F5 Q4 Revenue Rises 13%, FY2027 Growth Forecast at 8%-9%

F5 Inc. (NASDAQ: FFIV) reported 13% year-over-year revenue growth for its fiscal fourth quarter, driven by double-digit gains in both systems and software, and forecast 8% to 9% revenue growth for fiscal 2027. The application delivery and security company expects product and software revenue to grow at double-digit rates in the new fiscal year, though its outlook also points to lower non-GAAP gross margins.

Revenue for the quarter ended September 30, 2026, rose to $917 million from $810 million a year earlier. Product revenue increased 23% to $510 million, marking F5’s ninth consecutive quarter of double-digit product growth, while services revenue grew 3% to about $408 million.

Within products, systems revenue advanced 29% to $239 million and software revenue increased 19% to $271 million. Subscription software revenue grew 16% and represented 85% of quarterly software revenue. Recurring revenue, including subscriptions, SaaS and managed services, and maintenance, totaled $627 million, or 68% of overall revenue.

Growth varied by region. Revenue increased 31% in Europe, the Middle East and Africa, 14% in Asia-Pacific and 5% in the Americas. The Americas remained F5’s largest market, accounting for 53% of quarterly revenue, followed by EMEA at 30% and APAC at 17%.

Earnings and margins

GAAP gross margin was unchanged at 82.2%. GAAP operating income rose to $212 million from $206 million, but operating margin narrowed to 23.1% from 25.4%. GAAP net income declined to $186 million from $190 million, while diluted earnings per share slipped to $3.23 from $3.26, partly reflecting a higher effective tax rate.

On a non-GAAP basis, gross margin was 84.0%, compared with 84.3% a year earlier. Non-GAAP operating income increased to $309 million from $299 million, while the operating margin fell to 33.7% from 37.0%. Non-GAAP net income was $255 million, compared with $257 million, and diluted non-GAAP EPS edged up to $4.42 from $4.39.

For the full fiscal year, revenue rose 11% to $3.42 billion. Product revenue grew 19%, including a 31% increase in systems and an 8% increase in software. GAAP net income reached $722 million, or $12.52 per diluted share, compared with $692 million, or $11.80 per share, in fiscal 2025. Non-GAAP EPS increased 11% to $17.49.

F5 generated $869 million in fiscal 2026 free cash flow. Fourth-quarter operating cash flow and free cash flow were $118 million and $91 million, respectively. The company attributed the quarterly results to working-capital decisions intended to reduce supply-chain risk, including inventory purchases and supplier prepayments to secure supply for fiscal 2027 revenue.

Security and AI demand

F5 said hybrid multicloud deployments, a widening application-security threat landscape and increased AI inference activity are supporting demand for its products. Fiscal 2026 security revenue totaled $1.3 billion, including $746 million of product security revenue. Total security revenue grew 10%, compared with 6% growth in fiscal 2025, while product security revenue increased 15%, compared with 8% in the prior year.

Bookings tied directly to AI use cases exceeded $100 million for fiscal 2026 and grew by about 300% year over year. Second-half bookings were more than double the first-half level, and the number of direct AI customers increased fourfold to more than 200. F5 identified AI data delivery, AI factory load balancing and AI runtime security as its three direct AI use cases.

The company is also expanding AI-assisted security and management capabilities. Its Distributed Cloud web application firewall had more than 300 customers following its March launch, with over 75% deploying it in blocking mode. F5 Insight, its fleet-management offering, had more than 200 customers since launching in March.

Fiscal 2027 outlook

F5 expects fiscal 2027 revenue to grow 8% to 9%. Product revenue and software revenue are each projected to increase at double-digit rates, while systems revenue is expected to grow at an upper-single-digit rate. The company forecast low-to-mid-single-digit growth in services revenue.

Non-GAAP gross margin is expected to range from 80.5% to 82.5%, below the 84.0% recorded in fiscal 2026. F5 projected a non-GAAP operating margin of 33.0% to 35.0%, compared with 35.1% in the year just ended, and non-GAAP EPS of $18.00 to $18.30.

For the first quarter of fiscal 2027, F5 forecast revenue of $875 million to $895 million, a non-GAAP gross margin of 81.5% to 82.5% and non-GAAP EPS of $4.25 to $4.37.

F5 repurchased $100 million of shares during the fourth quarter and $600 million during fiscal 2026, equivalent to 69% of annual free cash flow. Its board authorized an additional $1.5 billion for repurchases, supplementing the $322 million remaining under the existing authorization as of September 30.

The outlook remains subject to customer adoption, overall technology spending, supply-chain availability and costs, competitive and pricing pressure, cybersecurity incidents, geopolitical and economic uncertainty, and F5’s ability to develop and sell new products. The company also cautioned that acquisition integration, sales-cycle unpredictability and potential security flaws in its products or networks could cause actual results to differ from its expectations.