F5 Will Double Its AI Security Sales Force In 2027 As Spending Squeezes Margins
The CEO said the specialist seller team doubles and marketing spend more than doubles, while the CFO said the investment is weighing on profit flow-through.
F5 will double its team of specialist sellers for AI security in fiscal 2027, CEO Francois Locoh-Donou said on the company's earnings call Tuesday, as the company defended a spending ramp that analysts said is leaving less profit than expected from each new revenue dollar.
Doubling the sellers, more than doubling marketing
F5, which sells software, cloud services and hardware that deliver and secure applications and APIs, is pushing hard into AI security. Asked by an analyst whether it was backing its AI guardrails product hard enough, Locoh-Donou said the specialist seller headcount will double in 2027 and marketing investment in the area will be "more than doubling." He added that the company has put incentives in place for its whole field force.
On competition, he conceded there "may be a lot of competitors" but said F5 is "clearly one of the top companies in this area already." He said F5 expects its addressable AI market to reach about $11 billion by 2030, from roughly $1 billion this year, with $9 billion of that in AI security.
The CFO on lighter operating leverage
A JPMorgan analyst said operating leverage looked lighter in the fourth quarter and that the outlook implies more of the same. CFO Cooper Werner said the biggest driver is spending on sales capacity, both broad-based and AI security specialists, which he called a bet on a growth opportunity that "extends beyond FY27."
Werner said year-end outperformance also raised commission and bonus accelerators. He said operating expenses as a share of revenue should fall for the full year, though first-quarter spending reflects the ramp.
For the first quarter, F5 guided to non-GAAP (adjusted) operating expenses of $420 million to $432 million and adjusted earnings of $4.25 to $4.37 per share. Revenue is guided to $875 million to $895 million.
A quarter above guidance
The spending comes after a quarter the company reported with revenue of $917 million, up 13% from a year earlier and above the top of guidance, and product revenue up 23%. Fiscal 2027 revenue growth is guided to 8% to 9%.
Direct AI bookings for fiscal 2026 rose nearly 300% to well over $100 million, Locoh-Donou said, most of it from AI data delivery. F5 also bought back $100 million of stock in the quarter at an average $422 a share, and its board authorized another $1.5 billion of repurchases.
Werner said F5 expects full-year fiscal 2027 share repurchases of at least 50% of annual free cash flow.
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
