Layers 4 to 7 Fire F5 Results

Switch vendor F5 Networks Inc. (Nasdaq: FFIV) busted out an impressive set of first-quarter results last night, thanks largely to its Layers 4 to 7 switches and traffic management devices.

The company posted quarterly revenues of $60 million, up 66 percent on the same period last year and beating analyst estimates of $54 million (see F5 Reports Q1). F5 earned 26 cents a share, or $10 million, up from the 11 cents or $3.8 million it reported a year ago. Analysts had expected F5 to report 21 cents a share.

Executives on last nights conference call say the performance was boosted by strong growth in the company’s core traffic management business across all geographies. The U.S. accounted for the lion’s share of this, with 59 percent. Japan, EMEA, and Asia/Pacific accounted for around 18 percent, 15 percent, and 8 percent, respectively, according to F5 CEO John McAdam.

Merrill Lynch & Co. Inc. analyst Tal Liani identified the company’s Layers 4 to 7 business as a highlight of the quarter, with product revenues up 26 percent. “We suspect that F5 continues to grow faster than the market and is taking share away from Nortel, particularly from its enterprise customer base,” he says.

F5 has certainly been busy in the Layers 4 to 7 space over recent months, with the company unveiling its long-awaited “Buffalo Jump” traffic management device last year (see F5 Revenues Do a Buffalo Jump).However, the company’s SSL VPN revenues actually declined during the quarter. McAdam says F5 will combat this by going for larger deals. “The one area where we have an opportunity with SSL VPN is to get the deal size up,” he says. "There are some indications that that might grow."

F5 also timed a number of product announcements to coincide with its first-quarter results, specifically a software upgrade on its Firepass Controller SSL VPN product and a new low-end device (see F5 Leaps Into SMB Market and F5 Launches New FirePass Controller).

Execs on the call promised that more hardware announcements are in the pipeline with “new platform structures and extensions to the product line” planned.

F5’s competitor Aventail Corp. is also planning a number of enhancements to its product range with two major upgrades planned for this year. These will focus on both hardware and areas such policy management, end-point control, and ease of use.

The market responded positively to F5’s results. In early trading Thursday morning, the company’s shares were up $2.21 (4.95 percent) to $46.90.— James Rogers, Site Editor, Next-Gen Data Center Forum