By Senad Karaahmetovic
Shares of F5 Networks (NASDAQ:FFIV) are up almost 7% in premarket Tuesday after the communications equipment company offered an upbeat FQ4 outlook.
The company reported an EPS of $2.57 on revenue of $674.5 million to top the consensus of EPS of $2.23 on revenue of $668.1 million.
For this quarter, F5 sees an adjusted EPS of between $2.45 and $2.57, easily ahead of the estimate of $2.29. Revenue is seen between $680 million and $700 million with the midpoint coming in slightly below the consensus of $691.1 million.
“We saw strong demand in our third quarter, and we have a strong fourth quarter pipeline,” the company said in a statement.
F5 also announced an additional $1 billion for its common stock repurchase program, which is in addition to the $272 million remaining in the existing program.
A Raymond James analyst believes the recession fears are not justified for F5.
“Are recession fears justified for F5? Considering the resilience of large enterprises, so far the answer is, “no”. Yet, management expressed a cautionary tone and cited risk from the macro-economy (e.g., inflation, foreign exchange), noting that it would slow hiring. Supply shortages were largely unchanged, and hardware revenue should bottom in the December quarter,” he told clients in a note.
An analyst from Bank of America reiterated a Neutral rating despite “better-than-expected Q3 results”.
“4Q is normally a strong quarter for software, but management highlighted greater risks in achieving the top-end of its FY22 software growth range and we calculate that at the low and mid-points of the annual guidance range, 4Q software could decelerate to 20% and 28% YoY, respectively. This also puts in question the ability to meet Street’s FY23 expectations of ~32% growth, and with a high bar of $700mn in annual software revenues, we model 23% and 20% growth for FY23/FY24,” the analyst wrote in a research note.