a few of the examples of customers leveraging F5's converged platform to consolidate vendors, simplify operations, and reduce risk. F5 is unmatched in delivering complete application delivery and security across hybrid multi-cloud environments. Our vision for a unified, converged platform is fueled by our commitment to customer-focused innovation, and we are continuing to invest to create even greater value for our customers.... In November, we launched F5 BIG-IP version 21.0, scaling the core for the most demanding AI workloads.
Finally, a foreign national law enforcement agency selected a converged F5 platform to support its national open data initiative. The customer's disparate infrastructures struggled with ransomware threats, high false positive, and limited scalability. F5's converged solution enabled the agency to consolidate load balancing, API protection, authentication, and threat mitigation. And these are just a few of the examples of customers leveraging F5's converged platform to consolidate vendors, simplify operations, and reduce risk. F5 is unmatched in delivering complete application delivery and security across hybrid multi-cloud environments. Our vision for a unified, converged platform is fueled by our commitment to customer-focused innovation, and we are continuing to invest to create even greater value for our customers.... In November, we launched F5 BIG-IP version 21.0, scaling the core for the most demanding AI workloads.
In summary, our first quarter of performance underscores F5, strong alignment with durable Market domain drivers including hybrid multi-cloud, adoption the acceleration of AI and the increasing need for converge platforms.
Speaker #3: F5's converged solution enabled the agency to consolidate load balancing, API protection, authentication, and threat mitigation. And these are just a few examples of customers leveraging F5's converged platform to consolidate vendors, simplify operations, and reduce risk.
We remain deeply committed to driving Innovation and to delivering Cutting Edge solutions that address our customers rapidly evolving, application, delivery and security challenges.
Now, I will turn the call over to Cooper. Who will walk you through our q1 results and our Outlook
Cooper.
Speaker #3: F5 is unmatched in delivering complete application delivery and security across hybrid multi-cloud environments. Our vision for a unified, converged platform is fueled by our commitment to customer-focused innovation.
Speaker #3: And we are continuing to invest to create even greater value for our customers. In November, we launched F5 BIG-IP version 21.0, scaling the core for the most demanding AI workloads.
Thank you Francois and hello, everyone. I will review our q1 results before. I update our outlook for FY, 26 and provider. Guidance for Q2, we delivered a strong q1 growing Revenue 7% to 822 million with a mix of 50% product, revenue, and 50% Services Revenue,
Speaker #3: This release delivers the significant control plane enhancements required to handle the scale and complexity of modern traffic. Crucially, we have applied this performance directly to AI data delivery, introducing native support for the Model Context Protocol, or MCP, and S3.
François Locoh-Donou: This release delivers the significant control plane enhancements required to handle the scale and complexity of modern traffic. Crucially, we have applied this performance directly to AI data delivery, introducing native support for the Model Context Protocol or MCP and S3. This ensures that BIG-IP is optimized for the high throughput storage and retrieval workloads that are critical to AI architectures. We are also bringing our advanced API security to the data center. One of the primary challenges our customers face is the risk of shadow APIs, endpoints that are active but invisible within their private networks. We have now enabled our API discovery engines to run locally in customer environments. This means we can deliver the exact same discovery and security capabilities on premises that our customers already rely on in F5 distributed cloud services. This allows customers to maintain a consistent API security posture in any environment.
This release delivers the significant control plane enhancements required to handle the scale and complexity of modern traffic. Crucially, we have applied this performance directly to AI data delivery, introducing native support for the Model Context Protocol or MCP and S3. This ensures that BIG-IP is optimized for the high throughput storage and retrieval workloads that are critical to AI architectures. We are also bringing our advanced API security to the data center. One of the primary challenges our customers face is the risk of shadow APIs, endpoints that are active but invisible within their private networks. We have now enabled our API discovery engines to run locally in customer environments. This means we can deliver the exact same discovery and security capabilities on premises that our customers already rely on in F5 distributed cloud services. This allows customers to maintain a consistent API security posture in any environment.
Need for greater resilience and data sovereignty are also emerging as hybrid multicloud. Accelerants
Speaker #3: This ensures that BigIP is optimized for the high-throughput storage and retrieval workloads that are critical to AI architectures. We are also bringing our advanced API security to the data center.
Speaker #3: One of the primary challenges our customers face is the risk of shadow APIs, endpoints that are active but invisible within their private networks. We have now enabled our API discovery engines to run locally in customer environments.
As Fran mentioned, we saw minimal demand impact from the security incident. In U1 product, Revenue totaled, 410 million increasing 11% year-over-year, while service revenue of 412 million grew 4%, year-over-year systems Revenue, total, 218 million of 37% over q1 FY, 25 by strong Tech refresh and capacity expansion in connection with hybrid multi Cloud adoption and growing AI demand. Our software revenue of 192 million down 8% year-over-year
Speaker #3: This means we can deliver the exact same discovery and security capabilities on-premises that our customers already rely on in F5 Distributed Cloud Services. This allows customers to maintain a consistent API security posture in any environment.
In the exceptionally strong results in q125 including the sizeable 8 figure, renewal we discussed last year, subscription-based software Revenue, totaled 164 million up 1% year-on-year. Perpetual license software total, 27 million down year-over-year against, exceptionally strong results from q125, revenue from recurring sources contributed, 69% of our q1 Revenue,
Speaker #3: In summary, our first-quarter performance underscores F5's strong alignment with durable market demand drivers, including hybrid multi-cloud adoption, the acceleration of AI, and the increasing need for converged platforms.
François Locoh-Donou: In summary, our first quarter performance underscores F5's strong alignment with durable market demand drivers, including hybrid multi-cloud adoption, the acceleration of AI, and the increasing need for converged platforms. We remain deeply committed to driving innovation and to delivering cutting-edge solutions that address our customers' rapidly evolving application delivery and security challenges. Now, I will turn the call over to Cooper, who will walk you through our Q1 results and our outlook. Cooper?
In summary, our first quarter performance underscores F5's strong alignment with durable market demand drivers, including hybrid multi-cloud adoption, the acceleration of AI, and the increasing need for converged platforms. We remain deeply committed to driving innovation and to delivering cutting-edge solutions that address our customers' rapidly evolving application delivery and security challenges.
our recurring Revenue consists of our subscription-based revenue and the maintenance portion of our services Revenue shifting to revenue distribution by region.
Revenue in the Americas grew 2% year-over-year, representing 53% of total revenue.
Speaker #3: We remain deeply committed to driving innovation and to delivering cutting-edge solutions that address our customers' rapidly evolving application delivery and security challenges. Now, I will turn the call over to Cooper, who will walk you through our Q1 results and our outlook.
Now, I will turn the call over to Cooper, who will walk you through our Q1 results and our outlook. Cooper?
As Francois highlighted a media delivered exceptional 24% growth representing 31% of Revenue and APAC declined, 1% and represented 16% of Revenue. Looking at our major verticals, Enterprise customers represented, 64% q1's product, bookings,
Speaker #3: Cooper,
Speaker #2: Thank you, Francois
Cooper Werner: Thank you, François, and hello, everyone. I will review our Q1 results before I update our outlook for FY 2026 and provide our guidance for Q2. We delivered a strong Q1, growing revenue 7% to $822 million, with a mix of 50% product revenue and 50% services revenue. Demand in the quarter came from continued hybrid multi-cloud adoption, fueled by customers' need for flexibility and their efforts to modernize architectures. AI, regulations, and the resulting need for greater resilience and data sovereignty are also emerging as hybrid multi-cloud accelerants. As François mentioned, we saw minimal demand impact from the security incident in Q1. Product revenue totaled $410 million, increasing 11% year-over-year, while services revenue of $412 million grew 4% year-over-year.
Cooper Werner: Thank you, François, and hello, everyone. I will review our Q1 results before I update our outlook for FY 2026 and provide our guidance for Q2. We delivered a strong Q1, growing revenue 7% to $822 million, with a mix of 50% product revenue and 50% services revenue. Demand in the quarter came from continued hybrid multi-cloud adoption, fueled by customers' need for flexibility and their efforts to modernize architectures. AI, regulations, and the resulting need for greater resilience and data sovereignty are also emerging as hybrid multi-cloud accelerants. As François mentioned, we saw minimal demand impact from the security incident in Q1. Product revenue totaled $410 million, increasing 11% year-over-year, while services revenue of $412 million grew 4% year-over-year.
Speaker #2: And hello, everyone. I will review our Q1 results before I update our outlook for FY26 and provide our guidance for Q2. We delivered a strong Q1, growing revenue 7% to $822 million, with a mix of 50% product revenue and 50% services revenue.
Government customers represented, a strong 23% of product bookings, including 8% from US Federal. Finally service providers represented 13% of q1 products, our continued Financial discipline contributed to our strong q1 operating results.
Gaap gross margin was 81.5%.
Non-gaap gross margin was 83.8%.
Speaker #2: Demand in the quarter came from continued hybrid multi-cloud adoption, fueled by customers' need for flexibility and their efforts to modernize architectures. AI, regulations, and the resulting need for greater resilience and data sovereignty are also emerging as hybrid multi-cloud accelerants.
Our gaap operating expenses were 456 million.
Our non-gaap operating expenses were 375 million, our gaap, operating margin was 26.0%.
Speaker #2: As Francois mentioned, we saw minimal demand impact from the security incident in Q1. Product revenue totaled $410 million, increasing 11% year over year, while services revenue of $412 million grew 4% year over year.
Our non-gaap operating margin was 38.2% and Improvement of 80 basis points year-over-year, our Gap effective tax rate for the court was 19.2%.
Our non-gaap effective tax rate was 19.8%.
Our Gap in income for the quarter was 180 million or 3.10 cents per share.
Speaker #2: Systems revenue totaled $218 million, up 37% over Q1 FY25, driven by strong tech refresh and capacity expansion in connection with hybrid multi-cloud adoption and growing AI demand.
Cooper Werner: Systems revenue totaled $218 million, up 37% over Q1 FY25, driven by strong tech refresh and capacity expansion in connection with hybrid multi-cloud adoption and growing AI demand. Our software revenue of $192 million was down 8% year-over-year. This met our expectations, given the exceptionally strong results in Q1 25, including the sizable eight-figure renewal we discussed last year. Subscription-based software revenue totaled $164 million, up 1% year-over-year. Perpetual licensed software totaled $27 million, down year-over-year against exceptionally strong results from Q1 25. Revenue from recurring sources contributed 69% of our Q1 revenue. Our recurring revenue consists of our subscription-based revenue and the maintenance portion of our services revenue. Shifting to revenue distribution by region.
Systems revenue totaled $218 million, up 37% over Q1 FY25, driven by strong tech refresh and capacity expansion in connection with hybrid multi-cloud adoption and growing AI demand. Our software revenue of $192 million was down 8% year-over-year. This met our expectations, given the exceptionally strong results in Q1 25, including the sizable eight-figure renewal we discussed last year. Subscription-based software revenue totaled $164 million, up 1% year-over-year. Perpetual licensed software totaled $27 million, down year-over-year against exceptionally strong results from Q1 25. Revenue from recurring sources contributed 69% of our Q1 revenue. Our recurring revenue consists of our subscription-based revenue and the maintenance portion of our services revenue. Shifting to revenue distribution by region.
Our non-gaap, net income was 259 million or 4.45 cents, per share reflecting 16% EPS growth for a year ago, period, I will now turn to cash flow and balance sheet metrics.
Speaker #2: Our software revenue of $192 million was down 8% year over year. This met our expectations given the exceptionally strong results in Q1 '25, including the sizable eight-figure renewal we discussed last year.
We generated 159 million in cash flow from operations in q1.
Capex was 10 million.
Speaker #2: Subscription-based software revenue totaled $164 million, up 1% year on year. Perpetual licensed software totaled $27 million, down year over year against exceptionally strong results from Q1 '25.
DSO, for the quarter was 54 days, cash and Investments totaled. Approximately 1.22, billion a quarter end.
Speaker #2: Revenue from recurring sources contributed 69% of our Q1 revenue. Our recurring revenue consists of our subscription-based revenue and the maintenance portion of our services revenue.
Deferred revenue was 2.1 billion up 6% from the year ago, period in q1. We repurchased 300 million worth of F5 shares at an average price of 249 per share.
We ended the quarter with a proximate nearly 6,400 employees.
I will now speak to our fiscal year 2026 Outlook.
Speaker #2: Shifting to revenue distribution by region, revenue from the Americas grew 2% year over year, representing 53% of total revenue. As Francois highlighted, EMEA delivered exceptional 24% growth, representing 31% of revenue.
Cooper Werner: Revenue from the Americas grew 2% year-over-year, representing 53% of total revenue. As François highlighted, EMEA delivered exceptional 24% growth, representing 31% of revenue, and APAC declined 1% and represented 16% of revenue. Looking at our major verticals, enterprise customers represented 64% of Q1's product bookings. Government customers represented a strong 23% of product bookings, including 8% from US federal. Finally, service providers represented 13% of Q1 product bookings. Our continued financial discipline contributed to our strong Q1 operating results. GAAP gross margin was 81.5%. Non-GAAP gross margin was 83.8%. Our GAAP operating expenses were $456 million. Our non-GAAP operating expenses were $375 million. Our GAAP operating margin was 26.0%.
Revenue from the Americas grew 2% year-over-year, representing 53% of total revenue. As François highlighted, EMEA delivered exceptional 24% growth, representing 31% of revenue, and APAC declined 1% and represented 16% of revenue. Looking at our major verticals, enterprise customers represented 64% of Q1's product bookings. Government customers represented a strong 23% of product bookings, including 8% from US federal. Finally, service providers represented 13% of Q1 product bookings. Our continued financial discipline contributed to our strong Q1 operating results. GAAP gross margin was 81.5%. Non-GAAP gross margin was 83.8%. Our GAAP operating expenses were $456 million. Our non-GAAP operating expenses were $375 million. Our GAAP operating margin was 26.0%.
With strong, close rates, q1 and solid pipeline creation. We are raising our FY 26 Outlook.
Speaker #2: And APAC declined 1% and represented 16% of revenue. Looking at our major verticals, enterprise customers represented 64% of Q1's product bookings. Government customers represented a strong 23% of product bookings, including 8% from U.S. federal.
We now expect FY 26, Revenue growth of between 5 to 6% up from our prior Outlook of 0, to 4% for the year. We now expect mid single digit software Revenue growth double digits systems, Revenue growth and low single digit Services Revenue growth
We estimate FY. 26 gross margin in a range of 82.5 to 83.5%.
Speaker #2: Finally, service providers represented 13% of Q1 product bookings. Our continued financial discipline contributed to our strong Q1 operating results. GAAP gross margin was $81.5%.
Speaker #2: Non-GAAP gross margin was 83.8%. Our GAAP operating expenses were $456 million; non-GAAP operating expenses were $375 million. Our GAAP operating margin was 26.0%.
This reflects a modest reduction to our prior range accounting for an anticipated impact to product cogs. In the second half related to Rising memory costs. We estimate FY. 26 non-gaap opting, margin to be in a range of 34% to 35% up from our prior range of 33.5% 34.5.
We continue to expect our fy6. Non-gaap effective tax rate will be in range of 21% to 22%.
Speaker #2: Our non-GAAP operating margin was 38.2%, an improvement of 80 basis points year over year. Our GAAP effective tax rate for the quarter was 19.2%.
Cooper Werner: Our non-GAAP operating margin was 38.2%, an improvement of eighty basis points year-over-year. Our GAAP effective tax rate for the quarter was 19.2%. Our non-GAAP effective tax rate was 19.8%. Our GAAP net income for the quarter was $180 million, or $3.10 per share. Our non-GAAP net income was $259 million, or $4.45 per share, reflecting 16% EPS growth from the year ago period. I will now turn to cash flow and balance sheet metrics. We generated $159 million in cash flow from operations in Q1. CapEx was $10 million. DSO for the quarter was 54 days. Cash and investments totaled approximately $1.22 billion at quarter end.
Our non-GAAP operating margin was 38.2%, an improvement of eighty basis points year-over-year. Our GAAP effective tax rate for the quarter was 19.2%. Our non-GAAP effective tax rate was 19.8%. Our GAAP net income for the quarter was $180 million, or $3.10 per share. Our non-GAAP net income was $259 million, or $4.45 per share, reflecting 16% EPS growth from the year ago period. I will now turn to cash flow and balance sheet metrics. We generated $159 million in cash flow from operations in Q1. CapEx was $10 million. DSO for the quarter was 54 days. Cash and investments totaled approximately $1.22 billion at quarter end.
Speaker #2: Our non-GAAP effective tax rate was 19.8%. Our GAAP net income for the quarter was $180 million, or $3.10 per share. Our non-GAAP net income was $259 million, or $4.45 per share, reflecting 16% EPS growth from the year-ago period.
And we expect FY, 26 non-gaap EPS in a range of 15.65 to $16.05 up from the prior range of 14.50 to $15.50
Finally, we continue to expect our full year sharir. Purchase to be at least 50% of our free cash flow.
Purchase activity will be lower in the remaining quarters of FY, 26.
Speaker #2: I will now turn to cash flow and balance sheet metrics. We generated $159 million in cash flow from operations in Q1. CapEx was $10 million.
Turning to our Q2 Outlook.
We expect Q2 Revenue in a range of 770 to 790 million reflecting approximately 7% growth in midpoint.
Speaker #2: DSO for the quarter was 54 days. Cash and investments totaled approximately $1.22 billion at quarter end. Deferred revenue was $2.1 billion, up 6% from the year-ago period.
We expect non-gaap gross margin in the range of 82.5 to 83%.
