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What changed in F5, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of F5, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+324 added−342 removedSource: 10-K (2025-11-25) vs 10-K (2024-11-18)

Top changes in F5, Inc.'s 2025 10-K

324 paragraphs added · 342 removed · 214 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+34 added−66 removed27 unchanged
Biggest changeThrough its BIG-IP, F5 NGINX, and F5 Distributed Cloud Services product families, F5 offers a range of integrated, artificial intelligence- and machine learning-driven solutions that support performance and protect both legacy and modern applications and APIs across data center, cloud, and edge locations. 3 Table of Contents Our multicloud application security and delivery solutions reduce our customers’ operational complexity and costs, enabling scalability, security, and optimization for legacy and modern applications and APIs, across any infrastructure.
Biggest changeWe are able to deliver on this strategy through our solutions portfolio, specifically our F5 BIG-IP, F5 NGINX, and F5 Distributed Cloud Services product families, which deliver a range of integrated, application and delivery services leveraging artificial intelligence and machine learning capabilities that support application performance and protect legacy, modern, and AI-powered applications and APIs across the data center, public clouds, and edge locations.
F5 enables businesses to continuously stay ahead of threats while delivering exceptional, secure digital experiences for their customers. Our application security and delivery solutions are available in a range of deployment and consumption models. We sell packaged software in perpetual, subscription, and usage-based consumption models.
F5 enables businesses to continuously stay ahead of threats while delivering exceptional, secure digital experiences for their customers. Our application delivery and security solutions are available in a range of deployment and consumption models. We sell packaged software in perpetual, subscription, and usage-based consumption models.
Within application delivery, our customers have the best of both worlds: reliability that F5’s always been known for – across any environment from on-premises to multicloud; and agility and flexibility enabled by lightweight modern technologies, without compromising security or manageability. Our BIG-IP offerings compete against Citrix and Broadcom.
Within application delivery, our customers have the best of both worlds: reliability that F5’s always been known for – across any environment from on-premises to multicloud; and agility and flexibility enabled by lightweight modern technologies, without compromising security or manageability. Our F5 BIG-IP offerings compete against Citrix and Broadcom.
In addition she led human resources for the Global Advisory Functions, was the Chief of Staff to the Chief Human Resource Officer and led the people strategy for a new business line, Google Technical Services. Previously, Schramm played a pivotal HR leadership role at the Bill & Melinda Gates Foundation where she was instrumental in the Foundation’s global expansion.
In addition, she led human resources for the Global Advisory Functions, was the Chief of Staff to the Chief Human Resource Officer, and led the people strategy for a new business line, Google Technical Services. Previously, Ms. Schramm played a pivotal HR leadership role at the Bill & Melinda Gates Foundation where she was instrumental in the Foundation’s global expansion.
We will continue to improve customer awareness and understanding of F5’s expanded portfolio with a focus on both user and buying personas, and business needs and intend to enhance our digital customer experiences to deliver both growth and efficiency. F5 is leveraging AI to accelerate the strength of both our current and future offerings.
We will continue to improve customer awareness and understanding of F5’s portfolio with a focus on both user and buying personas, and business needs. We intend to enhance our digital customer experiences to deliver both growth and efficiency. F5 is leveraging AI to accelerate the strength of both our current and future offerings.
We also sell our solutions in software-as-a-service (“SaaS”) and managed services deployment models with subscription and usage-based consumption models. In addition, we sell high-performance systems, or hardware, as well as a broad range of global services including maintenance, consulting, training and other technical support services. Our customers include large enterprise businesses, public sector institutions, governments, and service providers.
We also sell our solutions in software-as-a-service ("SaaS") and managed services deployment models with subscription and usage-based consumption models. In addition, we sell high-performance systems, or hardware, as well as a broad range of global services including maintenance, consulting, training and other technical support services. Our customers include large enterprise businesses, public sector institutions, governments, and service providers.
This includes the pay, incentive plans, restricted stock unit grants (“RSUs”), Employee Stock Purchase Plan, retirement plans, healthcare, paid time off and family leave F5 provides to employees, as well as the programs that support the diverse needs of our employees’ overall health and wellbeing.
This includes the pay, incentive plans, restricted stock unit grants ("RSUs"), Employee Stock Purchase Plan, retirement plans, healthcare, paid time off and family leave F5 provides to employees, as well as the programs that support the diverse needs of our employees’ overall health and wellbeing.
A high-performance, multicloud and edge focused content delivery network (“CDN”) solution that allows our customers to efficiently connect, secure, and optimize applications and workloads across multi- and hybrid-cloud environments through efficiently leveraging the integrated tools and technologies in the F5 Distributed Cloud Platform.
A high-performance, multicloud and edge focused content delivery network ("CDN") solution that allows our customers to efficiently connect, secure, and optimize applications and workloads across multi- and hybrid-cloud environments through efficiently leveraging the integrated tools and technologies in the F5 Distributed Cloud Platform.
Our employees are in 47 countries with 47% of employees in the United States. None of our employees in the United States are represented by a labor union.
Our employees are based in 47 countries with 47% of employees based in the United States. None of our employees in the United States are represented by a labor union.
In fiscal year 2024, F5 also renewed our popular Wellness Weekends to provide one weekend a quarter when all employees have a set Friday through Monday off to reset and refresh.
In fiscal year 2025, F5 also renewed our popular Wellness Weekends to provide one weekend a quarter when all employees have a set Friday through Monday off to reset and refresh.
Built from the F5 NGINX open source software that powers hundreds of millions of websites and applications across the world, our F5 NGINX technology suite delivers a lightweight, agile ADC and API connectivity solution for modern, container-native, micro-services-based applications and APIs.
Built from the F5 NGINX open-source software that powers hundreds of millions of websites and applications across the world, our F5 NGINX technology suite delivers a lightweight, agile ADC and API connectivity solution 5 Table of Contents for modern, container-native, micro-services-based applications and APIs.
An application delivery and deployment solution for connecting clusters across various cloud providers and regions. App Connect offers orchestrated awareness for API endpoints on all connected clusters, allowing cross-cluster service discovery and advertisement for seamless app-to-app communication with fine-grained API control.
An application delivery and deployment solution for application-level connectivity across various cloud providers and regions. App Connect offers orchestrated awareness for API endpoints on all connected clusters, allowing cross-cluster service discovery and advertisement for seamless app-to-app communication with fine-grained API control.
Item 1. Business General F5 is a multicloud application security and delivery provider committed to bringing a better digital world to life. F5 partners with the world’s largest, most advanced organizations to optimize and secure every application and Application Programming Interface (“API”) anywhere, including on-premises, in the cloud, or at the edge.
Item 1. Business General F5 is a multicloud application delivery and security provider committed to bringing a better digital world to life. F5 partners with the world’s largest, most advanced organizations to optimize and secure every application and Application Programming Interface ("API") anywhere, including on-premises, in the cloud, and at the network edge.
F5 NGINX Plus is also offered as a fully managed native service on the Microsoft Azure Cloud allowing teams to lift-and-shift their applications to the cloud with no configuration change removing the operational burden of self-managed instances from teams. • F5 NGINX Management Suite.
F5 NGINX Plus is also offered as a fully managed native service on the Microsoft Azure Cloud allowing teams to lift-and-shift their applications to the cloud with no configuration change removing the operational burden of self-managed instances from teams. • F5 NGINX One Console.
This commitment is delivered through our culture and engagement, our investment in employees’ growth and development, our focus on diversity and inclusion, and our compensation, benefits, and wellbeing offerings. Employees As of September 30, 2024, we had 6,557 employees – over 99% of whom were full time employees.
This commitment is delivered through our culture and engagement, our investment in employees’ growth and development, our focus on diversity and inclusion, and our compensation, benefits, and wellbeing offerings. As of September 30, 2025, we had 6,578 employees – over 99% of whom were full-time employees.
Through a link on the Investor Relations section of our website, we make available the following filings as soon as reasonably possible after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
Our website is www.f5.com and through a link on the Investor Relations section of our website, we make available the following filings as soon as reasonably possible after they are electronically filed with or furnished to the Securities and Exchange Commission ("SEC"): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
The solution provides the following F5 application security technologies: • Advanced Web Application Firewall (“WAF”) capabilities through F5’s BIG-IP WAF engine, which allows our customers to quickly apply, secure, and manage uniform comprehensive security policies at scale, across data centers, public or private clouds, and edge computing environments. • Mitigation against L3-L7 application-based and volumetric DDoS attacks through advanced F5 Distributed Cloud DDoS Mitigation, a managed, cloud-delivered mitigation service that detects and mitigates large-scale network, SSL, and application-targeted attacks in real time. • Enhanced API security, which leverages machine-based learning, auto-discovery, and anomaly detection, which automates the entire process of finding, securing, and monitoring APIs for anomalous behavior. • Next-generation, AI enabled bot mitigation through F5 Distributed Cloud Bot Defense provides our customers the ability to defend applications and APIs from automated attacks.
The solution provides the following F5 application security technologies: • Advanced Web Application Firewall ("WAF") capabilities through the F5 WAF engine available on BIG-IP and NGINX, allows our customers to quickly apply, secure, and manage uniform comprehensive security policies at scale, across data centers, public or private clouds, and edge computing environments. • Mitigation against OSI Model Layer 3-Layer 7 application-based and volumetric DDoS attacks through advanced F5 Distributed Cloud DDoS Mitigation, a managed, cloud-delivered mitigation service that detects and mitigates large-scale network, SSL, and application-targeted attacks in real time. • Enhanced API security, which leverages machine-based learning, auto-discovery, and anomaly detection, which automates the entire process of finding, securing, and monitoring APIs for anomalous behavior. • Next-generation, AI enabled bot mitigation through F5 Distributed Cloud Bot Defense provides our customers the ability to defend applications and APIs from automated attacks.
Orders are subject to cancellation, rescheduling by customers, or product specification changes by customers. Although we believe that the backlog orders are firm, purchase orders may be canceled by the customer prior to fulfillment without significant penalty. For this reason, we believe that our product backlog at any given date is not a reliable indicator of future revenues.
Although we believe that the backlog orders are firm, purchase orders may be canceled by the customer prior to fulfillment without significant penalty. For this reason, we believe that our product backlog at any given date is not a reliable indicator of future revenues.
He holds a B.A. in Business Administration and Management from Eastern Washington University. 13 Table of Contents Lyra Schramm joined F5 as our Executive Vice President and Chief People Officer in April 2024. She is responsible for driving people initiatives that support F5’s purpose to help bring a better digital world to life and position the company for continued growth.
He holds a B.A. in Business Administration and Management from Eastern Washington University. Lyra Schramm has served as our Executive Vice President and Chief People Officer since April 2024. She is responsible for driving people initiatives that support F5’s purpose to help bring a better digital world to life and position the company for continued growth.
Her early career with Amazon set the stage for AWS’s growth, where she developed key recruitment strategies that significantly increased headcount and revenue. Schramm holds a BA in Marketing from Washington State University. Kunal Anand has served as our Executive Vice President and Chief Innovation Officer since September 2024. He joined F5 in April 2024 as Chief Technology Officer.
Her early career with Amazon set the stage for AWS’s growth, where she developed key recruitment strategies that significantly increased headcount and revenue. Ms. Schramm holds a BA in Marketing from Washington State University. Kunal Anand has served as our Executive Vice President and Chief Product Officer since October 2025.
F5 uses AI in its application delivery and security solutions to support performance and efficacy. Today, our customers are able to further benefit from our four-pronged AI strategy. First, our current portfolio is positioned to solve security and performance challenges associated with new AI workloads.
F5 uses AI in its application delivery and security solutions to support performance and efficacy. Today, our customers are able to further benefit from our four-pronged AI strategy. First, our current portfolio is solving security and performance challenges associated with AI model training and inference and in support of AI-driven workloads.
In fiscal year 2024, two-thirds of all employees worldwide participated in Global Good programs, volunteering over 15,000 hours and directing the entirety of F5’s donations, through both the Company matching program and grant selection committees. F5 and our employees donated over $3.9 million to more than 3,200 non-profits worldwide in fiscal year 2024. Governance.
In fiscal year 2025, 72% of all employees worldwide participated in Global Good programs, volunteering over 13,400 hours and directing the entirety of F5’s donations, through both the Company matching program and grant selection committees. F5 and our employees donated over $3.9 million to more than 3,900 non-profits worldwide in fiscal year 2025. Governance.
Environmental, Social & Governance F5's Environmental, Social and Governance (“ESG”) programs are guided by our fundamental principle to “do the right thing” for each other, our customers, our shareholders, and our communities. Environmental.
Environmental, Social and Governance F5's Environmental, Social and Governance ("ESG") programs are guided by our fundamental principle to "do the right thing" for each other, our customers, our shareholders, and our communities. Environmental.
Fountain is responsible for overseeing F5’s global services organization, including global support, consulting, and services teams. He is also responsible for leading F5's digital transformation to accelerate critical solution delivery to customers and for driving execution, productivity and efficiency company wide. From November 2012 to January 2018, Mr.
He is also responsible for leading F5's digital transformation to accelerate critical solution delivery to customers and for driving execution, productivity and efficiency company wide. From November 2012 to January 2018, Mr.
Locoh-Donou serves on the board of Capital One Financial Corporation. He is also the co-founder of Cajou Espoir, a cashew-processing facility that employs several hundred people in rural Togo, 80 percent of whom are women. Cajou Espoir exports more than 400 tons of cashew kernels annually to the U.S. and Europe.
Locoh-Donou serves on the board of Capital One Financial Corporation. He is also the co-founder of Cajou Espoir, a cashew-processing facility that employs several hundred people in rural Togo, 80 percent of whom are women.
We conduct our business globally and manage our business by geography. Our business is organized into three primary geographic regions: Americas; Europe, the Middle East, and Africa (“EMEA”); and the Asia Pacific region (“APAC”). F5 was incorporated on February 26, 1996 in the state of Washington.
We conduct our business globally and manage our business by geography. Our business is organized into three primary geographic regions: Americas; Europe, the Middle East, and Africa ("EMEA"); and the Asia Pacific region ("APAC"). F5 was incorporated in 1996 and is headquartered in Seattle, Washington.
F5 Distributed Cloud DNS can be distributed globally as either a primary or secondary DNS, providing authoritative DDoS protection, Domain Name System Security Extensions ("DNSSEC"), and the flexibility to automatically scale to meet our customers growing application demands. 5 Table of Contents • F5 Distributed Cloud CDN.
A cloud-based Domain Name System ("DNS") solution that offers DNS delivery across multicloud environments and modern applications. F5 Distributed Cloud DNS can be distributed globally as either a primary or secondary DNS, providing authoritative DDoS protection, Domain Name System Security Extensions ("DNSSEC"), and the flexibility to automatically scale to meet our customers growing application demands. • F5 Distributed Cloud CDN.
Going forward we will leverage and grow our foundational capabilities in data and insights, digital sales, and SaaS-delivered capabilities to deliver consistent world-class customer experiences, including simple, integrated and friction-free consumption of our technologies.
Transforming how customers experience F5 We continue to leverage and grow our foundational capabilities in data and insights, digital sales, and SaaS-delivered capabilities to deliver consistent world-class customer experiences, including simple, integrated and friction-free consumption of our solutions.
F5 BIG-IP Application Delivery products include F5 BIG-IP Local Traffic Manager which manages network traffic so applications are always fast, available, and secure; F5 BIG-IP DNS which provides hyperscale and security during high query volumes and DNS DDoS attacks; and F5 BIG-IP Policy Enforcement Manager which improves network performance through effective policy management. • F5 BIG-IP Automation Tool Chain.
F5 BIG-IP Application Delivery products include F5 BIG-IP Local Traffic Manager which manages network traffic ensuring applications are always fast, available, and secure; F5 BIG-IP DNS which provides hyperscale and security during high query volumes and DNS DDoS attacks; F5 BIG-IP Policy Enforcement Manager which improves network performance through effective policy management; and F5 6 Table of Contents BIG-IP Next for Kubernetes which supports ingress and egress traffic management for integration to multiple networks. • F5 BIG-IP Automation Tool Chain.
At the end of fiscal year 2024, we had product backlog of approximately $85.3 million. Human Capital Management F5’s commitment to its employees is to be a human-first and high-performing team equipped with the tools and expertise to deliver extraordinary impact on what matters most to F5, our customers, and our partners.
Human Capital Management F5’s commitment to its employees is to be a human-first and high-performing team equipped with the tools and expertise to deliver extraordinary impact on what matters most to F5, our customers, and our partners.
Anand has a deep history of innovation and technical expertise, and has held roles leading security, data, technology, and engineering teams at Gravity, MySpace, and the NASA Jet Propulsion Lab. He holds a Bachelor of Science degree from Babson College.
Anand has a deep history of innovation and technical expertise, and has held roles leading security, data, technology, and engineering teams at Gravity, MySpace, and the NASA Jet Propulsion Lab. He holds a B.S. degree from Babson College. John Maddison has served as our Chief Marketing Officer since October 2025.
