F5, Inc. Common Stock 2026 Q4 Earnings Call

I am Suzanne DuLong, F5's Vice President of Investor Relations. We are here to discuss our fourth quarter and fiscal year 2026 financial results. François Locoh-Donou, F5's Chairman, President, and CEO, and Cooper Werner, 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 Today's press release is available on our website at f5.com, where an archived version of today's audio will be available through January 26, 2027. We will post the slide deck accompanying today's webcast to our IR site following this call. 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.

Thank you, Suzanne, and hello everyone. Fiscal 2026 was an exceptional year for F5, and Q4 closed it out with strong execution and accelerating strategic momentum. We delivered Q4 revenue of $917 million, up 13% year-over-year and above the top end of our guidance range. Importantly, that top-line performance was powered by product revenue growth of 23%. With Q4, we have now delivered nine consecutive quarters of double-digit product revenue growth, a clear signal that our customers are choosing F5 consistently and at scale. For the full year, total revenue reached $3.4 billion, representing 11% annual growth, including 19% product revenue growth. These results reflect three mega trends we have consistently highlighted: hybrid multi-cloud adoption, the expanding threat landscape, and accelerating AI inference. We called these trends early, and we built for them. Our FY 2026 results demonstrate how these trends are actively reshaping customer behavior right now.

They also frame our FY 2027 revenue outlook. Against an FY 2026 baseline that finished well above our main investor event expectations, we are guiding to FY 2027 growth of 8%-9%. We expect to deliver a third consecutive year of double-digit product revenue growth in FY 2027, providing a solid foundation to our outlook. Cooper Werner will elaborate on additional guidance details in his remarks. Before I highlight some customer wins from the quarter, I want to speak to another factor driving confidence in our outlook: the pace and quality of our innovation and the structural position it is reinforcing. The fundamental truth of modern enterprise security is that you cannot enforce consistent runtime protection without being in the data path. For three decades, F5 has built and defended exactly that position in the flow of traffic for many of the world's largest enterprise application environments.

That footprint is the foundation. What we are building on it is the advantage. In the last six months, that advantage has become more pronounced because the threat environment has fundamentally changed. Frontier AI has accelerated vulnerability discovery to machine speed, expanding the attack surface through APIs, agents, and AI models while compressing the time available to respond. More than 70,000 vulnerabilities were discovered and published through September this year. This is up roughly 50% over all of 2025. NIST reported a 208% year-over-year surge in vulnerabilities between July and September alone. Meantime to exploit has collapsed to negative seven days. A typical 43-day patching cycle is now a liability. Customers know it, and security is increasingly leading our customer conversations. An investment is moving away from fragmented point products towards converged platforms that enforce consistent policy in real time across every environment where applications and AI run.

That is precisely where F5 is differentiating. In less than six months since launching in March, we ended Q4 with more than 300 customers deploying our AI-powered WAF capabilities. More than 75% of these deployments are operating in blocking mode. That figure matters. It means customers are not just evaluating AI-assisted security. They are trusting it to stop malicious activity in production. Let me make that real with something that happened just last week. On Wednesday, two critical vulnerabilities were disclosed in PHP, the software behind roughly 70% of the world's websites. When a disclosure like that hits, a race starts. Attackers begin weaponizing exploits within hours. Defenders typically wait for vendors to write, test, and ship a new signature. Last week, we all saw websites being taken down so as not to risk attack. Our AI-powered WAF customers did not have to wait.

After the disclosure, our researchers hit an F5 protected application with multiple attack variations. Our AI-powered WAF stopped every one of them in blocking mode while letting legitimate traffic through. Our customers did not have to write a new rule, and they stayed protected while they patched. That is the shift we are betting on, security that adapts at the speed of the attacker, not the patch cycle. We are applying that same AI-based detection capabilities to API security, moving protection beyond static signatures and rules to models that identify and stop malicious API requests in real time. As AI agents drive more machine-to-machine activity, APIs have become the primary pathways agents use to reach models, data, and critical business systems. Protecting those interactions at runtime is becoming essential, and F5 is already doing it. Protecting customers at runtime is one dimension of our advantage.

