F5 Networks: Deal sizes remain consistent at near $200k

According to RBC Capital Markets, the deal sizes of application delivery networking vendor F5 Networks remained consistent at near $200k during its 2008 3rd Quarter.

RBC Capital Markets Managing Director - Mark Sue commented to yours truly:

"It was a good quarter for F5 Networks and new products helped the company to grow revenues 4% sequentially to $165.6M ahead of the consensus of $161M." "Non-Gaap EPS was $0.37 vs. our $0.36 and Consensus of $0.35 with lower share count helping a penny."

"F5 saw good strength for its new high end Viprion switch and ended the quarter with a book to bill greater than 1.0."

"Guidance remains healthy for the September quarter at $172-$174M vs. the street of $169M; RBC was already there at $174M."

"In an otherwise clean quarter, one disappointment was Acopia sales which declined from $8.1M to $5.1M due to weakness in the financial vertical."

"Consequently, total product revenues increased just 2% sequentially vs. services which grew 8% sequentially."

"Following results, our estimates remain mostly unchanged."

"For CY08, we are estimating top line growth of 21% to $678.7M and EPS of $1.51."

"For CY09 we are estimating 19% top line growth to $808M with EPS of $1.80."

"F5's financial vertical didn't bounce back as it did for some and was 20% of revenues."

"Technology was the strongest vertical at 22% while Telco and Service Provider sales driven by Viprion were 21% of revenues."

"Geographically, Americas was 58%, EMEA was 21%, APAC was 13% while Japan continued to struggle at just 7%."

"New products tailored for the Japanese market should help during the later part of this year."

"Deal sizes remain consistent at the moment near $200,000."

"Gross margins were flat sequentially at 77.6% while operating margins were 25.4% vs. 24.6% in the prior quarter."

"F5 generated $55.8M in cash from operations and now has $447M in total cash or close to $3.26/share."

"F5 also repurchased $50M of common stock or approximately 1.8 million shares."

"F5 has an arsenal of new products on its way including a major refresh of the low end, The BigIP 1600 and BigIP 360."

"Furthermore, deferred revenues grew 13% sequentially to $139M providing added visibility into the current quarter."

"F5 due to the top line growth prospects is adding 40 to 60 more people to its total headcount of 1,665."

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• Cisco
• LANs / WANs
• Disappointment was Acopia sales which declined
• F5 generated $55.8M in cash from operations
• F5's financial vertical
• Good quarter for F5 Networks
• New high end Viprion switch
• The BigIP 1600 and BigIP 360