F5 (FFIV) 29 Jul 242024 Q3 Earnings call transcript

Good afternoon, and welcome to the F5 Inc.

Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions]. I'll now turn the call over to Mr. Suzanne DuLong. begin. may you Ma'am,

making I'm also Locoh-Donou, FX's and FX's Vice the FX will FX's welcome. Other session. today's Investor of Q&A to members Frank President answer Relations. Executive the be CFO, and Francois President team President remarks Suzanne and on Vice call. are DuLong, executive of Pelzer, prepared here Hello, and during CEO; questions

audio archived will on of available our is website version today's of where fX.com, copy XX, today's A October available an be through XXXX. press at release

We our Time, replay will (XXX) or the phone, conclusion be will XX, call. post webcast the by July slide deck midnight telephone XXXX. XXX-XXXX access IR of XXX-XXXX available accompanying through today's and To replay to webcast (XXX) the of use today's site meeting Pacific at dial The our IDXXXXXXXX.

additional me to reach or directly follow-up at For questions, please out information s.dulong@fX.com.

statements believe, by that such and differ Our target. which include results implied actual those discussion words materially forward-looking uncertainties statements. contain statements, to from today expressed anticipate, expect forward-looking cause our involve or as these and will These may risks

detail summarized our affect factors that in in filings. results press SEC announcing have our results and our release financial We the may in

update deck. reference slide will Please In addition, of and note information release see reconciliation FX in discussion. any today's in press presented earnings full Please that metrics no we non-GAAP GAAP during our today's non-GAAP this appendix to duty to in our call. has the

over the that, With I turn to Francois. call will

for outlook. review additional results of as well provide will color QX Thank QX. Thank expectations you, highlights to joining speak and on and our you us for our then our QX our the will Frank I everyone. hello, details Suzanne, as today.

range. million, which We delivered top guidance end at is of revenue revenue our of the QX $XXX

favorability EPS well of our in top $X.XX, tax a and discipline as We continued operating as above guidance year-over-year non-GAAP also our grew and software Total this of is revenue end sequentially. well some delivered X% -- the as quarter. of the result XX%

provide momentum positive indicator $XXX new both offset in And quarter, growth of Software renewals largely Our contributed our during continued -- of Global In grew satisfaction a software quarter. also revenue X% the Services and XX% Global software customer QX. strong to software and an in Services was shift systems down the from QX, revenue, which year-over-year. combination last million, overall. growth

During pipeline QX, by period areas see to we started evidenced prolonged rates. improving some budget and demand improving a scrutiny, of close after of

growth we the in QX, As in new $XXX a revenue million puts guidance. these to to top our track uptick which 'XX range of in end deliver Factoring revenue towards of bookings in FY result, including strong $XXX an our million, business. on drove signals, team expect us QX the

our considerations: X into from and informed by software growing pipeline; Our outlook two, expansion trends the renewals; three, is visibility customers. our one, continued strong

FY to 'XX revenue we FY year. billion, 'XX. overcome is roughly expect headwind the this flat We despite $XXX have backlog $X.X roughly This million systems had of approximately with

good visibility characterization prior the have now single-digit of strong high mid- up thus we expect This modest and for year. growth to far growth. from flat performance revenue this QX, software Given into to the our the year, is from we software

-- EPS X% us our of range from XX%. discipline saw operating enable We also FY And will tax achieve QX, approximately expect X% this growth. to growth continued combined up of is the favorability non-GAAP we in with to 'XX prior

applications complexity, cost are and quarter. highlighting will teams only The FX from I Before are in wins outlook and greater current some of AI-driven our how in solving the Frank crisis. They we has what challenges customers' battling customer risks state the recap security hybrid is our for ball challenges, and customers' our by these discusses multi-cloud IT delivery detail, making call of more increasing pronounced. results application notable simultaneously, fire, enterprises large and

can FX truly of today's multi-cloud the demands Only hybrid support application infrastructures.

or We secures, only any anywhere. API app are and solution delivers the optimizes any provider that

We differentiated ways. addressing points are pain in several customers' in highly

delivers app of effective most comprehensive consolidate First, security enable to in API point targeting trade-offs. and and platform platform industry. customers the capabilities no integrated with security, our a onto threats products a specific FX and the efficacy We app suite single best-in-class

operations enables require. solution Second, environments. that public our to customers' clouds, has with a their simplicity businesses multi-cloud hybrid flexibility simplification. footprint Only extends edge customers' the FX across demand the on-premises FX the and IT

