* In a tough economic climate, bright spots remain for F5, Citrix and Riverbed
F5 Networks, Citrix Systems and Riverbed Technology last week reported financial results for the three months ended Sept. 30. F5 announced an impressive jump in fourth-quarter profit, tempered by a supply issue that left it unable to keep up with demand for its entry-level Big-IP devices. Citrix and Riverbed each saw sales rise and profit take a hit compared to their respective year-ago numbers.
For its fiscal fourth quarter, F5’s revenue hit $171.3 million, up 18% from $145.6 million in the fourth quarter of fiscal 2007. Net income for the quarter was $19.7 million — a 54% leap compared to the $12.9 million that F5 earned in its year-ago fourth quarter.
Telecommunications providers and large enterprises took an interest in F5’s high-end Viprion product, but the vendor’s inability to fulfill all the orders for its low-end Big-IP 1600 and 3600 boxes hurt revenue, according to equity trading and research firm MKM Partners.
“F5 reduced its vulnerability at the low end with the introduction of its entry-level Big-IP 1600 and 3600 boxes which exceeded management’s expectations in its first full quarter of shipment. The firm was unable to fulfill all orders of these products, which helped contribute to the revenue shortfall,” MKM Partners stated in a research note. “We think most investors would agree that supply constraints are a better problem to have than demand weakness in the current economy.”
John McAdam, F5’s president and CEO, said he was generally pleased with the results in the context of a difficult global economy.
“Although fourth quarter revenue was slightly below our expectations and guidance, robust demand for our new entry-level products outstripped our ability to fill all the orders we received during the quarter and resulted in a significant year-end backlog of orders for those products. Despite lower than expected revenue, our non-GAAP operating margin continued to improve, and earnings exceeded our targets on both a GAAP and non-GAAP basis,” McAdam said.
For the full year, F5’s revenue was $650.2 million, up 24% from $525.7 million posted in fiscal 2007. Net income for the year fell to $74.3 million, down from $77 million earned in fiscal year 2007.
Over at Riverbed, revenue for the third quarter came in at $86.5 million — a record for Riverbed and an increase of 36.7% from the $63.3 million reported in last year’s third quarter. However, Riverbed posted a net loss for the quarter of $12.4 million, which includes a one-time $11 million charge for the settlement of a patent infringement lawsuit with Quantum Corporation.
“We are very pleased with the results we delivered for our third quarter,” said Riverbed chairman, president and CEO Jerry M. Kennelly in a statement. “Despite weakness in the global economy, we generated record revenues. Our outperformance in the third quarter was driven by strength in the government vertical, continued deployment within our customer base, and new customer purchases.”
Citrix, meanwhile, reported better-than-expected third-quarter revenue and adjusted earnings that also beat expectations.
Citrix posted revenue of $399 million, which is a 14% increase compared to the $350 million it posted in last year’s third quarter. Net income for the quarter came in at $49 million, which is a 20% drop compared to the $61 million that Citrix earned a year ago.
Still Citrix is in a position to withstand the IT spending slowdown, according to MKM Partners.
“We note that IT buyers with whom we have spoken in the last several weeks have said that IT budgets are tighter, but they are not collapsing,” MKM Partners stated in a research note. “We think the seasonal deceleration in IT spending will be more pronounced in 1H09, but think Citrix’s strong maintenance base, its Online Services business, and high ROI “Xen” products should allow it to weather the storm with manageable damage.”
Mark Templeton, Citrix’s president and CEO, said he’s pleased with the results. “In the quarter, we took decisive actions to hold operating expenses flat, introduce new cost efficiency programs, and direct our customer conversations toward the tangible cost-savings we provide. These factors helped us deliver double digit revenue growth in a tough macro-economic environment.”