Cooper Werner: Deferred revenue was $2.1 billion, up 6% from the year ago period. In Q1, we repurchased $300 million worth of F5 shares at an average price of $249 per share. We ended the quarter with approximately 6,400 employees. I will now speak to our fiscal year 2026 outlook. With strong close rates in Q1 and solid pipeline creation, we are raising our FY 2026 outlook. We now expect FY 2026 revenue growth of between 5% and 6%, up from our prior outlook of 0% to 4%. For the year, we now expect mid-single-digit software revenue growth, double-digit systems revenue growth, and low single-digit services revenue growth. We estimate FY 2026 gross margin in a range of 82.5% to 83.5%.
Deferred revenue was $2.1 billion, up 6% from the year ago period. In Q1, we repurchased $300 million worth of F5 shares at an average price of $249 per share. We ended the quarter with approximately 6,400 employees. I will now speak to our fiscal year 2026 outlook. With strong close rates in Q1 and solid pipeline creation, we are raising our FY 2026 outlook. We now expect FY 2026 revenue growth of between 5% and 6%, up from our prior outlook of 0% to 4%. For the year, we now expect mid-single-digit software revenue growth, double-digit systems revenue growth, and low single-digit services revenue growth. We estimate FY 2026 gross margin in a range of 82.5% to 83.5%.
We estimate Q2 non-gaap operating expenses of 396 to 408 million.
Speaker #2: In Q1, we repurchased $300 million worth of F5 shares at an average price of $249 per share. We ended the quarter with approximately 6,400 employees.
As a reminder, our operating margins are typically lowest in fiscal Q2 due to January, payroll tax resets and expenses from a large customer event in March.
Speaker #2: I will now speak to our fiscal year 2026 outlook. With strong close rates in Q1 and solid pipeline creation, we are raising our FY26 outlook.
We expect Q2, share-based compensation expense of approximately 70 to 72 million.
Speaker #2: We now expect FY26 revenue growth of between 5% and 6%, up from our prior outlook of 0% to 4%. For the year, we now expect mid-single-digit software revenue growth, double-digit systems revenue growth, and low-single-digit services revenue growth.
We anticipate Q2 non-gaap EPS in a range of 3.34 to $346 cents per share.
I will now pass the call back to Francois.
Thank you, Cooper.
In closing, I will say that f5's mission to help each other Thrive and build a better. Digital world has never been more vital or more relevant.
Speaker #2: We estimate FY26 gross margin in a range of 82.5% to 83.5%. This reflects a modest reduction to our prior range, accounting for an anticipated impact to product COGS in the second half related to rising memory costs.
As we look ahead, we see our strengths aligning with the most significant secular Trends reshaping. The Enterprise.
Cooper Werner: This reflects a modest reduction to our prior range, accounting for an anticipated impact to product COGS in the second half related to rising memory costs. We estimate FY 2026 non-GAAP operating margin to be in a range of 34% to 35%, up from our prior range of 33.5% to 34.5%. We continue to expect our FY 2026 non-GAAP effective tax rate will be in a range of 21% to 22%, and we expect FY 2026 non-GAAP EPS in a range of $15.65 to 16.05, up from the prior range of $14.50 to 15.50. Finally, we continue to expect our full year share repurchase to be at least 50% of our free cash flow.
This reflects a modest reduction to our prior range, accounting for an anticipated impact to product COGS in the second half related to rising memory costs. We estimate FY 2026 non-GAAP operating margin to be in a range of 34% to 35%, up from our prior range of 33.5% to 34.5%. We continue to expect our FY 2026 non-GAAP effective tax rate will be in a range of 21% to 22%, and we expect FY 2026 non-GAAP EPS in a range of $15.65 to 16.05, up from the prior range of $14.50 to 15.50. Finally, we continue to expect our full year share repurchase to be at least 50% of our free cash flow.
Hybrid multicloud adoption, the AI Revolution and the growing demand for Converse platforms.
Speaker #2: We estimate FY26 non-GAAP operating margin to be in a range of 34% to 35%, up from our prior range of 33.5% to 34.5%. We continue to expect our FY26 non-GAAP effective tax rate will be in a range of 21% to 22%.
We expect these Trends will provide Tailwind for continued growth in fiscal year, 2026 and Beyond.
Operator. Please open the call to questions.
Thank you. We will now be conducting a question and answer section.
Speaker #2: And we expect FY26 non-GAAP EPS in a range of $15.65 to $16.05, up from the prior range of $14.50 to $15.50. Finally, we continue to expect our full-year share repurchase to be at least 50% of our free cash flow.
If you like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. First start to if you like to remove your question from the queue.
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1 moment. This is Zoe Paul for questions.
Speaker #2: Given the $300 million repurchased in Q1, we anticipate repurchase activity will be lower in the remaining quarters of FY26. Turning to our Q2 outlook, we expect Q2 revenue in a range of $770 million to $790 million, reflecting approximately 7% growth at the midpoint.
Cooper Werner: Given the $300 million repurchased in Q1, we anticipate repurchase activity will be lower in the remaining quarters of FY 2026. Turning to our Q2 outlook. We expect Q2 revenue in a range of $770 to $790 million, reflecting approximately 7% growth at the midpoint. We expect non-GAAP gross margin in the range of 82.5% to 83%. We estimate Q2 non-GAAP operating expenses of $396 to $408 million. As a reminder, our operating margins are typically lowest in fiscal Q2 due to January payroll tax resets and expenses from our large customer event in March. We expect Q2 share-based compensation expense of approximately $70 to $72 million. We anticipate Q2 non-GAAP EPS in a range of $3.34 to $3.46 per share.
Given the $300 million repurchased in Q1, we anticipate repurchase activity will be lower in the remaining quarters of FY 2026. Turning to our Q2 outlook. We expect Q2 revenue in a range of $770 to $790 million, reflecting approximately 7% growth at the midpoint. We expect non-GAAP gross margin in the range of 82.5% to 83%. We estimate Q2 non-GAAP operating expenses of $396 to $408 million. As a reminder, our operating margins are typically lowest in fiscal Q2 due to January payroll tax resets and expenses from our large customer event in March. We expect Q2 share-based compensation expense of approximately $70 to $72 million. We anticipate Q2 non-GAAP EPS in a range of $3.34 to $3.46 per share.
And the first question comes from the line of Matt Hedberg with RBC, please proceed with your question.
Speaker #2: We expect non-GAAP gross margin in the range of 82.5% to 83%. We estimate Q2 non-GAAP operating expenses of $396 million to $408 million. As a reminder, our operating margins are typically lowest in fiscal Q2 due to January payroll tax resets and expenses from our large customer event in March.
Speaker #2: We expect Q2 share-based compensation expense of approximately $70 to $72 million. We anticipate Q2 non-GAAP EPS in a range of $3.34 to $3.46 per share.
Great guys. Thanks for taking the question. Congrats really on the results. Really good to see. Um, especially following the, the security incident last year. Um, you know, friends. Well, you know, you spent a lot of time talking about some of the drivers and I thought it was super helpful. The 1 that continues to pique, my interest is AI. And you know, we're, we're basically 3 years after the release of Chad sheet. And, you know, it seems like non AI. Native Enterprise customers are accelerating their AI adoption. And and I guess based on your results I'd assume that
Cohort is becoming now more AI leaning. I'm wondering if you could talk a little bit more about this trend and I guess, like, how durable could that be? Because it feels like, could be very early in that cycle.
Speaker #2: I will now pass the call back to Francois.
Cooper Werner: I will now pass the call back to François.
I will now pass the call back to François.
Speaker #1: Thank you, Cooper. In closing, I will say that F5's mission to help each other thrive and build a better digital world has never been more vital or more relevant.
François Locoh-Donou: Thank you, Cooper. In closing, I will say that F5's mission to help each other thrive and build a better digital world has never been more vital or more relevant. As we look ahead, we see our strengths aligning with the most significant secular trends reshaping the enterprise: hybrid multi-cloud adoption, the AI revolution, and the growing demand for converged platforms. We expect these trends will provide tailwinds for continued growth in fiscal year 2026 and beyond. Operator, please open the call to questions.
François Locoh-Donou: Thank you, Cooper. In closing, I will say that F5's mission to help each other thrive and build a better digital world has never been more vital or more relevant. As we look ahead, we see our strengths aligning with the most significant secular trends reshaping the enterprise: hybrid multi-cloud adoption, the AI revolution, and the growing demand for converged platforms. We expect these trends will provide tailwinds for continued growth in fiscal year 2026 and beyond.
Speaker #1: As we look ahead, we see our strengths aligning with the most significant secular trends reshaping the enterprise: hybrid multicloud adoption, the AI revolution, and the growing demand for converged platforms.
Speaker #1: We expect these trends will provide tailwinds for continued growth in fiscal year 2026 and beyond. Operator, please open the call to questions.
Operator, please open the call to questions.
Speaker #1: questions. Thank you.
Operator: Thank you. We will now be conducting a question-and-answer session. We ask that you please... If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment as we poll for questions. The first question comes from the line of Matt Hedberg with RBC. Please proceed with your question.
Operator: Thank you. We will now be conducting a question-and-answer session. We ask that you please... If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment as we poll for questions.
Speaker #2: We will now be conducting a question-and-answer session. We ask that you please—if you would like to ask a question, please press star one on your telephone keypad.
Speaker #2: A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue.
Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. For the moment, we'll solely pull for questions.
Thank you, Matt. Uh, I'll start with where you left off, which is we, we absolutely are very early in the cycle, but let's talk a little bit about, you know, how how we've seen AI develop over the last couple of years. As, as you, you know started, uh, of course we've seen a lot of investment from hyperscalers in in capex and building out AI infrastructure. Uh, we've seen Enterprise, especially either AI native Enterprises or uh, a Enterprise large Enterprises that were very forward-leaning in AI start by investing in in training uh and you know starting to to build models and train those models. Uh, but now we're entering a different phase of the cycle where these AI the, you know, leaning Enterprises are now shifting from training to moving AI applications into production. So you're seeing a shift from training to to inference and with that uh, comes new requirements specifically.
The first question comes from the line of Matt Hedberg with RBC. Please proceed with your question.
Speaker #2: And the first question comes from the line of Matt Hedberg with RBC. Please proceed with your question.
Speaker #3: Great, guys. Thanks for taking my question. Congrats, really, on the results—really good to see, especially following the security incident last year. Francois, you spent a lot of time talking about some of the drivers, and I thought it was super helpful.
[Analyst] (RBC): Great, guys. Thanks for taking my question. Congrats really on the results. Really good to see, especially following the, the security incident last year. You know, François, you know, you spent a lot of time talking about some of the drivers, and I thought it was super helpful. The one that continues to pique my interest is AI. And, you know, we're basically three years after the release of ChatGPT, and, you know, it seems like non-AI native enterprise customers are accelerating their AI adoption. And I guess based on your results, I'd assume that customer cohort is becoming now more AI leaning. I wonder if you could talk a little bit more about this trend, and I guess, like, how durable could that be? Because it feels like we could be very early in that cycle.
Matt Hedberg: Great, guys. Thanks for taking my question. Congrats really on the results. Really good to see, especially following the, the security incident last year. You know, François, you know, you spent a lot of time talking about some of the drivers, and I thought it was super helpful. The one that continues to pique my interest is AI. And, you know, we're basically three years after the release of ChatGPT, and, you know, it seems like non-AI native enterprise customers are accelerating their AI adoption. And I guess based on your results, I'd assume that customer cohort is becoming now more AI leaning. I wonder if you could talk a little bit more about this trend, and I guess, like, how durable could that be? Because it feels like we could be very early in that cycle.
Speaker #3: The one that continues to pique my interest is AI. And we're basically three years after the release of ChatGPT, and it seems like non-AI-native enterprise customers are accelerating their AI adoption.
Speaker #3: And I guess, based on your results, I'd assume that the customer cohort is now becoming more AI-leaning. I wonder if you could talk a little bit more about this trend.
Speaker #3: And I guess, how durable could that be? Because it feels like we could be very early in that.
Speaker #3: cycle. Thank you,
François Locoh-Donou: Thank you, Matt. I'll start with where you left off, which is we absolutely are very early in the cycle. But let's talk a little bit about, you know, how we've seen AI develop over the last couple of years. As you, you know, started, of course, we've seen a lot of investment from hyperscalers in CapEx in building out AI infrastructure. We've then seen enterprise, especially either AI native enterprises or enterprise, large enterprises that were very forward-leaning in AI, start by investing in training, and, you know, starting to build models and train those models. But now we're entering a different phase of the cycle where these AI, the, you know, leaning enterprises are now shifting from training to moving AI applications into production.
François Locoh-Donou: Thank you, Matt. I'll start with where you left off, which is we absolutely are very early in the cycle. But let's talk a little bit about, you know, how we've seen AI develop over the last couple of years. As you, you know, started, of course, we've seen a lot of investment from hyperscalers in CapEx in building out AI infrastructure. We've then seen enterprise, especially either AI native enterprises or enterprise, large enterprises that were very forward-leaning in AI, start by investing in training, and, you know, starting to build models and train those models. But now we're entering a different phase of the cycle where these AI, the, you know, leaning enterprises are now shifting from training to moving AI applications into production.
Speaker #1: Matt, I'll start with where you left off, which is we absolutely are very early in the cycle. But let's talk a little bit about how we've seen AI develop over the last couple of years.
Speaker #1: As you started, of course, we've seen a lot of investment from hyperscalers in CapEx and building out AI, especially either AI-native infrastructure. We've then seen enterprises, or enterprise—large enterprises that were very forward-leaning in AI—start by investing in training.
Speaker #1: And starting to build models and train those models. But now we're entering a different phase of the cycle, where these AI-leaning enterprises are now shifting from training to moving AI applications into production.
That for all of FY, 25, and interestingly, you know, the mix in FY. 25 was very oriented towards data delivery. Basically high performance load balancing of data pipelines, but this quarter, the mix was, uh, you know, almost balanced between data, delivery and security. And we saw a lot more requirements for security as we project forward. Uh, I think the trend is durable because the, the Enterprises that are doing that today are kind of the, the largest Enterprises that are very forward-leaning in AI. But we will see, I think we'll see a lot more Enterprises uh, adopt AI in the in the future and early Enterprises are doing. So right now will also scale in in production. Uh, pretty significantly. Uh, an example, I'll give you of that. Is we we signed a multi-million dollar deal with a global technology, OEM this quarter uh who have repatriated uh, part of their data.
Speaker #1: So, you’re seeing a shift from training to inference. And with that comes new requirements—specifically, as enterprises move to production, their data pipelines need to be hardened.
François Locoh-Donou: So you're seeing a shift from training to inference, and with that comes new requirements. Specifically, as enterprises move to production, their data pipelines need to be hardened. They need to be able to, you know, connect their data stores to their AI models, and they need to be able to do that at speed, at scale, with very low latency. That requires significant performance from their traffic management solutions. So it requires low latency, high scale, high throughput, high performance, and that is perfect for F5. That's kind of the first requirement. And then the second requirement as they move into production is security. Specifically, runtime security becomes really, really important. And so this quarter, what we saw were a little bit of an inflection around enterprise adoption and AI.
So you're seeing a shift from training to inference, and with that comes new requirements. Specifically, as enterprises move to production, their data pipelines need to be hardened. They need to be able to, you know, connect their data stores to their AI models, and they need to be able to do that at speed, at scale, with very low latency. That requires significant performance from their traffic management solutions. So it requires low latency, high scale, high throughput, high performance, and that is perfect for F5. That's kind of the first requirement. And then the second requirement as they move into production is security. Specifically, runtime security becomes really, really important. And so this quarter, what we saw were a little bit of an inflection around enterprise adoption and AI.
Speaker #1: They need to be able to connect their data stores to their AI models, and they need to be able to do that at speed, at scale, with very low latency.
Speaker #1: That requires significant performance from their traffic management solutions. So it requires low latency, high scale, high throughput, high performance. And that is perfect for F5. That’s kind of the first requirement.
Uh, from the cloud because they're collecting more data from the customers. They know their data is is, you know, more valuable. They're having a lot more Telemetry from customers from their products. Uh and they they they're putting all this data in large data links on Prem but they then need to leverage their data, in their AI applications and connecting their data. To their AI applications requires significant enhancements to their infrastructure. And that is just going to scale uh, more and more in in the future. So we think the trend is durable both in terms of data delivery and in
Speaker #1: And then the second requirement as they move into production is security—specifically, runtime security—becomes really, really important. And so, this quarter what we saw was a little bit of an inflection around enterprise adoption and AI.
François Locoh-Donou: We won as many new customers in AI just in the last 90 days as we had for all of FY 25. And interestingly, you know, the mix in FY 25 was very oriented towards data delivery, basically high performance load balancing for these data pipelines. But this quarter, the mix was, you know, almost balanced between data delivery and security, and we saw a lot more requirements for security. As we project forward, I think the trend is durable because the enterprises that are doing that today are kind of the largest enterprises that are very forward-leaning in AI. But we will see, I think we'll see a lot more enterprises adopt AI in the future, and the early enterprises that are doing so right now will also scale in production pretty significantly.
Speaker #1: We want as many new customers in AI just in the last 90 days as we had for all of FY25. And interestingly, the mix in FY25 was very oriented towards data delivery—basically, high-performance, low balancing for these data pipelines.
We won as many new customers in AI just in the last 90 days as we had for all of FY 25. And interestingly, you know, the mix in FY 25 was very oriented towards data delivery, basically high performance load balancing for these data pipelines. But this quarter, the mix was, you know, almost balanced between data delivery and security, and we saw a lot more requirements for security. As we project forward, I think the trend is durable because the enterprises that are doing that today are kind of the largest enterprises that are very forward-leaning in AI. But we will see, I think we'll see a lot more enterprises adopt AI in the future, and the early enterprises that are doing so right now will also scale in production pretty significantly.