In the deployed connecting environments simplify them. solutions are ridiculously multi-cloud applications easy. disparate on to make across in we hybrid and Our short, and infrastructure mission a

operations. third, silos and ultimate more life consistent IT We delivers with rationalize analytics. streamlined automation This and customers cost-effective vendors sets, FX to policies, And standardization customers' and management consolidate operational deployments. operations and comprehensive their enables scalable tool on-premises and of rich automation, cycle

of with flow the traffic us well-established our plays extinguish FX for combined ways cannot. in ball the fire These competitors embedded points our strong to X role differentiation application of the customers enables of in

a wins QX delivering are how that how from illustrate review capabilities FX few value our for me our Let and customers. customer is differentiated

The our first will X highlight speak customer I application and examples security API capabilities. to

modernize and products an QX, infrastructure. During launched a IT company to security its services U.S.-based effort

BIG-IP estate, Cloud to was infrastructure. a BIG-IP customer SaaS-based and IT and scalable, hybrid cloud customer The its solutions. SaaS-based selected expand to and security creating services to existing an a was hardware FX self-managed complement the cloud customer looking Specifically, beyond and Distributed

pace. at and to software and standardized their hardware, enabling deployment API application own deliver of security options and multi-cloud portfolio across their them FX's environments, SaaS modernize hybrid

FX attack mitigation Also threat DDoS application changed layer We a completed in down Defense brought a a quickly services. during stopped team a suite that experienced and partner successful and them. WAF Cloud activated government attacks, of quickly and launched its Distributed solutions FX via When the FX's and tactics brought operations actor U.S. the emergency servers. state a when deployed quarter, channel Bot

including to result As is and properties. the application of their pressure, and customer other web under performance a additional FX's DNS moving FX, services

on security accolades industry-leading as continued performance move take our highlight point industry customers. will winning experts of I differentiation, to that Before innovation well next is minute and I to a as our from

quarter, FX independent leader as an parties. the by was application several During recognized security

FX SecureIQLab's is by CyberRisk passing rating, leader WAAP assessment XXXX in Cloud operational security a perfect vulnerability Distributed a efficiency Design Secure both rated Report. efficacy score. WAAP WAAP and SecureIQLab's in FX Validation First, Cloud earned the with

our security, and the pay singled eliminating In lauded customers disparate approach and holistic web FX out for as Enterprise WAAP visionary Cloud is its in security for XXXX Distributed In security for and FX API solutions. API report app to for protection addition, its need capabilities. or Management Vision Associates vendor application manage to API a API

as FX full KuppingerCole setting runner for as finally, recognized is excellence application cybersecurity defenses. in that FX And the leader firewall market, in bar web a a spotlighting

is multi-cloud The be IT how simplicity flexibility demand businesses our the happen against competitors. require. next examples continued X operations their hybrid momentum of highlight will customers' with They customer FX enabling exemplify to our wins I the also both

a BIG-IP, During their and consolidate provider. platform will that replace web The delivers and of U.S.-based technology WAF I capabilities, on-premises company will we deployment also and of competitor land the our ADC commercial collaboration quarter, WAF selected that a software infrastructure XXXX, efficacy standardize protection. use centers. for FX note displaced this to customer a selected win. across because incumbent the options, and was to and models. In their hardware third-party including DDoS its data advanced our and was DNS and expand a flexible FX video our

was Distributed this selected the from the single security layer. APAC-based quarter, another challenges FX FX outperformed of Cloud to looking delivery multiple address abstract to agency for the app process large Distributed case, In customer through Cloud In Initially, the travel capabilities use provider. incumbent the streamline its enable it example to proving a simultaneously.

As disruption new a them result, FX, consolidated to and migration while application customer data stage the risk. minimizing centers enabling to on

and addition, features, drastically Cloud's observability SaaS customer. console reduced operational In the for overhead Distributed comprehensive

final customer rich consistent comprehensive we how speak automation I policies, highlight The analytics. customers' wins and with X will operations streamline to

customer XX and a a an bank the and network. deal QX, is our secured retail was global During team extensive that in investment land making. large months The expand branch with

IT to new building Banking regulations environment. also to segments implement automation to They existing software their environments. to NGINX enable Plus require accomplish to practices for they of network the footprint. BIG-IP human parallel best a their their upgraded BIG-IP to augment NGINX in are existing from To selected saving them capabilities automation time open error. board, them BIG-IP's the across virtualized potential run they source. separate reducing and this,

to days in or, are cases, XX versus operationalize even required previously. BIG-IPs multiple the minutes to XX able now just weeks in some They

posture their enables across and secure access to application NGINX Kubernetes environments. Plus consistent reliable addition, a applications of all security In delivers and their

is BIG-IP time. customer subscription services highlight is will is from final their previously. the automotive it and and renewing the This BIG-IP to expanding seconds delivery or weeks existing application The took leveraging a The in months I capabilities who customer second the compared an security company. quarter automation enable example self-service with BIG-IP's global to customer is for

