F5, Inc.

Q3 revenue rose 11% year over year to $865 million, with product revenue up 19% to $463 million and services revenue up 3% to $402 million. Systems revenue was $240 million, up 32% year over year; software revenue was $223 million, up 7%, and subscription-based software revenue was $201 million, up 9%. GAAP net income was $208 million, or $3.62 per share; non-GAAP net income was $272 million, or $4.73 per share, up 14% year over year. GAAP gross margin was 82.2% and non-GAAP gross margin was 84.2%; GAAP operating margin was 24.7% and non-GAAP operating margin was 35%. Cash flow from operations was $316 million, free cash flow was $281 million, cash and investments were $1.63 billion, and deferred revenue was $2.19 billion, up 12% year over year. For Q4, F5 guided revenue to $870 million to $890 million, non-GAAP EPS to $4.14 to $4.26, and non-GAAP gross margin to 83% to 84%. For FY26, F5 now expects revenue growth of approximately 9% to 10%, non-GAAP gross margin of 83.5% to 84%, non-GAAP operating margin of 34.5% to 35.5%, non-GAAP EPS of $17.21 to $17.33, and a non-GAAP tax rate of 18% to 19%.

Francois Locoh-Donou framed the quarter as proof that F5 is well positioned at the intersection of hybrid multi-cloud adoption, rising application-layer threats, and the AI inference buildout. He emphasized that customers are consolidating onto F5 for application delivery and security, and highlighted momentum in AI data delivery, AI runtime security, and AI factory load balancing. His tone was confident and promotional, with repeated references to durable secular tailwinds and the company’s ability to innovate faster in response to frontier AI risk.

Cooper Werner said Q3 results came in above the top end of guidance and highlighted favorable mix and execution. He pointed to 82.2% GAAP gross margin, 84.2% non-GAAP gross margin, $316 million of operating cash flow, $281 million of free cash flow, and $100 million of share repurchases at an average price of $299 per share. He said the Q4 and near-term gross margin improvement was driven by stronger adoption of higher-performance appliances and better component sourcing, but he held FY27 gross margin guidance at 80% to 82% because memory and storage pricing remains dynamic; he also said full-year repurchases are expected to be at least 50% of free cash flow.

Analysts pressed on the size and sustainability of AI-related revenue, and management said direct AI customer counts are rising quickly but revenue does not map one-for-one to customer growth; F5 said AI momentum is also showing up indirectly through higher hardware demand tied to AI traffic. Questions also focused on hardware mix, gross margin, and the iSeries refresh, with management saying refresh is orderly but expansion at refresh and outside refresh is improving, and that AI and sovereignty are adding secular lift. On software, F5 said FY26 growth is being held back by a weak renewal cohort from 2023, but expects reacceleration in FY27 from stronger renewals, Distributed Cloud strength, and the end of legacy SaaS/managed-service transition.