Growth and Development We provide employees with opportunities to improve their technical and professional knowledge, nurture our innovation ecosystem, strengthen management and leadership, as well as maintain our high standards of business integrity through ongoing compliance training. These development opportunities are available through live employee events like Technology Days dedicated to exploring new ideas, such as Generative AI.
Growth and Development We provide employees with opportunities to improve their technical and professional knowledge, nurture our innovation ecosystem, strengthen management and leadership, as well as maintain our high standards of business integrity through ongoing compliance training.
His journey to Imperva began in 2018 with the acquisition of Prevoty, an application security startup he co-founded in 2013. Before joining Prevoty, he was the Director of Technology at BBC Worldwide. Mr.
Anand held the dual role of Chief Technology Officer and Chief Information Security Officer at Imperva. He joined Imperva in 2018 with the acquisition of Prevoty, an application security startup he co-founded in 2013. Before joining Prevoty, he was the Director of Technology at BBC Worldwide. Mr.
F5 BIG-IP packaged software includes a growing portfolio of products that provide the performance and security to deliver applications to end users. F5 BIG-IP Packaged Software offerings include the following: • F5 BIG-IP Security.
The F5 BIG-IP family of products includes packaged software, which are available in subscription and perpetual consumption models, and F5 BIG-IP system offerings. • F5 BIG-IP Packaged Software. F5 BIG-IP packaged software includes a growing portfolio of products that provide the performance and security to deliver applications to end users.
As of June 2024, employees reported high satisfaction with F5’s culture on several key questions: • 80% of employees favorably rate “I am proud to work for F5.” • 88% of employees favorably rate “My manager genuinely cares about my well-being.” • 89% of employees favorably rate “F5 shows a commitment to ethical business decisions and conduct.” One survey measure that F5 tracks closely as a gauge of our culture decreased from fiscal year 2023.
As of March 2025, employees reported high satisfaction with F5’s culture on several key questions: • 85% of employees favorably rate "I am proud to work for F5." • 90% of employees favorably rate "I trust my manager." • 91% of employees favorably rate "F5 shows a commitment to ethical business decisions and conduct." One survey measure that F5 tracks closely as a gauge of our culture increased from fiscal year 2024.
As a result of this broad portfolio, we are the only provider capable of supporting our customers’ modern and legacy application security and delivery needs across any environment — on premises, co-located, in a cloud or at the edge — with the added flexibility of multiple deployment models including SaaS, managed services, packaged software, and hardware offerings.
With our comprehensive portfolio, we are the only provider capable of supporting customers’ modern and legacy application delivery and security needs across any environment — on premises, co-located, in a cloud or at the edge.
Executive Officers of the Registrant The following table sets forth certain information with respect to our executive officers as of November 18, 2024: Name Age Position François Locoh-Donou 53 President, Chief Executive Officer and Director Tom Fountain 48 Executive Vice President and Chief Operating Officer Frank Pelzer 54 Executive Vice President and Chief Financial Officer Scot Rogers 57 Executive Vice President and General Counsel Chad Whalen 53 Executive Vice President and Chief Revenue Officer Lyra Schramm 50 Executive Vice President and Chief People Officer Kunal Anand 41 Executive Vice President and Chief Innovation Officer 12 Table of Contents François Locoh-Donou has served as our President, Chief Executive Officer and member of our Board of Directors since April 2017.
Executive Officers of the Registrant The following table sets forth certain information with respect to our executive officers as of November 25, 2025: Name Age Position François Locoh-Donou 54 President, Chief Executive Officer and Director Edward Werner 51 Executive Vice President and Chief Financial Officer Tom Fountain 49 Executive Vice President and Chief Operating Officer Chad Whalen 54 Executive Vice President and Chief Revenue Officer Lyra Schramm 51 Executive Vice President and Chief People Officer Kunal Anand 42 Executive Vice President and Chief Innovation Officer John Maddison 62 Executive Vice President and Chief Product Marketing and Technology Alliances Officer Angelique Okeke 50 Executive Vice President and General Counsel Michael Montoya 54 Executive Vice President and Chief Technology Operations Officer François Locoh-Donou has served as our President, Chief Executive Officer and member of our Board of Directors since April 2017.
We believe we generally compete favorably on the basis of these factors as a result of our robust solutions and services, and our ability to deliver and secure any application, and any API, anywhere.
We believe we generally compete favorably on the basis of these factors because of our robust solutions and services, our ability to deliver and secure any application, and any API, anywhere, and our platform approach. To provide a unified experience across all our offerings, we have introduced the F5 ADSP.
We believe our differences—when embraced with humility and respect—drive smarter decisions, increased innovation, stronger performance, and a culture where everyone can be themselves and reach their full potential. Our strategic framework for this important work is called “IDEA”: Inclusion, Diversity, Equity and Allyship.
Diversity and Inclusion F5 is steadfast in its commitment to create a diverse and inclusive workplace. We believe our differences—when embraced with humility and respect—drive smarter decisions, increased innovation, stronger performance, and a culture where everyone can be themselves and reach their full potential.
Tom Fountain has served as our Executive Vice President and Chief Operating Officer since September 2024. From June 2020 through August 2024, he previously served as Executive Vice President of Global Services and Chief Strategy Officer. Mr. Fountain joined F5 in January 2018 as Executive Vice President and Chief Strategy Officer. Mr.
From June 2020 through August 2024, he served as Executive Vice President of Global Services and Chief Strategy Officer. Mr. Fountain joined F5 in January 2018 as Executive Vice President and Chief Strategy Officer. Mr. Fountain is responsible for overseeing F5’s global services organization, including global support, consulting, and services teams.
He is responsible for driving the company’s technology and AI vision and innovation, with a focus on incorporating rapid AI adoption across F5’s product solutions. Prior to F5, Mr. Anand held the dual role of Chief Technology Officer and Chief Information Security Officer at Imperva.
From October 2024 to October 2025, he served as our Chief Innovation Officer. He joined F5 in April 2024 as Chief Technology Officer. He is responsible for driving the Company’s technology and AI vision and innovation, with a focus on incorporating rapid AI adoption across F5’s product solutions. Prior to F5, Mr.
He is responsible for F5’s global sales go-to-market strategy and brings over 20 years of experience leading global teams across Europe, Asia, and North and South America in network infrastructure, security, and SaaS. From July 2018 to August 2024, he was Executive Vice President of Worldwide Sales. Mr. Whalen joined F5 in 2017 to lead the Cloud Sales team.
Chad Whalen has served as our Executive Vice President and Chief Revenue Officer since September 2024. He is responsible for F5’s global sales go-to-market strategy and brings over 20 years of experience leading global teams across Europe, Asia, and North and South America in network infrastructure, security, and SaaS.
This solution is deployed at the central point of entry into a Kubernetes cluster and reduces complexity, increases uptime, and provides better insights into application health and performance at scale. This offering is sold in a subscription consumption model that scales with the customer’s Kubernetes cluster size. • F5 NGINX App Protect.
The F5 NGINX Ingress Controller provides traffic management for Kubernetes clusters. This solution is deployed at the central point of entry into a Kubernetes cluster and reduces complexity, increases uptime, and provides better insights into application health and performance at scale.
Second, we are leveraging AI models in our current data fabric in order to enhance our existing products. Third, we are working to build new offerings based on the changing application and data security landscapes and the customer needs associated with these changes. Finally, we are pursuing partnerships with AI players to help secure and deliver AI workloads.
Third, we are innovating to create new offerings based on the rapidly evolving application and data security landscapes and the customer needs associated with these changes. Finally, we are pursuing partnerships with global leaders in AI to help deliver and secure AI workloads.
F5 BIG-IQ simplifies, enhances management of, and reduces customer operational costs associated with F5 BIG-IP deployments through central management, analytics, and automation for F5 BIG-IP instances. • F5 BIG-IP Next. F5 BIG-IP Next is the next version of BIG-IP rearchitected to be more modern, scalable and secure with a Kubernetes based architecture.
F5 BIG-IQ simplifies, enhances management of, and reduces customer operational costs associated with F5 BIG-IP deployments through central management, analytics, and automation for F5 BIG-IP instances. • F5 BIG-IP Systems.
Prior to joining F5, he ran strategic alliances at Fortinet, worldwide sales and services at Jasper, Americas sales and field operations at Ciena and global sales and marketing at World Wide Packets.
From July 2018 to August 2024, he was Executive Vice President of Worldwide Sales. Mr. Whalen joined F5 in 2017 to lead the Cloud Sales team. Prior to joining F5, he ran strategic alliances at Fortinet, worldwide sales and services at Jasper, Americas sales and field operations at Ciena and global sales and marketing at World Wide Packets.
Our BIG-IP family primarily serves traditional applications on premises, co-located or in cloud environments. Our F5 NGINX family serves modern, container-native and microservices-based applications and APIs. Our F5 Distributed Cloud Services is a portfolio of SaaS and managed services serving both traditional and modern applications where a SaaS-deployment model is preferred.
Our F5 NGINX family also delivers essential application delivery and security services but is optimized for modern, container-native and microservices-based applications and APIs. Our F5 Distributed Cloud Services is a portfolio of SaaS and managed services designed for both traditional and modern applications where a SaaS deployment model is preferred.
Our lightweight, agile, developer-friendly F5 NGINX offerings, which provide capabilities like optimizing Kubernetes traffic management and load balancing cloud-native and hybrid cloud applications compete against Amazon Web Services ("AWS"), Google Cloud Platform, Envoy, and HAProxy. 7 Table of Contents In application security, we compete with vendors that offer web application firewall, bot detection and mitigation, API protection, carrier-grade firewall, carrier-grade network address translation ("NAT"), SSL orchestration, access policy management, and DDoS mitigation including Akamai, Cisco, Cloudflare, Fortinet, Juniper Networks, Palo Alto, Radware, and Thales.
In application security, we compete with vendors that offer web application firewall, bot detection and mitigation, API protection, carrier-grade firewall, carrier-grade network address translation ("NAT"), SSL orchestration, access policy management, and DDoS mitigation including Akamai, Cisco, Cloudflare, Fortinet, Juniper Networks, Palo Alto, Radware, and Thales (Imperva).
Such legacy applications are the most ubiquitous application architecture today, and many organizations continue to rely exclusively on legacy applications to power the most mission-critical business applications, customer-facing digital interfaces and internally used applications. For most organizations, the priority around legacy applications is maximizing operational efficiency and minimizing the total cost of ownership.
Also known as traditional applications, legacy applications are based on monolithic, three-tier, or client-server architectures. Such legacy applications are the most ubiquitous application architecture today, and many organizations continue to rely exclusively on legacy applications to power the most mission-critical business applications, customer-facing digital interfaces and internally used applications.
The auditor’s verification letter is available on page 20 of F5’s 2023 ESG report at f5.com under the ‘‘Company — Investor Relations — ESG’’ section. Social.
The Double Materiality Assessment is available on page 7 of F5’s 2024 ESG report at f5.com under the "Company — Investor Relations — ESG" section.
In fiscal year 2024, F5 took a step forward in our environmental commitments by successfully obtaining the Science Based Target Initiative's verification for our 2030 target to reduce both absolute Scope 1 and 2 emissions by 50% and absolute Scope 3 emissions by 43% from the 2021 baseline.
F5's 2030 climate target, verified by the Science Based Target Initiative, is to reduce both absolute Scope 1 and 2 emissions by 50% and absolute Scope 3 emissions by 43% from a 2021 baseline.
Title to the products transfers from Flex to us and then to our customers upon shipment from a designated fulfillment location. Backlog Backlog is primarily systems-based and represents orders confirmed with a purchase order for products to be fulfilled and invoiced to customers with approved credit status.
Backlog Backlog is primarily systems-based and represents orders confirmed with a purchase order for products to be fulfilled and invoiced to customers with approved credit status. Orders are subject to cancellation, rescheduling by customers, or product specification changes by customers.
It can be used in a variety of the use cases that F5 NGINX Plus is deployed and integrate easily into CI/CD pipelines for automation. F5 NGINX App Protect can be added to subscriptions and is bundled into “advanced” offerings for F5 Ingress Controller. F5 BIG-IP.
It is a lightweight solution that seamlessly integrates into DevOps environments and is platform-agnostic running across distributed architectures and hybrid environments to deliver consistent protection. It can be used in a variety of the use cases where F5 NGINX Plus is deployed and integrate easily into CI/CD pipelines for automation.
To increase inclusion at F5, we foster communities through our seven Employee Inclusion Groups (“EIGs”) – F5 Ability, F5 Appreciates Blackness, F5 Connects Women, F5 Latinx e Hispanos Unidos, F5 Military Veterans, F5 Pride, and our newest EIG representing Asian and Pacific Islanders.
The most critical drivers of our diversity and inclusion efforts year after year are represented in our seven Employee Inclusion Groups ("EIGs") – F5 Ability, F5 Asian and Pacific Islanders, F5 Appreciates Blackness, F5 Connects Women, F5 Latinx e Hispanos Unidos, F5 Military Veterans, and F5 Pride.
Our BIG-IP family of product offerings provide feature-rich, highly programmable and configurable application security and delivery solutions for legacy applications in enterprises and service providers. Also known as traditional applications, legacy applications are based on monolithic, three-tier, or client-server architectures.
F5 WAF for NGINX can be added to subscriptions and is bundled into "advanced" offerings for F5 NGINX Ingress Controller. F5 BIG-IP. Our F5 BIG-IP family of product offerings provide feature-rich, highly programmable and configurable application delivery and security solutions for legacy applications in enterprises and service providers.
Frank Pelzer has served as our Executive Vice President and Chief Financial Officer since May 2018. He oversees F5's worldwide financial planning, analysis, accounting, reporting, and internal auditing procedures, as well as investor relations. Prior to joining F5, Mr.
He oversees F5's worldwide financial planning, analysis, accounting, reporting, and internal auditing procedures, as well as investor relations. Mr. Werner holds a B.A. in Business Administration with an Accounting Concentration from the Foster School of Business at the University of Washington. Tom Fountain has served as our Executive Vice President and Chief Operating Officer since September 2024.
Systems built in Guadalajara are shipped to the Flex fulfillment center in Milpitas, California for distribution primarily to distributors, value-added resellers, or end users in the Americas and EMEA. Systems built and fulfilled in Zhuhai are distributed to partners and customers in APAC.
Additionally, Flex manages material procurement and fulfillment activities on our behalf, ensuring we maintain high standards of efficiency and scalability across our operations. Systems built in Guadalajara are shipped to the Flex fulfillment center in Memphis, Tennessee for distribution primarily to distributors, value-added resellers, or end-users in the Americas and EMEA.
We have experienced no work stoppages and believe that our employee relations are in good standing, as evidenced by our bi-annual employee engagement survey results and described in the section below entitled Culture and Engagement .
We have experienced no work stoppages and believe that our employee relations are in good standing, as evidenced by our annual employee engagement survey results, described in the section below entitled "Culture and Engagement." Culture and Engagement We have been able to sustain our strong company culture because BeF5 and LeadF5 behaviors are key to executing our strategy. 8 Table of Contents We measure the success of and identify areas of improvement for our company culture through global surveys of employee experience and sentiment at least once each year.
We plan to meet this target by optimizing our energy use, sourcing more renewable energy, and enhancing the sustainability of our products and supply chain processes. As evidence of our progress towards our science-based target, F5’s most recent annual ESG report in April 2024 disclosed a 31% reduction in our total emissions during fiscal year 2023.
As evidence of our progress towards our climate target, F5’s most recent annual ESG report in March 2025 disclosed a reduction in our total emissions from fiscal year 2023 to fiscal year 2024. This was driven by a 16% year-over-year reduction in Scope 1 and 2 emissions and a 10% year-over-year reduction in Scope 3 emissions.
Competition As F5 expands its reach and role into a broader set of multicloud security and delivery solutions, the companies that we consider competitors evolve. We compete against companies that offer web application firewalls, server load balancing, traffic management, and other functions normally associated with application delivery, application security, and multicloud networking.
Competition As F5 expands its reach and role into a broader set of hybrid multicloud application delivery and security solutions, our competitive set evolves and includes vendors with capabilities associated with application delivery, application security, and multicloud networking.
All such filings are available free of charge. The information posted on our website is not incorporated into this report. Strategy and Priorities Nearly all organizations today find themselves at the convergence of two significant trends: the evolution of applications as the center of their businesses and their customers’ digital lives, and the escalation of threats against those applications.
All such filings are available free of charge. The information posted on our website is not incorporated into this report.
F5 NGINX App Protect is a comprehensive WAF security and denial-of-service ("DoS") defense solution designed to protect applications and API’s from advanced Layer 7 attacks. It is a lightweight solution that seamlessly integrates into DevOps environments and is platform-agnostic running across distributed architectures and hybrid environments to deliver consistent protection.
This offering is sold in a subscription consumption model that scales with the customer’s Kubernetes cluster size. • F5 WAF for NGINX. F5 WAF for NGINX is a comprehensive WAF security and denial-of-service ("DoS") defense solution designed to protect applications and API’s from advanced Layer 7 attacks.
F5 Distributed Cloud enables our customers to choose the best location and architecture for their application portfolio while easing the operational burden of securing and delivering applications across public, private and edge clouds. 4 Table of Contents F5 Products and Solutions F5’s portfolio of multicloud application security and delivery technologies are enabling customers to address the challenges of delivering differentiated digital experiences to their customers.