consumption renewal. internal accelerated that significant has significantly each to external with this has so market BIG-IP value their capabilities BIG-IP's doubled customers. of them customer's time to and both for The automation is

are some revolution ensure I customers pass AI, will Before we and Frank, call brief with are to about working commentary they close with AI shaping the I ready. the how enabling to AI

initiatives of several and customers these focusing to to address AI-related continued Two their their we QX, our interactions. challenges. collaborating have During pivotal on AI with critical major emerged from trends engage

both AI organizations, networking largest nonnegotiable for and factories inference. are that model security are recognize to building training and are the high-performance First, which starting

foundational both AI or FX's to AI delivery use model our demands capabilities for case distinctive in Second, where use models ADC application factories the and constructing robust security APIs extensively. organizations inference role will an and play. important In for security. using are inference, have top-tier executing that leading also training performance and scenarios platform This

use winning and seeing are We early cases. AI

to rapidly securely As selected data model company FX systems training large-scale significantly from clusters, transfer an automotive global data example, process. storage BIG-IP their to and accelerating a

our external use access of augmented models as time. solutions AI cases data in incorporate sources they the this, retrievable generation For real optimizing performance are like and

by customer, API which family running protect via our In is is being traffic. era, utilized this communication and all happening balance on-premises public distributed, increasingly private customers APIs, other to multiple are from the clouds AI-related and in across entire Separate load clouds. product AI

needing era. positioned organizations distributed an their in services relationships consistent for to APIs. partnerships with solution management Distributed also are FX's is advance the for long-standing AI leaders, we AI Cloud security Leveraging semiconductor and our these ideal strategically

scale. Our X approach X customers. are AI we AI enterprises remains to practical probably focusing expect in solving production at technology-agnostic, years Realistically, real-world deploying we on challenges from out for

efficiently. and just enables to critical the the to AI Importantly providing adapting it, potential shaping though, of that actively we harness the infrastructure are customers FX safely not is AI revolution, our full

turn I Frank? call Now the to will Frank.

. Product lapping and Francois, product million a increases. XX% you, grew our will on X% Global million, everyone. with Thank I year-over-year. level the line million, XX% Services and of of results XX% We $XXX a QX revenue -- expectations, ago our before revenue. backlog-related in due Systems QX revenue decline QX elaborate price of than totaled $XXX slowing delivered prior to I our year million X%, and review lower with $XXX good benefit a of afternoon, of of systems revenue outlook. demonstrates Services which Global a $XXX reflected of mix year-over-year quarter. shipments revenue down

representing XX% totaled X% year-over-year and or and XX% revenue revenue X% million Software contributed sequential XX% revenue, $XXX million, growth. growth Subscription-based growth. total of growth sequential year-over-year $XXX software representing

as sophisticated with Subscription Rounding majority trend are renewing, Defense in is expansion but exception remained some the software agreements. up revenue opting our our perpetual QX solution global this million. from subscription-based recurring QX's maintenance of revenue solid contributed the customers from point revenue, sources An lower-cost to in Bot XX% as year of the multiyear of ago. includes our our less portion contributed are where renewals out revenue, options. services software revenue. for a Revenue $XX XX% strong Recurring continued well

XX% Americas XX% of with revenue. revenue. revenue. revenue of X%, delivered was APAC year-over-year, quarter basis, declined growth, a X% XX% of representing strong representing representing total X% a EMEA On from down regional

product customers verticals, strong X% XX% of major also the another enterprise including bookings product Federal. performed bookings, customers delivered representing our XX% U.S. of well, in quarter. from at Government Looking performance, representing

providers service of Finally, bookings. QX XX% represented product

and XX.X%, continued margin points was GAAP improvement of strong, operating XX.X%. results QX gross approximately FY reflecting was were discipline. an XX margin our operating QX Non-GAAP gross and 'XX. -- basis from Our

operating non-GAAP $XXX GAAP expenses expenses operating Our million. were $XXX were million, our

Our GAAP XX.X%. operating was margin

quarter our Our GAAP FY an was non-GAAP was operating for XX%. XX -- reflecting improvement from approximately effective margin basis rate XX.X%, of the We tax QX 'XX. points of

Our non-GAAP associated effective tax return tax filing QX rate nonrecurring income to benefit annual the our during quarter. last of with reflects lower-than-expected XX.X%. Similar rate federal was a the year, tax

net million GAAP $XXX income was share. quarter Our $X.XX for or the per

income million net was per or $X.XX non-GAAP $XXX Our share.

totaled billion, sales higher to I days generated will end. bookings DSO which operations very QX. in in the $XXX for to to balance and down now revenue Cash to at cash was deferred lower in $XXX ago a cash $X.XX also quarter million change weighting quarter approximately million line and sheet, and CapEx the QX. remained days, due the period. strong. turn XX was from XX million. revenue. The our -- with investments of $X allocation X% flow Deferred subscriptions term-based corresponding is flow We in from of was a year We