Speaker #1: But this quarter, the mix was almost balanced between data delivery and security. And we saw a lot more requirements for security. As we project forward, I think the trend is durable because the enterprises that are doing that today are kind of the largest enterprises that are very forward-leaning in AI.
Uh, insecurity. And then the, the last thing I'll say about, uh, security is that a lot of the security that we've said we've seen so far when I talked about runtime security, uh, was really almost traditional security applied to AI applications. We are now in the early days of seeing uh uh AI models. Also going to production, they are specific threats for AI models. That we now address with our Ai guardrails and we had a very strong start to our AI guardrail solution. This quarter uh really with with strong adoption from some of the largest uh Enterprises in sectors, like Financial Services or technology or even management consulting.
Uh, for for these AI guard rail Solutions. So, we're pretty excited about the quality of customers, that, that we are seeing, uh, in the early stage of this. And we think the trend is, you know, is only going to grow from here.
Congrats.
Thank you, Matt.
Speaker #1: But we will see—I think we'll see a lot more enterprises adopt AI in the future. And the early enterprises that are doing so right now will also scale in production pretty significantly.
And the next question comes from the line of Tim long with Barclays, please proceed with your question.
François Locoh-Donou: An example I'll give you of that is we signed a multimillion-dollar deal with a global technology OEM this quarter, who have repatriated part of their data from the cloud because they're collecting more data from their customers. They know their data is, you know, more valuable. They're having a lot more telemetry from customers, from their products, and they're putting all this data in large data lakes on-prem, but they then need to leverage their data in their AI applications, and connecting their data to their AI applications requires significant enhancements to their infrastructure, and that is just gonna scale more and more in the future. So we think the trend is durable, both in terms of data delivery and in security.
Speaker #1: An example I'll give you of that is, we signed a multi-million dollar deal with a global technology OEM this quarter, who have repatriated part of their data from the cloud because they're collecting more data from their customers.
An example I'll give you of that is we signed a multimillion-dollar deal with a global technology OEM this quarter, who have repatriated part of their data from the cloud because they're collecting more data from their customers. They know their data is, you know, more valuable. They're having a lot more telemetry from customers, from their products, and they're putting all this data in large data lakes on-prem, but they then need to leverage their data in their AI applications, and connecting their data to their AI applications requires significant enhancements to their infrastructure, and that is just gonna scale more and more in the future. So we think the trend is durable, both in terms of data delivery and in security.
Speaker #1: They know their data is more valuable. They're having a lot more telemetry from customers, from their products. And they're putting all this on-prem, but they then need to leverage their data in their AI applications, and connecting their data to their AI applications requires significant enhancements to their infrastructure.
Thank you. Um, maybe if I could do 1 on software 1 on Hardware, just on the software side. Um, I get the tough year-over-year, uh, comparison in the December quarter, but the sequential, you know, looks like it was a little worse than normal. So, you know, how do we think about that in the quarter and how we can get to
Speaker #1: And that is just going to scale more and more in the future. So we think the trend is durable, both in terms of data delivery and in security.
Speaker #1: And then the last thing I'll say about security is, a lot of the security that we've seen so far, when I talked about runtime security, was really almost traditional security applied to AI applications.
François Locoh-Donou: And then the last thing I'll say about security is a lot of the security that we've said we've seen so far, when I talked about runtime security, was really almost traditional security applied to AI applications. We are now in the early days of seeing AI models also go into production. There are specific threats for AI models that we now address with our AI guardrails, and we had a very strong start to our AI guardrail solution this quarter. Really, with strong adoption from some of the largest enterprises in sectors like financial services, technology, or even management consulting, for these AI guardrail solutions.
And then the last thing I'll say about security is a lot of the security that we've said we've seen so far, when I talked about runtime security, was really almost traditional security applied to AI applications. We are now in the early days of seeing AI models also go into production. There are specific threats for AI models that we now address with our AI guardrails, and we had a very strong start to our AI guardrail solution this quarter. Really, with strong adoption from some of the largest enterprises in sectors like financial services, technology, or even management consulting, for these AI guardrail solutions.
Speaker #1: We are now in the early days of seeing AI models also go into production; there are specific threats for AI models that we now address with our AI guardrails.
Speaker #1: And we had a very strong start to our AI guardrail solution this quarter—really, with strong adoption from some of the largest enterprises in sectors like financial services, technology, or even management consulting, for these AI guardrail solutions.
Speaker #1: So, we're pretty excited about the quality of customers that we are seeing in the early stage of this, and we think the trend is only going to grow from here.
François Locoh-Donou: So we're pretty excited about the quality of customers that we are seeing in the early stage of this, and we think the trend is, you know, is only gonna grow from here.
So we're pretty excited about the quality of customers that we are seeing in the early stage of this, and we think the trend is, you know, is only gonna grow from here.
Speaker #3: Congrats.
[Analyst] (Iera): Congrats.
Matt Hedberg: Congrats.
Speaker #1: Thank you, Matt.
François Locoh-Donou: Thank you, Matt.
François Locoh-Donou: Thank you, Matt.
Speaker #2: And the next question comes from the line.
Operator: The next question comes from the line of Tim Long with Barclays. Please proceed with your question.
Operator: The next question comes from the line of Tim Long with Barclays. Please proceed with your question.
The mid single digit, you know, get that business accelerating. And then, just on the hardware side, I'm just hoping you could break down your views a little bit continues to perform very well. Um, market share versus market growth. It seems like we're starting to see Hardware, um, you're selling or systems that you're selling in, maybe new use cases. So maybe the market, uh, growth is dynamic, is changing, just love, uh, opinions on both of those, thank you.
Speaker #2: Tim Long with Barclays. Please proceed with your question.
Speaker #3: Thank you. Maybe if I could do one on software, one on hardware. Just on the software side, I get they've talked year-over-year comparison in the December quarter, but the sequential looks like it was a little worse than normal.
Tim Long: Thank you. Maybe if I could do one on software, one on hardware. Just on the software side, I get the tough year-over-year comparison in the December quarter, but the sequential, you know, looks like it was a little worse than normal. So, you know, how do we think about that in the quarter and how we can get to mid-single digit, you know, get that business accelerating? And then just on the hardware side, I'm just hoping you could break down your views a little bit. VIPRION continues to perform very well, market share versus market growth. It seems like we're starting to see hardware that you're selling or systems that you're selling in maybe new use cases, so maybe the market growth dynamic is changing. Just love opinions on both of those. Thank you.
Tim Long: Thank you. Maybe if I could do one on software, one on hardware. Just on the software side, I get the tough year-over-year comparison in the December quarter, but the sequential, you know, looks like it was a little worse than normal. So, you know, how do we think about that in the quarter and how we can get to mid-single digit, you know, get that business accelerating? And then just on the hardware side, I'm just hoping you could break down your views a little bit. VIPRION continues to perform very well, market share versus market growth. It seems like we're starting to see hardware that you're selling or systems that you're selling in maybe new use cases, so maybe the market growth dynamic is changing. Just love opinions on both of those. Thank you.
Speaker #3: So how do we think about that in the quarter and how we can get to mid-single-digit, get that business accelerating? And then, just on the hardware side, I'm just hoping you could break down your views a little bit.
Has changed in the market. Is that hybrid multi cloud deployments?
Multicloud architectures for Enterprises are. Now The New Normal
Speaker #3: It continues to perform very well. Market share versus market growth, it seems like we're starting to see hardware that you're selling, or systems that you're selling, in maybe new use cases.
Speaker #3: So maybe the market growth is dynamic, it is changing. Just love opinions on both of those. Thank you.
Speaker #1: Yeah, Tim, so this is Cooper. I'll speak to the software performance. So you're right, we did have a pretty strong comparer from the Q1 period of a year ago.
Cooper Werner: Yeah, Tim, so this is Cooper. I'll speak to the software performance. So, you're right, we did have a pretty strong compare from the Q1 period of a year ago. We had the large eight-figure renewal that we had referenced. We also had a pretty strong quarter with our perpetual software business that was tied to a couple of specific deals in the service provider space. So it was a little bit of an anomalous growth quarter a year ago. But our performance in the quarter in Q1 of 2026 was right in line, is actually slightly ahead of our expectations.
Cooper Werner: Yeah, Tim, so this is Cooper. I'll speak to the software performance. So, you're right, we did have a pretty strong compare from the Q1 period of a year ago. We had the large eight-figure renewal that we had referenced. We also had a pretty strong quarter with our perpetual software business that was tied to a couple of specific deals in the service provider space. So it was a little bit of an anomalous growth quarter a year ago. But our performance in the quarter in Q1 of 2026 was right in line, is actually slightly ahead of our expectations.
Speaker #1: We had the large eight-figure renewal that we had referenced. We also had a pretty strong quarter with our perpetual software business that was tied to a couple of specific deals in the service provider space.
Um, and we've seen that shift happened over the last 2, 3 years. But it is accelerating now now over the last 3 years, hybrid multicloud, architectures have been driven by um you know first of all Enterprises wanting to have the flexibility to deploy apps uh in any environment uh cost optimization control. Those have been the the drivers of hybrid multi cloud deployments. And we have been ideally positioned for hybrid multi Cloud because of the unique flexibility. We provide with Hardware software and staff were absolutely unique in the world of delivery and Security in being able to do all of that.
Speaker #1: So, there's a little bit of an anomalous growth quarter a year ago. But our performance in the quarter—in Q1 of '26—was right in line.
Speaker #1: It was actually slightly ahead of our expectations. And I think as we look ahead, we're pleased both in terms of the execution that we saw into new software projects.
Speaker #1: It was actually slightly ahead of our expectations. And I think, as we look ahead, we're pleased both in terms of the execution that we saw in Q1 and that there was no demand disruption. Related things moved forward in a pretty orderly fashion.
Cooper Werner: And I think as we look ahead, we're pleased both in terms of the execution that we saw in Q1 and that there was no demand disruption related to new software projects, so things moved forward in a pretty orderly fashion. But also, as we look ahead to the renewal cohort for the rest of the year, which is pretty strong, the utilization rates that we're seeing with customers is very healthy, and we see that as a good indicator that we should have a strong finish for the remainder of the year. And so that gives us confidence that we'll be able to grow the business in the mid-single digit range.
And I think as we look ahead, we're pleased both in terms of the execution that we saw in Q1 and that there was no demand disruption related to new software projects, so things moved forward in a pretty orderly fashion. But also, as we look ahead to the renewal cohort for the rest of the year, which is pretty strong, the utilization rates that we're seeing with customers is very healthy, and we see that as a good indicator that we should have a strong finish for the remainder of the year. And so that gives us confidence that we'll be able to grow the business in the mid-single digit range.
Now, we are seeing now um, and these are of accelerated really over the last 3 to 6 months, we're seeing 2, um, 2. New catalysts that are accelerating that and driving demand, ultimately, for both hardware and software. But in the near term, we're still seeing very strong demand for Hardware. These 2, new catalysts are number 1.
Uh regulation.
Speaker #1: But also, as we look ahead to the renewal cohort for the rest of the year—which is pretty strong—the utilization rates that we're seeing with customers are very healthy, and we see that as a good indicator that we should have a strong finish for the remainder of the year.
Especially outside of the US. Uh, there is regulation that has come into force or will come into force. That is, uh, you know, forcing companies to adopt the strongest band on resilience and the stronger stance on digital sovereignty, uh, it means that companies need for example, to be able to fail over from 1, a cloud back to on
Speaker #1: And so that gives us confidence that we'll be able to grow the business in the mid-single-digit range.
Prime minister and to have true hybrid.
Speaker #4: And Tim, let's talk about the hardware, although the trends we're seeing really apply to both hardware and software. But if you step back, really the thing that has changed in the market is that hybrid multi-cloud deployments, hybrid multi-cloud architectures for enterprises are now the new normal.
François Locoh-Donou: And, Tim, let's talk about the hardware, although it's... The trends we're seeing really apply to both hardware and software. But if you step back, really the thing that has changed in the market is that Hybrid Multi-Cloud deployments, Hybrid Multi-Cloud architectures for enterprises are now the new normal. And we've seen that shift happen over the last two, three years, but it is accelerating now. Now, over the last three years, Hybrid Multi-Cloud architectures have been driven by, you know, first of all, enterprises wanting to have the flexibility to deploy apps in any environment, cost optimization, control. Those have been the drivers of Hybrid Multi-Cloud deployments. And we have been ideally positioned for Hybrid Multi-Cloud because of the unique flexibility we provide with hardware, software, and SaaS.
François Locoh-Donou: And, Tim, let's talk about the hardware, although it's... The trends we're seeing really apply to both hardware and software. But if you step back, really the thing that has changed in the market is that Hybrid Multi-Cloud deployments, Hybrid Multi-Cloud architectures for enterprises are now the new normal. And we've seen that shift happen over the last two, three years, but it is accelerating now. Now, over the last three years, Hybrid Multi-Cloud architectures have been driven by, you know, first of all, enterprises wanting to have the flexibility to deploy apps in any environment, cost optimization, control. Those have been the drivers of Hybrid Multi-Cloud deployments. And we have been ideally positioned for Hybrid Multi-Cloud because of the unique flexibility we provide with hardware, software, and SaaS.
Speaker #4: And we've seen that shift happen over the last two, three years, but it is accelerating now. Over the last three years, hybrid multi-cloud architectures have been driven by, first of all, enterprises wanting to have the flexibility to deploy apps in any environment. Cost optimization and control—those have been the drivers of hybrid multi-cloud deployments.
Uh, resilience in their environment. It means, for example, that they need to have consistent security controls across, all of their infrastructure, uh, environments regulations like nisoo Dora, uh, cyber resilience regulations that have come into Force, you know, in 25 and all the way through 27 will come into force or really causing reinvestment in Data Center and and stronger resilient between Data Center and the cloud and we are perfectly positioned to to benefit for that. And we're seeing those Tailwinds in the business. This is 1 of the reasons that we had a a very strong quarter in Europe, uh, this quarter and then the second new Catalyst, um,
Speaker #4: And we have been ideally positioned for hybrid multi-cloud because of the unique flexibility we provide with hardware, software, and SaaS. We're absolutely unique in the world of delivery and security in being able to do all of that.
François Locoh-Donou: We're absolutely unique in the world of delivery and security in being able to do all of that. Now, we are seeing these have accelerated really over the last three to six months. We're seeing two new catalysts that are accelerating that and driving demand ultimately for both hardware and software, but in the near term, we're still seeing very strong demand for hardware. These two new catalysts are, number one, regulation. Especially outside of the US, there is regulation that has come into force or will come into force that is, you know, forcing companies to adopt a stronger stance on resilience and a stronger stance on digital sovereignty.
We're absolutely unique in the world of delivery and security in being able to do all of that. Now, we are seeing these have accelerated really over the last three to six months. We're seeing two new catalysts that are accelerating that and driving demand ultimately for both hardware and software, but in the near term, we're still seeing very strong demand for hardware. These two new catalysts are, number one, regulation. Especially outside of the US, there is regulation that has come into force or will come into force that is, you know, forcing companies to adopt a stronger stance on resilience and a stronger stance on digital sovereignty.
Uh, driving also strong Hardware demand is Enterprise adoption of AI is accelerating. Uh, I share that earlier, but AI is hyper hybrid, and it accelerates hybrid multicloud architectures. And we are seeing that, uh, contribute meaningfully to the hardware demand. That we saw this quarter
Speaker #4: Now, what we are seeing—and these trends have really accelerated over the last three to six months—is two new catalysts that are accelerating and driving demand, ultimately, for both hardware and software. But in the near term, we're seeing very strong demand for hardware.
Okay, thank you. And I hope those Sirens aren't current for you guys know, we're we're fine. Tim, thank you.
And the next question comes from the line of Sami chatterji with JP Morgan. Please proceed with your question.
Speaker #4: These two new catalysts are, number one, regulation—especially regulation that has come into, outside of the US, either in force or will come into force—that is forcing companies to adopt a stronger stance on resilience and a stronger stance on digital sovereignty.
François Locoh-Donou: It means that companies need, for example, to be able to fail over from one cloud back to on-premise and to have true hybrid resilience in their environment. It means, for example, that they need to have consistent security controls across all of their infrastructure environments. Regulations like NIS2, DORA, cyber resilience regulations that have come into force, you know, in 25 and all the way through 27, will come into force, are really causing reinvestment in data center and stronger resilience between data center and the cloud, and we are perfectly positioned to benefit for that, and we're seeing those tailwinds in the business. This is one of the reasons that we had a very strong quarter in Europe this quarter.
Speaker #4: It means that companies need, for example, to be able to fail over from one cloud back to on-premise, and to have true hybrid resilience in their environment.
It means that companies need, for example, to be able to fail over from one cloud back to on-premise and to have true hybrid resilience in their environment. It means, for example, that they need to have consistent security controls across all of their infrastructure environments. Regulations like NIS2, DORA, cyber resilience regulations that have come into force, you know, in 25 and all the way through 27, will come into force, are really causing reinvestment in data center and stronger resilience between data center and the cloud, and we are perfectly positioned to benefit for that, and we're seeing those tailwinds in the business. This is one of the reasons that we had a very strong quarter in Europe this quarter.
Speaker #4: It means, for example, that they need to have consistent security controls across all of their regulations, like NIS2, DORA, and cyber resilience regulations that have come into force in '25, and all the way through '27 will come into force, are really causing reinvestment in data centers and stronger resilience between data centers and the cloud.
Hi. Um thanks for taking my question. Uh fro maybe if I can start off with um similarly on the hardware side. Um and the upgrade cycle you're seeing from your customers as well as the incremental use cases. Uh, but there is that sort of end of software support I believe in early 2027. Um, how much of the momentum that you're seeing on the hardware is you would tie to sort of the Victor and the I series which are going through the upgrades versus maybe on the rest of the portfolio and has the security incident. Led to a big IP customers coming in for those upgrades and I have a quick follow-up after that. Thank you.