F5 Products and Solutions F5’s portfolio of multicloud application delivery and security technologies enables customers to address the challenges of delivering differentiated digital experiences while safeguarding their applications across complex hybrid and multicloud environments. Our infrastructure-agnostic approach ensures customers can create a unified and optimized experience across diverse IT environments.
This achievement was driven by a 40% reduction in Scope 1 and 2 emissions and a 30% reduction in Scope 3 emissions. To ensure the integrity of our emissions reporting, F5 also secured third-party verification for our Scope 1 and 2 emissions data from fiscal year 2023.
To ensure the integrity of our emissions reporting, F5 also secured third-party verification for our Scope 1 and 2 emissions data from fiscal year 2024. The auditor’s verification letter is available on page 19 of F5’s 2024 ESG report at f5.com under the ‘‘Company — Investor Relations — ESG’’ section. Social.
Each month, content is made available to the allyship community to deepen their understanding of experiences different from their own and gain new skills to speak up and speak out as active participants in creating a more diverse and inclusive F5. 11 Table of Contents Compensation, Benefits and Wellbeing F5 aims to attract, reward, and retain extraordinary talent from diverse backgrounds by offering a total compensation package that is equitable, flexible, and market competitive.
Since our first EIG was established in 2013, these global communities represent a space for all F5ers to collaborate, share experiences, and learn. Compensation, Benefits and Wellbeing F5 aims to attract, reward, and retain extraordinary talent from diverse backgrounds by offering a total compensation package that is equitable, flexible, and market competitive.
BIG-IPs “best-of-suite” approach helps standardize and consolidate application security and delivery functions into a single solution, automating functions and reducing operational cost. The F5 BIG-IP family of products includes packaged software, which are available in subscription and perpetual consumption models, and F5 BIG-IP system offerings. 6 Table of Contents • F5 BIG-IP Packaged Software.
For most organizations, the priority around legacy applications is maximizing operational efficiency and minimizing the total cost of ownership. F5 BIG-IP's "best-of-suite" approach helps standardize and consolidate application delivery and security functions into a single solution, automating functions and reducing operational cost.
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Our headquarters is in Seattle, Washington, and our mailing address is 801 5th Avenue, Seattle, Washington 98104-1663. The telephone number at that location is (206) 272-5555. Our website is www.f5.com. We have 83 subsidiaries, branch offices, or representative offices worldwide.
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Cyber Incident On October 15, 2025, we disclosed a security incident in which a threat actor maintained long-term, persistent access to F5 systems, and exfiltrated certain files, referred to as the "Cyber Incident." For further information about the Cyber Incident, see "Risk Factors" included in Item 1A of Part I of this Annual Report on Form 10-K, and "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Cyber Incident" included in Item 7 of Part II of this Annual Report on Form 10-K. 3 Table of Contents Strategy and Priorities We deliver a broad portfolio of solutions to help customers address the complexity and risk in today’s hybrid multicloud IT environments.
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This presents a tremendous challenge as many companies now manage complex application portfolios comprising older legacy and newer modern technologies and infrastructures. In our 2024 State of Application Strategy Report, the majority of organizations said they operate both legacy and modern application architectures, and operate in multiple clouds.
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Key components of our strategy include: Solving multicloud application delivery and security challenges Our F5 BIG-IP family delivers essential application delivery and security services, ensuring applications operate efficiently and securely. It is optimized for traditional applications whether deployed on premises, in co-located data centers, or in cloud environments.
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Companies are forced to deploy separate, and often inconsistent, security controls across these hybrid environments, creating operational complexity and expanding the potential threat surface. Over the past several years, F5 has significantly expanded its software and SaaS offerings to deliver a broad portfolio of solutions to help customers address the complexity and risk in today’s hybrid IT environments.
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We are selling F5 solutions in support of AI data delivery, AI runtime security and AI factory load balancing use cases. Second, we are leveraging AI models in our current data fabric in order to enhance our existing products.
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F5 leverages a near real-time collection of application telemetry, machine learning and artificial intelligence, and toolchain automation to enable rapid response to changes in application performance, availability, and security threats with little to no human interaction.
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In response to customers' growing preference for a platform approach, in 2025 we introduced the F5 Application Delivery and Security Platform ("ADSP"). The F5 ADSP aims to unify high-performance traffic management with advanced application and API security at scale across hybrid and multicloud environments. Unlike fragmented point solutions, the F5 ADSP is purpose-built to simplify hybrid multicloud complexity.
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Key components of our strategy include: Solving multicloud application security and delivery challenges Through our organic innovation and inorganic investments, we have created the broadest portfolio of multicloud application security and delivery technologies in the market and as a result, we are capable of serving any application or API in any environment.
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With the F5 ADSP, we aim to leverage the full strength of our broad portfolio with capabilities to enhance security, scalability, and operational efficiency while enabling key capabilities such as policy management, analytics, and automation. Capturing growth in security and SaaS We continue to invest in expanding our SaaS-based F5 Distributed Cloud Services.
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Transforming how customers experience F5 As we expand the role we play for our customers, we are also transforming how our customers experience F5. Our goal is to create a unified and frictionless F5 experience for our customers. Over the last several years, we have made it easier for our customers to procure, deploy, use, manage, and upgrade our technologies.
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Our F5 Distributed Cloud Services console extends visibility and simplifies management for F5 BIG-IP and F5 NGINX customers. With F5 Distributed Cloud Services, we enable customers to optimize application deployment across public, private, and edge clouds, providing flexibility in location and architecture while reducing the operational complexity of delivering and securing applications.
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We also have taken steps to integrate the customer experience across our growing portfolio by simplifying the product naming and rebranding of several acquired and integrated solutions as part of our F5 Distributed Cloud Services platform.
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We sell application delivery and security solutions for web application and API protection, hybrid multicloud networking, enterprise AI delivery and security, application migration, application modernization, zero trust architecture and post quantum cryptography readiness. Our product portfolio includes solutions across the following product families: F5 Distributed Cloud Services, F5 NGINX, F5 BIG-IP. 4 Table of Contents F5 Distributed Cloud Services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factor Summary Operational and Execution Risk s • Security vulnerabilities or control failures in our IT infrastructure or multicloud application security and delivery solutions and services as well as unforeseen product errors could have a material adverse impact on our business results of operations, financial condition and reputation; • We are dependent on various information technology systems, and failures of or interruptions to those systems could harm our business; • Our success depends on our key personnel and our ability to hire, retain and motivate qualified executives, sales and marketing, operations, product development and professional services personnel; • Cloud-based and SaaS computing trends present competitive and execution risks; • Our success depends upon our ability to effectively plan and manage our resources and restructure our business; • Our business may be harmed if our contract manufacturers are not able to provide us with adequate supplies of our products or if a single source of hardware assembly is lost or impaired; • Our business could suffer if there are any interruptions or delays in the supply of hardware components from our third-party sources; • It is difficult to predict our future operating results because we have an unpredictable sales cycle; • We may not be able to sustain or develop new distribution relationships, and a reduction or delay in sales to significant distribution partners could hurt our business; • Reliance on fulfillment at the end of the quarter could cause our revenue for the applicable period to fall below expected levels; • Our operating results are exposed to risks associated with international commerce; • The average selling price of our products may decrease and our costs may increase, which may negatively impact revenues and profits; and • Acquisitions present many risks and we may not realize the financial and strategic goals that are contemplated at the time of the transaction. 14 Table of Contents Strategic and Industry Risks • Our success depends on our timely development of new software and systems products and features, market acceptance of new software and systems product offerings and proper management of the timing of the life cycle of our software and systems products; • Our success depends on sales and continued innovation of our application security and delivery product lines; • Issues related to the development and use of artificial intelligence ("AI") could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm of our business; • Our business could be adversely impacted by conditions affecting the markets in which we compete; • Industry consolidation may result in increased competition; • We may not be able to compete effectively in the application security and delivery market; and • Misuse of our products could harm our reputation.
Biggest changeRisk Factor Summary Operational and Execution Risks • Security vulnerabilities or control failures in our IT infrastructure or multicloud application delivery and security products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation; • The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows; • We are dependent on various information technology systems, and failures of or interruptions to those systems could harm our business; • Our success depends on our key personnel and our ability to hire, retain and motivate qualified executives, sales and marketing, operations, product development and professional services personnel; • Cloud-based and SaaS computing trends present competitive and execution risks; • Our success depends upon our ability to effectively plan and manage our resources and restructure our business; • Our business may be harmed if our contract manufacturers are not able to provide us with adequate supplies of our products or if a single source of hardware assembly is lost or impaired; • Our business could suffer if there are any interruptions or delays in the supply of hardware components from our third-party sources; • It is difficult to predict our future operating results because we have an unpredictable sales cycle; • We may not be able to sustain or develop new distribution relationships, and a reduction or delay in sales to significant distribution partners could hurt our business; • Reliance on fulfillment at the end of the quarter could cause our revenue for the applicable period to fall below expected levels; • Our operating results are exposed to risks associated with international commerce; • The average selling price of our products may decrease and our costs may increase, which may negatively impact revenues and profits; and • Acquisitions present many risks and we may not realize the financial and strategic goals that are contemplated at the time of the transaction.
Our multicloud application security and delivery products and services are used by our customers to manage their critical applications and data.
Our multicloud application delivery and security products and services are used by our customers to manage their critical applications and data.
Despite our efforts to harden our IT infrastructure, our security and delivery products and services against these risks, those efforts may not be successful, and from time to time, those systems and products could be compromised.
Despite our efforts to harden our IT infrastructure, our delivery and security products and services against these risks, those efforts may not be successful, and from time to time, those systems and products could be compromised.
Threat actors can seek to exploit, among other things, known or unknown vulnerabilities and control weaknesses in technology included in our IT infrastructure, security and delivery products and services, and failure to quickly identify, patch or mitigate security vulnerabilities or strengthen security controls could render our IT infrastructure, security and delivery products and services susceptible to a cyber-attack which may subject the Company to liability to our customers, suppliers, business partners and others, as well as reputational and financial harm.
Threat actors can seek to exploit, among other things, known or unknown vulnerabilities and control weaknesses in technology included in our IT infrastructure, delivery and security products and services, and failure to quickly identify, patch or mitigate security vulnerabilities or strengthen security controls could render our IT infrastructure, delivery and security products and services susceptible to a cyber-attack which may subject the Company to liability to our customers, suppliers, business partners and others, as well as reputational and financial harm.
Our inability to successfully operate and integrate newly-acquired businesses appropriately, effectively and in a timely manner, or to retain key personnel of any acquired business, could have a material adverse effect on our ability to take advantage of further growth in demand for application security and delivery solutions and other advances in technology, as well as on our revenues, gross margins and expenses.
Our inability to successfully operate and integrate newly-acquired businesses appropriately, effectively and in a timely manner, or to retain key personnel of any acquired business, could have a material adverse effect on our ability to take advantage of further growth in demand for application delivery and security solutions and other advances in technology, as well as on our revenues, gross margins and expenses.
Demand for our products and services depends substantially upon the general demand for application security and delivery solutions, which fluctuates based on numerous factors, including capital spending levels and growth of our current and prospective customers, as well as general economic conditions.
Demand for our products and services depends substantially upon the general demand for application delivery and security solutions, which fluctuates based on numerous factors, including capital spending levels and growth of our current and prospective customers, as well as general economic conditions.
Moreover, inadequate or incomplete security monitoring, logging, asset management, or internal reporting and escalation, or gaps in coverage of security tools in our environment, could impact our ability to detect and respond to threats early and efficiently, giving threat actors an opportunity to gain access to our environment undetected.
Moreover, inadequate or incomplete security monitoring, logging, asset management, or internal reporting and escalation, or gaps in coverage of security tools in our environment, could impact our ability to detect and respond to threats early and efficiently, giving threat actors an opportunity to gain or maintain access to our environment undetected.
If any one or more of these vendor's security is compromised, it could have similar consequences as if we experienced a security event ourselves. Our products may also contain undetected errors, defects, or vulnerabilities when first introduced or as new versions are released. We have experienced these issues in the past in connection with new products and product upgrades.
If any one or more of these vendors' security is compromised, it could have similar consequences as if we experienced a security event ourselves. Our products may also contain undetected errors, defects, or vulnerabilities when first introduced or as new versions are released. We have experienced these issues in the past in connection with new products and product upgrades.
Additionally, our international sales and operations are subject to a number of risks, including the following: • greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods; • the uncertainty of protection for intellectual property rights in some countries; 19 Table of Contents • greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties; • risks associated with trade restrictions and foreign legal requirements, including the importation, certification, and localization of our products required in foreign countries; • greater risk of a failure of foreign employees, partners, distributors, and resellers to comply with both U.S. and foreign laws, including antitrust regulations, the U.S.
Additionally, our international sales and operations are subject to a number of risks, including the following: • greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods; • the uncertainty of protection for intellectual property rights in some countries; • greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties; • risks associated with trade restrictions and foreign legal requirements, including the importation, certification, and localization of our products required in foreign countries; • greater risk of a failure of foreign employees, partners, distributors, and resellers to comply with both U.S. and foreign laws, including antitrust regulations, the U.S.
Strategic and Industry Risks Our success depends on our timely development of new software and systems products and features, market acceptance of new software and systems product offerings and proper management of the timing of the life cycle of our software and systems products The markets for our products and services are characterized by: • rapid technological change; • evolving industry standards; • consolidation of network and application functions into existing network infrastructure products; • requirements that our products interoperate with technologies from other vendors to enable ease of management; • fluctuations in customer demand; • changes in customer requirements; and • frequent new product and service introductions and enhancements.
Strategic and Industry Risks Our success depends on our timely development of new software and systems products and features, market acceptance of new software and systems product offerings and proper management of the timing of the life cycle of our software and systems products The markets for our products and services are characterized by: • rapid technological change; • evolving industry standards; • consolidation of network and application functions into existing network infrastructure products; • requirements that our products interoperate with technologies from other vendors to enable ease of management; • fluctuations in customer demand; • changes in customer requirements; and 19 Table of Contents • frequent new product and service introductions and enhancements.
The provision for income taxes may also be impacted by changes in stock-based compensation, changes in the research and development tax credit laws, earnings being lower than anticipated in jurisdictions where we have lower statutory rates and being higher than anticipated in jurisdictions where we have higher statutory rates, transfer pricing adjustments, not meeting the terms and conditions of tax holidays or incentives, changes in the valuation of our deferred tax assets and liabilities, changes in actual results versus our 25 Table of Contents estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof, including changes to the tax laws applicable to corporate multinationals.
The provision for income taxes may also be impacted by changes in stock-based compensation, changes in the research and development tax credit laws, earnings being lower than anticipated in jurisdictions where we have lower statutory rates and being higher than anticipated in jurisdictions where we have higher statutory rates, transfer pricing adjustments, not meeting the terms and conditions of tax holidays or incentives, changes in the valuation of our deferred tax assets and liabilities, changes in actual results versus our estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof, including changes to the tax laws applicable to corporate multinationals.
Any errors, defects or vulnerabilities in our products or IT infrastructure could result in: • expenditures of significant financial and product development resources in efforts to analyze, correct, eliminate, or work-around errors and defects or to address and eliminate vulnerabilities; • remediation costs, such as liability for stolen assets or information, repairs or system damage; 16 Table of Contents • increased cybersecurity protection costs which may include systems and technology changes, training, and engagement of third party experts and consultants; • increased insurance premiums; • loss of existing or potential customers or channel partners; • loss of proprietary information leading to lost competitive positioning and lost revenues; • inaccessibility to certain data or systems necessary to operate the business; • negative publicity and damage to our reputation; • delayed or lost revenue; • delay or failure to attain market acceptance or decrease in demand for our products and services; • an increase in warranty claims compared with our historical experience, or an increased cost of servicing warranty claims, either of which would adversely affect our gross margins; and • litigation, regulatory inquiries, or investigations that may be costly and harm our reputation.
Any errors, defects, control failures, or vulnerabilities in our products or IT infrastructure, including the Cyber Incident, could result in: • expenditures of significant financial and product development resources in efforts to analyze, correct, eliminate, or work-around errors and defects or to address and eliminate vulnerabilities; • remediation costs, such as liability for stolen assets or information, repairs or system damage; • increased cybersecurity protection costs which may include systems and technology changes, training, and engagement of third party experts and consultants; • increased insurance premiums; • loss of existing or potential customers or channel partners; • loss of proprietary information leading to lost competitive positioning and lost revenues; • inaccessibility to certain data or systems necessary to operate the business; • negative publicity and damage to our reputation; • delayed or lost revenue; 14 Table of Contents • delay or failure to attain market acceptance or decrease in demand for our products and services; • an increase in warranty claims compared with our historical experience, or an increased cost of servicing warranty claims, either of which would adversely affect our gross margins; and • litigation, regulatory inquiries, or investigations that may be costly and harm our reputation.