In lapping renewals. price addition, we maintenance on increases are

decisions, maintenance longer go-to-market no strategic some including towards implemented have agreements. customers also multiyear incentivizing We

reflected $XXX flow million share. commitment price We of approximately towards of to of shares direct have to Year-to-date, XX% ongoing repurchases, an flow towards share we free free our QX repurchases of returning to repurchased FX of share at Our share least far shareholders. cash our at cash excess $XXX commitment in repurchases. used worth in our cash average per XX%

employees. the we Finally, ended approximately quarter X,XXX with

million will for slight the business I now revenue of in QX range million QX. to -- software a to We strength in renewals expect $XXX speak our and our of uptick on the outlook new momentum. $XXX we

we $XXX approximately operating of XX%. We -- estimate million. non-GAAP expenses to gross expect margins million non-GAAP $XXX QX of And

QX EPS targeting non-GAAP per range in the to of $X.XX share. $X.XX are We

approximately We $XX million. of to expect expense share-based million QX compensation $XX

range billion year. the of mid- single-digit to will XX%, up our to growth, year. revenue our be revenue We implies the is for we Our the to prior start updates down positive high from in XX% $X.X had growth non-GAAP QX in the flat FY of -- now expectation We to in modest 'XX to at expect some FY Embedded for outlook the the rate tax guidance effective our prior expectation of expect from for this 'XX. range we software XX.X% approximately XX%.

growth, improving we XX%. rate of operational compared our from FY is With to expectations, is prior a discipline our combination the revenue EPS up of of expect and The approximately that to expectations X% 'XX X% tax now this growth continued non-GAAP prior -- growth.

gross and basis gross -- an margins for revising 'XX non-GAAP continue improvement range of not the to We from our targets are XX% XXX expect to or operating XX%, of in margin FY 'XX. FY to points reflect and which XX would

basis operating We of an and of from also -- to expect XX%, XXX continue range to XX% to the 'XX. would improvement which non-GAAP points XXX FY reflect margin in

more navigate in software 'XX to is Delivering news. guidance software-led. of FY the revenue, pass the that as 'XX team with of back FX. our to I was call in the consecutive I've have, signaling likely transition through to a retire majority the massive third made where to XX-K completed that decision QX the that some the to hardware-led I plan personal I remain joined make and our fact, Francois, filing from I CFO year FX Before revenue company the -- successfully we wanted one mid-November. team a in transition. FY product will to share from help XXXX our

November financial His institutional between upon strong smooth been been grown has expect executive for for we as which continue our our Finance to a to you software years, is team. business the departure. FX as procurement addition last the work during a he organizations, SVP and to and new transformation. been ensure expertise and great now SVP managing will our pivotal in real currently FX has leader, trade team responsibilities He a XX as him executed is estate He of the and on slated who be have changed. FP&A, Cooper consistently Werner, take has leadership guiding years, and our taken my XX have Cooper with of I knowledge over extensive well. with CFO and to Finance, know transition. Many has to model we engaging is of Cooper

I'll pass Francois? the that, With Francois. to call back

thank Frank. the X years. enough last I you counsel your cannot partnership over you, truly for Thank and

of executive been an FX. on have impact team immeasurable You an integral our leadership part with

of knowledge and FX's deep software-led was software Your SaaS-led instrumental businesses to company. successful a to transition

at and You and and point, have thank extraordinary you an know for here advocate goodbye partner been it's and friend. employees I not a tireless want really business FX, our but our this I Cooper your at about ability with the worked tenure now. succeed my role. you closely in I in also enormous CFO comments Cooper. to FX have I and his echo have very will and confidence to

FX operational I and they in uniquely and escalating a with conclusion, risks. cost positioned help as multi-cloud security reality complexity, hybrid reiterate will In that is forward customers to brings move our that untenable considerable it

the are their optimization, are infrastructures AI As large IT enterprises modernizing and IT driving strategies for also comprehensive businesses. across they their developing globe cost

is meaningful in modernization to enhanced process multi-cloud to an and at scale. our customers itself ready efficiencies. across FX FX and hybrid infrastructure proving security, and management operational AI performance IT automation delivery, leverage their invaluable this partner with optimizing environments is enabling application

their forward, world spend. will to are all their applications, factor. for, and we share AI-driven hybrid the form gain we era we customers have we positioned budgets We of of in and of believe especially is covers as require we as IT customers needs the invested their This regardless well believe confidence SaaS priorities, more -- security of going enter our app capture a platform and and that delivery

call open to please Operator, the questions.