Speaker #4: And we are perfectly positioned to benefit from that. And we're seeing those tailwinds in the business. This is one of the reasons that we had a very strong quarter in Europe this quarter.
Speaker #4: And then, the second new catalyst driving also strong hardware demand is enterprise adoption of AI is accelerating. I shared that earlier, but AI is hyper-hybrid, and it accelerates hybrid multi-cloud architectures.
François Locoh-Donou: And then the second new catalyst, driving also strong hardware demand, is enterprise adoption of AI is accelerating. I shared that earlier, but AI is hyper hybrid, and it accelerates hybrid multi-cloud architectures, and we are seeing that contribute meaningfully to the hardware demand that we saw this quarter.
And then the second new catalyst, driving also strong hardware demand, is enterprise adoption of AI is accelerating. I shared that earlier, but AI is hyper hybrid, and it accelerates hybrid multi-cloud architectures, and we are seeing that contribute meaningfully to the hardware demand that we saw this quarter.
I think like the clearly we are, you know, in addition to the trends, I've just talked about which are, you know, which are macro Trends. There is a trend that is specific to a 5 at the moment, which is that we are in the middle of a refresh cycle, uh, you know, with a lot of customers, you mentioned the, the, the dates. Um, you know, uh, looking to to refresh their, uh, infrastructure that said, what we are seeing this. Refresh cycle is stronger than than classic or Cycles because what what we are seeing is not just refresh but a lot of expansion uh for customers and from from all the conversations we're having with customers. And the data points we're seeing we think the the refresh is
Speaker #4: And we are seeing that contribute meaningfully to the hardware demand that we saw this quarter.
Speaker #3: Okay, thank you. And I hope those sirens aren't current for you.
Tim Long: Okay, thank you, and I hope those sirens aren't current for you guys.
Tim Long: Okay, thank you, and I hope those sirens aren't current for you guys.
Speaker #3: guys.
Speaker #4: No, we're fine, Tim. Thank
Cooper Werner: No, we're fine, Tim. Thank you.
Cooper Werner: No, we're fine, Tim. Thank you.
Stronger and has a lot of expansion uh because customers are also getting their infrastructure ready for AI, the deployments of um uh AI infrastructure and getting their capacity. Ready for AI. We think that's a substantial driver. The others. I've just talked about hybrid multicloud also accelerating the this refresh cycle.
Speaker #2: And the next question is from You Chatterjee with JP Morgan. Please proceed with your question.
Operator: The next question comes from the line of Sameek Chatterjee with J.P. Morgan. Please proceed with your question.
Operator: The next question comes from the line of Sameek Chatterjee with J.P. Morgan. Please proceed with your question.
Speaker #2: Comes from the line of Samiq.
Speaker #3: Hi, thanks for taking my question. Francois, maybe if I can start off similarly on the hardware side, and the upgrade cycle you're seeing from your customers as well as the incremental use cases.
Samik Chatterjee: Hi, thanks for taking my question. François, maybe if I can start off with, similarly on the hardware side, and the upgrade cycle you're seeing from your customers as well as the incremental use cases. But there is that sort of end of software support, I believe, in early 2027. How much of the momentum that you're seeing on the hardware is, you would tie to sort of the VIPRION and the iSeries, which are going through the upgrades, versus maybe on the rest of the portfolio? And has the security incident led to any sort of BIG-IP customers coming in for those upgrades? And I have a quick follow-up after that. Thank you.
Samik Chatterjee: Hi, thanks for taking my question. François, maybe if I can start off with, similarly on the hardware side, and the upgrade cycle you're seeing from your customers as well as the incremental use cases. But there is that sort of end of software support, I believe, in early 2027. How much of the momentum that you're seeing on the hardware is, you would tie to sort of the VIPRION and the iSeries, which are going through the upgrades, versus maybe on the rest of the portfolio? And has the security incident led to any sort of BIG-IP customers coming in for those upgrades? And I have a quick follow-up after that. Thank you.
Speaker #3: But there is that sort of end of software support, I believe, in early 2027. How much of the momentum that you're seeing on the hardware would you tie to the Viprion and the iSeries, which are going through the upgrades, versus maybe on the rest of the portfolio?
Joining us for AI workloads. And then, of course, the sum of the data sovereignty uh uh in regulation uh drivers if I mentioned earlier
Speaker #3: And has the security incident led to any sort of big IP customers coming in for those upgrades? And I have a quick follow-up after that.
Speaker #3: Thank
Speaker #3: you. I think Samiq, the
François Locoh-Donou: I think, Sameek, clearly, we are, you know, in addition to the trends I've just talked about, which are, you know, which are macro trends, there is a trend that is specific to F5 at the moment, which is that we are in the middle of a refresh cycle, you know, with a lot of customers. You mentioned the dates, you know, looking to refresh their infrastructure. That said, this refresh cycle obviously is stronger than past refresh cycles, because what we are seeing is not just refresh, but a lot of expansion for customers.
François Locoh-Donou: I think, Sameek, clearly, we are, you know, in addition to the trends I've just talked about, which are, you know, which are macro trends, there is a trend that is specific to F5 at the moment, which is that we are in the middle of a refresh cycle, you know, with a lot of customers. You mentioned the dates, you know, looking to refresh their infrastructure. That said, this refresh cycle obviously is stronger than past refresh cycles, because what we are seeing is not just refresh, but a lot of expansion for customers.
Speaker #4: Clearly, in addition to the trends I've just talked about, which are macro trends, there is a trend that is specific to F5 at the moment, which is that we are in the middle of a refresh cycle.
Got it, got it. And my, for my follow up, I imagine this will be a question for everyone this season. Earning season is sort of you did highlight the increasing memory costs and sort of what your budgeting for it. But uh, maybe if you can outline, sort of how are you managing it through your supply chain? And, um, are there any sort of concerns around capacity or sort of Supply constraints, as well that you're baking into your guide? Just outside of price. Is there a supply constraint? We thought of as well. Thank you.
Speaker #4: With a lot of customers, you mentioned the dates. Looking to refresh their infrastructure. That said, what we are seeing this refresh cycle—obviously it is stronger than past refresh cycles—because what we are seeing is not just refresh, but a lot of expansion for customers.
Speaker #4: And from all the conversations we're having with customers, and the data points we're seeing, we think the refresh is stronger and has a lot of expansion.
François Locoh-Donou: And from all the conversations we're having with customers and the data points we're seeing, we think the refresh is stronger and has a lot of expansion, because customers are also getting their infrastructure ready for AI, the deployments of AI infrastructure and getting their capacity ready for AI. We think that's a substantial driver. The other I've just talked about, Hybrid Multi-Cloud also accelerating this refresh cycle.
And from all the conversations we're having with customers and the data points we're seeing, we think the refresh is stronger and has a lot of expansion, because customers are also getting their infrastructure ready for AI, the deployments of AI infrastructure and getting their capacity ready for AI. We think that's a substantial driver. The other I've just talked about, Hybrid Multi-Cloud also accelerating this refresh cycle.
Speaker #4: Because customers are also getting their infrastructure ready for AI—the deployments of AI infrastructure and getting their capacity ready for AI—we think that's a substantial driver.
Speaker #4: The others I just talked about—hybrid multi-cloud—are also accelerating the refresh cycle.
Speaker #3: Yeah, I'm sorry. I would add we're continuing to see strength, not just from the refresh motion—that has a lot of expansion—but also outside of the refresh motion.
Samik Chatterjee: Yeah, sorry.
Samik Chatterjee: Yeah, sorry.
Cooper Werner: Yeah, and Sameek, I would add, we're continuing to see strength on not just from the refresh motion that has a lot of expansion, but also outside of the refresh motion. We're seeing continued capacity expansion with existing customers. We're seeing, we think, some readiness for AI workloads, and then, of course, some of the data sovereignty and regulation drivers that François mentioned earlier.
Cooper Werner: Yeah, and Sameek, I would add, we're continuing to see strength on not just from the refresh motion that has a lot of expansion, but also outside of the refresh motion. We're seeing continued capacity expansion with existing customers. We're seeing, we think, some readiness for AI workloads, and then, of course, some of the data sovereignty and regulation drivers that François mentioned earlier.
And this is a this is a an important topic of discussion. Uh and as you know that your memory prices have gone up substantially and there, there are worries about Supply in the industry. Now you, you know, we went through that in in 2022, uh, effectively with the same management team as we have today. So we we did learn from uh, what we send the supply chain crisis of 2022. We took a lot of actions early as it relates to to memory. We we raised our forecasts and volume requests with our suppliers several months ago. Uh, we give them. We give our suppliers extended visibility uh, to our needs. We qualified additional suppliers to have more diversity. We started executing a broker buys. Uh, so we did early a lot of the elements.
Speaker #3: We're seeing, we think, some continued readiness for AI workloads and then, of course, some of the data sovereignty and regulation drivers that Francois mentioned.
Into the Playbook that we, we have to do in in 2022. And I think, because of all these actions that we have taken in terms of Supply, I think we feel very confident about where we are in the near term.
Um, of course, as you, you know, as you go further,
Speaker #3: earlier. Got it.
Samik Chatterjee: Got it. Got it. For my follow-up, I imagine this will be a question for everyone this season, earnings season, is sort of you did highlight the increasing memory costs and sort of what you're budgeting for it. But maybe if you can outline sort of how are you managing it through your supply chain, and are there any sort of concerns around capacity or sort of supply constraints as well, that you're baking into your guide, just outside of price, is there a supply constraint to be thought of as well? Thank you.
Samik Chatterjee: Got it. Got it. For my follow-up, I imagine this will be a question for everyone this season, earnings season, is sort of you did highlight the increasing memory costs and sort of what you're budgeting for it. But maybe if you can outline sort of how are you managing it through your supply chain, and are there any sort of concerns around capacity or sort of supply constraints as well, that you're baking into your guide, just outside of price, is there a supply constraint to be thought of as well? Thank you.
Speaker #5: Got it. And for my follow-up, I imagine this will be a question for everyone this season earnings season is sort of you did highlight the increasing memory costs and sort of what you're budgeting for it.
Speaker #5: But maybe if you can outline sort of how you are managing it through your supply chain, and are there any sort of concerns around capacity or sort of supply constraints as well that you're baking into your guide?
Speaker #5: Just outside of price, is there a supply constraint to be thought of as well? Thank you.
Speaker #5: you. Samiq, this
François Locoh-Donou: Sameek, this is an important topic of discussion. And as you know, your memory prices have gone up substantially, and there are worries about supply in the industry. Now, you know, we went through that in 2022, effectively with the same management team as we have today. So we did learn from what we saw in the supply chain crisis of 2022. We took a lot of actions early as it relates to memory. We raised our forecast and volume request with our suppliers several months ago. We gave our suppliers extended visibility to our needs. We qualified additional suppliers to have more diversity. We started executing on bulk buys.
François Locoh-Donou: Sameek, this is an important topic of discussion. And as you know, your memory prices have gone up substantially, and there are worries about supply in the industry. Now, you know, we went through that in 2022, effectively with the same management team as we have today. So we did learn from what we saw in the supply chain crisis of 2022. We took a lot of actions early as it relates to memory. We raised our forecast and volume request with our suppliers several months ago. We gave our suppliers extended visibility to our needs. We qualified additional suppliers to have more diversity. We started executing on bulk buys.
Speaker #4: It is an important topic of discussion. And as you know, memory prices have gone up substantially, and there are worries about supply in the industry.
uh, into the future. Uh, there is some some risk around supply for us, as for any, anybody else in the ecosystem? And we are all aware of it and trying to take as many actions as possible to, uh, prevent having some some shortage of components today with the with the, you know, the group of suppliers that we've put in place. Um, what we we have not seen, you know, we have not been seeing decommits from these suppliers, but we have seen, of course, substantial price increases. Uh, and so we're monitoring that very very closely uh, to ensure that we can uh, you know, continue to have the the the the right Supply not just in the near term but also um beyond the next couple of quarters
Thank you, thanks for taking my questions.
Speaker #4: Now, you know, we went through that in 2022, effectively with the same management team as we have today. So we did learn from what we saw in the supply chain crisis of 2022.
And the next question comes from the line of George Carter with wolf research, please proceed with your question.
Speaker #4: We took a lot of actions early as it relates to memory. We raised our forecast and volume requests with our suppliers several months ago.
Hi guys, thanks very much. I just wanted to, um, kind of button up the whole discussion of the security. Breach, I'm just curious about, um, you know, have you seen any evidence of your customers in turn getting breached? Um, since you first discovered the situation I'm wondering if um,
Speaker #4: We give our suppliers extended visibility to our needs. We qualified additional suppliers to have more diversity, which started executing on broker buys. So we did early a lot of the elements of the playbook that we had to do in 2022.
François Locoh-Donou: So we did early a lot of the elements of the playbook that we had to do in 2022, and I think because of all these actions that we have taken, in terms of supply, I think we feel very confident about where we are in the near term. Of course, as you know, as you go further into the future, there is some risk around supply for us as for anybody else in the ecosystem, and we are all aware of it and trying to take as many actions as possible to prevent having some shortage of components.
So we did early a lot of the elements of the playbook that we had to do in 2022, and I think because of all these actions that we have taken, in terms of supply, I think we feel very confident about where we are in the near term. Of course, as you know, as you go further into the future, there is some risk around supply for us as for anybody else in the ecosystem, and we are all aware of it and trying to take as many actions as possible to prevent having some shortage of components.
Speaker #4: And I think, because of all these actions that we have taken in terms of supply, I think we feel very confident about where we are in the near term.
uh, you know, you guys are continuing to to provide patches to your big IP software code. Um, you know, I'm wondering if there was any disruptions in the field and sales organization that kind of inhibited from selling just how long did that whole distraction last. And, you know, any impact you can kind of tie to the design border results. Thanks,
Speaker #4: Of course, as you go further into the future, there is some risk around supply for us as an ecosystem. And we are, for anybody else in the call, aware of it and trying to take as many actions as possible to prevent having some shortage of components.
Speaker #4: Today, with the group of suppliers that we've put in place, what we have not seen—we have not been seeing decommits from these suppliers—but we have seen, of course, substantial price increases.
François Locoh-Donou: Today, with the group of suppliers that we've put in place, you know, we have not seen, you know, we have not been seeing decommits from these suppliers, but we have seen, of course, substantial price increases. And so we're monitoring that very, very closely, to ensure that we can, you know, continue to have the right supply, not just in the near term, but also beyond the next couple of quarters.
Today, with the group of suppliers that we've put in place, you know, we have not seen, you know, we have not been seeing decommits from these suppliers, but we have seen, of course, substantial price increases. And so we're monitoring that very, very closely, to ensure that we can, you know, continue to have the right supply, not just in the near term, but also beyond the next couple of quarters.
Thank you, George. Um, no. We have not seen, uh, any evidence of customers being breached as a result of our, um, you know, of our security, isn't it? Uh, and and, of course, I should I should caveat and say we are not aware of any customers having reported, uh, any such, uh, incident to us. Uh, and I, I would say generally, you know, we feel that our response, our Collective response, both our customers, our partners, and F5, our Collective response to the security incident has been very successful
Speaker #4: And so we're monitoring that very, very closely to ensure that we can continue to have the right supply, not just in the near term, but also beyond the next couple of quarters.
Speaker #4: quarters. Got it.
Samik Chatterjee: Correct. Correct. Great. Thank you. Thanks for taking my questions.
Samik Chatterjee: Correct. Correct. Great. Thank you. Thanks for taking my questions.
Speaker #5: Got it. Great. Thank you. Thanks for taking my—
Speaker #5: questions.
Speaker #2: And the next question comes from the line.
Operator: The next question comes from the line of George Notter with Wolfe Research. Please proceed with your question.
Operator: The next question comes from the line of George Notter with Wolfe Research. Please proceed with your question.
Speaker #2: of George Nodder with Wolf Research. Please proceed with your question.
Speaker #2: question. Hi, guys.
George Notter: ... Hi, guys. Thanks very much. I just wanted to, kind of button up the whole discussion of the security breach. I'm just curious about, you know, have you seen any evidence of your customers in turn getting breached, since you first discovered the situation? I'm wondering if, you know, you guys are continuing to provide patches to your BIG-IP software code. You know, I'm wondering if there was any disruptions in the field and sales organizations that kind of inhibited you from selling. Just how long did that whole distraction last? And, you know, any impact you can kind of tie to the December quarter results? Thanks.
George Notter: ... Hi, guys. Thanks very much. I just wanted to, kind of button up the whole discussion of the security breach. I'm just curious about, you know, have you seen any evidence of your customers in turn getting breached, since you first discovered the situation? I'm wondering if, you know, you guys are continuing to provide patches to your BIG-IP software code. You know, I'm wondering if there was any disruptions in the field and sales organizations that kind of inhibited you from selling. Just how long did that whole distraction last? And, you know, any impact you can kind of tie to the December quarter results? Thanks.
Speaker #6: Thanks very much. I just wanted to kind of button up the whole discussion of the security breach. I'm just curious about—have you seen any evidence of your customers in turn getting breached since you first discovered the situation?
Speaker #6: I'm wondering, guys, are you continuing to provide patches to your BIG-IP software code? I'm also wondering if there were any disruptions in the field and sales organizations that kind of inhibited you from selling?
Speaker #6: Just how long did that whole distraction last? And any impact you can kind of tie to the December quarter results?
Speaker #6: Thanks. Thank
Speaker #4: You, George. No, we have not seen any evidence of customers being breached as a result of our security incident. And, of course, I should caveat and say we are not aware of any customers having reported any such incident to us.
