Seattle, Washington – (The Hosting News) – July 27, 2006 –
Application delivery networking company, F5 Networks, has released its third quarter financials for fiscal 2006, announcing revenue of $100.1 million, up 6 percent from $94.1 million in the prior quarter and 37 percent from $73.1 million in the third quarter of fiscal 2005.
John McAdam, President and Chief Executive Officer of F5 Networks commented that during the third quarter the company achieved solid sequential growth in Europe, Asia-Pacific and the Americas. As expected, Japan revenue was down from the prior quarter, reflecting the seasonal weakness that characterizes the first quarter of Japan’s fiscal year. Year over year, Japan revenue grew 72 percent.
During the third quarter, revenue growth was driven by continuing strength in BIG-IP sales and increasing demand for the company’s recently acquired WAN optimization products. Reflecting increased competition and ongoing softness in the SSL-VPN market, overall security revenue dipped sequentially, despite a steady ramp in revenue from application security products.
Service revenue for the quarter was $22.9 million, up 7 percent sequentially and 44 percent year over year. Deferred revenue increased 12 percent from the prior quarter to $53.6 million. For the fourth quarter, ending September 30, 2006, Mr. McAdam said management has set a revenue target of $104 million to $106 million.
As previously announced, a special committee of F5’s board of directors has been conducting a review of the company’s practices relating to the granting of stock options. This review, which is being assisted by independent legal counsel and forensic accountants, has not yet been completed, and the special committee has not communicated any final findings to the company. However, in the course of furnishing information to the special committee, the company has identified at least one occasion on which the accounting measurement date for option awards granted to certain employees, officers and directors of the company was different from the correct accounting measurement date determined under applicable accounting rules. As a result, the company expects to record an additional non-cash, stock-based compensation expense related to these options. In addition, because the company believes such expense is material under applicable SEC standards, the company will restate its financial statements for fiscal years 2001 through 2005, and for the first two quarters of fiscal 2006. The company has not completed its assessment of the amount or effect of any such adjustments. However, such adjustments are not expected to affect the company’s current cash position or previously reported revenues, but will likely affect the company’s income statements through fiscal 2005 and balance sheets through the present.
Because the special committee’s review of the company’s stock option grant practices has not been completed, it is possible that additional issues concerning the company’s historical stock option grants could be identified. As a result:
- the company will not be in a position to publish financial statements for the third quarter until the special committee has completed its review and appropriate stock-based compensation adjustments have been determined;
- today’s announcement of results for the third quarter of fiscal 2006 does not include a current income statement or balance sheets or other GAAP financials for the third quarter and prior periods; and
- it is unlikely the special committee’s review will be completed in time for the company to file its Quarterly Report on Form 10-Q for the third quarter ended June 30, 2006, by the SEC deadline of August 14, 2006.
The company intends to publish financial statements for the quarterly period ended June 30, 2006, and to file its Quarterly Report on Form 10-Q, together with any restated historical financial statements, as soon as practicable after the completion of the special committee’s review.
In light of the expected restatement of the company’s financial statements to reflect the additional compensation expense for 2001 option grants described above, and the possibility that the special committee’s review may identify the need for additional historical adjustments, the company’s financial statements and earnings releases and similar financial communications relating to fiscal periods commencing on or after October 1, 2000, the first day of the company’s fiscal year 2001, should no longer be relied upon. Moreover, the company may determine, prior to the completion of the special committee’s review, that the accounting of other historical stock option grants was incorrect. For this reason, the company may determine that the financial statements issued with respect to additional fiscal periods beginning prior to October 1, 2000 should not be relied upon.
F5 Networks is a global application delivery networking company, providing solutions designed to make applications secure, fast, and available. F5’s goal is to optimize applications and facilitate them to work faster and consume fewer resources. F5’s architecture aims to intelligently integrate application optimization, protect the application and the network, and deliver application reliability, within one universal platform. The company is headquartered in Seattle, Washington with offices worldwide.
To learn more, please visit: www.f5.com.