If any breach or attack compromises our IT infrastructure, creates system disruptions or slowdowns or exploits security vulnerabilities therein, the information stored on our networks or those of our customers could be accessed and modified, publicly disclosed, or lost or stolen, and we may be subject to liability to our customers, individuals, suppliers, business partners and others, and may suffer reputational and financial harm.
If any breach or attack, including the Cyber Incident, compromises our IT infrastructure, creates system disruptions or slowdowns or exploits security vulnerabilities therein, the information stored on our networks or those of our customers could be accessed and modified, publicly disclosed, or lost or stolen, and we may be subject to liability to our customers, individuals, suppliers, business partners and others, and may suffer reputational and financial harm.
Our IT infrastructure and those of our partners and customers are subject to the increasing threat of intrusions by a wide range of bad actors and malicious parties, including computer programmers, hackers or sophisticated nation-state and nation-state supported actors, or they may be compromised due to employee error or wrongful conduct, malfeasance, or other disruptions.
Our IT infrastructure and 13 Table of Contents those of our partners and customers are subject to the increasing threat of intrusions by a wide range of bad actors and malicious parties, including computer programmers, hackers or sophisticated nation-state and nation-state supported actors, or they may be compromised due to employee error or wrongful conduct, malfeasance, or other disruptions.
Although we monitor our use of open source closely, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products.
We incorporate open source software into our products. Although we monitor our use of open source closely, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products.
If there is a 26 Table of Contents deterioration of a major customer’s creditworthiness or actual defaults are higher than expected, future losses, if incurred, could harm our business and have a material adverse effect on our operating results. Further, our operating results may be below the expectations of securities analysts and investors in future quarters or years.
If there is a deterioration of a major customer’s creditworthiness or actual defaults are higher than expected, future losses, if incurred, could harm our business and have a material adverse effect on our operating results. Further, our operating results may be below the expectations of securities analysts and investors in future quarters or years.
In the ordinary course of our business, we are involved in disputes and licensing discussions with others regarding their claimed proprietary rights and cannot provide assurance that we will always successfully defend ourselves against such claims and such matters are subject to many uncertainties and outcomes are not predictable with assurance.
In the ordinary course of our business, we are involved in disputes and 22 Table of Contents licensing discussions with others regarding their claimed proprietary rights and cannot provide assurance that we will always successfully defend ourselves against such claims and such matters are subject to many uncertainties and outcomes are not predictable with assurance.
These problems may cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts, cause significant customer relations problems, and impact demand for our products and services. We may also be subject to liability claims for damages.
These problems may cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts, cause significant customer relations problems, result in legal claims or liability, and impact demand for our products and services. We may also be subject to liability claims for damages.
Despite our security measures, and those of our third-party vendors, our IT infrastructure has experienced breaches or disruptions and may be vulnerable in the future to breach, attacks or disruptions.
Despite our security measures, and those of our third-party vendors, our IT infrastructure has experienced breaches or disruptions, including the Cyber Incident, and may be vulnerable in the future to breach, attacks or disruptions.
In addition, our software and systems products must interoperate with our end customers’ IT infrastructure, including the expanding use of the cloud and hybrid cloud environments, which often have different specifications, deploy products from multiple vendors, and utilize multiple protocol standards.
In addition, our software and systems products must interoperate with our end customers’ IT infrastructure, including the rapid adoption of AI-enabled software and systems, expanding use of the cloud and hybrid cloud environments, which often have different specifications, deploy products from multiple vendors, and utilize multiple protocol standards.
In addition to other risks listed in this “Risk Factors” section, factors that may affect our operating results include, but are not limited to: • fluctuations in demand for our products and services due to changing market conditions, pricing conditions, technology evolution, seasonality, or other changes in the global economic environment; • changes or fluctuations in sales and implementation cycles for our products and services; • changes in the mix of our products and services, including increases in SaaS and other subscription-based offerings; • changes in the growth rate of the application delivery market; • reduced visibility into our customers’ spending and implementation plans; • reductions in customers’ budgets for data center and other IT purchases or delays in these purchases; • changes in end-user customer attach rates and renewal rates for our services; 28 Table of Contents • fluctuations in our gross margins, including the factors described herein, which may contribute to such fluctuations; • our ability to control costs, including operating expenses, the costs of hardware and software components, and other manufacturing costs; • our ability to develop, introduce and gain market acceptance of new products, technologies and services, and our success in new and evolving markets; • any significant changes in the competitive environment, including the entry of new competitors or the substantial discounting of products or services; • the timing and execution of product transitions or new product introductions, and related inventory costs; • variations in sales channels, product costs, or mix of products sold; • our ability to establish and manage our distribution channels, and the effectiveness of any changes we make to our distribution model; • the ability of our contract manufacturers and suppliers to provide component parts, hardware platforms and other products in a timely manner; • benefits anticipated from our investments in sales, marketing, product development, manufacturing or other activities; • impacts on our overall tax rate caused by any reorganization in our corporate structure; • changes in tax laws or regulations, or other accounting rules; and • general economic conditions, both domestically and in our foreign markets.
Failure to comply with these regulations or requirements could result in investigations, sanctions, enforcement actions, fines, or litigation, potentially harming our business, operating results, or financial condition. 26 Table of Contents In addition to other risks listed in this "Risk Factors" section, factors that may affect our operating results include, but are not limited to: • fluctuations in demand for our products and services due to changing market conditions, pricing conditions, technology evolution, seasonality, or other changes in the global economic environment; • changes or fluctuations in sales and implementation cycles for our products and services; • changes in the mix of our products and services, including increases in SaaS and other subscription-based offerings; • changes in the growth rate of the application delivery market; • reduced visibility into our customers’ spending and implementation plans; • reductions in customers’ budgets for data center and other IT purchases or delays in these purchases; • changes in end-user customer attach rates and renewal rates for our services; • fluctuations in our gross margins, including the factors described herein, which may contribute to such fluctuations; • our ability to control costs, including operating expenses, the costs of hardware and software components, and other manufacturing costs; • our ability to develop, introduce and gain market acceptance of new products, technologies and services, and our success in new and evolving markets; • any significant changes in the competitive environment, including the entry of new competitors or the substantial discounting of products or services; • the timing and execution of product transitions or new product introductions, and related inventory costs; • variations in sales channels, product costs, or mix of products sold; • our ability to establish and manage our distribution channels, and the effectiveness of any changes we make to our distribution model; • the ability of our contract manufacturers and suppliers to provide component parts, hardware platforms and other products in a timely manner; • benefits anticipated from our investments in sales, marketing, product development, manufacturing or other activities; • impacts on our overall tax rate caused by any reorganization in our corporate structure; • changes in tax laws or regulations, or other accounting rules; and • general economic conditions, both domestically and in our foreign markets.
We devote significant resources to develop and deploy our cloud-based and SaaS software and services strategies. While we believe our expertise and investments in software and infrastructure for cloud-based services provides us with a strong foundation to compete, it is uncertain whether our strategies will continue to attract the customers or generate the revenue required to be successful.
While we believe our expertise and investments in software and infrastructure for cloud-based services provides us with a strong foundation to compete, it is uncertain whether our strategies will continue to attract the customers or generate the revenue required to be successful.
We face litigation risks We are a party to lawsuits in the normal course of our business. Litigation in general, and intellectual property and securities litigation in particular, can be expensive, lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict.
We face litigation risks We are a party to lawsuits in the normal course of our business. Litigation in general, and intellectual property and securities litigation in particular, can be expensive, lengthy and disruptive to normal business operations. Further, we could face litigation in connection with the Cyber Incident. Moreover, the results of complex legal proceedings are difficult to predict.
Adverse macroeconomic conditions both in the U.S. and abroad, including, but not limited to, rising interest rates, inflationary pressures on goods and services, challenges in the financial and credit markets, labor shortages, supply chain disruptions, trade uncertainty, adverse changes in global taxation and tariffs, sanctions, outbreaks of pandemic diseases, political unrest and social strife, armed conflicts, or other impacts from the macroeconomic environment could adversely affect our business, financial condition, results of operations and cash flows through, among others, softer demand of our products and services as well as unfavorable increases to our operating costs, which could negatively impact our profitability. 27 Table of Contents We face risks associated with having operations and employees located in Israel We have offices and employees located in Israel.
Adverse macroeconomic conditions both in the U.S. and abroad, including, but not limited to, rising interest rates, inflationary pressures on goods and services, challenges in the financial and credit markets, labor shortages, supply chain disruptions, trade uncertainty, adverse changes in global taxation and tariffs, sanctions, outbreaks of pandemic diseases, political unrest and social strife, armed conflicts, or other impacts from the macroeconomic environment could adversely affect our business, financial condition, results of operations and cash flows through, among others, softer demand of our products and services as well as unfavorable increases to our operating costs, which could negatively impact our profitability.
If we are unable to establish or maintain our indirect sales channels, our business and results of operations will be harmed. In addition, two worldwide distributors of our products accounted for 32.2% of our total net revenue for fiscal year 2024.
If we are unable to establish or maintain our indirect sales channels, our business and results of operations will be harmed. In addition, two worldwide distributors of our products accounted for 33.3% of our total net revenue for fiscal year 2025.
The effects of these hostilities and violence on the Israeli economy and our operations in Israel are unclear, and we cannot predict the effect on us of further increases in these hostilities or future armed conflict, political instability or violence in the region.
There has been a significant increase in hostilities and political unrest in Israel and the surrounding region. The effects of these hostilities and violence on the Israeli economy and our operations in Israel are unclear, and we cannot predict the effect on us of further increases in these hostilities or future armed conflict, political instability or violence in the region.
In addition to server load balancing, traffic management, and other functions normally associated with application delivery, our suite of solutions has expanded our addressable market into security, and policy management, where we compete with a number of companies focused on niche areas of application security. We expect to continue to face additional competition as new participants enter our markets.
In addition to server load balancing, traffic management, and other functions normally associated with application delivery, our suite of solutions has expanded our addressable market into security, and policy management, where we compete with a number of companies focused on niche areas of application security.
We carry insurance policies covering these types of liabilities, but these policies may not provide sufficient protection should a claim be asserted. A material product liability claim may harm our business and results of operations. Our products must successfully operate with products from other vendors.
We carry insurance policies covering these types of liabilities, but these policies may not provide sufficient protection should a claim be asserted. A material product liability claim may harm our business and results of operations.
Foreign Corrupt Practices Act, and any trade regulations ensuring fair trade practices; • heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements; • increased expenses incurred in establishing and maintaining office space and equipment for our international operations; • greater difficulty in recruiting local experienced personnel, and the costs and expenses associated with such activities; • management communication and integration problems resulting from cultural and geographic dispersion; • fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; • economic uncertainty around the world, including continued economic uncertainty as a result of sovereign debt issues in Europe; and • general economic and political conditions in these foreign markets.
Foreign Corrupt Practices Act, and any trade regulations ensuring fair trade practices; • heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements; • increased expenses incurred in establishing and maintaining office space and equipment for our international operations; • greater difficulty in recruiting local experienced personnel, and the costs and expenses associated with such activities; • management communication and integration problems resulting from cultural and geographic dispersion; • fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; • economic uncertainty around the world, including geopolitical, trade, economic and diplomatic relations may result in regulatory, operational, and cost challenges to our global operations; and • general economic and political conditions in these foreign markets. 18 Table of Contents We must hire and train experienced personnel to staff and manage our foreign operations.
In addition, we may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices. 20 Table of Contents Acquisitions present many risks and we may not realize the financial and strategic goals that are contemplated at the time of the transaction With respect to our past acquisitions, as well as any other future acquisitions we may undertake, we may find that the acquired businesses, products or technologies do not further our business strategy as expected, that we paid more than what the assets are later worth or that economic conditions change, all of which may generate future impairment charges.
Acquisitions present many risks and we may not realize the financial and strategic goals that are contemplated at the time of the transaction With respect to our past acquisitions, as well as any other future acquisitions we may undertake, we may find that the acquired businesses, products or technologies do not further our business strategy as expected, that we paid more than what the assets are later worth or that economic conditions change, all of which may generate future impairment charges.
We may not be able to sustain or develop new distribution relationships, and a reduction or delay in sales to significant distribution partners could hurt our business We sell our products and services through multiple distribution channels in the United States and internationally, including leading industry distributors, value-added resellers, systems integrators, service providers and other indirect channel partners.
As a result, our products have an unpredictable sales cycle that contributes to the uncertainty of our future operating results. 17 Table of Contents We may not be able to sustain or develop new distribution relationships, and a reduction or delay in sales to significant distribution partners could hurt our business We sell our products and services through multiple distribution channels in the United States and internationally, including leading industry distributors, value-added resellers, systems integrators, service providers and other indirect channel partners.
International, national, regional and local economic conditions, such as recessionary economic cycles, protracted economic slowdown or further deterioration of the economy could adversely impact demand for our products.
We are dependent upon the overall economic health of our current and prospective customers. International, national, regional and local economic conditions, such as recessionary economic cycles, protracted economic slowdown or further deterioration of the economy could adversely impact demand for our products.
We also enter into strategic distributor and reseller relationships with companies in certain international markets where we do not have a local presence. If we are not able to maintain successful strategic distributor relationships internationally or recruit additional companies to enter into strategic distributor relationships, our future success in these international markets could be limited.
If we are not able to maintain successful strategic distributor relationships internationally or recruit additional companies to enter into strategic distributor relationships, our future success in these international markets could be limited.
In addition, complexity and difficulties in managing product transitions at the end-of-life stage of a product can create excess inventory of components associated with the outgoing product that can lead to increased expenses.
In addition, complexity and difficulties in managing product transitions at the end-of-life stage of a product can create excess inventory of components associated with the outgoing product that can lead to increased expenses. Any or all of the above problems could materially harm our business and results of operations.
Any or all of the above problems could materially harm our business and results of operations. 21 Table of Contents Our success depends on sales and continued innovation of our application security and delivery product lines We expect to derive a significant portion of our net revenues from the sale of our cloud, software and hardware application security and delivery product lines in the future.
Our success depends on sales and continued innovation of our application delivery and security product lines We expect to derive a significant portion of our net revenues from the sale of our cloud, software and hardware application delivery and security product lines in the future.
Pricing and delivery models are evolving and our competitors are developing and deploying cloud-based services for customers. In addition, new cloud infrastructures are enabling the emergence of new competitors including large cloud providers who offer their own application security and delivery functionality as well as smaller companies targeting the growing numbers of "born in the cloud" applications.
In addition, new cloud infrastructures are enabling the emergence of new competitors including large cloud providers who offer their own application delivery and security functionality as well as smaller companies targeting the growing numbers of "born in the cloud" applications. We devote significant resources to develop and deploy our cloud-based and SaaS software and services strategies.
AI-related issues, deficiencies and/or failures could (i) give rise to legal and/or regulatory action, including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new applications of existing data protection, privacy, intellectual property, and other laws; (ii) damage our reputation; or (iii) otherwise materially harm our business.
AI-related issues, deficiencies and/or failures could (i) give rise to legal and/or regulatory action, including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new applications of existing data protection, privacy, intellectual property, and other laws; (ii) damage our reputation; or (iii) otherwise materially harm our business. 20 Table of Contents Our business could be adversely impacted by conditions affecting the markets in which we compete A substantial portion of our business depends on the demand for information technology by large enterprise customers and service providers.
Our success depends on our key personnel and our ability to hire, retain and motivate qualified executives, sales and marketing, operations, product development and professional services personnel Our success depends, in large part, on our ability to attract, engage, retain, and integrate qualified executives and other key employees throughout all areas of our business.
To the extent this impacted our ability to react timely to specific market or business opportunities, our financial results may be harmed. 15 Table of Contents Our success depends on our key personnel and our ability to hire, retain and motivate qualified executives, sales and marketing, operations, product development and professional services personnel Our success depends, in large part, on our ability to attract, engage, retain, and integrate qualified executives and other key employees throughout all areas of our business.
If in the future, our internal controls over financial reporting are determined to be not effective resulting in a material weakness, investor perceptions regarding the reliability of our financial statements may be adversely affected which could cause a decline in the market price of our stock and otherwise negatively affect our liquidity and financial condition.
If in the future, our internal controls over financial reporting are determined to be not effective resulting in a material weakness, investor perceptions regarding the reliability of our financial statements may be adversely affected which could cause a decline in the market price of our stock and otherwise negatively affect our liquidity and financial condition. 24 Table of Contents Risks Related to our Common Stock Our quarterly and annual operating results may fluctuate in future periods, which may cause our stock price to fluctuate Our quarterly and annual operating results have varied significantly in the past and could vary significantly in the future, which makes it difficult for us to predict our future operating results.
In addition, restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, may include a reduction in force of the Company's workforce.
In addition, restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, may include a reduction in force of the Company's workforce. These restructuring activities could lead to increased attrition amongst those employees who were not directly affected by the reduction in force program.
Accordingly, our ability to determine with certainty the origin and chain of custody of these raw materials is limited. Our relationships with customers, suppliers, and investors could suffer if we are unable to describe our products as “conflict-free.” We may also face increased costs in complying with conflict minerals disclosure requirements.
