F5 Guides Fiscal 2027 Revenue Growth To 8% To 9% As Hardware Refresh Cools In Second Half
The CFO said replacement of aging gear will slow late in fiscal 2027, with new AI and takeout business taking up more of the mix.
F5, which sells software, cloud services and hardware that deliver and secure applications, guided to fiscal 2027 revenue growth of 8% to 9% on its fourth-quarter earnings call, with CFO Cooper Werner warning that the hardware refresh cycle behind its systems sales will fade in the second half. The company's results announcement is here.
A refresh that runs out of road
Answering a Barclays analyst on the call, Werner said the second-half slowdown in systems growth is "entirely around the cyclical part of the refresh motion." As software end-of-support dates pass, he said, revenue from replacing legacy installed gear will decline over the back half.
He said roughly two-thirds of systems business in recent years has come through that refresh motion and about a third from new opportunities such as direct AI use cases, capacity expansion and competitive takeouts. He expects next year's mix to lean toward new business.
CEO Francois Locoh-Donou said the quarter was one of the strongest in several years for directly displacing rival application delivery products, and he expects that to continue.
The quarter behind the guide
F5 reported fourth-quarter revenue of $917 million, up 13% from a year earlier and above the top of its guidance range. Product revenue rose 23% to $510 million, and systems revenue of $239 million was up 29%. For the full year, revenue was $3.4 billion, up 11%.
Locoh-Donou said 29% of the company's top 1,000 customers now deploy three or more product families, up from 22% in 2025. He also said direct AI use case bookings for the year were well over $100 million, up nearly 300%.
For the first quarter, F5 guided to revenue of $875 million to $895 million and adjusted earnings of $4.25 to $4.37 a share. The board authorized an additional $1.5 billion for buybacks, bringing total authorization to $1.8 billion.
Inventory and pricing
Werner said F5 is building inventory, with the biggest increases in the first half of fiscal 2027. He told a Piper Sandler analyst the company is positioned for "upside," though the supply chain is not completely de-risked.
On pricing, Werner said F5 plans to keep annual price increases, with an off-cycle change possible if costs accelerate. Fourth-quarter free cash flow was $91 million, which he tied partly to inventory builds and supplier prepayments.
F5 will report first-quarter results against that $875 million to $895 million revenue range, the first test of Werner's second-half warning on systems.
Sources
- F5 Reports Fourth Quarter Results with 23% Product Revenue Growth – Company Announcement - FT.com — Financial Times
- F5 Q4 2026 Earnings Call Transcript — benzinga.com
- Here’s How Much You Would Have Made Owning F5 Stock In The Last 5 Years - F5 (NASDAQ:FFIV) — benzinga.com
- F5 dips as fiscal 2027 revenue guidance shows slight deceleration | Seeking Alpha — seekingalpha.com