Instructions]. [Operator

Long Tim with from is Barclays. Our first question

quarter I out a of sequential all Frank, you us you drove don't the side, the quantify role know congrats that? Francois. the Congratulations give growth, you parse strong you in kind touch Is maybe can any new a you seems lot of Frank software Wanted the it coming. for at to and on said on strong surprisingly best but Cooper, looking just of what specifics, to -- little way or there. and the business. can way Any new there the luck,

hardware And X renewal, do what's at Is as in as are these currently? high about there dollar true far follow-up. think a retention? looking better then stronger the then software I have of How better a the aspects forwards? level, And we,

Sure, Tim.

the kind for So for job so a the is thanks much and Cooper to do great going in question. so Yes, wishes the much thanks role.

software, On you update know, will some the at end ARR the in as of QX. metrics we particular, type of the

number. I a to be So obviously take get continue I renewals, particular, of world-class don't across still that us a We want helping say much to look business, into it would business. expansion. too But with at the is The NRR, bit about in we when in talked some subscription that. in that little is challenge somewhat a quite bot which strong the

-- ended it that saw at you really was we the obviously was based top But up was given expecting off activity what guidance. a the course was we of But necessarily we software some of cases, business into activity. in And pipeline. really a had new through see business our hardware And see it deal more that broadly, strong in lot in converts it the of and the which the we in end the new the guidance not quarter, negotiations.

of sort extrapolate can new business into you a in that activity. So lift

you? about backlog know networking hardware. challenge, most a on do it's How still quickly is the a these see where at we of just other levels, you I hopefully but pockets comparison starting then like to does given bottom. And are seem feel of are it that Great. behind Okay.

change. the macro several last have digested Tim, but sweating seen over current it's we're last a have Look, customers the their seen we the still over customers I hardware quarters inventory assets we several quarters, of to starting stabilize as and Francois. see have think that number in environment,

on But at think we the this is that levels view demand good. going And pretty hardware are next our to -- year. into are we year, so signals the be about this we're for the year, going

next so a it's will year Tim. to And year. not but decline, this few could possibly up be is our hardware certainly expectation that by use relative driven And cases,

have customers activity, on to is no the have to horizon of sweated to be we see Number a hardware service also, And strong largely at CapEx we're starting that close their this pipeline assets specifically We're in catalyst provider point. is we're in come AI for this and that service one this assets for up And to longer provider. pretty that refresh from digested or they going very aggressively. large starting in inventory tech starting and customers the strong, were the rates programs pipeline hardware. can space, see see that now again as are a on have where sweating do

these factories these few So the models. enterprises high-performance service is AI of the obviously, clusters and one these technology, specifically traffic management building that issues cost providers efficiencies training for high-capacity, reduce large to GPU AI specifically technology, are improve big them. the factories, of large the And large thereby large cost perfectly building BIG-IP, or in the of our suited of our is

a think starting as potential FY we already as this a that but opportunities going positive couple time well of XXXX. won We area. to for to catalyst develop, it's So see take we're to have in

Appreciate it.

next Marshall question Stanley. Our is Morgan from with Meta

to question. start following up Maybe Great. Tim's on

is But kind that that better talking Cloud? of kind of is? that Distributed systems of Clearly, in any of what the Just more disclosures of makeup Is just about that some of if better some you're upside. kind around NGINX? pipeline, pipeline the

volumes? higher And as coming portfolio well. expansion question, their you noted new second that of Is or kind from products customers within or then product expanding better FX a in maybe as

were the Meta? have that has talked well comments in I NGINX fact, tech pipeline hardware, are and to this where, the to We've they really seen just strong, experiences the Where Cloud. generally, heard Distributed our been and and as be deliver, a that we because customers of in from stronger operate applies able a I these to enterprise fire have But term, come is to digital about environments pipeline have this generally, mean deliver to but specific the environments crisis escalating. made our refresh. and these of does of to hybrid in and they multi-cloud ball you've complexity

inconsistent about example, So of year security back because policies to give of if between in all this customers you cloud that and forces on environment you where in now that than cloud we It our year vendors has in operated in XX% less more cost. the had fixed that or this an XX% these they customers operating our complexity could And creates to on-prem And environment. to one. risk a them that a these use environments. It go mission we drives on and vendors are ago, up doubled operational last daunting that multiple of infrastructure use constitutes consolidate of simplify. this to

this for And platform really portfolio and we extinguish effectively put of creates together really Cloud ball a have so it's can simplify environments the that fire that multi-cloud single our hybrid Distributed BIG-IP with that customers. NGINX and and

my remarks using examples and across of Distributed portfolio augment prepared a the standardize their security environments, We a footprint had was that couple and multiple BIG-IP FX. use their In security company leveraging of big of that. Cloud also, to I mentioned

simplify very pipeline operations the having customers. multi-cloud really hybrid these product of products seeing complexity multiple lines and our an being us the customers complexity of and So across to we're really address our for and that effect that present is