Our relationships with customers, suppliers, and investors could suffer if we are unable to describe our products as "conflict-free." We may also face increased costs in complying with conflict minerals disclosure requirements.
Further, our license agreements typically require us to indemnify our customers, distributors and resellers for infringement actions related to our technology, which could cause us to become involved in infringement claims made against our customers, distributors or resellers.
Further, our license agreements typically require us to indemnify our customers, distributors and resellers for infringement actions related to our technology, which could cause us to become involved in infringement claims made against our customers, distributors or resellers. Any of the above-described circumstances relating to intellectual property rights disputes could result in our business and results of operations being harmed.
As a result, political, economic, and military conditions in Israel and the surrounding region directly affect our operations. The future of peace efforts between Israel and its neighbors in the Middle East remains uncertain. There has been a significant increase in hostilities and political unrest in Israel and the surrounding region.
We face risks associated with having operations and employees located in Israel We have offices and employees located in Israel. As a result, political, economic, and military conditions in Israel and the surrounding region directly affect our operations. The future of peace efforts between Israel and its neighbors in the Middle East remains uncertain.
If our estimates and assumptions are incorrect, if we are unsuccessful at implementing changes, or if other unforeseen events occur, our business and results of operations could be adversely affected.
Our ability to achieve the anticipated cost savings and other benefits from these initiatives is subject to many estimates and assumptions, which are subject to uncertainties. If our estimates and assumptions are incorrect, if we are unsuccessful at implementing changes, or if other unforeseen events occur, our business and results of operations could be adversely affected.
This could harm our ability to ship products or our ability to deliver cloud-based services, which could harm our financial results. In addition, reconfiguring our IT systems or other business processes in response to changing business needs may be time-consuming and costly.
In addition, reconfiguring our IT systems or other business processes in response to changing business needs may be time-consuming and costly.
General Risks • Continued macroeconomic downturns or uncertainties may harm our industry, business, and results of operations; • We face risks associated with having operations and employees located in Israel; • Our business is subject to the risks of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by man-made problems such as terrorism; and • Climate change may have an impact on our business. 15 Table of Contents Operational and Execution Risks Security vulnerabilities or control failures in our IT infrastructure or multicloud application security and delivery products and services as well as unforeseen product errors could have a material adverse impact on our business results of operations, financial condition and reputation In the ordinary course of business, we store sensitive data, including intellectual property, personal data, our proprietary business information and that of our customers, suppliers and business partners on our networks.
Operational and Execution Risks Security vulnerabilities or control failures in our IT infrastructure or multicloud application delivery and security products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation In the ordinary course of business, we store sensitive data, including intellectual property, personal data, our proprietary business information and that of our customers, suppliers and business partners on our networks.
Conversely, in the last few years, we have initiated restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, which resulted in restructuring charges. Our ability to achieve the anticipated cost savings and other benefits from these initiatives is subject to many estimates and assumptions, which are subject to uncertainties.
Conversely, in the last few years, we have initiated restructuring plans to better align strategic 16 Table of Contents and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, which resulted in restructuring charges.
The evolving data protection regulatory environment may require significant management attention and financial resources to analyze and modify our IT infrastructure to meet these changing requirements all of which could reduce our operating margins and impact our operating results and financial condition. 23 Table of Contents A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks Sales to U.S. and foreign, federal, state, and local governmental agency end-customers account for a significant portion of our revenues and we may in the future increase sales to government entities.
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks Sales to U.S. and foreign, federal, state, and local governmental agency end-customers account for a significant portion of our revenues and we may in the future increase sales to government entities.
Any of these may temporarily or permanently disable our end-customers’ networks, information technology infrastructure or other systems, or expose our end-customers’ networks to attacks or compromise from security threats.
We expect that these errors, defects, or vulnerabilities will be found from time to time in new or enhanced products after commencement of commercial shipments. Any of these may temporarily or permanently disable our end-customers’ networks, information technology infrastructure or other systems, or expose our end-customers’ networks to attacks or compromise from security threats.
If the demand for our products grows, we will need to increase our raw material and component purchases, contract manufacturing capacity and internal test and quality control functions.
If the demand for our products grows, we will need to increase our raw material and component purchases, contract manufacturing capacity and internal test and quality control functions. Any disruptions in product flow may limit our revenue, may harm our competitive position and may result in additional costs or cancellation of orders by our customers.
Any disruptions in product flow may limit our revenue, may harm our competitive position and may result in additional costs or cancellation of orders by our customers. 18 Table of Contents Our business could suffer if there are any interruptions or delays in the supply of hardware components from our third-party sources We currently purchase several hardware components used in the assembly of our products from a number of single or limited sources.
Our business could suffer if there are any interruptions or delays in the supply of hardware components from our third-party sources We currently purchase several hardware components used in the assembly of our products from a number of single or limited sources. Lead times for these components vary significantly.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our securities could decrease, which might cause the price and trading volume of our securities to decline.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our securities could decrease, which might cause the price and trading volume of our securities to decline. 25 Table of Contents General Risks Macroeconomic downturns or uncertainties may harm our industry, business, and results of operations We operate globally and as a result, our business, revenues, and profitability may be impacted by global macroeconomic conditions.
Legal and Regulatory Risks Our failure to adequately protect personal information could have a material adverse effect on our business A wide variety of local, state, national, and international laws, directives and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data.
In addition, as many of our products are subject to export control regulations, diversion of our products to restricted third parties by others could result in investigations, penalties, fines, trade restrictions and negative publicity that could damage our reputation and materially impact our business, operating results, and financial condition. 21 Table of Contents Legal and Regulatory Risks Our failure to adequately protect personal information could have a material adverse effect on our business A wide variety of local, state, national, and international laws, directives and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data.
We must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing, and retaining an international staff, and specifically staff related to sales management and sales personnel, we may experience difficulties in sales productivity in foreign markets.
To the extent that we experience difficulties in recruiting, training, managing, and retaining an international staff, and specifically staff related to sales management and sales personnel, we may experience difficulties in sales productivity in foreign markets. We also enter into strategic distributor and reseller relationships with companies in certain international markets where we do not have a local presence.
These heightened competitive pressures could result in a loss of customers or a reduction in our revenues or revenue growth rates, all of which could adversely affect our business, results of operations and financial condition. 22 Table of Contents We may not be able to compete effectively in the application security and delivery market The markets we serve are rapidly evolving and highly competitive, and we expect competition to persist and intensify in the future.
These heightened competitive pressures could result in a loss of customers or a reduction in our revenues or revenue growth rates, all of which could adversely affect our business, results of operations and financial condition.
As we expand our reach and role into a broader set of multicloud solutions, the companies that we consider competitors evolves as well.
We may not be able to compete effectively in the application delivery and security market The markets we serve are rapidly evolving and highly competitive, and we expect competition to persist and intensify in the future. As we expand our reach and role into a broader set of multicloud solutions, the companies that we consider competitors evolves as well.
The SEC requires us, as a public company that uses certain raw materials considered to be “conflict minerals” in our products, to report publicly on the extent to which “conflict minerals” are in our supply chain. As a provider of hardware end-products, we are several steps removed from the mining, smelting, or refining of any conflict minerals.
As a provider of hardware end-products, we are several steps removed from the mining, smelting, or refining of any conflict minerals. Accordingly, our ability to determine with certainty the origin and chain of custody of these raw materials is limited.
As our products and customer IT infrastructures become increasingly complex, customers may also experience unforeseen errors in implementing our products into their IT environments. We expect that these errors, defects, or vulnerabilities will be found from time to time in new or enhanced products after commencement of commercial shipments.
Our products also must successfully operate with products from other vendors. As our products and customer IT infrastructures become increasingly complex, customers may also experience unforeseen errors in implementing our products into their IT environments or integrating them with other vendor products.
Changes in governmental regulation and our inability or failure to obtain required approvals, permits or registrations could harm our international and domestic sales and adversely affect our revenues, business and operations.
Changes in governmental regulation and our inability or failure to obtain required approvals, permits or registrations could harm our international and domestic sales and adversely affect our revenues, business and operations. 23 Table of Contents The SEC requires us, as a public company that uses certain raw materials considered to be "conflict minerals" in our products, to report publicly on the extent to which "conflict minerals" are in our supply chain.
These restructuring activities could lead to increased attrition amongst those employees who were not directly affected by the reduction in force program. 17 Table of Contents Cloud-based and SaaS computing trends present competitive and execution risks Customers are transitioning to a hybrid computing environment utilizing various cloud-based software and services accessed via various smart client devices.
Cloud-based and SaaS computing trends present competitive and execution risks Customers are transitioning to a hybrid computing environment utilizing various cloud-based software and services accessed via various smart client devices. Pricing and delivery models are evolving and our competitors are developing and deploying cloud-based services for customers.
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As a result, when problems occur in a network, it may be difficult to identify the source of the problem. The occurrence of software or hardware problems, whether caused by our products or another vendor’s products, may result in the delay or loss of market acceptance of our products.
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Strategic and Industry Risks • Our success depends on our timely development of new software and systems products and features, market acceptance of new software and systems product offerings and proper management of the timing of the life cycle of our software and systems products; • Our success depends on sales and continued innovation of our application delivery and security product lines; 12 Table of Contents • Issues related to the development and use of artificial intelligence ("AI") could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business; • Our business could be adversely impacted by conditions affecting the markets in which we compete; • Industry consolidation may result in increased competition; • We may not be able to compete effectively in the application delivery and security market; and • Misuse of our products could harm our reputation.
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The occurrence of any of these problems may harm our business and results of operations.
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General Risks • Macroeconomic downturns or uncertainties may harm our industry, business, and results of operations; • We face risks associated with having operations and employees located in Israel; • Our business is subject to the risks of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by man-made problems such as terrorism; and • Climate change and associated regulation may have an impact on our business.
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To the extent this impacted our ability to react timely to specific market or business opportunities, our financial results may be harmed.
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The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows The Cyber Incident may harm our reputation, our customers, employee and partner relations and our operations and business.
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As a result, our products have an unpredictable sales cycle that contributes to the uncertainty of our future operating results.
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Customers may in the future defer purchasing or choose to cancel or not renew their agreements or subscriptions with us. We may expend significant costs and expenses related to the Cyber Incident including in connection with our investigations, and to address the damage to our reputation, customer, employee and partner relations.
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In addition, the impact of Brexit on EU-UK political, trade, economic and diplomatic relations continues to be uncertain and such impact may not be fully realized for several years or more. Continued uncertainty and friction may result in regulatory, operational, and cost challenges to our UK and global operations.
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If we are unable to maintain the trust of our current and prospective customers and partners, or our personnel continue to have to devote significant time to the Cyber Incident, our business, market share, results of operations and financial condition could be negatively affected.
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Our business could be adversely impacted by conditions affecting the markets in which we compete A substantial portion of our business depends on the demand for information technology by large enterprise customers and service providers. We are dependent upon the overall economic health of our current and prospective customers.
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As a result of the Cyber Incident and market forces beyond our control, the cost of our insurance may increase substantially, and we may not be able to obtain additional or comparable insurance coverage on commercially reasonable terms.
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In addition, as many of our products are subject to export control regulations, diversion of our products to restricted third parties by others could result in investigations, penalties, fines, trade restrictions and negative publicity that could damage our reputation and materially impact our business, operating results, and financial condition.
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In addition, governmental authorities investigating the Cyber Incident may seek to impose undertakings, injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, materially increase our software development and related expenses or otherwise require us to alter how we operate our business.
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Any of the above-described 24 Table of Contents circumstances relating to intellectual property rights disputes could result in our business and results of operations being harmed. We incorporate open source software into our products.
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Further, any legislative or regulatory changes adopted in reaction to the Cyber Incident could require us to make modifications to the operation of our business that could have an adverse effect or increase or accelerate our compliance costs. We have not seen any evidence of modification to our software supply chain, including our source code and our build release pipelines.
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Risks Related to our Common Stock Our quarterly and annual operating results may fluctuate in future periods, which may cause our stock price to fluctuate Our quarterly and annual operating results have varied significantly in the past and could vary significantly in the future, which makes it difficult for us to predict our future operating results.
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We have confirmed that the threat actor exfiltrated files from our BIG-IP product development environment and engineering knowledge management platform.
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General Risks Macroeconomic downturns or uncertainties may harm our industry, business, and results of operations We operate globally and as a result, our business, revenues, and profitability may be impacted by global macroeconomic conditions.
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The discovery of new or different information regarding the Cyber Incident, including with respect to its scope and impact on our systems, products or customers, could increase our costs and liabilities related to the Cyber Incident and result in further damage to our business, reputation, intellectual property, results of operations and financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn September 2024, our current CISO began transitioning to a new role within the Company, and as a result, we have appointed an interim CISO while we conduct a search for his permanent replacement. Our interim CISO has over 25 years of experience in technology and information security operations across a diverse range of business sectors. 30 Table of Contents
Biggest changeOur CISO has over 25 years of experience in techn ology and information security operations across a diverse range of business sectors. In addition, on October 15, 2025 Michael Montoya, a former member of our Board of Directors, was appointed as the Company's Chief Technology Operations Officer. In his role, Mr.
Our cybersecurity risk management program is led by our Chief Information Security Officer (“CISO”), who manages our security team and is principally responsible for our cybersecurity risk assessment processes, our security controls, and our detection and response to cybersecurity incidents.
Our cybersecurity risk management program is led by our Chief Information Security Officer ("CISO"), who manages our security team and is principally responsible for our cybersecurity risk assessment processes, our security controls, and our detection and response to cybersecurity incidents.
If cyber-related issues arise between Risk Committee meetings that the CISO believes could have a material adverse impact on the Company, the CISO, or another appropriate risk management leader, will report to the Chair of the Risk Committee.
If cyber-related issues arise between Risk Committee meetings that the CISO believes could 28 Table of Contents have a material adverse impact on the Company, the CISO, or another appropriate risk management leader, will report to the Chair of the Risk Committee.
As of the date of this report, we do not believe that any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our Company, including our business strategy, results of operations or financial condition.
As of the date of this report, other than with respect to the Cyber Incident, we do not believe that any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our Company, including our business strategy, results of operations or financial condition.
Components of our program include: • risk assessments designed to help identify cybersecurity threats to our products and related supportive infrastructure, critical IT systems, information, and our broader enterprise IT environment; • monitoring, detection and collection and analysis of information regarding evolving, ongoing, and emerging threats and vulnerabilities, and corresponding actions to assess and remediate corresponding risks; • regular testing and assessments to identify vulnerabilities; • the periodic engagement of independent security firms and other third-party experts, where appropriate, to assess, test, and certify components of our cybersecurity program, and to otherwise assist with aspects of our cybersecurity processes and controls; • annual cybersecurity awareness training for our employees; • regular assessments of the design and operational effectiveness of the program’s key processes and controls by our internal audit team as well as external consultants; and • a risk management process for third-party service providers and vendors that includes due diligence in the selection process and periodic monitoring regarding adherence to applicable cybersecurity standards. 29 Table of Contents We also have a cybersecurity incident response plan to assess and manage cybersecurity incidents, which includes escalation procedures based on the nature and severity of the incident, including, where appropriate, escalation to the Risk Committee and the Board.
Components of our program include: • risk assessments designed to help identify cybersecurity threats to our products and related supportive infrastructure, critical IT systems, information, and our broader enterprise IT environment; • monitoring, detection and collection and analysis of information regarding evolving, ongoing, and emerging threats and vulnerabilities, and corresponding actions to assess and remediate corresponding risks; 27 Table of Contents • regular testing and assessments to identify vulnerabilities; • the periodic engagement of independent security firms and other third-party experts, where appropriate, to assess, test, and certify components of our cybersecurity program, and to otherwise assist with aspects of our cybersecurity processes and controls; • annual cybersecurity awareness training for our employees; • regular assessments of the design and operational effectiveness of the program’s key processes and controls by our internal audit team as well as external consultants; and • a risk management process for third-party service providers and vendors that includes due diligence in the selection process and periodic monitoring regarding adherence to applicable cybersecurity standards.
“Risk Factors,” including “Security vulnerabilities or control failures in our IT infrastructure or multicloud application security and delivery products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation.” Governance Our Board of Directors is actively involved in overseeing risks from cybersecurity threats and is assisted in that oversight by its Risk Committee.
"Risk Factors," including "Security vulnerabilities or control failures in our IT infrastructure or multicloud application delivery and security products and services as well as unforeseen product errors could have a material adverse impact on our business, results of operations, financial condition and reputation," and "The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows." Governance Our Board of Directors is actively involved in overseeing risks from cybersecurity threats and is assisted in that oversight by its Risk Committee.
Despite our security measures, however, there can be no assurance that we, or third parties with whom we interact, will not experience a cybersecurity incident in the future that will materially affect us. For more information on our cybersecurity related risks, see Part I, Item 1A.
For more information on the Cyber Incident, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Cyber Incident". Despite our security measures, however, there can be no assurance that we, or third parties with whom we interact, will not experience a cybersecurity incident in the future that will materially affect us.
We periodically perform tabletop exercises to test our incident response procedures, identify gaps and improvement opportunities, and assess team preparedness.