François Locoh-Donou: Thank you, George. No, we have not seen any evidence of customers being breached as a result of our, you know, of our security incident. And, of course, I should caveat and say we are not aware of any customers having reported any such incident to us. And I would say generally, you know, we feel that our response, our collective response, both our customers, our partners, and F5, our collective response to the security incident has been very successful. So if I go back in time, we, you know, back to where we were in October, you know, we had to mobilize very rapidly.
François Locoh-Donou: Thank you, George. No, we have not seen any evidence of customers being breached as a result of our, you know, of our security incident. And, of course, I should caveat and say we are not aware of any customers having reported any such incident to us. And I would say generally, you know, we feel that our response, our collective response, both our customers, our partners, and F5, our collective response to the security incident has been very successful. So if I go back in time, we, you know, back to where we were in October, you know, we had to mobilize very rapidly.
As a result of, um, this, this this partnership and the work with our customers, uh, the the disruption was actually kept to a, to a minimum. Uh, we we, of course, had this question because customers had to mobilize their resources to do to do their upgrades, and we were extraordinarily thankful for that, uh, but we also saw minimal disruption in in demand for us, uh, in terms of
Uh, where we are ones. Well, we we uh provided um,
Speaker #4: And I would say, generally, we feel that our response—our collective response, both our customers, our partners, and F5—our collective response to the security incident has been very successful.
Speaker #4: So if I go back in time, back to where we were in October, we had to mobilize very rapidly. We mobilized our development teams to ensure that we had the right releases for our customers immediately upon disclosure, so they could take actions and protect themselves.
François Locoh-Donou: We mobilized our, you know, our development teams to ensure that we had the right releases for our customers immediately upon disclosure, so they could take actions and protect themselves. We mobilized our support teams to be ready to take thousands and thousands of support calls, which did happen, but we were able to take all these calls with minimum wait times, and attend to customers very quickly, so they could perform upgrades in record time. And we mobilized our sales teams to engage and support customers quickly. Our customers were both extraordinarily patient with us and empathetic, but also acted with a sense of urgency around the actions they needed to take to protect themselves.
We mobilized our, you know, our development teams to ensure that we had the right releases for our customers immediately upon disclosure, so they could take actions and protect themselves. We mobilized our support teams to be ready to take thousands and thousands of support calls, which did happen, but we were able to take all these calls with minimum wait times, and attend to customers very quickly, so they could perform upgrades in record time. And we mobilized our sales teams to engage and support customers quickly. Our customers were both extraordinarily patient with us and empathetic, but also acted with a sense of urgency around the actions they needed to take to protect themselves.
Speaker #4: We mobilized our support teams to be ready to take thousands and thousands of support calls, which did happen, but we were able to take all these calls with minimum wait times and attend to customers very quickly so they could perform upgrades in record time.
Um, you know, of course, significant patterns. So to, you know, a number of versions of software around, October 15th, uh, and made those available to all of our customers, a lot of our customers upgraded really quickly, um, that has the, the, the benefit that today, uh, you know, if I, if I spoke to where we were at this time, a year ago, we had about 15% of our customers on our latest release. And I speak to you, today we have over 50% of our customers that are on our uh, latest software release, uh, and that is that is kind of The Testament to the speed with which our customers acted. Uh, but we're also really happy with where, um, where the estate at we're going to remain, of course vigilant.
Speaker #4: And we mobilized our sales teams to engage and support customers quickly. Our customers were both extraordinarily patient with us and empathetic, but also acted with a sense of urgency around the actions they needed to take to protect themselves.
Speaker #4: And as a result of the partnership and the work with—was actually kept to our customers, the disruption was minimum. We, of course, had disruption because customers had to mobilize their resources to do their upgrades, and we were extraordinarily thankful for that.
François Locoh-Donou: And as a result of this, the partnership and the work with our customers, the disruption was actually kept to a minimum. We of course had disruption because customers had to mobilize their resources to do their upgrades, and we were extraordinarily thankful for that. But we also saw minimal disruption in demand for us. In terms of where we are on patches, well, we provided, you know, of course, significant patches to, you know, a number of versions of software around 15 October, and made those available to all of our customers. A lot of our customers upgraded really quickly.
And as a result of this, the partnership and the work with our customers, the disruption was actually kept to a minimum. We of course had disruption because customers had to mobilize their resources to do their upgrades, and we were extraordinarily thankful for that. But we also saw minimal disruption in demand for us. In terms of where we are on patches, well, we provided, you know, of course, significant patches to, you know, a number of versions of software around 15 October, and made those available to all of our customers. A lot of our customers upgraded really quickly.
Speaker #4: But we also saw minimal disruption in demand for us. In terms of where we are on patches, well, we provided, of course, significant patches to a number of versions of software around October 15.
With, with all of this we we have made significant enhancements to our security posture and we are continuing uh to make enhancements to our our overall security environment, our development environment, our product environment. So you know we will um consider this and and never green Journey. But so far, we are we are very pleased with the you know, the response from our customers. And the way that um they have continued to, of course, invest in fee and frankly, we're taking this as an opportunity, not just to maintain the trust that our customers have in us. But to strengthen that trust, uh, they have in us and we've had the opportunity to engage with dozens and dozens of CEOs over the last several months. I have personally spoken to uh, you know, dozens and dozens of our customers. I mean every single 1 of these conversations, uh, they have expressed their um, their appreciation for f5's response and I'm immensely proud of the way that all that fibers have rallied together. Uh,
Speaker #4: And made those available to all of our customers. A lot of our customers upgraded really quickly. That has the benefit that today, if I spoke to where we were at this time a year ago, we had about 15% of our customers on our latest release. As I speak to you today,
With our partners and our customers on, on this incident.
François Locoh-Donou: That has the benefit that today, you know, if I spoke to where we were at this time a year ago, we had about 15% of our customers on our latest release. As I speak to you today, we have over 50% of our customers that are on our latest software release. And that is kind of testament to the speed with which our customers acted. But we're also really happy with where the estate is at. We're gonna remain, of course, vigilant with all of this. We have made significant enhancements to our security posture, and we are continuing to make enhancements to our overall security environment, our development, our environment, our product environment.
That has the benefit that today, you know, if I spoke to where we were at this time a year ago, we had about 15% of our customers on our latest release. As I speak to you today, we have over 50% of our customers that are on our latest software release. And that is kind of testament to the speed with which our customers acted. But we're also really happy with where the estate is at. We're gonna remain, of course, vigilant with all of this. We have made significant enhancements to our security posture, and we are continuing to make enhancements to our overall security environment, our development, our environment, our product environment.
That's great. Just as a quick follow-up, any Financial impacts, you know, Revenue that you lost or cost that you incurred incrementally that you can point to in the December quarter results. Thanks a lot.
Speaker #4: We have over 50% of our customers that are on our latest software release. And that is kind of a testament to the speed with which our customers acted, but we're also really happy with where the estate is at.
Yeah, no. We, we really didn't see any noticeable impact. Uh, you know, we've talked about, we went went into the call in October that we hadn't yet seen any change in terms of some of the sales metrics that we track around Pipeline and close rates. But it was a very short period of time as we reported. I think that something we're really happy with was just
Speaker #4: We're going to remain, of course, vigilant with all of this. We have made significant enhancements to our security posture, and we are continuing to make enhancements to our overall security environment, our development environment, our product environment.
Speaker #4: So, we will consider this a never-green journey, but so far, we are very pleased with the response from our customers and the way that they have continued to, of course, invest in F5.
François Locoh-Donou: So, you know, we will consider this an evergreen journey, but so far, we are very pleased with the, you know, the response from our customers and the way that they have continued to, of course, invest in F5. And frankly, we're taking this as an opportunity not just to maintain the trust that our customers have in us, but to strengthen that trust they have in us. And we've had the opportunity to engage with dozens and dozens of CISOs over the last several months. I have personally spoken to, you know, dozens and dozens of our customers, and in every single one of these conversations, they have expressed their their appreciation for F5's response. And I'm immensely proud of the way that all F5ers have rallied together with our partners and our customers on this incident.
So, you know, we will consider this an evergreen journey, but so far, we are very pleased with the, you know, the response from our customers and the way that they have continued to, of course, invest in F5. And frankly, we're taking this as an opportunity not just to maintain the trust that our customers have in us, but to strengthen that trust they have in us. And we've had the opportunity to engage with dozens and dozens of CISOs over the last several months. I have personally spoken to, you know, dozens and dozens of our customers, and in every single one of these conversations, they have expressed their their appreciation for F5's response. And I'm immensely proud of the way that all F5ers have rallied together with our partners and our customers on this incident.
With the response that we had with customers, they were able to move pretty quickly through their remediation activities and as a result they were, they were able to get back to business in a short period of time. And so that that Trend really helped through all the way through the quarter, in terms of a normal velocity around pipeline generation, you know, predictable, close rates. And so it, it just, it was kind of a very healthy execution, uh, throughout the quarter and, uh, importantly, also a strong pipeline build as we, you know, head into Q2
Thank you.
Speaker #4: And frankly, we're taking this as an opportunity not just to maintain the trust that our customers have in us, but to strengthen that trust they have in us.
And the next question comes from the line of Simon Leupold with Raymond James, please proceed with your question.
Speaker #4: And we've had the opportunity to engage with dozens and dozens of CISOs over the last several months. I have personally spoken to dozens and dozens of our customers, and in every single one of these conversations, they have expressed their appreciation for F5's response, and I'm immensely proud of the way that all F5ers have rallied together with our partners and our customers on this incident.
Speaker #4: And we've had the opportunity to engage with dozens and dozens of CISOs over the last several months. I have personally spoken to dozens and dozens of our customers, and in every single one of these conversations, they have expressed their appreciation for F5's response. I'm immensely proud of the way that all F5ers have rallied together with our partners and our customers on this incident.
Speaker #6: That's great. Just as a quick follow-up, any financial impact? Revenue that you lost or costs that you incurred incrementally that you can point to in the December quarter results?
George Notter: That's great. Just as a quick follow-up, any financial impact, you know, revenue that you lost or costs that you incurred incrementally that you can point to in the December quarter results? Thanks a lot.
George Notter: That's great. Just as a quick follow-up, any financial impact, you know, revenue that you lost or costs that you incurred incrementally that you can point to in the December quarter results? Thanks a lot.
Thanks for taking the question. Uh, I've got, uh, 2, uh, pretty straightforward. I hope. Uh, first 1 is regarding, um, the progress in AI, you've given us, interesting, metrics around customer numbers. I'm wondering if we could frame it in terms of Revenue, in other words, what what rough percentage of Revenue was coming from AI projects today and then, what do you expect full year? Longer term as a as a portion of the mix? Uh, the
Speaker #6: Thanks a lot.
Speaker #4: Yeah, no, we really didn’t see any noticeable impact. We talked about, as we went into the call in October, that we hadn’t yet seen any change in terms of some of the sales metrics that we track around pipeline and close rates. But it was a very short period of time, as we reported.
Cooper Werner: Yeah, no, we really didn't see any noticeable impact. You know, we talked about, as we went into the call in October, that we hadn't yet seen any change in terms of some of the sales metrics that we track around pipeline and close rates, but it was a very short period of time, as we reported. I think that something we're really happy with was just with the response that we had with customers. They were able to move pretty quickly through their remediation activities, and as a result, they were able to get back to business in a short period of time. And so that trend really held through all the way through the quarter in terms of a normal velocity around pipeline generation, you know, predictable close rates.
Cooper Werner: Yeah, no, we really didn't see any noticeable impact. You know, we talked about, as we went into the call in October, that we hadn't yet seen any change in terms of some of the sales metrics that we track around pipeline and close rates, but it was a very short period of time, as we reported. I think that something we're really happy with was just with the response that we had with customers. They were able to move pretty quickly through their remediation activities, and as a result, they were able to get back to business in a short period of time. And so that trend really held through all the way through the quarter in terms of a normal velocity around pipeline generation, you know, predictable close rates.
You've had success raising product prices uh, passing through the, the higher costs, I'm wondering if you could maybe help us Bridge what? What portion of your system's Revenue growth? Could you attribute to your price hikes? Thank you.
Speaker #4: I think that something we're really happy with was just with the response that we had with customers. They were able to move pretty quickly through their remediation activities.
Um, Simon. I'll start with. I think the first part in, uh, Cooper will take the the second part. Look, we, we have not, of course, Broken Out, uh, AI revenues in part, because we feel it's too early. We want to see. Um,
Speaker #4: And as a result, they were able to get back to business in a short period of time. And so that trend really held all the way through the quarter in terms of a normal velocity, predictable close rates.
Speaker #4: And so, around pipeline generation, it was kind of a very healthy execution throughout the quarter. And importantly, also a strong pipeline build as we head into Q2.
Cooper Werner: So it just was kind of a very healthy execution throughout the quarter, and importantly, also a strong pipeline build as we, you know, head into Q2.
So it just was kind of a very healthy execution throughout the quarter, and importantly, also a strong pipeline build as we, you know, head into Q2.
AI, but it's not visible to us.
Speaker #6: Thank you.
George Notter: Thank you.
George Notter: Thank you.
Speaker #1: And the next question comes from Simon Leopold with Raymond James. Please proceed with your question.
Operator: And the next question comes from the line of Simon Leopold with Raymond James. Please proceed with your question.
Operator: And the next question comes from the line of Simon Leopold with Raymond James. Please proceed with your question.
Speaker #5: Thanks for taking the question. I've got two pretty straightforward, I hope. First one is, regarding the progress in AI, you've given some interesting metrics around customer numbers.
François Locoh-Donou: Thanks for taking the question. I've got two pretty straightforward, I hope. First one is regarding the progress in AI. You've given us interesting metrics around customer numbers. I'm wondering if we could frame it in terms of revenue. In other words, what rough percentage of revenue is coming from AI projects today? And then what do you expect full year, longer term, as a portion of the mix? The second-
Simon Leopold: Thanks for taking the question. I've got two pretty straightforward, I hope. First one is regarding the progress in AI. You've given us interesting metrics around customer numbers. I'm wondering if we could frame it in terms of revenue. In other words, what rough percentage of revenue is coming from AI projects today? And then what do you expect full year, longer term, as a portion of the mix? The second-
Speaker #5: I'm wondering if we could frame it in terms of revenue. In other words, what rough percentage of revenue is coming from AI projects today?
Speaker #5: And then, what do you expect full year, longer term, as a portion of the mix? You've had success raising product prices, passing through the higher costs.
[Analyst] (Iera): ... You, you've had success raising product prices, passing through the higher costs. I'm wondering if you could maybe help us bridge, what portion of your system's revenue growth could you attribute to your price hikes? Thank you.
... You, you've had success raising product prices, passing through the higher costs. I'm wondering if you could maybe help us bridge, what portion of your system's revenue growth could you attribute to your price hikes? Thank you.
Speaker #5: I'm wondering if you could maybe help us bridge what portion of your system's revenue growth you could attribute to your price hikes? Thank you.
François Locoh-Donou: Simon, I'll start with, I think, the first part, and Cooper will take the second part. Look, we have not, of course, broken out AI revenues, in part because we feel it's too early. We wanna see, you know, more quarters behind us on AI. We have shared, I think in the past, that AI - if we isolate our answer here to use cases that we know are AI, and I say that because there's part of our business that may well be related to AI, but it's not visible to us.
Speaker #5: Simon, I'll start with, I think, the first part, and Cooper will take the second part. Look, we have not, of course, broken out AI revenues, in part because we feel it's too early.
François Locoh-Donou: Simon, I'll start with, I think, the first part, and Cooper will take the second part. Look, we have not, of course, broken out AI revenues, in part because we feel it's too early. We wanna see, you know, more quarters behind us on AI. We have shared, I think in the past, that AI - if we isolate our answer here to use cases that we know are AI, and I say that because there's part of our business that may well be related to AI, but it's not visible to us.
Uh, and so if we, if we isolate this for use cases, that we know are uh, a direct AI use case, we said that, you know, last year it was kind of single digit, uh, millions of dollars every quarter. Uh, you know, this quarter. It was above that it was, you know, healthy in the double digit millions of dollars a quarter, uh, but we're not, you know, prepared to go, you know, beyond that and um, qualify that. And in terms of the future, uh, you know, our our view when we look at the trends over the last few quarters, our view is that it is likely to grow. Uh, because, you know, we're we're seeing more use cases emerge, not just data delivery, which is an important and growing use case, but security is also to be a growing use case. Um, we think that runtime Security in in AI is going to be a multi-billion dollar market. We're just scratching the surface uh, of, uh, of the very early Innings of this market. So clearly there's a lot of growth potential, uh, but you know, uh,
We're going to take it 1 quarter at a time.
Speaker #5: We want to see more quarters behind us on AI. We have shared, I think, in the past that AI—if we isolate our answer here to use cases that we know are AI.
Speaker #5: And I say that because there's part of our business that may well be related to AI, but it's not visible to us. And so, if we isolate this for use cases that we know are a direct AI use case, we said that last year it was kind of single-digit millions of dollars every quarter.
Yeah. And then, in terms of the, the pricing increases on in the impact on Revenue, so that where we see the biggest impact is in systems business. Uh, because those are applied to, you know, they're effectively all net new, uh, sales. And so we had a, a price increase that we introduced last January, so, January of 2025. And so, we're, we're still realizing the benefit of that. That was a roughly mid single digit price increase.