Our Piper James next Fish with Sandler. from question is

promotion, Frank Cooper. forward you, you Cooper the retirement to on looking to and working more [indiscernible] congrats And with

change try thinking and what alternatives? not given trajectory shape you have API of you based bundles Maybe on mentioned any here. last has customers pieces, to of year or talked manager the lower looking guess security But about you pick between so something said. on you especially about bot guys bot problematic potential And been what to doing at the side, you to manager? WAF on guys manager, are bot over how kind guys security cost I are the

is in it of we want solution. also a Managed because What sharing of we're we're their bot a subscription. was it area I'll challenged seeing the is And a only that have majority is been is and have are Services Jim. high-end this lower the where as in take to This one. Thank in end and want some solution have bot? solution you, at point the managed seeing and that Frank the platform it customers is that high service. platform management a but a solution, and point value scale actually But on -- end customers So part bundle. solution, see the bot enormous not renewing of a

and and that been to that technology, so market And our technology the plan has most cloud distributor migrate FX take that our that technology we take platform. have the on is bot sophisticated onto now integrate

that bundle. we now bot as commercializing of And so we SI are have of bot as SaaS and solution, part part distributor cloud, now our

fact, of on quite a bit traction we're getting -- and In that.

over on our services. combination of platform are you customers, and customers the those X last WAAP-as-a-service if are but the any year, doubled would includes that X that we buy The number of look our customers WAAP customers WAF, WAAP-as-a-service fact, those DDoS, In have bot, API that has bundle bundle. security so a at using these

customers high a platform really a Jim, it's of a transition, that's at our from point a So want part think I is a end solution go. bundle, which and the to part where to solution of

you kind And Frank, about outlook. around, quarter, of around gave getting it. Got after color QX fiscal is hours here of 'XX. Last kind one guys you raising I'm of for some fiscal guys talked questions the you,

this outlined in you year. as those kind higher 'XX fiscal growth point? So rate rates good this last that numbers? up confident of a feeling the growth at Should still numbers goes we continue time to dollar proxy for Or you are on expect

the absolutely. question, I Jim. Yes, appreciate

to the anything say FY And back low of of updating So around October to to number My starting about be of look, you'll as now probably more 'XX. 'XX. single-digit October point not FY I growth a 'XX. would go still we'll off in We're for flat we are. have mid-single-digit what in FY to said where triangulate

We XX% we that off is is our absolutely of how are process of out. confidence operating will number. do that based process. the planning got of they the largely are still What 'XX margin And that deliver playing off we've FY and renewals in subscription the revenue in

see I The a there's just happened quarter, renewals take 'XX subscription at maybe and the add expect I 'XX. look what in back more is because to we want are -- year one of come the look and back in that of do FY if half because to of versus the half as happening confusion you next no larger sure thing where the really make that just in into we we this ones growth of probably

I slightly so would in come that more depending what new maybe FY of to to the and we be the of business that flat, did And But half on what going continues. of expect back momentum relatively activity happens half up, some FY of 'XX first in growth with 'XX. the is

you way So directionally I just about want thinking that's we're the business. the to give

retirement. again on Congrats Helpful.

it, James. I Thanks much. so appreciate

next with is Our Sachs. Ng Michael Goldman from question

if of retirement of on on DCS software. I how has the gone wondering wondering to update I headwinds the Silverline just you you potential businesses just the have if was was could legacy I relative SaaS X, and related migration first to expectations. could to us. comment

had previously think headwind million you I up there. to $XX said an

you longer was of could there's multiyear why maintenance. talked And on just provide about market in toward if no customers additional a wondering incentivizing prepared bit there. your good change a color little then remarks, second, I you

some have the on pretty I'll to. $XXX the $XX legacy in Yes. the much we of the We about this transition of in million migrate SaaS expected services October. we and the we is intend start in migrations are to to Cloud our business. shared million with have Those products Things way that retired we -- progressing we that other that is have ARR Distributed question Indeed, started. platform.

would a early are did We say the journey. We in X-year curve. it be

platform-based in to seeing is, a on lot some we at renewing, are Frank move and customers there -- -- the earlier, going mentioned of business What wanting process, we solution are of churn high as the in to seeing but migration we're the to early customers lower-end the on or the plan. some business, starting bot end not the largely but So that solutions. seeing renewing, because a, we're manager

flip new the driven driven adoption of strong strong the platform security. the But by we our mentioned and we API seeing is by an incredible also WAF as SaaS Distributed side, it's also on that traction that's on that bundle But offering. growth, earlier have offerings I in in customer are -- Cloud, platform.