We also have a cybersecurity incident response plan to assess and manage cybersecurity incidents, which includes escalation procedures based on the nature and severity of the incident, including, where appropriate, escalation to the Risk Committee and the Board. We periodically perform tabletop exercises to test our incident response procedures, identify gaps and improvement opportunities, and assess team preparedness.
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In December 2023, our CISO retired after three years in the position, and a career spanning over twenty-five years as an industry-recognized leader in cybersecurity, information technology, and risk management.
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For more information on our cybersecurity related risks, see Part I, Item 1A.
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Her replacement has served in various roles in information technology, security and risk management for over 15 years, including having previously served as the CISO of two other publicly traded technology companies.
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Montoya will lead the enterprise-wide strategy and execution of our enterprise-wide cybersecurity program with our CISO, and in partnership with other business leaders, including our General Counsel and Chief Operating Officer to further embed security into every aspect of how F5 operates.

Item 2. Properties

Properties — owned and leased real estate

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Corporate Functions Customer Services and Technical Support We believe that our ability to provide consistent, high-quality customer service and technical support is a key factor in attracting and retaining large enterprise and service provider customers. Accordingly, we offer a broad range of support services that includes technical support, hardware repair and replacement, software updates, online tools, consulting, and training services.
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We provide these services directly to customers and also utilize a multi-tiered support model, leveraging the capabilities of our broad base of channel partners. Our technical support staff is strategically located in regional service centers to support our global customer base.
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Product Development We believe our future success depends on our ability to maintain technology leadership by continuing to innovate and to improve our products and by developing new products to meet the changing needs of our customers and partners.
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Our engineering organization uses standard processes for the development, documentation, and quality control of services, software, and systems that are designed to meet these goals. These processes include working with our business development and marketing teams, customers, and partners to identify technology innovation opportunities to better meet the evolving needs of our addressable markets.
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We have had dedicated teams focused on testing new disruptive innovations in technology, business models, or customer segments. We expect innovations resulting from the work of these teams will be complementary to our goal of delivering the broadest and most consistent portfolio of solutions across cloud and on-premises environments.
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We rely on a combination of patent, copyright, trademark, and trade secret laws and restrictions on disclosure to protect our intellectual property rights. F5 holds various patents in the United States and internationally (with applications pending for various aspects of our technology).
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We file patent applications to protect our intellectual property and believe that the duration of our issued patents is sufficient when considering the expected lives of our products. Our future success depends in part on our ability to protect our proprietary rights to the technologies used in our principal products.
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Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use trade secrets or other information that we regard as proprietary. In addition, the laws of some foreign countries do not protect our proprietary rights as fully as the laws of the United States.
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Any issued patent may not preserve our proprietary position, and competitors or others may develop technologies similar to or superior to our technology. In addition to our own proprietary software, we incorporate software licensed from several third-party sources into our products.
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These are generally term licenses which may renew annually and that generally provide for certain rights and licenses to support our customers post termination.
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While we may not be able to renew all of these licenses in the future, we believe that alternative technologies for these licenses are available both domestically and internationally. 29 Table of Contents Sales and Marketing Our customers include a wide variety of large enterprise businesses, public sector institutions, governments, and service providers, including many among Fortune 1000 and Business Week Global 1000 companies.
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Our customers include businesses in technology, telecommunications, financial services, transportation, education, manufacturing, healthcare, and government. In fiscal year 2025, sales outside of the Americas represented 44.2% of our net revenues. Refer to Note 15 of our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding our revenues by geographic area.
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Sales Our sales teams sell our products and services directly to customers working closely with our channel partners including distributors, value-added resellers ("VARs"), managed service providers ("MSPs"), and systems integrators. F5 sales teams . Our inside sales team generates and qualifies leads from marketing and helps manage accounts by serving as a liaison between the field and internal corporate resources.
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Our outside sales team works directly with partners and customers across the globe. Our field sales personnel are located in major cities across our three sales regions. Field sales personnel work closely with our channel partners to sell our products and services to their customers.
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We reward partners that identify new business and provide sales expertise for our portfolio of products and solutions through various incentive programs. Systems engineers, with deep technical domain expertise, support our regional sales account managers and channel partners providing pre-sale technical solution engineering and support, as needed. Distributors, VARs, and MSPs .
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As a key component of our sales strategy, we have established relationships with a number of large national and international distributors, local and specialized distributors, VARs, and MSPs. We derive a majority of our product sales from VARs and MSPs, relying on our large distributors for fulfillment, training, and partner enablement.
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Our agreements with our channel partners are not exclusive and do not prevent them from selling competitive products. These agreements typically have one-year terms with no obligation to renew, and typically do not provide for exclusive sales territories or minimum purchase requirements.
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Our agreements with distributors are standard, non-exclusive distribution agreements that renew automatically on an annual basis and generally can be terminated by either party with 90 days written notice prior to the start of any renewal term. The agreements grant certain distributors the right to distribute our products to resellers, with no minimum purchase requirements. Systems integrators.
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We also market our products through strategic relationships with systems integrators who include our products as core components of application deployments or network-based solutions they deploy for their customers. In most cases, systems integrators do not directly purchase our products for resale to their customers.
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Instead, they typically recommend and/or manage our products as a part of broader solutions supporting enterprise applications and internet facing systems that incorporate our technology for security, high availability, and enhanced performance. Resellers and technology partners . Historically, our ability to compete with much larger companies has been strengthened through partnerships with large systems and software vendors.
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Currently, we partner with many technology partners and public cloud providers who resell our products. We have ongoing partnerships with the major cloud providers such as AWS, Microsoft Azure, and Google Cloud Platform and have expanded our reseller routes to market to include their public cloud marketplaces.
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We are actively engaged with AWS, Microsoft Azure, and Google Cloud Platform on private offers leveraging our software on all three cloud providers. Our business development team manages these relationships and closely monitors adjacent and complementary markets for opportunities to partner with those whose solutions are complementary to ours and could enable us to expand our addressable market.
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Marketing As we continue to expand our offerings, we are focused on driving the compelling and unique value proposition of F5's solutions among our existing customers, including new buying centers within existing customers, as well as with new customers.
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To do so, we are revitalizing our brand, informing current customers about our expanded portfolio, and broadening our reach with new customers. We continue to focus on our core NetOps buying persona while seeking to expand our relationships with DevOps, SecOps, Chief Information Security Officer and Cloud Architect audiences.
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We are investing in driving brand, demand, and advocacy experiences, addressing touchpoints across the customer journey to ensure we do all we can to enable our customers to realize value in their investments with F5.
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To maximize our reach and impact, we continue to meet customers where they are by increasing our focus and investments in more digitally enabled, personalized, and frictionless experiences at scale. 30 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+0 added−0 removed1 unchanged
Biggest changeShares repurchased and retired during the fourth quarter of fiscal year 2024 are as follows (in thousands, except shares and per share data): Total Number of Shares Purchased 1 Average Price Paid per Share Total Number of Shares Purchased per the Publicly Announced Plan Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan 2 July 1, 2024 — July 31, 2024 — — — $ 522,421 August 1, 2024 — August 31, 2024 7,705 $ 195.48 — $ 522,421 September 1, 2024 — September 30, 2024 485,893 $ 205.81 485,893 $ 422,421 (1) Includes 7,705 shares withheld from restricted stock units that vested in the fourth quarter of fiscal 2024 to satisfy minimum tax withholding obligations that arose on the vesting of restricted stock units.
Biggest changeShares repurchased and retired during the fourth quarter of fiscal year 2025 are as follows (in thousands, except shares and per share data): Total Number of Shares Purchased 1 Average Price Paid per Share Total Number of Shares Purchased per the Publicly Announced Plan Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan 2 July 1, 2025 — July 31, 2025 420,197 $ 297.48 420,197 $ 922,421 August 1, 2025 — August 31, 2025 7,267 $ 307.43 — $ 922,421 September 1, 2025 — September 30, 2025 — — — $ 922,421 (1) Includes 7,267 shares withheld from restricted stock units that vested in the fourth quarter of fiscal 2025 to satisfy minimum tax withholding obligations that arose on the vesting of restricted stock units.
This authorization is incremental to the existing $5.4 billion program, initially approved in October 2010 and expanded in subsequent fiscal years. Acquisitions for the share repurchase programs will be made from time to time in private transactions, accelerated share repurchase programs, or open market purchases as permitted by securities laws and other legal requirements.
This authorization is incremental to the existing $6.4 billion program, initially approved in October 2010 and expanded in subsequent fiscal years. Acquisitions for the share repurchase programs will be made from time to time in private transactions, accelerated share repurchase programs, or open market purchases as permitted by securities laws and other legal requirements.
(2) Shares withheld from restricted stock units that vested to satisfy minimum tax withholding obligations that arose on the vesting of such awards do not deplete the dollar amount available for purchases under the repurchase program. 32 Table of Contents Performance Measurement Comparison of Shareholder Return The following graph compares the annual percentage change in the cumulative total return on shares of our common stock, the Nasdaq Composite Index, the S&P 500 Index, and the S&P 500 Information Technology Index for the period commencing September 30, 2019, and ending September 30, 2024.
(2) Shares withheld from restricted stock units that vested to satisfy minimum tax withholding obligations that arose on the vesting of such awards do not deplete the dollar amount available for purchases under the repurchase program. 32 Table of Contents Performance Measurement Comparison of Shareholder Return The following graph compares the annual percentage change in the cumulative total return on shares of our common stock, the Nasdaq Composite Index, the S&P 500 Index, and the S&P 500 Information Technology Index for the period commencing September 30, 2020, and ending September 30, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Prices of Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “FFIV.” The following table sets forth the high and low sales prices of our common stock as reported on the Nasdaq Global Select Market.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Prices of Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol "FFIV." The following table sets forth the high and low sales prices of our common stock as reported on the Nasdaq Global Select Market.
Unregistered Securities Sold in 2024 We did not sell any unregistered shares of our common stock during the fiscal year 2024. Issuer Purchases of Equity Securities On July 25, 2022, we announced that our Board of Directors authorized an additional $1.0 billion for our common stock share repurchase program.
Unregistered Securities Sold in 2025 We did not sell any unregistered shares of our common stock during the fiscal year 2025. Issuer Purchases of Equity Securities On October 25, 2024, we announced that our Board of Directors authorized an additional $1.0 billion for our common stock share repurchase program.
As of November 12, 2024, there were 38 holders of record of our common stock. As many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial holders of our common stock represented by these record holders.
As of November 12, 2025, there were 36 holders of record of our common stock. As many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial holders of our common stock represented by these record holders.
Comparison of Cumulative Total Return On Investment Since September 30, 2019* The Company’s closing stock price on September 30, 2024, the last trading day of the Company’s 2024 fiscal year, was $220.20 per share. * Assumes that $100 was invested September 30, 2019 in shares of common stock and in each index, and that all dividends were reinvested.
Comparison of Cumulative Total Return On Investment Since September 30, 2020* The Company’s closing stock price on September 30, 2025, the last trading day of the Company’s 2025 fiscal year, was $323.19 per share. * Assumes that $100 was invested September 30, 2020 in shares of common stock and in each index, and that all dividends were reinvested.
Shareholder returns over the indicated period should not be considered indicative of future shareholder returns. 33 Table of Contents
Shareholder returns over the indicated period should not be considered indicative of future shareholder returns. 33 Table of Contents Item 6. [Reserved] 34 Table of Contents
The programs can be terminated at any time. During fiscal year 2024, we repurchased and retired 2,823,608 shares of common stock at an average price of $177.08 per share and as of September 30, 2024, we had $422.4 million remaining authorized to purchase shares.
The programs can be terminated at any time. During fiscal year 2025, we repurchased and retired 1,879,403 shares of common stock at an average price of $266.04 per share and as of September 30, 2025, we had $922.4 million remaining authorized to purchase shares.
Fiscal Year 2024 Fiscal Year 2023 High Low High Low First Quarter $ 180.70 $ 145.45 $ 159.96 $ 133.68 Second Quarter $ 199.49 $ 171.05 $ 159.95 $ 135.49 Third Quarter $ 196.35 $ 159.01 $ 154.04 $ 127.05 Fourth Quarter $ 223.74 $ 169.55 $ 167.89 $ 142.16 The last reported sales price of our common stock on the Nasdaq Global Select Market on November 12, 2024 was $244.00.
Fiscal Year 2025 Fiscal Year 2024 High Low High Low First Quarter $ 264.50 $ 213.24 $ 180.70 $ 145.45 Second Quarter $ 313.00 $ 249.68 $ 199.49 $ 171.05 Third Quarter $ 301.83 $ 227.04 $ 196.35 $ 159.01 Fourth Quarter $ 337.39 $ 288.76 $ 223.74 $ 169.55 The last reported sales price of our common stock on the Nasdaq Global Select Market on November 12, 2025 was $240.17.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

67 edited+29 added−48 removed8 unchanged
Biggest changeThe increase of $17.5 million in net product revenues for fiscal year 2023 was due to growth in systems revenue. 37 Table of Contents The following presents net product revenues by systems and software (in thousands): Years Ended September 30, 2024 2023 2022 Net product revenues Systems revenue $ 537,318 $ 670,652 $ 651,902 Software revenue 735,477 663,986 665,215 Total net product revenue $ 1,272,795 $ 1,334,638 $ 1,317,117 Percentage of net product revenues Systems revenue 42.2 % 50.2 % 49.5 % Software revenue 57.8 49.8 50.5 Total net product revenue 100.0 % 100.0 % 100.0 % Software Revenues.
Biggest changeThe increase of $36.1 million in service revenue for fiscal year 2025 was primarily the result of increased initial purchases and renewals of maintenance contracts. 37 Table of Contents The following presents net product revenues by systems and software (in thousands): Years Ended September 30, 2025 2024 2023 Net product revenues Systems revenue $ 705,551 $ 537,318 $ 670,652 Software revenue Subscription 507,585 430,474 352,615 SaaS and managed services 175,641 193,201 203,326 Perpetual licenses 119,863 111,802 108,045 Total net product revenue $ 1,508,640 $ 1,272,795 $ 1,334,638 Percentage of net product revenues Systems revenue 46.8 % 42.2 % 50.2 % Software revenue Subscription 33.7 33.8 26.4 SaaS and managed services 11.6 15.2 15.3 Perpetual licenses 7.9 8.8 8.1 Total net product revenue 100.0 % 100.0 % 100.0 % Total systems revenue increased 31.3% in fiscal year 2025 from 2024 was primarily due to increases in customer demand and pricing increases on system offerings.
As a result of the first fiscal quarter of 2024 restructuring initiative, we recorded a charge of $8.7 million, net of adjustments, related to a reduction in workforce that is reflected in our results for fiscal 2024.
As a result of the first quarter of fiscal 2024 restructuring initiative, we recorded a charge of $8.7 million, net of adjustments, related to a reduction in workforce that is reflected in our results for fiscal 2024.
These forward-looking statements are based on current information and expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under “Item 1A.
These forward-looking statements are based on current information and expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under "Item 1A.
The majority of our product revenues are derived from sales of our application security and delivery solutions including our BIG-IP software and systems, F5 NGINX software, and our F5 Distributed Cloud Services offerings. Our BIG-IP software solutions are sold both on a perpetual license and a subscription basis. We sell F5 NGINX on a subscription basis.
The majority of our product revenues are derived from sales of our application delivery and security solutions including our F5 BIG-IP software and systems, F5 NGINX software, and our F5 Distributed Cloud Services offerings. Our F5 BIG-IP software solutions are sold both on a subscription and perpetual license basis.
As of September 30, 2024, our principal commitments consisted of obligations outstanding under operating leases and purchase obligations with one of our component suppliers. In October 2022, we entered into an unconditional purchase commitment with one of our suppliers for the delivery of systems components.
As of September 30, 2025, our principal commitments consisted of obligations outstanding under operating leases and purchase obligations with one of our component suppliers. In October 2022, we entered into an unconditional purchase commitment with one of our suppliers for the delivery of systems components.
Risk Factors” herein and in other documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to revise or update any such forward-looking statements.
Risk Factors" herein and in other documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to revise or update any such forward-looking statements.
We have recorded liabilities to address potential tax exposures related to business and income tax positions we have taken that could be challenged by taxing authorities. The ultimate resolution of these potential exposures may be greater or less than the liabilities recorded, which could result in an adjustment to our future tax expense.
We have recorded liabilities to address potential tax exposures related to business and income tax positions we have taken that could be challenged by taxing authorities. The 40 Table of Contents ultimate resolution of these potential exposures may be greater or less than the liabilities recorded, which could result in an adjustment to our future tax expense.
Uncertain economic conditions, including inflation, higher interest rates, slower growth, fluctuations in foreign exchange rates, and other changes in economic conditions, may adversely affect our results of operations and financial performance.
Uncertain economic conditions, including inflation, tariffs and other duties, higher interest rates, slower growth, fluctuations in foreign exchange rates, and other changes in economic conditions, may adversely affect our results of operations and financial performance.
Our total non-cancelable long-term purchase commitments outstanding as of September 30, 2024 was $20.0 million. We have a contractual obligation to purchase inventory components procured by our primary contract manufacturer in accordance with our annual build forecast. The contractual terms of the obligation contain cancellation provisions, which reduce our liability to purchase inventory components for periods greater than one year.