François Locoh-Donou: So if we isolate this for use cases that we know are a direct AI use case, we said that, you know, last year it was kinda single-digit $ millions every quarter. You know, this quarter it was above that. It was, you know, healthily in the double-digit $ millions a quarter. But we're not, you know, prepared to go, you know, beyond that and qualify that. In terms of the future, you know, our view when we look at the trends over the last few quarters, our view is that it is likely to grow, because, you know, it, we're seeing more use cases emerge, not just data delivery, which is an important and growing use case, but security is also going to be a growing use case.
So if we isolate this for use cases that we know are a direct AI use case, we said that, you know, last year it was kinda single-digit $ millions every quarter. You know, this quarter it was above that. It was, you know, healthily in the double-digit $ millions a quarter. But we're not, you know, prepared to go, you know, beyond that and qualify that. In terms of the future, you know, our view when we look at the trends over the last few quarters, our view is that it is likely to grow, because, you know, it, we're seeing more use cases emerge, not just data delivery, which is an important and growing use case, but security is also going to be a growing use case.
Speaker #5: It was healthy in the quarter. This quarter, it was above double-digit millions of dollars a quarter. But we're not really prepared to go beyond that and qualify that.
Uh, you know, we had that factored in to our outlook for the year. And uh, so we'll we'll continue to uh, look to monetize that on the software side. There's a little bit more of a muted impact, because a lot of our software sales are sold in multi or agreements. And so, it takes time, uh, for for some of the pricing increases the mulate through that business. But we're we are seeing that, uh, healthy, uh, pickup from the pricing on the software side as well.
Thank you.
Speaker #5: And in terms of the future, our view, when we look at the trends over the last few quarters, is that it is likely to grow.
And the next question comes from the line Michael. And with Goldman Sachs, please proceed with your question.
Speaker #5: Because we're seeing more use cases emerge—not just data delivery, which is an important and growing use case, but security is also going to be a growing use case.
François Locoh-Donou: We think that runtime security in AI is going to be a multi-billion dollar market. We're just scratching the surface of the very early innings of this market. So clearly, there's a lot of growth potential, but, you know, we're gonna take it one quarter at a time.
Speaker #5: We think that runtime security in AI is going to be a multibillion-dollar market. We're just scratching the surface of the very early innings of this market.
We think that runtime security in AI is going to be a multi-billion dollar market. We're just scratching the surface of the very early innings of this market. So clearly, there's a lot of growth potential, but, you know, we're gonna take it one quarter at a time.
Speaker #5: So clearly, there's a lot of growth potential. But we're going to take it one quarter at a time.
Speaker #5: at a time. Yeah.
Speaker #4: And then in terms of the pricing increases and the impact on revenue, where we see the biggest impact is in the systems business, because those are applied to—they’re effectively all net new sales. And so we had a price increase that we introduced last January, so January of 2025.
Cooper Werner: Yeah, and then in terms of the pricing increases and the impact on revenue, so where we see the biggest impact is in the systems business, because those are applied to, you know, they're effectively all net new sales. And so we had a price increase that we introduced last January, so January of 2025, and so we're still realizing the benefit of that. That was a roughly mid-single digit price increase. You know, we had that factored into our outlook for the year, and so we'll continue to look to monetize that. On the software side, there's a little bit more of a muted impact because a lot of our software sales are sold in multi-year agreements, and so it takes time for some of the pricing increases to percolate through that business.
Cooper Werner: Yeah, and then in terms of the pricing increases and the impact on revenue, so where we see the biggest impact is in the systems business, because those are applied to, you know, they're effectively all net new sales. And so we had a price increase that we introduced last January, so January of 2025, and so we're still realizing the benefit of that. That was a roughly mid-single digit price increase. You know, we had that factored into our outlook for the year, and so we'll continue to look to monetize that. On the software side, there's a little bit more of a muted impact because a lot of our software sales are sold in multi-year agreements, and so it takes time for some of the pricing increases to percolate through that business.
Uh, hi. Good afternoon. Um, thank you for the question. I just have 2. Um, first, um, just on the, the systems Revenue Outlook, you know, it's it's very encouraging to hear about the double digit Revenue growth for the full year. Um, I think the guidance implies around like mid teens system regarding your growth, uh, for the full year. Um, and if, if that's right, could you just maybe talk a little bit about, um, you know, the the revenue shape uh, throughout the rest of the year? Um, is there, you know, anything that that you call out that might drive a, a deceleration relative to the, you know, obviously very strong growth that we saw in the December quarter?
Speaker #4: And so we're still realizing the benefit of that. That was a roughly mid-single-digit price increase. We had that factored into our outlook for the year.
and then, you know, second, um, I I wanted to ask about the EPS, um, upgrade, you know, you beat the midpoint
Speaker #4: And so, we'll continue to look to monetize that. On the software side, there's a little bit more of a muted impact because a lot of our software sales are sold in multi-year agreements.
Speaker #4: And so, it takes time for some of the pricing increases to matriculate through that business. But we are seeing a healthy pickup from the pricing on the software side as well.
Cooper Werner: But we are seeing a healthy pickup from the pricing on the software side as well.
But we are seeing a healthy pickup from the pricing on the software side as well.
Uh, in the December quarter by 85 cents. The full year was raised by 85 cents. Um, you know, just given you know, what's trends? Like a very constructive outlook for the top line for the rest of the year. Um, is there anything that you would call out in terms of like in incremental costs that um, would prevent, you know, more of the the Top Line upside flowing down to to the bottom line for the full year. Thank you very much.
Speaker #5: Thank
Speaker #5: you. And the next question
[Analyst] (Iera): Thank you.
Simon Leopold: Thank you.
Operator: The next question comes from the line of Michael Ng with Goldman Sachs. Please proceed with your question.
Operator: The next question comes from the line of Michael Ng with Goldman Sachs. Please proceed with your question.
Speaker #1: Comes from the line of Michael Ng with Goldman Sachs. Please proceed with your question.
Speaker #1: question. Hi, good
[Company Representative] (InComm Conferencing): Yeah, hi, good afternoon. Thank you for the question. I just have two. First, just on the systems revenue outlook, you know, it's very encouraging to hear about the double-digit revenue growth for the full year. I think the guidance implies around like mid-teens systems revenue growth for the full year. And if that's right, could you just maybe talk a little bit about, you know, the revenue shape throughout the rest of the year? Is there, you know, anything that you would call out that might drive a deceleration relative to the, you know, obviously, very strong growth that we saw in the December quarter? And then, you know, second, I wanted to ask about the EPS upgrade.
Michael Ng: Yeah, hi, good afternoon. Thank you for the question. I just have two. First, just on the systems revenue outlook, you know, it's very encouraging to hear about the double-digit revenue growth for the full year. I think the guidance implies around like mid-teens systems revenue growth for the full year. And if that's right, could you just maybe talk a little bit about, you know, the revenue shape throughout the rest of the year? Is there, you know, anything that you would call out that might drive a deceleration relative to the, you know, obviously, very strong growth that we saw in the December quarter? And then, you know, second, I wanted to ask about the EPS upgrade.
Speaker #7: Afternoon. Thank you for the question. I just have two. First, just on the systems revenue outlook—it's very encouraging to hear about the double-digit revenue growth for the full year.
Speaker #7: I think the guidance implies around mid-teens system revenue growth for the full year. And if that's right, could you just maybe talk a little bit about the revenue shape throughout the rest of the year?
Speaker #7: Is there anything that you would call out that might drive a deceleration relative to the, obviously, very strong growth that we saw in the December quarter?
Speaker #7: And then, second, I wanted to ask about the EPS upgrade. You beat the midpoint in the December quarter by $0.85. The full year was raised by $0.85.
Uh, yeah, so I'll I'll handle both. So on the revenue guide. I think you you can see if you take the midpoint of the guidance for the full year, it implies kind of a 4 to 5% growth in the second half and and the the little bit higher, I think it's around 7% for the first half. So to your point it does reflect a little bit of a deceleration. I don't think there's anything that we're seeing today that that where we have visibility that there will be a deceleration. It's it's really just that it's early in the year. And so we've seen tremendous strength in the first quarter. Uh we have a good pipeline in the second quarter. And I think what you're seeing is let's take a little bit of a measured approach to how we look in the the out quarters for the year. Uh, but but nothing specific that suggests that the business should slow down. Uh, and so then to the EPS question, uh, the the 2 things I would point to is we have the gross margin. We took the guidance down a little bit, tied to the pricing increases, so that has a little bit of an effect on the operating.
[Company Representative] (InComm Conferencing): You know, you beat the midpoint in the December quarter by $0.85. The full year was raised by $0.85. You know, just given, you know, what sounds like a very constructive outlook for the top line for the rest of the year, is there anything that you would call out in terms of, like, incremental costs that would prevent, you know, more of the top-line upside flowing down to the bottom line for the full year? Thank you very much.
You know, you beat the midpoint in the December quarter by $0.85. The full year was raised by $0.85. You know, just given, you know, what sounds like a very constructive outlook for the top line for the rest of the year, is there anything that you would call out in terms of, like, incremental costs that would prevent, you know, more of the top-line upside flowing down to the bottom line for the full year? Thank you very much.
Speaker #7: Just given what sounds like a very constructive outlook for the top line for the rest of the year, is there anything that you would call out in terms of incremental costs that would prevent more of the top-line upside flowing down to the bottom line for the full year?
Speaker #7: year? Yeah. Thank you very
Cooper Werner: Yeah, so I'll handle both. So on the revenue guide, I think you can see if you take the midpoint of the guidance for the full year, it implies kind of a 4% to 5% growth in the second half and a little bit higher, I think it's around 7% for the first half. So to your point, it does reflect a little bit of a deceleration. I don't think there's anything that we're seeing today that where we have visibility, that there will be a deceleration. It's really just that it's early in the year, and so we've seen tremendous strength in the first quarter.
Cooper Werner: Yeah, so I'll handle both. So on the revenue guide, I think you can see if you take the midpoint of the guidance for the full year, it implies kind of a 4% to 5% growth in the second half and a little bit higher, I think it's around 7% for the first half. So to your point, it does reflect a little bit of a deceleration. I don't think there's anything that we're seeing today that where we have visibility, that there will be a deceleration. It's really just that it's early in the year, and so we've seen tremendous strength in the first quarter.
Speaker #4: So I'll handle both. On the revenue guide, I think you can see if you take the midpoint of the guidance for the full year, it implies kind of a 4 to 5 percent growth in the second half, and a little bit higher—I think it's around 7%—for the first half.
Anything ultimately will drive a higher rate of adoption across the portfolio and then some just some other features on a road map. So we think it's an opportune time for us to really invest in future growth just given the The increased Outlook we've got for this current year.
Speaker #4: So, to your point, it does reflect a little bit of a deceleration. I don't think there's anything that we're seeing today where we have visibility that there will be a deceleration.
Great. Thanks. Cooper. That's very clear. Appreciate the response.
Great. Thank you, Michael.
Speaker #4: It's really just that it's early in the year, and so we've seen tremendous strength in the first quarter. We have a good pipeline in the second quarter.
Please proceed with your question.
Cooper Werner: We have a good pipeline in the second quarter, and I think what you're seeing is us take a little bit of a measured approach to how we look in the out quarters for the year, but nothing specific that suggests that the business should slow down. To the EPS question, the two things I would point to is we have the gross margin. We took the guidance down a little bit, tied to the pricing increases, so that has a little bit of an effect on the operating margin guide.
We have a good pipeline in the second quarter, and I think what you're seeing is us take a little bit of a measured approach to how we look in the out quarters for the year, but nothing specific that suggests that the business should slow down. To the EPS question, the two things I would point to is we have the gross margin. We took the guidance down a little bit, tied to the pricing increases, so that has a little bit of an effect on the operating margin guide.
Speaker #4: And I think what you're seeing is us take a little bit of a measured approach to how we look in the out quarters for the year.
Speaker #4: But nothing specific that suggests that the business should slow down. And so then to the EPS question, the two things I would point to are: we have the gross margin—we took the guidance down a little bit, tied to the pricing increases.
Speaker #4: So that has a little bit of an effect on the operating margin guide. And seeing in some of these trends, that we then, just based on the strength that we think are pretty sustainable beyond FY26, we're making some targeted investments that we think can really help drive a better growth outlook in FY27 and beyond.
Cooper Werner: And then, just based on the strength that we're seeing in some of these trends, these that we think are pretty sustainable beyond FY 2026, we're making some targeted investments that we think can really help drive a better growth outlook in FY 2027 and beyond. So we're looking at sales capacity, you know, where we see additional opportunity that we wanna get in front of with some early investments. We're making some investments in the roadmap, you know, things we talked about xOps, so, you know, capabilities that we can bring to customers around analytics and telemetry that we think ultimately will drive a higher rate of adoption across the portfolio, and then some, just some other features on our roadmap.
And then, just based on the strength that we're seeing in some of these trends, these that we think are pretty sustainable beyond FY 2026, we're making some targeted investments that we think can really help drive a better growth outlook in FY 2027 and beyond. So we're looking at sales capacity, you know, where we see additional opportunity that we wanna get in front of with some early investments. We're making some investments in the roadmap, you know, things we talked about xOps, so, you know, capabilities that we can bring to customers around analytics and telemetry that we think ultimately will drive a higher rate of adoption across the portfolio, and then some, just some other features on our roadmap.
Thanks for the question and congrats on a great quarter. Here, I wanted to ask about the strength in Neah, you mentioned sovereignty. Uh, I wonder if you could just double, click on that a bit and expand on, you know, how long that dialogue has been going on, is this relatively new phenomenon and you didn't see happening so quickly. Uh, or and if there was any contribution of uh you know, deferred upgrades or expansions from customers that may have pushed them off, while they were uh, going through the uh uh, kind of the, the recovery from the breach. Thank you.
Thank you, Ryan. Um,
Speaker #4: So we're looking at sales capacity, where we see additional opportunity that we want to get in front of with some early investments. We're making some investments in the roadmap, things we talk about—XOPS.
well, there's an element of both. So the the dialogue around, um, you know, sort of hybrid multi cloud deployments in in Europe, driven by the need for digital sovereignty. The need for more resilience,
Speaker #4: So, capabilities that we can bring to customers around analytics and telemetry that we think ultimately will drive a higher rate of adoption across the portfolio.
Has been going on, uh, for, for several quarters, but we did see an acceleration this quarter. Um, if if I go back to
Speaker #4: And then just some other features on our roadmap. So, we think it's an opportune time for us to really invest in future growth, just given the increased outlook we've got for this current year.
Cooper Werner: So we think it's an opportune time for us to really invest in future growth, just given the increased outlook we've got for this current year.
So we think it's an opportune time for us to really invest in future growth, just given the increased outlook we've got for this current year.
Speaker #7: Great, thanks, Cooper. That's very clear. Appreciate the response.
[Company Representative] (InComm Conferencing): Great. Thanks, Cooper. That's very clear. Appreciate the response.
Michael Ng: Great. Thanks, Cooper. That's very clear. Appreciate the response.
Speaker #4: Great. Thank you,
Cooper Werner: Great. Thank you, Michael.
Cooper Werner: Great. Thank you, Michael.
Speaker #4: Michael. And the next question comes from the line.
Operator: ... The next question comes from the line of Ryan Koontz with Needham & Company. Please proceed with your question.
Operator: ... The next question comes from the line of Ryan Koontz with Needham & Company. Please proceed with your question.
Speaker #1: of Ryan Koontz with Needham & Company. Please proceed with your question.
Speaker #1: question. Great.
Speaker #8: Thanks for the question, and congrats on a great quarter here. I wanted to ask you about the strength in EMEA. You mentioned sovereignty—I wonder if you could just double-click on that a bit and expand on how long that dialogue's been going on.
Ryan Koontz: Great, thanks for the question, and congrats on a great quarter here. Wanted to ask about the strength in EMEA. You mentioned sovereignty. I wonder if you could just double click on that a bit and expand on, you know, how long that dialogue's been going on. Is this a relatively new phenomenon you didn't see happening so quickly? And if there was any contribution of, you know, deferred upgrades or expansions from customers that may have pushed them off while they were going through the kind of recovery from the breach. Thank you.
Ryan Koontz: Great, thanks for the question, and congrats on a great quarter here. Wanted to ask about the strength in EMEA. You mentioned sovereignty. I wonder if you could just double click on that a bit and expand on, you know, how long that dialogue's been going on. Is this a relatively new phenomenon you didn't see happening so quickly? And if there was any contribution of, you know, deferred upgrades or expansions from customers that may have pushed them off while they were going through the kind of recovery from the breach. Thank you.
Speaker #8: Is this a relatively new phenomenon and you didn't see happening so quickly? And if there was any contribution of deferred upgrades or expansions from customers that may have pushed them off while they were going through the kind of the recovery from the breach.
Um, why that is? I think, first of all, this regulation have have come into Force. Some of them have come into Force already in 2025, uh, and organizations that are not compliant are moving quickly. Uh, to to be compliant before, uh, before they face some, some Pepsis, uh, in some cases uh that it and I would say in the majority of cases we're seeing that translate into new projects uh customers that need both some hardware and some software or software as a service, uh, to be able to deliver a consistent security or consistent delivery across all their infrastructure environments. Uh, and there are some cases where we saw customers that
Speaker #8: Thank
Speaker #8: you. Thank
Speaker #5: You, Ryan. While there's an element of both, the dialogue around hybrid multi-cloud deployments in Europe—driven by the need for digital sovereignty and the need for more resilience—has been going on for several quarters.
François Locoh-Donou: Thank you, Ryan. Well, there's an element of both. So the dialogue around, you know, sort of hybrid multi-cloud deployments in Europe, driven by the need for digital sovereignty, the need for more resilience, has been going on for several quarters. But we did see an acceleration this quarter. If I go back to why that is, I think, first of all, these regulations have come into force. Some of them have come into force already in 2025. And organizations that are not compliant are moving quickly to be compliant before they face some penalties.