really APIs securing challenge So a enterprises. becoming is big for

make this to and API that of it's the so You'll all way But end this AI seeing in quarters on the and area, to years most built protecting hear of come solution security more because testing of comprehensive solution in because in we're from importance APIs, traction going is weeks eliminating that. security discovery code of scanning significant all manual the goes in analysis we API greater. comprehensive a APIs these to that and about even to part have automates

is -- seeing API tripled we we're customers traction customers security has the year-on-year have so year. since last API the that number And of

business. dynamics and So those Services are Managed the in the SaaS

world-class, the the do organization as know, a is Michael, software. high lead associated on products significant this global maintenance for on people with in question, And an hardware they time, customer -- those relationships amazing the job maintenance our and throughout our has service and is some frankly, of And perpetual period led rates products. long all of that they to attach those very most

we that does that discounts generally, renewal the what our that to And those is seen we cycle and that those very time, of the found a are delivered don't goes as customers. service we services discount rate itself, so for the with the through. that have we company, lock it each fact the of high rate, attach some try of we we super to what we And over itself. X does time cash cash-generative service need in offer is recoup upfront, upfront The quality over that really years product

need maintenance continue to have didn't from to higher strategically incentivize we so moved through and discounts, away agreements multiyear that. And

in comment relation the really the revenue with services was business. deferred that associated So, to our

with Our next from question is Needham & Company. Alex Henderson

with changes. years. working look certainly the let congratulations involved and working fabulous to been X I Cooper, the over forward more people in it's off, you, Frank, say great First with to me who's these

been So of foremost, Is levels? in front. good increase or couple you any chatter seeing on question pretty competitors in changes and there out competitors? around poaching who sales is some been accurate your staffing my is, FX sales of management some the the first Have inaccurate? any that a There by people change has some had have they that pulled

question second the the environment. then to more And

a look on arena, the frame starting at that it it's at look to starting to broadly. course and which doesn't Zuck's stability can Is comment the to ] of year take efficiency to get application where a run that least to the frame, FX's are to multi-years, out really like is time right metric qualification use applications have we we -- that extend reaccelerate [ and appears As in its directional outlook. show

application cloud read For if companies. the growth to instance, see we you or strong through a sales at Is guys? that

take me let you through questions. Alex,

your with the -- the level. start on starting on -- sales me Let our and side question on sales

we So at tell and that of well sales I'll been organization. industry the nurture that you while the our culture team part sales the at attrition in for in because have way highest and level, leadership has is very FX below the norms a strong we in

a several have built a trying sales and go-to-market have, more couple with and our is our to large the there. person organization thousand day field push have that we teams, to we the extraordinary with But the hires and an sales also that competitors years, enterprise here over than up go have way that promote of relationship we XX-plus I'm partners build to FX way our but takes model proud get not am organization customers. with just We it own that re-create sales customers very with that FX. serving the our proud or team I across of enterprise this relationships at customers. are actually team channel every

about So in our about the confident competitiveness go-to-market the best market. organization continuing in I feel and very, our to very retain and salespeople hire very confident

to positive for think where driven FX, about number of in are is as rationalization your Then positive. the dynamic of complexity big around a our of you question the business by at how to applications is for The applications, FX. outlook their as -- application the customers it it because and a mentioned relates is Yes, around big also the applications. distribution second

to creates is in infrastructure fixed environments. stat multiple about of in I application XX% it And have customers so a customers. seeing, on operating than earlier, environment. their flexibility Alex, are complexity. for massive we organization what That But other increasingly, infrastructure place mentioned hand, that more the creates

and have our built these they're player in only regardless or in we industry agnostic secure platform of where truly truly of And any deliver at. infrastructure the optimize are can applications that delivery. only the and the the We in market security API, and

plays be of distribution gravity, with up problem. And positive fire to know, application, and run so AI, models FX big AI. a seeing Again, close components where as AI want where also of because, so in with the solving to the us, is of inference to which to issue will the apps the and data you AI accelerate and will data is, inference accelerate the run is right, with capability more going distribution ball that for it has we're of to needs

Raymond Our next question is from Simon Leopold James. with

of the congratulations luck of both First, on job best you. super Frank, switching, and to

tricky we've your VMware. budgets of First perhaps affecting one customers. And might of answer. adjustments Broadcom's on was picked this that it all, because But price the is shifting for business a your anecdotes thought to this up question you was regarding the for be was

what's VMware with maybe if you would wondering if put some number the this other clearly, that. very even I'm up if quarter. there's and pricing or software not better, for a this Now And number explanation despite strong be this happening is either

anecdotally, are from mean, had into in price have sense term Broadcom couple think anecdotally a the I to of right with in have coping I increases, situation. the that I terms budget where VMware they in short pull again, these you of the heard, customers

reaction very that base a out seen large the going a it's And little on I a to of across fairly customers. have short-term trend down significant what's think not as with, settle I also will that think differently road. I a