Our total non-cancelable long-term purchase commitments outstanding as of September 30, 2025 was $10.0 million. We have a contractual obligation to purchase inventory components procured by our primary contract manufacturer in accordance with our annual build forecast. The contractual terms of the obligation contain cancellation provisions, which reduce our liability to purchase inventory components for periods greater than one year.
We market and sell our products primarily through multiple indirect sales channels in the Americas; Europe, the Middle East, and Africa ("EMEA"); and the Asia Pacific region ("APAC").
We market and sell our products primarily through multiple indirect sales channels in our Americas; Europe, the Middle East, and Africa ("EMEA"); and Asia Pacific ("APAC") regions.
Enterprise customers (Fortune 1000 or Business Week Global 1000 companies) in the technology, telecommunications, financial services, transportation, education, manufacturing, and health care industries, along with government customers, continue to make up the largest percentage of our customer base.
Enterprise customers (Fortune 1000 or Business Week Global 1000 companies) in the technology, financial services, transportation, education, manufacturing, and health care industries, along with government customers, and service providers continue to make up the largest percentage of our customer base.
Going forward, we believe the primary driver of cash flows will be net income from operations. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash.
Going forward, we believe the primary driver of cash flows will 35 Table of Contents continue to be net income from operations. We will continue to evaluate possible acquisitions of, or investments in businesses, products, or technologies that we believe are strategic, which may require the use of cash.
On January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility").
Additionally, on January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). On January 31, 2025, the Revolving Credit Facility expired.
Under the terms of the agreement, we are obligated to purchase $10 million of component inventory annually, with a total committed amount of $40 million over a four-year term. As of September 30, 2024, we had no remaining purchase commitments under the second year of the agreement.
Under the terms of the agreement, we are obligated to purchase $10 million of component inventory annually, with a total committed amount of $40 million over a four-year term. As of September 30, 2025, we had no remaining purchase commitments under the third year of the agreement.
Obligations and Commitments As of September 30, 2024, we had approximately $98.7 million of tax liabilities, including interest and penalties, related to uncertain tax positions (See Note 8 to our Consolidated Financial Statements). Because of the high degree of uncertainty regarding the settlement of these liabilities, we are unable to estimate the years in which future cash outflows may occur.
Obligations and Commitments As of September 30, 2025, we had approximately $99.3 million of tax liabilities, including interest and penalties, related to uncertain tax positions (See Note 8 to our Consolidated Financial Statements). Because of the high degree of uncertainty regarding the settlement of these liabilities, we are unable to estimate the years in which future cash outflows may occur.
In the first fiscal quarter of 2024, and the first and third fiscal quarters of 2023, we completed restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability.
In the first and fourth fiscal quarters of 2025, and the first fiscal quarter of 2024, we completed restructuring plans to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability.
For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see Part I, Item 1A titled “Risk Factors.” Results of Operations The following discussion and analysis should be read in conjunction with our consolidated financial statements, related notes and risk factors included elsewhere in this Annual Report on Form 10-K.
For further discussion of the potential impacts of recent macroeconomic events on our business, financial condition, and operating results, see Part I, Item 1A titled "Risk Factors." Results of Operations The following discussion and analysis comparing our fiscal 2025 financial results to fiscal 2024 should be read in conjunction with our consolidated financial statements, related notes and risk factors included elsewhere in this Annual Report on Form 10-K.
General and Administrative. General and administrative expenses consist of the salaries, benefits and related costs of our executive, finance, information technology, human resource and legal personnel, third-party professional service fees, bad debt charges, facilities and depreciation expenses.
General and administrative expenses consist of personnel costs, including the salaries, benefits and related costs of our executive, finance, information technology, human resource and legal personnel, third-party professional service fees, bad debt charges, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses.
Cash used in financing activities was partially offset by cash received from the exercise of employee stock options and stock purchases under our employee stock purchase plan of $60.0 million.
Cash used in financing activities was partially offset by cash received from the exercise of employee stock options and stock purchases under our employee stock purchase plan of $59.2 million.
Our management team monitors and analyzes a number of key performance indicators in order to manage our business and evaluate our financial and operating performance on a consolidated basis. Those indicators include: • Revenues . Our revenue is derived from the sales of both global services and products. Our global services revenue includes annual maintenance contracts, training and consulting services.
Our management team monitors and analyzes a number of key performance indicators in order to manage our business and evaluate our financial and operating performance on a consolidated basis. Those indicators include: • Revenues . Our revenue is derived from the sales of both products and services.
Cash provided by operating activities during fiscal year 2024 was $792.4 million compared to $653.4 million in fiscal year 2023 and $442.6 million in fiscal year 2022. Cash provided by operating activities resulted primarily from cash generated from net income, after adjusting for non-cash charges such as stock-based compensation, depreciation and amortization charges and changes in operating assets and liabilities.
Cash provided by operating activities during fiscal year 2025 was $949.7 million compared to $792.4 million in fiscal year 2024. Cash provided by operating activities resulted primarily from cash generated from net income, after adjusting for non-cash charges such as stock-based compensation, depreciation and amortization charges and changes in operating assets and liabilities.
Our enterprise-grade application services are available as cloud-based, software-as-a-service, and software-only solutions optimized for multicloud environments, with modules that can run independently, or as part of an integrated solution on our high-performance appliances.
Our application services are available as hardware, software, SaaS, and software-only solutions optimized for hybrid, multicloud environments, with modules that can run independently, or as part of an integrated solution on our high-performance appliances.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of expansion into new territories, the timing of introductions of new products and enhancements of existing products, the continuing market acceptance of our products and cash paid for future acquisitions.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of expansion into new territories, the timing of introductions of new products and enhancements of existing products, the continuing market acceptance of our products, cash paid for future strategic initiatives such as our share repurchase program and acquisitions, and macroeconomic events or conditions.
Years Ended September 30, 2024 2023 2022 (in thousands, except percentages) Net revenues Products $ 1,272,795 $ 1,334,638 $ 1,317,117 Services 1,543,325 1,478,531 1,378,728 Total $ 2,816,120 $ 2,813,169 $ 2,695,845 Percentage of net revenues Products 45.2 % 47.4 % 48.9 % Services 54.8 52.6 51.1 Total 100.0 % 100.0 % 100.0 % Net Revenues.
Years Ended September 30, 2025 2024 2023 (in thousands, except percentages) Net revenues Products $ 1,508,640 $ 1,272,795 $ 1,334,638 Services 1,579,432 1,543,325 1,478,531 Total $ 3,088,072 $ 2,816,120 $ 2,813,169 Percentage of net revenues Products 48.9 % 45.2 % 47.4 % Services 51.1 54.8 52.6 Total 100.0 % 100.0 % 100.0 % Net Product Revenues.
Years Ended September 30, 2024 2023 2022 (in thousands, except percentages) Operating expenses Sales and marketing $ 832,279 $ 878,215 $ 926,591 Research and development 490,120 540,285 543,368 General and administrative 268,828 263,405 274,558 Restructuring charges 8,655 65,388 7,909 Total $ 1,599,882 $ 1,747,293 $ 1,752,426 Operating expenses (as a percentage of net revenue) Sales and marketing 29.6 % 31.2 % 34.4 % Research and development 17.4 19.2 20.1 General and administrative 9.5 9.4 10.2 Restructuring charges 0.3 2.3 0.3 Total 56.8 % 62.1 % 65.0 % Sales and Marketing.
Years Ended September 30, 2025 2024 2023 (in thousands, except percentages) Operating expenses Sales and marketing $ 860,506 $ 832,279 $ 878,215 Research and development 539,815 490,120 540,285 General and administrative 322,340 268,828 263,405 Restructuring charges 25,484 8,655 65,388 Total $ 1,748,145 $ 1,599,882 $ 1,747,293 Operating expenses (as a percentage of net revenue) Sales and marketing 27.9 % 29.6 % 31.2 % Research and development 17.5 17.4 19.2 General and administrative 10.4 9.5 9.4 Restructuring charges 0.8 0.3 2.3 Total 56.6 % 56.8 % 62.1 % Sales and Marketing.
Sales and marketing expenses consist of the salaries, commissions and related benefits of our sales and marketing staff, the costs of our marketing programs, including public relations, advertising and trade shows, travel, facilities, and depreciation expenses.
Sales and marketing expenses consist of personnel costs, including the salaries, commissions, stock-based compensation, and related benefits of our sales and marketing personnel, the costs of our marketing programs, including public relations, advertising and trade shows, travel, facilities, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses.
Years Ended September 30, 2024 2023 2022 (in thousands) Liquidity and Capital Resources Cash and cash equivalents and investments $ 1,083,182 $ 808,391 $ 894,110 Cash provided by operating activities 792,419 653,409 442,631 Cash (used in) provided by investing activities (59,214) 36,393 218,116 Cash used in financing activities (457,002) (653,299) (476,508) Cash and cash equivalents, short-term investments and long-term investments totaled $1,083.2 million as of September 30, 2024, compared to $808.4 million as of September 30, 2023, representing an increase of $274.8 million.
Years Ended September 30, 2025 2024 2023 (in thousands) Liquidity and Capital Resources Cash and cash equivalents and investments $ 1,359,966 $ 1,083,182 $ 808,391 Cash provided by operating activities 949,666 792,419 653,409 Cash (used in) provided by investing activities (219,491) (59,214) 36,393 Cash used in financing activities (464,815) (457,002) (653,299) Cash and cash equivalents, short-term investments and long-term investments totaled $1,360.0 million as of September 30, 2025, compared to $1,083.2 million as of September 30, 2024, representing an increase of $276.8 million.
The cash and cash equivalents and investment balances outside of the U.S. are subject to fluctuation based on the settlement of intercompany balances.
As of September 30, 2025, 64.0% of our cash and cash equivalents and investment balances were outside of the U.S. The cash and cash equivalents and investment balances outside of the U.S. are subject to fluctuation based on the settlement of intercompany balances.
Years Ended September 30, 2024 2023 2022 (in thousands, except percentages) Other income and income taxes Income from operations $ 658,591 $ 472,568 $ 403,792 Other income (expense), net 36,874 13,420 (18,399) Income before income taxes 695,465 485,988 385,393 Provision for income taxes 128,687 91,040 63,233 Net income $ 566,778 $ 394,948 $ 322,160 Other income and income taxes (as percentage of net revenue) Income from operations 23.4 % 16.8 % 15.0 % Other income (expense), net 1.3 0.5 (0.7) Income before income taxes 24.7 17.3 14.3 Provision for income taxes 4.6 3.3 2.3 Net income 20.1 % 14.0 % 12.0 % Other Income (Expense), Net.
Years Ended September 30, 2025 2024 2023 (in thousands, except percentages) Other income and income taxes Income from operations $ 765,949 $ 658,591 $ 472,568 Other income, net 42,387 36,874 13,420 Income before income taxes 808,336 695,465 485,988 Provision for income taxes 115,956 128,687 91,040 Net income $ 692,380 $ 566,778 $ 394,948 Other income and income taxes (as percentage of net revenue) Income from operations 24.8 % 23.4 % 16.8 % Other income, net 1.4 1.3 0.5 Income before income taxes 26.2 24.7 17.3 Provision for income taxes 3.8 4.6 3.3 Net income 22.4 % 20.1 % 14.0 % Other Income, Net.
Investing activities include purchases, sales and maturities of available-for-sale securities, business acquisitions and capital expenditures. Cash used in investing activities for fiscal year 2024 was primarily the result of $32.9 million in cash paid for acquisitions and $30.4 million in capital expenditures related to maintaining our operations worldwide, partially offset by $6.2 million in maturities of investments.
Cash used in investing activities for fiscal year 2024 was primarily the result of $32.9 million in cash paid for acquisitions and $30.4 million in capital expenditures related to maintaining our operations worldwide, partially offset by $6.2 million in maturities of investments. 41 Table of Contents Cash used in financing activities was $464.8 million for fiscal year 2025, compared to cash used in financing activities of $457.0 million for fiscal year 2024.
These statements include, but are not limited to, statements about our plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions.
These statements include, but are not limited to, statements about our plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and similar expressions.
Our financial condition remains strong with significant cash and investments. The increase in cash and investments for fiscal year 2024 was primarily due to cash provided by operating activities of $792.4 million, partially offset by $500.6 million of cash used for the repurchase of outstanding common stock under our stock repurchase program and the payment of related excise taxes.
The increase in cash and investments for fiscal year 2025 was primarily due to cash provided by operating activities of $949.7 million, partially offset by $502.1 million of cash used for the repurchase of outstanding common stock under our stock repurchase program, including the payment of related excise taxes.
Cost of net product revenues consist of finished products purchased from our contract manufacturers, manufacturing overhead, freight, warranty, provisions for excess and obsolete inventory, software-as-a-service infrastructure costs and amortization expenses in connection with developed technology from acquisitions.
Cost of net product revenues consist of finished products purchased from our contract manufacturers, personnel costs, including the salaries, stock-based compensation, and related benefits of our personnel, manufacturing overhead, freight, warranty, provisions for excess and obsolete inventory, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses, and amortization expenses in connection with developed technology from acquisitions.
Additionally, on January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an 35 Table of Contents aggregate principal amount of $350.0 million (the "Revolving Credit Facility").
On January 31, 2020, we entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). On January 31, 2025, the Revolving Credit Facility expired. At the time of expiration, there were no outstanding borrowings under the Revolving Credit Facility.
The net decrease in the valuation allowance of $4.3 million for fiscal year 2024 and net decrease of $2.2 million for fiscal year 2023 was primarily related to tax net operating losses and credits incurred in certain foreign jurisdictions, and state tax carryforwards.
The net decrease in the valuation allowance of $5.4 million for fiscal year 2025 was primarily related to tax net operating losses and credits incurred in certain foreign jurisdictions, and state tax carryforwards. Our net deferred tax assets as of September 30, 2025 and 2024 were $444.5 million and $358.8 million, respectively.
We strive to control our cost of revenues and thereby maintain our gross margins. Significant items impacting cost of revenues are hardware costs paid to our contract manufacturers, third-party software license fees, software-as-a-service infrastructure costs, amortization of developed technology and personnel and overhead expenses.
Significant items impacting cost of revenues are hardware costs paid to our contract manufacturers, third-party software license fees, technology costs, including cloud hosting and software licenses expenses, amortization of developed technology and personnel and overhead expenses.
In making these determinations we consider historical and projected taxable income, and ongoing prudent and feasible tax planning strategies in assessing the appropriateness of a valuation allowance.
We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. In making these determinations we consider historical and projected taxable income, and ongoing prudent and feasible tax planning strategies in assessing the appropriateness of a valuation allowance.
Cash provided by investing activities for fiscal year 2023 was primarily the result of $111.3 million in maturities of investments and $16.1 million in sales of investments, partially offset by $35.0 million in cash paid for acquisitions and $54.2 million in capital expenditures related to maintaining our operations worldwide.
Cash used in investing activities for fiscal year 2025 was primarily the result of $171.1 million in cash paid for acquisitions and $43.3 million in capital expenditures related to maintaining our operations worldwide.
Years Ended September 30, 2024 2023 2022 (in thousands, except percentages) Cost of net revenues and gross profit Products $ 336,237 $ 375,192 $ 319,713 Services 221,410 218,116 219,914 Total 557,647 593,308 539,627 Gross profit $ 2,258,473 $ 2,219,861 $ 2,156,218 Percentage of net revenues and gross margin (as a percentage of related net revenue) Products 26.4 % 28.1 % 24.3 % Services 14.3 14.8 16.0 Total 19.8 21.1 20.0 Gross margin 80.2 % 78.9 % 80.0 % Cost of Net Product Revenues.
No other distributor customers accounted for more than 10% of total net revenue or receivables, other than those noted above. 38 Table of Contents Years Ended September 30, 2025 2024 2023 (in thousands, except percentages) Cost of net revenues and gross profit Products $ 338,037 $ 336,237 $ 375,192 Services 235,941 221,410 218,116 Total 573,978 557,647 593,308 Gross profit $ 2,514,094 $ 2,258,473 $ 2,219,861 Percentage of net revenues and gross margin (as a percentage of related net revenue) Products 22.4 % 26.4 % 28.1 % Services 14.9 14.3 14.8 Total 18.6 19.8 21.1 Gross margin 81.4 % 80.2 % 78.9 % Cost of Net Product Revenues.
The following customers accounted for more than 10% of total net revenue: Years Ended September 30, 2024 2023 2022 Ingram Micro, Inc. 16.3 % 15.6 % 20.0 % Synnex Corporation 15.9 % 15.0 % 13.4 % The following customers accounted for more than 10% of total receivables: September 30, 2024 2023 Ingram Micro, Inc. 20.3 % — Synnex Corporation 14.8 % 16.0 % Carahsoft Technology Corporation — 10.1 % 38 Table of Contents No other customers accounted for more than 10% of total net revenue or receivables.