Strengthening the software itself is another. We are leveraging frontier open source and open weight AI models to identify and remediate vulnerabilities in our own code base faster than was ever previously possible. We are continuously scanning more than 140 million lines of code with F5-built AI harnesses and leveraging AI to remediate thousands of vulnerabilities. As a result, in just the last 3 months, we have implemented engineering fixes that previously would have taken 7 years of work. In Q4, as part of an accelerated security cadence, we delivered two software updates focused entirely on remediating vulnerabilities before they can be exploited. We are pairing that accelerated cadence with F5 Insight, our solution for fleet-wide visibility, upgrade orchestration, and lifecycle management across BIG-IP environments.

Launched in March, F5 Insight has gained the trust of more than 200 customers with automated fleet management already dramatically reducing upgrade times and operational risk. Together, accelerated critical releases and F5 Insight's automated deployment capabilities create a faster path from vulnerability to protection, enabling customers to find, fix, release, and deploy at greater speed and scale. F5's differentiation in this fundamentally new threat environment is showing up in our pipeline and our wins. It's also being reflected by the analyst community. In July, F5 was named a leader in SecureIQLab's Cloud WAF Cyber Risk Validation Comparative Report. In September, IDC named F5 a leader in its MarketScape for Worldwide WAF Platforms. Also in September, just 4 months after we launched the F5 AI Security Platform, Gartner recognized F5 as one of only two market shapers in AI application security. Three recognitions in 3 months.

We believe this progression reflects both the pace of our innovation and strength of our market position. Our application delivery and security platform is one platform, one policy framework, one management plane. We deliver consistent security and delivery policy from data center to edge to cloud for every app, every API, and every AI workload the enterprise runs. No point product vendor can replicate that position, and we are investing and innovating to extend it. Before I pass the call to Cooper, let me bring our differentiation to life with a few customer wins from the quarter. Each one shows why the mega trends reshaping IT are translating directly into demand for F5. I will start with wins driven by hybrid multi-cloud adoption, which is driving demand for F5 across data center build-out, digital sovereignty, competitive displacement, and platform consolidation.

Customers operating across on-premises, co-location, and cloud environments cannot meet data residency and compliance requirements with disconnected point tools. They need consistent policy enforced everywhere, and that requires a converged platform. That fact is showing up directly in our business. 29% of our top 1,000 customers now deploy three or more F5 product families, up from 22% in 2025, and we are seeing strong platform traction across all theaters. In an eight-figure win from Q4, a large regional North American financial institution selected F5 as its unified application delivery and security platform across its on-premises, co-location, and cloud environments. The customer had accumulated a fragmented architecture over time, including two incumbent ADC providers and two separate cloud security and CDN tool sets. This approach created policy inconsistency and operational complexity that sovereignty and compliance requirements increasingly prohibit.

Following a competitive evaluation, F5 consolidated the entire estate, displacing all four incumbent vendors. BIG-IP anchors high-performance application delivery across on-premises and co-location environments. Distributed Cloud WAF, data intelligence, and CDN extend consistent protection into the cloud. F5 Insight centralizes visibility and management across their full environment. One platform, one policy framework from on-premises to cloud. In another win from the quarter, a central bank technology authority in Asia selected F5 as the unified platform for a national financial services cloud built to keep critical banking infrastructure under domestic control. Following a rigorous public sector tender on technical merit and cost, F5 displaced two incumbent application delivery competitors. BIG-IP powers high-performance traffic management and high-availability delivery across the customer's own data centers. Distributed Cloud WAF, data intelligence, and CDN extend consistent application security and API protection into the cloud, all managed through a single F5 management plane.

The expanding threat landscape continues to accelerate demand for F5, and the data from our own solutions tell the story. In Q4, F5 Distributed Cloud telemetry recorded an 84% year-over-year increase in WAF requests and a 103% surge in API security events. Frontier AI models have escalated the threat level for organizations globally. As a result, the volume and velocity of attacks at the application layer is compounding and organizations are taking action to defend themselves. During Q4, a leading European financial institution determined that signature-based tools could no longer keep pace with the speed and scale of AI-driven threats. Following a competitive evaluation, the customer standardized on F5 as their single application delivery and security vendor across EMEA, APAC, and the Americas. They deployed our AI-powered WAF and Bot Defense on F5 Distributed Cloud alongside Advanced WAF on BIG-IP.