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Recovery in Systems Category to Aid F5 (FFIV) Q3 Earnings
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F5, Inc. (FFIV - Free Report) is scheduled to report third-quarter fiscal 2023 results on Jul 24. The application security solution provider’s third-quarter performance is likely to have benefited from the recovery in the Systems product category.
Backlog Clearance to Boost Systems’ Revenues
Industry-wide supply-chain constraints for components in 2022 had severely hurt F5’s Systems segment’s overall performance. Despite strong demand, the company wasn’t able to supply due to component shortages and failed to meet the demand for its Systems products.
As a result, its Systems product category registered a revenue decline in back-to-back four quarters from the second quarter of fiscal 2022 to the first quarter of fiscal 2023. This also resulted in a huge order backlog for F5’s Systems products.
However, an improvement in the supply chain has helped the company clear its backlog from the second quarter of fiscal 2023 onward. Due to the massive backlog clearance, the company reported whopping 43% year-over-year growth in Systems’ revenues in the last reported quarter.
The trend is likely to have continued in the third quarter. Our estimate of $190.1 million for Systems’ revenues indicates robust 28.9% year-over-year growth.
The recovery in the Systems sub-division is likely to have more than offset the weak performance of Software. On its second-quarter earnings conference call, the company stated that it no longer sees 15% to 20% year-over-year growth in Software revenues in fiscal 2023, considering recent quarters’ performances and the current environment for new software projects.
In the second quarter, revenues from the Software sub-segment declined 13% year over year to $131.9 million. Our estimate for Software’s third-quarter revenues is currently pegged at $143.7 million, depicting a 19.7% drop from the year-ago quarter.
Overall, our estimate of $333.8 million for the F5 Product division’s third-quarter revenues, which comprises the Systems and Software sub-segments, indicates a year-over-year improvement of 2.3%.
Zacks Rank & Stocks to Consider
F5 currently carries a Zacks Rank #3 (Hold). Shares of FFIV have risen 3.9% year to date (YTD).
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by 21 cents to $1.90 per share for the past 60 days. For fiscal 2024, earnings estimates have moved upward by 33 cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 72% YTD.
The Zacks Consensus Estimate for Fortinet’s second-quarter 2023 earnings has remained unchanged at 34 cents per share in the past 60 days. For 2023, earnings estimates have remained unchanged at $1.46 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 16.4%. Shares of FTNT have rallied 58.6 % YTD.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised a penny northward to $2.85 per share in the past 30 days. For 2023, earnings estimates have increased by 4 cents to $12.01 per share in the past seven days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 151.3% YTD.
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Recovery in Systems Category to Aid F5 (FFIV) Q3 Earnings
F5, Inc. (FFIV - Free Report) is scheduled to report third-quarter fiscal 2023 results on Jul 24. The application security solution provider’s third-quarter performance is likely to have benefited from the recovery in the Systems product category.
Backlog Clearance to Boost Systems’ Revenues
Industry-wide supply-chain constraints for components in 2022 had severely hurt F5’s Systems segment’s overall performance. Despite strong demand, the company wasn’t able to supply due to component shortages and failed to meet the demand for its Systems products.
As a result, its Systems product category registered a revenue decline in back-to-back four quarters from the second quarter of fiscal 2022 to the first quarter of fiscal 2023. This also resulted in a huge order backlog for F5’s Systems products.
However, an improvement in the supply chain has helped the company clear its backlog from the second quarter of fiscal 2023 onward. Due to the massive backlog clearance, the company reported whopping 43% year-over-year growth in Systems’ revenues in the last reported quarter.
The trend is likely to have continued in the third quarter. Our estimate of $190.1 million for Systems’ revenues indicates robust 28.9% year-over-year growth.
F5, Inc. Price and EPS Surprise
F5, Inc. price-eps-surprise | F5, Inc. Quote
Systems Recovery to Offset Software Sluggishness
The recovery in the Systems sub-division is likely to have more than offset the weak performance of Software. On its second-quarter earnings conference call, the company stated that it no longer sees 15% to 20% year-over-year growth in Software revenues in fiscal 2023, considering recent quarters’ performances and the current environment for new software projects.
In the second quarter, revenues from the Software sub-segment declined 13% year over year to $131.9 million. Our estimate for Software’s third-quarter revenues is currently pegged at $143.7 million, depicting a 19.7% drop from the year-ago quarter.
Overall, our estimate of $333.8 million for the F5 Product division’s third-quarter revenues, which comprises the Systems and Software sub-segments, indicates a year-over-year improvement of 2.3%.
Zacks Rank & Stocks to Consider
F5 currently carries a Zacks Rank #3 (Hold). Shares of FFIV have risen 3.9% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Salesforce (CRM - Free Report) , Fortinet (FTNT - Free Report) and Meta Platforms (META - Free Report) . Salesforce and Fortinet each sport a Zacks Rank #1 (Strong Buy), while Meta carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by 21 cents to $1.90 per share for the past 60 days. For fiscal 2024, earnings estimates have moved upward by 33 cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 72% YTD.
The Zacks Consensus Estimate for Fortinet’s second-quarter 2023 earnings has remained unchanged at 34 cents per share in the past 60 days. For 2023, earnings estimates have remained unchanged at $1.46 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 16.4%. Shares of FTNT have rallied 58.6 % YTD.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised a penny northward to $2.85 per share in the past 30 days. For 2023, earnings estimates have increased by 4 cents to $12.01 per share in the past seven days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 151.3% YTD.
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