François Locoh-Donou: Thank you, Ryan. Well, there's an element of both. So the dialogue around, you know, sort of hybrid multi-cloud deployments in Europe, driven by the need for digital sovereignty, the need for more resilience, has been going on for several quarters. But we did see an acceleration this quarter. If I go back to why that is, I think, first of all, these regulations have come into force. Some of them have come into force already in 2025. And organizations that are not compliant are moving quickly to be compliant before they face some penalties.
Perhaps should have refreshed their, um, their equipment. Several moons ago did not do so and were, uh, not in compliance and in the face of coming enforcement decided to, to refresh quickly and, and upgrade their equipment. And we're seeing that come to us by way of of extra Hardware demand. So we're we're seeing both
Speaker #5: But we did see an acceleration this quarter. If I go back, come into force. Some of them have come into—so why that is, I think, first of all, this regulation has force already in 2025.
It is a durable Trend because there is for 2 Reasons. 1 is there is more regulation regulation coming, um, you know, to Andor already in place but there's a cyber resilience act that is coming. I think that the enforcement date for that will be in 2027 and the regulation vary by countries. Uh, so I think we're going to see that deploy across multiple countries. Um, and then the other the other phenomenon is
Speaker #5: And organizations that are not compliant are moving quickly to be compliant before they face some penalties. In some cases—that, and I would say in the majority of cases—we're seeing that translate into new projects: customers that need both some hardware and some software, or software as a service, to be able to deliver a consistent security or consistent delivery across all their infrastructure environments.
There are a number of large Enterprises, have expressed to us that uh, because they don't know yet. How new regulations will be applied.
François Locoh-Donou: In some cases, that is, and I would say in the majority of cases, we're seeing that translate into new projects, customers that need both some hardware and some software or software as a service, to be able to deliver consistent security or consistent delivery across all their infrastructure environments. And there are some cases where we saw customers that perhaps should have refreshed their, their equipment several moons ago, did not do so and were not in compliance, and in the face of coming enforcement, decided to, to refresh, quickly and, and upgrade their equipment. And we're seeing that come to us by way of, of, extra hardware demand. So we're seeing both, but it is a durable trend because there is, for two reasons. One is there is more regulation coming.
In some cases, that is, and I would say in the majority of cases, we're seeing that translate into new projects, customers that need both some hardware and some software or software as a service, to be able to deliver consistent security or consistent delivery across all their infrastructure environments. And there are some cases where we saw customers that perhaps should have refreshed their, their equipment several moons ago, did not do so and were not in compliance, and in the face of coming enforcement, decided to, to refresh, quickly and, and upgrade their equipment. And we're seeing that come to us by way of, of, extra hardware demand. So we're seeing both, but it is a durable trend because there is, for two reasons. One is there is more regulation coming.
Speaker #5: And there are some cases where we saw customers that perhaps should have refreshed their equipment several moons ago, did not do so and were not in compliance.
Speaker #5: And in the face of coming enforcement, they decided to refresh quickly and upgrade their equipment. We're seeing that come to us by way of extra hardware demand.
Speaker #5: So we're seeing both. But it is a durable trend, because there is, for two reasons. One is, there is more regulation coming—NIS2 and DORA are already in place, but there's a Cyber Resilience Act that is coming.
It's very difficult for them to forecast where they should have their data or where they should have their workloads to be in compliance with this regulation. And in the face of that uncertainty um a partner like F5 is ideal because we are we give them the flexibility to deploy their licenses at 5 in any environment they they want today or in the future and also to deploy it with whatever form factors. They may want today or in the future whether it's Hardware software or software as a service. And so we are at this time for that certainty and for matters of digital sovereignty, the the perfect company that has the perfect flexibility, the perfect number of models and the perfect scalability for what these large Enterprises are are facing. And I think that is going to to continue for some time
François Locoh-Donou: You know, NIS2 and DORA are already in place, but there's a Cyber Resilience Act that is coming. I think the enforcement date for that will be in 2027, and the regulations vary by countries. So I think we're gonna see that deploy across multiple countries. And then the other phenomenon is, there are a number of large enterprises have expressed to us that, because they don't know yet how new regulations will be applied, it's very difficult for them to forecast where they should have their data or where they should have their workloads to be in compliance with this regulation.
You know, NIS2 and DORA are already in place, but there's a Cyber Resilience Act that is coming. I think the enforcement date for that will be in 2027, and the regulations vary by countries. So I think we're gonna see that deploy across multiple countries. And then the other phenomenon is, there are a number of large enterprises have expressed to us that, because they don't know yet how new regulations will be applied, it's very difficult for them to forecast where they should have their data or where they should have their workloads to be in compliance with this regulation.
Super helpful friends raw. Thank you.
Thank you.
Speaker #5: I think that the enforcement date for that will be in 2027. And the regulation varies by country. So I think we're going to see that deploy across multiple countries.
And the next question comes from the line of tal liani with Bank of America, please proceed with your question.
Speaker #5: And then the other phenomenon is, there are a number of large enterprises that have expressed to us that, because they don't know yet how new regulations will be applied, it's very difficult for them to forecast where they should have their data or where they should have their workloads to be in compliance with this regulation.
Speaker #5: And in the face of that uncertainty, a partner like F5 is ideal because we give them the flexibility to deploy their licenses of F5 in any environment they want today, or in the future.
François Locoh-Donou: In the face of that uncertainty, a partner like F5 is ideal because we give them the flexibility to deploy their licenses of F5 in any environment they want today or in the future, and also to deploy it with whatever form factor they may want today or in the future, whether it's hardware, software, or software as a service. So we are, at this time, for that uncertainty and for matters of digital sovereignty, this perfect company that has the perfect flexibility, the perfect number of models, and the perfect scalability for what these large enterprises are facing. I think that is going to continue for some time.
In the face of that uncertainty, a partner like F5 is ideal because we give them the flexibility to deploy their licenses of F5 in any environment they want today or in the future, and also to deploy it with whatever form factor they may want today or in the future, whether it's hardware, software, or software as a service. So we are, at this time, for that uncertainty and for matters of digital sovereignty, this perfect company that has the perfect flexibility, the perfect number of models, and the perfect scalability for what these large enterprises are facing. I think that is going to continue for some time.
Hey guys, it's uh, timers Overman on for tall. Uh, maybe going back to 1 of your earlier answers. You talked about second half implied deceleration to around 4, 5% growth. How do you balance that between, uh, the fact that as we approach next quarter and really the next 3 quarters. Um, you're starting to laugh much more difficult comparisons within systems that I think 180 to 190 million, uh, kind of quarterly run rate versus, you know, maybe some of your large Enterprises refreshing, well, ahead of that 2027, end of service.
Speaker #5: And also to deploy it with whatever form factor they may want today or in the future, whether it's hardware, software, or software as a service.
Yes, so just a couple of factors. So I it it isn't
Speaker #5: And so, we are at this time, for that uncertainty and for matters of digital sovereignty, this perfect company that has the perfect flexibility, the perfect number of models, and the perfect scalability for what these large enterprises are facing.
Speaker #5: And I think that is going to continue for some time.
Speaker #5: time. Super helpful, Francois.
Ryan Koontz: Super helpful, François. Thank you.
Ryan Koontz: Super helpful, François. Thank you.
Speaker #8: Thank you.
Speaker #5: Thank
Speaker #5: You. And the next question comes from the—
François Locoh-Donou: Thank you.
François Locoh-Donou: Thank you.
Operator: The next question comes from the line of Tal Liani with Bank of America. Please proceed with your question.
Operator: The next question comes from the line of Tal Liani with Bank of America. Please proceed with your question.
Speaker #1: Line of Tal Liani with Bank of America. Please proceed with your question.
Speaker #9: Hey, guys. It's Tomer Zilberman on for Tal. Maybe going back to one of your earlier answers—you talked about second-half implied deceleration to around 4% to 5% growth. How do you balance that with the fact that as we approach next quarter, and really the next three quarters, you're starting to lap much more difficult comparisons within systems?
Tomer Zilberman: Hey, guys, it's Tomer Zilberman on for Tal. Maybe going back to one of your earlier answers, you talked about second half implied deceleration to around 4 to 5% growth. How do you balance that between the fact that as we approach next quarter and really the next three quarters, you're starting to lap much more difficult comparisons within systems of, I think, $180 to 190 million, kind of quarterly run rate versus, you know, maybe some of your large enterprises refreshing well ahead of that 2027 end of service?
Tomer Zilberman: Hey, guys, it's Tomer Zilberman on for Tal. Maybe going back to one of your earlier answers, you talked about second half implied deceleration to around 4 to 5% growth. How do you balance that between the fact that as we approach next quarter and really the next three quarters, you're starting to lap much more difficult comparisons within systems of, I think, $180 to 190 million, kind of quarterly run rate versus, you know, maybe some of your large enterprises refreshing well ahead of that 2027 end of service?
It isn't anything to do with the Cadence of the refresh, so we're still relatively early in that opportunity, we have not seen any kind of an acceleration in terms of, you know, decommissioning on the Legacy base. So I I think it's, it's been orderly to strengthen. The refresh has really been around the expansion and that's tied to the Dynamics that France has been outlining, that customers are facing today. So I don't think that we expect that to really slow down in the second half of the year. Uh, it it again, it's just more about where we're sitting in the cycle. It's, you know, a new calendar year, so budgets are still getting cemented with customers. Uh, there are some fluid dynamics in just in the macro. And so I think we're just being a little bit from pragmatic with how we approach second half. But uh, the underlying pipeline trends that we're seeing in the momentum, in the business is very strong as we enter the quarter and that's reflected in the Q2 guide so that it it's more to do with just, you know, where we sit in the the calendar as we're kind of looking ahead on our guidance.
Speaker #9: As I think, $180 to $190 million kind of quarterly run rate, versus maybe some of your large enterprises refreshing well ahead of that 2027 end of service?
Got it. And maybe just as 1, quick follow-up. On the software side, do you see the Renault cohort uh equally balanced throughout the remainder of the year, or do you think that's more clustered around the second half?
Speaker #4: Yeah, so just a couple of factors. So it isn't anything to do with the cadence of the refresh. So we're still relatively early in that opportunity.
Cooper Werner: Yeah, so just a couple of factors. So it isn't anything to do with the cadence of the refresh, so we're still relatively early in that opportunity. We have not seen any kind of an acceleration in terms of, you know, decommissioning on the legacy base. So I think it's been orderly. The strength in the refresh has really been around the expansion, and that's tied to the dynamics that François has been outlining that customers are facing today. So I don't think that we expect that to really slow down in the second half of the year. Again, it's just more about where we're sitting in the cycle. It's, you know, a new calendar year, so budgets are still getting cemented with customers.
Cooper Werner: Yeah, so just a couple of factors. So it isn't anything to do with the cadence of the refresh, so we're still relatively early in that opportunity. We have not seen any kind of an acceleration in terms of, you know, decommissioning on the legacy base. So I think it's been orderly. The strength in the refresh has really been around the expansion, and that's tied to the dynamics that François has been outlining that customers are facing today. So I don't think that we expect that to really slow down in the second half of the year. Again, it's just more about where we're sitting in the cycle. It's, you know, a new calendar year, so budgets are still getting cemented with customers.
No, it's more balanced than it has been prior years. We we actually expect to have a pretty strong growth quarter in Q2 and and then Healthy Growth in the second half of the year.
Got it, thanks.
Speaker #4: We have not seen any kind of an acceleration in terms of decommissioning on the legacy base. So I think it's been orderly. The strength in the refresh has really been around the expansion, and that's tied to the dynamics that Francois has been outlining that customers are facing today.
And the next question comes from the line of meta Marshall with Morgan Stanley. Please proceed with your question.
Speaker #4: So, I don't think that we expect that to really slow down in the second half of the year. Again, it's just more about where we're sitting in the cycle.
Speaker #4: It's a new calendar year, so budgets are still getting cemented with customers. There are some fluid dynamics just in the macro, and so I think we're just being a little bit pragmatic with how we approach the second half.
Cooper Werner: There are some fluid dynamics in, just in the macro, and so I think we're just being a little bit pragmatic with how we approach second half. But, the underlying pipeline trends that we're seeing and the momentum in the business is very strong as we enter the quarter, and that's reflected in the Q2 guide. So, it's more to do with just, you know, where we sit in the calendar as we're kind of looking ahead on our guidance.
There are some fluid dynamics in, just in the macro, and so I think we're just being a little bit pragmatic with how we approach second half. But, the underlying pipeline trends that we're seeing and the momentum in the business is very strong as we enter the quarter, and that's reflected in the Q2 guide. So, it's more to do with just, you know, where we sit in the calendar as we're kind of looking ahead on our guidance.
Great thanks. Uh, a couple points for me. Um, you know, friends while you mentioned kind of a lot of strength around these hybrid uh implementations just wondering, you know, have there been any trends that have developed between kind of virtual adcs versus product or, you know, or Hardware versus the last time you kind of went through 1 of these Cycles? Uh and then second question, you know, uh maybe
Speaker #4: But the underlying pipeline trends that we're seeing, and the momentum in the business, is very strong as we enter the quarter. And that's reflected in the Q2 guide.
Speaker #4: So it's more to do with just where we sit in the calendar, as we're kind of looking ahead on our guidance.
Speaker #9: Got it. And maybe just as one quick follow-up on the software side, do you see the Renault cohort equally balanced throughout the remainder of the year?
Tomer Zilberman: Got it. And, and maybe just as one quick follow-up on the software side, do you see the renewal cohort equally balanced throughout the remainder of the year, or do you think that's more clustered around the second half?
Tomer Zilberman: Got it. And, and maybe just as one quick follow-up on the software side, do you see the renewal cohort equally balanced throughout the remainder of the year, or do you think that's more clustered around the second half?
Building on Ryan's question, you know, the government business or public sector business, was probably the highest concentration that's been, you know, 3 plus years. Uh, just wondering, you know, was there any kind of strength within Europe on the public sector side? That was concentrated. Thanks.
Speaker #9: Or do you think that's more clustered around the second?
Speaker #9: half?
Speaker #4: No, it's more balanced
Cooper Werner: No, it's more balanced than it has been prior years. We actually expect to have a pretty strong growth quarter in Q2 and then healthy growth in the second half of the year.
Cooper Werner: No, it's more balanced than it has been prior years. We actually expect to have a pretty strong growth quarter in Q2 and then healthy growth in the second half of the year.
Speaker #4: than it has been in prior years. We actually expect to have pretty strong growth in Q2 and then healthy growth in the second half of the year.
Speaker #9: Got it.
Tomer Zilberman: Got it. Thanks.
Tomer Zilberman: Got it. Thanks.
Speaker #9: Thanks. And the next
Thank you, Ma. I'll uh, I I will, I will, I handle both and I, I'll start with the your last question about government sector was very strong. Uh, that was driven in in, uh, by North America uh, in fact. And, you know, it may come as a surprise because we had I think, the longest government shutdown in in history in the quarter over 40 days.
Operator: The next question comes from the line of Meta Marshall with Morgan Stanley. Please proceed with your question.
Speaker #1: The question comes from the line of Meta Marshall with Morgan Stanley. Please proceed with your question.
Operator: The next question comes from the line of Meta Marshall with Morgan Stanley. Please proceed with your question.
Cooper Werner: ... Great, thanks. A couple quick ones for me. You know, François, you mentioned kind of a lot of strength around these hybrid implementations. Just wondering, you know, have there been any trends that have developed between kind of virtual ADCs versus product or, you know, or hardware versus the last time you kind of went through one of these cycles? And then second question, you know, maybe building on Ryan's question, you know, the government business or public sector business was probably the highest concentration it's been in, you know, three-plus years. Just wondering, you know, was there any kind of strength within Europe on the public sector side that was concentrated? Thanks.
Meta Marshall: ... Great, thanks. A couple quick ones for me. You know, François, you mentioned kind of a lot of strength around these hybrid implementations. Just wondering, you know, have there been any trends that have developed between kind of virtual ADCs versus product or, you know, or hardware versus the last time you kind of went through one of these cycles? And then second question, you know, maybe building on Ryan's question, you know, the government business or public sector business was probably the highest concentration it's been in, you know, three-plus years. Just wondering, you know, was there any kind of strength within Europe on the public sector side that was concentrated? Thanks.
Speaker #10: Great, thanks. A couple from me. Francois, you mentioned kind of a lot of strength around these hybrid implementations. Just wondering, have there been any trends that have developed between kind of virtual ADCs versus product or hardware versus the last time you kind of went through one of these cycles?
Speaker #10: Question, maybe. And then, second, building on Ryan's question—the government business, or public sector business, was probably the highest concentration it’s been in three-plus years.
Of shutdown. Uh, and of course we had, you know, entering the quarter, we had the, the expectation of some, some destruction, with the security incident. Um, but we had a a very strong quarter with the FED here in, in the US. Uh, frankly. I'm very proud of the execution of our federal, uh, Federal team here who, you know, put put their shoulders behind the wheel and despite not having as much time to interact with customers because of the shutdown. Um, we're able to engage in the right conversations and um,
Speaker #10: Just wondering, was there any kind of strength within Europe on the public sector side that was concentrated? Thanks.
Speaker #5: Thank you, Meta. I'll actually handle both, and I'll start with the last question about government sector—was very strong. That was driven in by North America, in fact.
François Locoh-Donou: Thank you, Meta. I'll actually handle both, and I'll start with your last question. Right, government sector was very strong. That was driven in by North America, in fact, and, you know, it may come as a surprise because we had, I think, the longest government shutdown in history in the quarter, over 40 days of shutdown. And of course, we had, you know, at entering the quarter, we had the expectation of some disruption with a security incident. But we had a very strong quarter with the Fed here in the US.