I So validation the just that's perhaps that have anecdote you the for raised. only

in that really NVDIA I'm enterprise opportunity expect as basically adoption opportunities has GPU to you're would that that terms And AI, way Great. traditional your And presuming own just envisioning your a of follow-up, of its load in be with the would clusters sales? you balancing. internal correlated essentially the server

just I So that's wanted that. case. not clarify use to your

that. So

of way two, cost; are one, pull AI, terms the in security big and security. emerging, that -- you issues trends are If Simon, safety number number or big up, the and

first there talk they're in are me with issue, each that these let GPUs. there moment. of around few to for a GPU investing factories, So companies, the are digital cost is amounts clusters, but utilization the and challenge AI a . The building it's large massive these innovators

fit reducing of cost you multiple to our a balance traffic infrastructures. AI low increase thereby the so balancing data high-capacity perfect or capability, a will, clusters, solutions per these are And query, these between load the high-capacity if factories ingestion efficiency AI of

that building with And opportunity products we of so there, these kinds for see the an existing are immediate factories. companies

inference absolutely do in opportunity investment APIs And long models. believe securing these securing how data their AI APIs significant that And and in AI you Where AI big deploy for think enterprises, the we issue all who secure to key be shifts their the API is is -- the we reason, that securing will will security. for are workloads. placed and to have I environment. key environment want in A is who run term in to going

on we to year-on-year forward. AI be that a earlier security customers that we going mentioned That solution I catalyst yet, the of not driven of seeing AI have. API are has but by substantial tripling expect number And we already a been that

We'll take from William question final our with Sebastian Blair. Naji

the the hardware Cooper wanted and My first is between echo mix first to their It I stick seems to expected Frank little preferring congratulations been to both factors. a like that as really mix you, just years, to well. slower than question with shift just many the hardware. around software and customers maybe form Great. over few last to bit has shift software

time here in to around? wondering we Could more change? could new something entered a rapid this fiscal shift as more Just year see solutions cycle we software upgrade 'XX, a

the But very we've should and software we've clear for year. hardware talked I say think -- we as about of don't next been see dynamics preference hardware the I catalyst we and about what model that the players part other over them or to don't is years our value that adopt FX the that one other. to that last of delivery in customers the we relative several see force

and choices, force but don't are help right we We advisers them. we make the them

our provide customers software modernizing with where their certain and solution unparalleled of software adopt software different or especially number think into change it's SaaS to that are if do in and go to who and we environment industry. we we're the business, And and way hardware meet I flexibility and that come them they And they're we solutions, that completely a hybrid our hardware starting are. they in the or where asking large for or our leveraging enterprises relative then is meet the hardware is players choice applications, fast to in them sense at, with customers

force either ADC customers have the differentiates historically doesn't us pure clients for large infrastructure to different. enterprises or that And not that want to the that traditional only SaaS something have do hardware-software therefore, work have from do consumption and vendors hardware-software either. players And that models I

that did software in say growth return hardware. will really continue we to We've We to software double-digit and our feel year. is terms of think expected manifest way. that see. software market. how terms catalysts that next in We to of going -- And still good to we we we in grow. how go on So is year, We itself got will that next to hardware

meeting they fire are solutions. to and is are we modernize our where mix most where of of in the ball for and combination But the that's the so And environment both them overall of problem. their important their solve the customers

security dedicated Got not opportunity or That's it. that the typically of lot yet? have for there greenfield Or Distributed When helpful. of you're things they some quick vendor? solutions, as are another for solution displacing customers to security they're maybe cross-selling -- Cloud is FX a successfully follow-up. you a Maybe don't API a like

and combination a a customers. in never both. that of to of net X/X Cloud are customers FX new had customers FX. customers about I earlier shown, are our Distributed it's had about X/X the think, existing So FX, with year or they relationship We've BIG-IP

So we're also acquiring new logos with Distributed Cloud.

solution. we relates are with FX had, as customers player pure who sometimes go cross-selling, it whom before to it customers to is SaaS SaaS However, to a a had had

And had therefore, use they thereby so to player their increase player because use cloud complexity for FX for or vendors. they CDN would a Edge either of some complexity application, would public and and applications on-prem multiplicity creating or a

security FX Cloud consistent for for actually, some now better that's have and Distributed can application all a single my can me. is have I me therefore, of very across And have back saying, are and and environment, delivery security, that simple I a my vendor we to we've for built that integration, solution all us they coming

displacing So at essentially is SaaS environment. into gone that this yes, times, had players the

full with It's bundle and problem our that comes of protecting were them. a application and and which it not security of yet sometimes, big set greenfield. for And for perhaps solve applications Distributed a Cloud is security they complexity

This concludes today's call.

You Thank may for disconnect. participation. now your you

Goodbye.