The following distributor customers accounted for more than 10% of total net revenue: Years Ended September 30, 2025 2024 2023 Customer A 15.8 % 16.3 % 15.6 % Customer B 17.5 % 15.9 % 15.0 % The following distributor customers accounted for more than 10% of total receivables: September 30, 2025 2024 Customer A 11.1 % 20.3 % Customer B 17.8 % 14.8 % Customer C 10.9 % — Customer D 11.4 % — No end-user customers accounted for more than 10% of total net revenue or receivables.
Cash from operations could be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I, Item 1A titled “Risk Factors.” However, we anticipate our current cash, cash equivalents and investment balances, anticipated cash flows generated from operations, and available borrowing capacity on the Revolver Credit Facility will be sufficient to meet our liquidity needs. 41 Table of Contents Cash used in investing activities during fiscal year 2024 was $59.2 million compared to cash provided by investing activities of $36.4 million in fiscal year 2023 and cash provided by investing activities of $218.1 million in fiscal year 2022.
Cash from operations could be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I, Item 1A titled "Risk Factors." However, we anticipate our current cash, cash equivalents and investment balances and anticipated cash flows generated from operations will be sufficient to meet our liquidity needs.
Accordingly, we believe the following policy is the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition. We sell products through distributors, resellers, and directly to end users. Revenue related to our contracts with customers is recognized by following a five-step process: • Identify the contract(s) with a customer.
Accordingly, we believe the following policy is the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition. The majority of our contracts with our customers include various combinations of our products and subscriptions and support.
As a result of the first and third fiscal quarters of 2023 restructuring initiatives, we recorded charges of $8.7 million and $56.7 million, respectively, related to a reduction in workforce and exit of leased space that is reflected in our results for fiscal 2023.
As a result of the first and fourth quarters of fiscal 2025 restructuring initiatives, we recorded charges of $11.3 million and $14.3 million, net of adjustments, related to reductions in workforce that are reflected in our results for fiscal 2025.
We view cash, short-term and long-term investments, deferred revenue, accounts receivable balances and days sales outstanding as important indicators of our financial health. Deferred revenues continued to increase in fiscal 2024 due to an increase in deferred subscription contracts, including SaaS and maintenance associated with licensed-based subscriptions, which includes sales as part of our Flex Consumption Program.
Deferred revenues continued to increase in fiscal 2025 due to an increase in deferred subscription contracts, including SaaS and maintenance associated with licensed-based subscriptions, which includes sales as part of our Flexible Consumption Program. Our days sales outstanding for the fourth quarter of fiscal year 2025 was 46.
The increase was primarily due to cash provided by operating activities of $792.4 million for fiscal 2024, partially offset by cash used for the repurchase of outstanding common stock and the payment of related excise taxes of $500.6 million. As of September 30, 2024, 62.9% of our cash and cash equivalents and investment balances were outside of the U.S.
The increase was primarily due to cash provided by operating activities of $949.7 million for fiscal 2025, partially offset by cash used for the repurchase of outstanding common stock and the payment of related excise taxes of $502.1 million.
Cash used in financing activities for fiscal year 2023 included $350.0 million of cash used for the repayment of the Term Loan Facility, as well as $350.0 million of cash used to repurchase shares. In addition, $13.2 million in cash was used for taxes related to net share settlement of equity awards.
Cash used in financing activities for fiscal year 2025 included $502.1 million of cash used for the repurchase of outstanding common stock and the payment of related excise taxes, as well as $21.9 million in cash used for taxes related to the net share settlement of equity awards.
Existing headcount and future hiring plans are the predominant factors in analyzing and forecasting future operating expense trends. Other significant operating expenses that we monitor include marketing and promotions, travel, professional fees, computer costs related to the development of new products and provision of services, facilities and depreciation expenses. • Liquidity and cash flows.
Other significant operating expenses that we monitor include costs associated with cyber and enterprise-wide security, marketing and promotions, travel, professional fees, technology costs, including cloud hosting and software licenses expenses, related to the development of new products and provision of services, facilities and depreciation expenses. • Liquidity and cash flows. Our financial condition remains strong with significant cash and investments.
General and administrative headcount at the end of fiscal year 2024 increased to 875 from 855 at the end of fiscal year 2023. In fiscal year 2023, general and administrative expense included a decrease of $7.0 million in fees paid to outside consultants for legal, accounting and tax services.
General and administrative headcount at the end of fiscal year 2025 increased to 898 from 875 at the end of fiscal year 2024. In addition, fees paid for professional services increased $19.7 million in fiscal year 2025 from the prior year, primarily due to activity related to acquisitions. Restructuring charges .
In order to support our build forecast, we will, from time-to-time prepay our primary contract manufacturer for inventory purchases. 42 Table of Contents Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07").
In order to support our build forecast, we will, from time-to-time prepay our primary contract manufacturer for inventory purchases. Recently Issued Accounting Pronouncements Refer to "Recently Issued Accounting Pronouncements" in Note 1.
The decrease of $61.8 million in net product revenues for fiscal year 2024 was due to a decrease in systems sales, partially offset by an increase in software revenue primarily from packaged software sales.
Net product revenues increased 18.5% in fiscal year 2025 from fiscal year 2024. The increase of $235.8 million in net product revenues for fiscal year 2025 was due to an increase in revenues associated with systems and software of $168.2 million and $67.6 million, respectively. Net Service Revenues.
Net Service Revenues. Net service revenues increased 4.4% in fiscal year 2024 from fiscal year 2023, compared to an increase of 7.2% in fiscal year 2023 from the prior year.
Net service revenues increased 2.3% in fiscal year 2025 from fiscal year 2024.
Sales and marketing headcount at the end of fiscal year 2024 decreased to 2,165 from 2,170 at the end of fiscal year 2023.
Sales and marketing headcount at the end of fiscal year 2025 increased to 2,186 from 2,165 at the end of fiscal year 2024. In addition, technology expenditures to support the sales and marketing organization increased $6.5 million in fiscal year 2025 from the prior year. Research and Development.
F5 Distributed Cloud Services provides security, multicloud networking, and edge-based computing solutions and are offered on a subscription basis, under a unified software-as-a-service ("SaaS") platform. We monitor the sales mix of our revenues within each reporting period. We believe customer acceptance rates of our new products, feature enhancements and consumption models are indicators of future trends.
We sell F5 NGINX on a subscription basis as deployable software or SaaS. F5 Distributed Cloud Services provides security, multicloud networking, and edge-based computing solutions and are offered on a subscription basis, under a unified SaaS platform and managed service platform. Our services revenue includes annual maintenance contracts, training and consulting services.
Cash provided by operating activities for fiscal year 2024 increased from the prior year primarily due to an increase in net income, as well as an increase in cash received from customers.
Cash provided by operating activities for fiscal year 2025 increased from the prior year primarily due to growth of our business as reflected by increases in collections during fiscal 2025, partially offset by higher cash expenditure to support our business growth.
General and administrative expense increased $5.4 million, or 2.1% in fiscal year 2024 from the prior year, as compared to a year-over-year decrease of $11.2 million, or 4.1% in fiscal 2023. The decrease in general and administrative expense for fiscal year 2024 was primarily due to a decrease of $6.5 million in fees paid for professional services.
Sales and marketing expense increased $28.2 million, or 3.4% in fiscal year 2025 from the prior year. The increase in sales and marketing expense for fiscal year 2025 was primarily due to an increase of $20.6 million in personnel costs.
Overview F5 is a leading provider of multicloud application security and delivery solutions which enable our customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud.
Overview F5 is a global leader in application delivery and security solutions which enables its customers to deploy, operate, secure, optimize, and govern every application and API across on-premises architectures, in the cloud, and at the network edge. Our cloud, software, and hardware solutions enable our customers to deliver fast, available, and secure digital experiences to their customers at scale.
The increase in other income (expense), net for fiscal year 2024 was primarily due to an increase in interest income of $16.8 million from our investments, and a decrease in interest expense of $3.2 million, compared to the prior year. In addition, foreign currency gains and losses improved by $2.1 million in fiscal year 2024, compared to the prior year.
The change in other income, net for the fiscal year ended September 30, 2025 was primarily driven by interest income and expense, investment income, and foreign currency transaction gains and losses compared to the same periods in the prior year. Provision for Income Taxes.
The increase in effective tax rate from fiscal year 2022 to 2023 and 2024 is primarily due to the tax impact from stock-based compensation and tax reserves. We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized.
We recorded a 14.3% provision for income taxes for fiscal year 2025, compared to 18.5% in fiscal year 2024. The decrease in effective tax rate from fiscal year 2024 to 2025 is primarily due to the tax impact from stock-based compensation and tax reserves.
Research and development expenses consist of the salaries and related benefits of our product development personnel, prototype materials and other expenses related to the development of new and improved products, facilities and depreciation expenses. Research and development expense decreased $50.2 million, or 9.3% in fiscal year 2024 from the prior year, and remained relatively flat year-over-year in fiscal 2023.
Research and development expenses consist of personnel costs, including the salaries, stock-based compensation, and related benefits of our product development personnel, prototype materials and other expenses related to the development of new and improved products, technology costs, including cloud hosting and software licenses expenses, 39 Table of Contents facilities, depreciation and amortization expenses.
Liquidity and Capital Resources We have funded our operations with our cash balances and cash generated from operations.
The Company will continue to monitor for additional guidance but does not expect a material impact to the consolidated financial statements for future years. Liquidity and Capital Resources We have funded our operations with our cash balances and cash generated from operations.
The increase in other income (expense), net for fiscal year 2023 as compared to fiscal year 2022 was primarily due to an increase in interest income of $16.5 million from our 40 Table of Contents investments, and a decrease in interest expense of $5.5 million, compared to the prior year.
General and administrative expense increased $53.5 million, or 19.9% in fiscal year 2025 from the prior year. The increase in general and administrative expense for fiscal year 2025 was primarily due to an increase of $25.8 million in personnel costs.
In addition, we continued to experience component cost increases, expedite fees and other sourcing-related costs in fiscal 2023. Cost of Net Service Revenues. Cost of net service revenues consist of the salaries and related benefits of our professional services staff, travel, facilities and depreciation expenses.
Cost of net service revenues consist of personnel costs, including the salaries, stock-based compensation, and related benefits of our professional services personnel, travel, technology costs, including cloud hosting and software licenses expenses, facilities and depreciation expenses. Cost of net service revenues increased $14.5 million, or 6.6% in fiscal year 2025 from the prior year.
Management has determined the period of benefit to be 4.5 years for initial PCS on hardware and perpetual software offerings, and 3 to 5 years for subscription offerings. Impact of Current Macroeconomic Conditions Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on customer behavior.
As our business offerings evolve over time, we may be required to modify our estimated standalone selling prices, and as a result the timing and classification of our revenue could be affected. Impact of Macroeconomic Conditions Our overall performance depends in part on worldwide economic and geopolitical conditions and their impacts on customer behavior.
The decrease in research and development expense for fiscal year 2024 was primarily due to a decrease of $36.7 million in personnel costs, largely driven by reductions in workforce as part of the first quarter of fiscal 2024 and third quarter of fiscal 2023 restructuring plans.
Research and development expense increased $49.7 million, or 10.1% in fiscal year 2025 from the prior year. The increase in research and development expense for fiscal year 2025 was primarily due to an increase of $31.4 million in personnel costs.
Cash used in financing activities was $457.0 million for fiscal year 2024, compared to cash used in financing activities of $653.3 million for fiscal year 2023 and cash used in financing activities of $476.5 million for fiscal year 2022.
Cash used in investing activities during fiscal year 2025 was $219.5 million compared to cash used in investing activities of $59.2 million in fiscal year 2024. Investing activities include purchases, sales and maturities of available-for-sale securities, business acquisitions and capital expenditures.
Our days sales outstanding for the fourth quarter of fiscal year 2024 was 47. Days sales outstanding is calculated by dividing ending accounts receivable by revenue per day for a given quarter. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Days sales outstanding is calculated by dividing ending accounts receivable by revenue per day for a given quarter.
Overall revenue growth for the year ended September 30, 2024 was due to an increase in service revenue driven by continued growth in maintenance contract renewals, partially offset by a decrease in product revenue. International revenues represented 47.1%, 47.1% and 44.8% of net revenues in fiscal years 2024, 2023 and 2022, respectively. Net Product Revenues.
Cost of net product revenues increased primarily due to systems and software revenue growth. The increase was largely offset by an improvement in product margins driven by a more favorable product mix. Cost of Net Service Revenues.
Removed
We also consider overall revenue concentration by geographic region as an additional indicator of current and future trends. In fiscal 2023 and as we entered fiscal 2024, continued customer budget constraints brought on by uncertainties in the macroeconomic environment led to delays in customer purchase decisions.
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We monitor the sales mix of our revenues within each reporting period. We believe customer acceptance rates of our new products, feature enhancements and consumption models are indicators of future trends. We also consider overall revenue concentration by geographic region as an additional indicator of current and future trends.
Removed
The impact of these buying patterns led to softer demand for both our software and systems products and services. Over the course of fiscal 2024, we have seen customer demand stabilizing, however, we will continue to closely monitor the macroeconomic environment and its impacts on our business. • Cost of revenues and gross margins.
Added
In fiscal 2025, we benefited from improving customer demand, which began to stabilize and improve following macroeconomic uncertainties at the start of fiscal 2024. • Cost of revenues and gross margins. We strive to control our cost of revenues and thereby maintain our gross margins.
Removed
We have the option to increase commitments under the Revolving Credit Facility from time to time, subject to certain conditions, by up to $150.0 million. As of September 30, 2024, there were no outstanding borrowings under the Revolving Credit Facility, and we had available borrowing capacity of $350.0 million. • Balance sheet.
Added
Existing headcount and future hiring plans are the predominant factors in analyzing and forecasting future operating expense trends.
Removed
Evidence of a contract generally consists of a purchase order issued pursuant to the terms and conditions of a distributor, reseller or end user agreement. • Identify the performance obligations in the contract.
Added
In addition, $171.1 million of cash was used for the acquisition of businesses during fiscal 2025, and $43.3 million of cash was used for capital expenditures related to the expansion of our facilities to support our operations worldwide, as well as investments in technology, including cloud hosting and software licenses, and equipment purchases to support our core business activities.
Removed
Performance obligations are identified in our contracts and include hardware, hardware-based software, software-only solutions, cloud-based subscription services as well as a broad range of service performance obligations including consulting, training, installation and maintenance. • Determine the transaction price. The purchase price stated in an agreed upon purchase order is generally representative of the transaction price.
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At the time of expiration, there were no outstanding borrowings under the Revolving Credit Facility. • Balance sheet. We view cash, short-term and long-term investments, deferred revenue, accounts receivable balances and days sales outstanding as important indicators of our financial health.
Removed
We offer several programs in which customers are eligible for certain levels of rebates if certain conditions are met. When determining the transaction price, we consider the effects of any variable consideration. • Allocate the transaction price to the performance obligations in the contract.
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Cyber Incident On October 15, 2025, we disclosed information about a Cyber Incident in which a highly sophisticated nation-state threat actor had gained unauthorized long-term, persistent access to certain Company systems, and exfiltrated certain files, some of which contained certain portions of our BIG-IP source code and information about undisclosed vulnerabilities that our engineering teams were working on in BIG-IP.
Removed
The transaction price in a contract is allocated based upon the relative standalone selling price of each distinct performance obligation identified in the contract. • Recognize revenue when (or as) the entity satisfies a performance obligation. We satisfy performance obligations either over time or at a point in time as discussed in further detail below.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+2 added−1 removed2 unchanged
Biggest changeWe are actively monitoring the current inflationary environment, but we do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
Biggest changeIf our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
While we conduct transactions in foreign currencies and expect to continue to do so, we do not anticipate that foreign currency transaction gains or losses will be significant at our current level of operations. However, as we continue to expand our operations internationally, transaction gains or losses may become significant in the future. 44 Table of Contents
While we conduct transactions in foreign currencies and expect to continue to do so, to date we have not, and do not anticipate that related foreign currency transaction gains or losses will be significant at our current level of operations.
Our inability or failure to do so could harm our business, financial condition and results of operations. If the current inflationary environment constrains our customers’ ability to procure goods and services from us, we may see customers reprioritize these investment decisions. These macroeconomic conditions could harm our business, financial condition and results of operations. Foreign Currency Risk.
If the inflationary environment constrains our customers’ ability to procure goods and services from us, we may see customers reprioritize these investment decisions. These macroeconomic conditions could harm our business, financial condition and results of operations. Foreign Currency Risk. The majority of our sales, cost of net revenues, and operating expenses are denominated in U.S. dollars ("USD").
Removed
The majority of our sales, cost of net revenues, and operating expenses are denominated in U.S. dollars and as a result, we have not experienced significant foreign currency transaction gains and losses to date.
Added
We are actively monitoring the macroeconomic inflationary environment, including the impact from changes in foreign trade policies, tariffs, and other duties, but we do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Added
However, as we operate in and continue to expand our operations internationally, fluctuations in foreign currency exchange rates relative to the USD, could impact our foreign currency-denominated costs and may result in operating margin volatility. To date, such fluctuations have not had a material impact on our financial results. 43 Table of Contents