François Locoh-Donou: Thank you, Meta. I'll actually handle both, and I'll start with your last question. Right, government sector was very strong. That was driven in by North America, in fact, and, you know, it may come as a surprise because we had, I think, the longest government shutdown in history in the quarter, over 40 days of shutdown. And of course, we had, you know, at entering the quarter, we had the expectation of some disruption with a security incident. But we had a very strong quarter with the Fed here in the US.
Speaker #5: And it may come as a surprise because we had, I think, the longest government shutdown in history in the quarter—over 40 days of shutdown.
And get, uh, really interesting projects started. Interestingly, the strength in government uh, came from New use cases, specifically, you know, on Modern applications and also we started to see our first AI, uh, use cases in government. So we, we feel very good about what we saw in the, in the fed. This this quarter and our ability to execute, um, uh, despite the shutdown. And, um, you know, the continued trust that we have from from our customers there, in terms of the, your question around, you know, do we have? We seen a different dynamic between software and Hardware in these hybrid multicloud architectures.
Speaker #5: And, of course, entering the quarter, we had the expectation of some disruption with the security incident. But we had a very strong quarter with the Fed here in the U.S.
François Locoh-Donou: Frankly, I'm very proud of the execution of our federal, federal team here, who, you know, put, put their shoulders behind the wheel, and despite not having as much time to interact with customers because of the shutdown, we're able to engage in the right conversations and, and get, really interesting projects started. Interestingly, the strength in government, came from new use cases, specifically, you know, on modern applications, and also we started to see our first AI, use cases in government. So we, we feel very good about, what we saw in the, in the Fed this, this quarter and, our ability to execute, despite the shutdown and, you know, the continued trust that we have from, from our customers there.
Speaker #5: Frankly, I'm very proud of the execution of our federal team here, who, despite not having as much time to interact, put their shoulders behind the wheel.
Frankly, I'm very proud of the execution of our federal, federal team here, who, you know, put, put their shoulders behind the wheel, and despite not having as much time to interact with customers because of the shutdown, we're able to engage in the right conversations and, and get, really interesting projects started. Interestingly, the strength in government, came from new use cases, specifically, you know, on modern applications, and also we started to see our first AI, use cases in government. So we, we feel very good about, what we saw in the, in the Fed this, this quarter and, our ability to execute, despite the shutdown and, you know, the continued trust that we have from, from our customers there.
Speaker #5: With customers, because of the shutdown, we're able to engage in the right conversations and get really interesting projects started. Interestingly, the strength in government came from new use cases, specifically on modern applications, and also we started to see our first AI use cases in government.
Speaker #5: So, we feel very good about what we saw in the Fed this quarter, and our ability to execute despite the shutdown, and the continued trust that we have from our customers there.
Speaker #5: In terms of your question around do we have we seen a different dynamic between software and hardware in these hybrid multi-cloud architectures? I would say that as you know, part of what part of the what's really appealing for customers of F5 is the ability we give them to choose between hardware and software and to implement their software licenses across any infrastructure environment.
François Locoh-Donou: In terms of your question around, you know, have we seen a different dynamic between software and hardware in these hybrid multi-cloud architectures? I would say that, you know, as you know, part of what's really appealing for customers of F5 is the ability we give them to choose between hardware and software, and to implement their, you know, their software licenses across any infrastructure environment. Over the last, I think you will continue to see a trend towards more customers wanting to move to software because they ultimately, it gives them more flexibility, and especially flexibility against the uncertainty that I talked about. But over the last couple of quarters, we have seen very strong demand for hardware.
In terms of your question around, you know, have we seen a different dynamic between software and hardware in these hybrid multi-cloud architectures? I would say that, you know, as you know, part of what's really appealing for customers of F5 is the ability we give them to choose between hardware and software, and to implement their, you know, their software licenses across any infrastructure environment. Over the last, I think you will continue to see a trend towards more customers wanting to move to software because they ultimately, it gives them more flexibility, and especially flexibility against the uncertainty that I talked about. But over the last couple of quarters, we have seen very strong demand for hardware.
Speaker #5: Over the last, I think you will continue to see a trend towards more customers wanting to move to software because ultimately it gives them more flexibility.
Speaker #5: And especially flexibility against the uncertainty that I talked about. But over the last couple of quarters, we have seen very strong demand for hardware.
Speaker #5: So, I would say at the moment, the dynamic is we're seeing more customers wanting to spend in hardware, in part because of some of the use cases in AI data delivery where they really need the performance of hardware for high throughput.
François Locoh-Donou: So I would say, at the moment, the dynamic is we're seeing more customers wanting to spend in hardware, in part, because of some of the use cases in AI data delivery, where they really need the performance of hardware for high throughput, in part, because of some of the security use cases. So we're seeing that strong demand in hardware. I think, you know, over time, you will continue to see our software grow, and we feel pretty confident about our software growth for the long term.
So I would say, at the moment, the dynamic is we're seeing more customers wanting to spend in hardware, in part, because of some of the use cases in AI data delivery, where they really need the performance of hardware for high throughput, in part, because of some of the security use cases. So we're seeing that strong demand in hardware. I think, you know, over time, you will continue to see our software grow, and we feel pretty confident about our software growth for the long term.
Hardware for High throughput, um, uh, in part because of some of the security use cases, but we're seeing that strong demand in Hardware. I think, you know, over time you will continue to see our our software grow and and we feel pretty confident about our uh our software growth for the for the long term. Uh I would I would add that 1 1 element that is going to fuel all of them and we we really started to see this quarter is in the past, you know, our customers uh if if they were purchasing you know, Hardware or software from a 5 versus software as a service. Uh those were 2 completely different experiences and we have talked about building our application, delivery and security platform. And some of that Innovation is now making its way into production for our customers. And it's, it's fueling their desire to have convert platforms. They all want to have simpler operating environments and a number of the wins that we had this quarter were customers.
Speaker #5: In part because of some of the security use cases. So we're seeing that strong demand in hardware. I think over time, you will continue to see our software grow, and we feel pretty confident about our software growth for the long term.
François Locoh-Donou: I would add that one element that is going to fuel all of this, and we really started to see it this quarter, is in the past, you know, our customers, if they were purchasing, you know, hardware or software from F5 versus software as a service, those were two completely different experiences. And we have talked about building our Application Delivery and Security Platform, and some of that innovation is now making its way into production for our customers, and it's fueling their desire to have converged platforms.
Speaker #5: I would add that one element that is going to fuel all of this—and we really started to see this quarter—is, in the past, our customers, if they were purchasing hardware or software from F5 versus software as a service, those were two completely different experiences.
Consolidating spend on F5 because they had multiple Point, Security products or Point delivery products, and they went to F5, because, as we were a single vendor that could deliver, uh, across all of their environments and replace multiple of their food vendors and then on top of that, we're starting to give them a single experience from a single console. Uh, Cooper mentioned some of the xop, uh, uh, Innovation that we are investing in, uh, that gives them the ability to, you know, deploy policies from a single.
I would add that one element that is going to fuel all of this, and we really started to see it this quarter, is in the past, you know, our customers, if they were purchasing, you know, hardware or software from F5 versus software as a service, those were two completely different experiences. And we have talked about building our Application Delivery and Security Platform, and some of that innovation is now making its way into production for our customers, and it's fueling their desire to have converged platforms.
Speaker #5: And we have talked about building our application delivery and security platform, and some of that innovation is now making its way into production for our customers.
Speaker #5: And it's fueling their desire to have converged platforms. They all want to have simpler operating environments. And a number of the wins that we had this quarter were customers consolidating spend on F5 because they had multiple point security products or point delivery products.
François Locoh-Donou: They all want to have simpler operating environments, and a number of the wins that we had this quarter were customers consolidating spend on F5 because they had multiple point security products or point delivery products, and they went to F5 because as we were a single vendor that could deliver across all of their environments and replace multiple of their point vendors. And then on top of that, we're starting to give them a single experience from a single console. Cooper mentioned some of the xOps innovation that we are investing in. That gives them the ability to, you know, deploy policies from a single console across multiple environments. This quarter, we took the API discovery capabilities that were in F5 Distributed Cloud, and we're making them available on BIG-IP. So we're bringing that API discovery capability to the data center on-premise.
They all want to have simpler operating environments, and a number of the wins that we had this quarter were customers consolidating spend on F5 because they had multiple point security products or point delivery products, and they went to F5 because as we were a single vendor that could deliver across all of their environments and replace multiple of their point vendors. And then on top of that, we're starting to give them a single experience from a single console. Cooper mentioned some of the xOps innovation that we are investing in. That gives them the ability to, you know, deploy policies from a single console across multiple environments. This quarter, we took the API discovery capabilities that were in F5 Distributed Cloud, and we're making them available on BIG-IP. So we're bringing that API discovery capability to the data center on-premise.
Console across multiple environments this quarter, we took the API Discovery capabilities that were in F5, distributed cloud and we're making them available on big IP. So we're bringing that API Discovery capability to the data center on primit. That is a massive issue for customers know, 1 addresses that properly today. And so the consistency that we're bringing around these security and delivery capabilities across Hardware software across on premise. And Cloud uh is unique and that convergent adding is going to continue to fuel our work into the hybrid multi-cloud environments.
Speaker #5: And they went to F5 because we were a single vendor that could deliver across all of their environments and replace multiple of their point vendors.
Speaker #5: And then, on top of that, we're starting to give them a single experience from a single console. Cooper mentioned some of the XOPS innovation that we are investing in.
Speaker #5: That gives them the ability to deploy policies from a single console across multiple environments. This quarter, we took the API discovery capabilities that were in F5 Distributed Cloud.
And then meet uh, I also wanted to add on the on the government question. So the US staff is absolutely the the headliner on the strength that we're seeing, but that's what we also saw it fairly strong uh results in a Mia as well with a number of of government agencies, uh, particularly around the same data sovereignty. Uh, you know concerns, you can imagine those are, um, you know, uh, top of mind for government entities and so that drove a lot of strength into me. Uh, in addition to the, the strength we were seeing in the FED. Perfect. All right, great, thanks so much guys.
and our final question comes from the line of
Of James fish with Piper Sandler. Please proceed with your question.
Speaker #5: And we're making them available on BIG-IP. So we're bringing that API discovery capability to the data center, on-premise. That is a massive issue for customers; no one addresses that properly today.
François Locoh-Donou: That is a massive issue for customers. No one addresses that properly today. And so the consistency that we're bringing around these security and delivery capabilities across hardware, software, across on-premise and cloud, is unique and that convergence, I think it's gonna continue to fuel our growth into the Hybrid Multi-Cloud environments.
That is a massive issue for customers. No one addresses that properly today. And so the consistency that we're bringing around these security and delivery capabilities across hardware, software, across on-premise and cloud, is unique and that convergence, I think it's gonna continue to fuel our growth into the Hybrid Multi-Cloud environments.
Speaker #5: And so, the consistency that we're bringing around these security and delivery capabilities, across hardware and software, across on-premise and cloud, is going to continue to fuel our growth uniquely.
Hey guys, thanks for squeezing me in here, just circling back on product refresh. Um, what kind of capacity Plus expansion? Are you seeing typically in? And I get it, it's hard to tell exactly what your AI exposure to to Simon's earlier question. But um, how are you able to tell that these are capacity Plus increases related to sort of traditional General environment versus sort of AI modernization?
Speaker #5: into the hybrid multi-cloud
Speaker #5: environments. And then Meta, I—and that convergence, I think it's
Cooper Werner: And then, Meta, I also wanted to add on the, on the government question. So the US Fed was absolutely the headliner on the strength that we're seeing. But that said, we also saw fairly strong results in EMEA as well, with a number of government agencies, particularly around the same data sovereignty, you know, concerns. You can imagine those are, you know, top of mind for government entities, and so that drove a lot of strength in EMEA, in addition to the strength we were seeing in the Fed. Perfect. All right, great. Thanks so much, guys.
Cooper Werner: And then, Meta, I also wanted to add on the, on the government question. So the US Fed was absolutely the headliner on the strength that we're seeing. But that said, we also saw fairly strong results in EMEA as well, with a number of government agencies, particularly around the same data sovereignty, you know, concerns. You can imagine those are, you know, top of mind for government entities, and so that drove a lot of strength in EMEA, in addition to the strength we were seeing in the Fed.
Speaker #4: Also wanted to add on the government question. So, the US Fed was absolutely the headliner on the strength that we're seeing. But that said, we also saw fairly strong results in EMEA as well, with a number of government agencies—particularly around the same data sovereignty concerns.
Speaker #4: You can imagine those are top of mind for government entities, and so that drove a lot of strength in EMEA, in addition to the strength we were seeing.
Speaker #4: in the Fed. Perfect.
Meta Marshall: Perfect. All right, great. Thanks so much, guys.
Speaker #1: All right. Great. Thanks so much,
Speaker #1: guys. And our final
Operator: Our final question comes from the line of James Fish with Piper Sandler. Please proceed with your question.
Operator: Our final question comes from the line of James Fish with Piper Sandler. Please proceed with your question.
Speaker #6: The question comes from the line of James Fish with Piper Sandler. Please proceed with your question.
Yeah. So 1 thing that we're seeing is a lot of customers uh have higher security needs which is driving a performance. Uh requirement. So we've been seeing this for the last couple of quarters and this trend is continuing where customers are refreshing very often at higher up in the portfolio. And so, we're seeing a, a higher ASB at that time of refresh. Uh, and then also additional capacities in terms of more units. And so it's I'd say It's a combination of kind of getting in front of some of the performance needs for security as well as getting in front of the kind of Downstream performance needs. They're anticipating related to Ai workloads and so the customers are just being a little bit more front and center in terms of their planning than than we had seen in Prior Cycles.
Speaker #7: Hey, guys. Thanks for squeezing me in here. Just circling back on product refresh. What kind of capacity plus expansion are you seeing typically in?
James Fish: Hey, guys, thanks for squeezing me in here. Just circling back on product refresh, what kind of capacity plus expansion are you seeing typically? And I get it, it's, it's hard to tell exactly what your AI exposure to, to Simon's earlier question, but, how are you able to tell that these are capacity plus increases related to sort of traditional general environments versus sort of AI modernizations?
James Fish: Hey, guys, thanks for squeezing me in here. Just circling back on product refresh, what kind of capacity plus expansion are you seeing typically? And I get it, it's, it's hard to tell exactly what your AI exposure to, to Simon's earlier question, but, how are you able to tell that these are capacity plus increases related to sort of traditional general environments versus sort of AI modernizations?
Got it. Thanks guys.
Speaker #7: It's hard to tell exactly what your— And I get AI exposure to assignments— earlier question. But how are you able to tell that these are capacity plus increases related to sort of traditional, general environments versus sort of AI?
Thank you. Thank you.
Ladies and gentlemen, that does conclude our question and answer session.
I would like to turn the floor back over to Suzanne dulong for any closing comments.
Speaker #7: modernizations? Yeah.
Thank you everyone for joining us today. We look forward to seeing many of you out and about during the quarter.
Cooper Werner: Yeah, so one thing that we're seeing is a lot of customers have higher security needs, which are driving a performance requirement. So we've been seeing this for the last couple of quarters, and this trend is continuing, where customers are refreshing very often higher up in the portfolio, and so we're seeing a higher ASB at that time of refresh, and then also additional capacities in terms of more units. It's a combination of kind of getting in front of some of the performance needs for security, as well as getting in front of the kind of downstream performance needs they're anticipating related to AI workloads. So the customers are just being a little bit more front and center in terms of their planning than we had seen in prior cycles.
Cooper Werner: Yeah, so one thing that we're seeing is a lot of customers have higher security needs, which are driving a performance requirement. So we've been seeing this for the last couple of quarters, and this trend is continuing, where customers are refreshing very often higher up in the portfolio, and so we're seeing a higher ASB at that time of refresh, and then also additional capacities in terms of more units. It's a combination of kind of getting in front of some of the performance needs for security, as well as getting in front of the kind of downstream performance needs they're anticipating related to AI workloads. So the customers are just being a little bit more front and center in terms of their planning than we had seen in prior cycles.
Speaker #3: So one thing that we're seeing is a lot of customers have higher security needs, which is driving a performance requirement. So we've been seeing this for the last couple of quarters, and this trend has continued, where customers are refreshing very often higher up in the portfolio.
Speaker #3: And so we're seeing a higher ASP at that time of refresh, and then also additional capacities in terms of more units. So I'd say it's a combination of kind of getting in front of some of the performance needs for security, as well as getting in front of the kind of downstream performance needs of their workloads.
Speaker #3: Anticipating related to AI, and so customers are just being a little bit more front and center in terms of their planning than we had seen in prior cycles.
Speaker #7: Got it. Thanks,
James Fish: Got it. Thanks, guys.
James Fish: Got it. Thanks, guys.
Speaker #2: Thank you. guys.
François Locoh-Donou: Thank you.
François Locoh-Donou: Thank you.
Speaker #4: Thank
Speaker #4: Ladies and gentlemen, that does conclude.
Cooper Werner: Thank you.
Cooper Werner: Thank you.
Operator: Ladies and gentlemen, that does conclude our question and answer session. I would like to turn the floor back over to Suzanne Dulong for any closing comments.
Operator: Ladies and gentlemen, that does conclude our question and answer session. I would like to turn the floor back over to Suzanne Dulong for any closing comments.
Speaker #6: Our question and answer session has concluded. I would like to turn the floor back over to Suzanne DuLong for any closing remarks.
Speaker #8: Thank you, everyone, for joining
Suzanne DuLong: Thank you, everyone, for joining us today. We look forward to seeing many of you out and about during the quarter.
Suzanne DuLong: Thank you, everyone, for joining us today. We look forward to seeing many of you out and about during the quarter.
