Benzinga | Nov 9, 2020 06:35AM EST

F5 Networks Updates Horizon 2 Targets Including 6%-7% Total Revenue Growth CAGR and Expanding Operating Margin, Resulting in Double-Digit Non-GAAP EPS Growth

F5 Networks, Inc. (NASDAQ:FFIV) today announced a preview of the Company's upcoming analyst and investor meeting scheduled for November 18, where the Company will provide a strategic overview and updated financial targets. The Company is making information available ahead of the scheduled meeting to enable a more informed and in-depth review of its accelerating transformation strategy. F5 had originally planned its Analyst and Investor Meeting for March 2020 but postponed the event at the outset of the COVID-19 pandemic.

As the leading multi-cloud application security and delivery provider, F5 is uniquely positioned to pioneer the era of Adaptive Applications and drive significant new growth through its best-in-class application security, delivery, and analytics platform. With a software transformation well ahead of schedule, and a growing recurring revenue base, the company expects to deliver attractive shareholder returns, including a commitment to double-digit non-GAAP EPS growth.

The event will feature presentations from President and Chief Executive Officer, Fran?ois Locoh-Donou, Chief Financial Officer, Frank Pelzer, and leaders from F5's portfolio and go-to-market teams, outlining F5's compelling market opportunity and its mission to solve its customers' most important application challenges. Mr. Locoh-Donou's presentation is available for preview under Coming Events in the investor relations section of the Company's website.

Mr. Locoh-Donou commented, "We have transformed F5 at an unprecedented pace, exceeding our original expectations on total revenue, software growth, software mix, and subscription mix performance. As the only true multi-cloud player serving both traditional and modern applications, we are in a position to pioneer the next phase of application performance innovation in a high growth total addressable market of more than $28 billion in 2023."

Mr. Locoh-Donou continued, "As shown in our recent results, we have reached an inflection point in our transformation story where operating margins are poised to expand and revenue will accelerate, leading to sustainable double-digit non-GAAP EPS growth. With this momentum, we now fully expect to grow revenue faster than non-GAAP operating expenses. Moreover, the success of our transformation and resiliency of our business through the pandemic thus far has affirmed a confidence in our position to accelerate our return of capital to shareholders."

Highlights of F5's presentation will include a Horizon 2 (fiscal years 2021 - 2022) outlook that includes:

* Total revenue growth CAGR between 6% to 7%

* Software revenue growth CAGR of 35% to 40%

* Software representing at least 50% of product revenue by fiscal year 2022

* Non-GAAP operating margin between 31% to 32% in fiscal year 2021, and between 32% to 34% in fiscal year 2022

* Double-digit non-GAAP EPS growth

* Commitment to achieving "Rule of 40" where total revenue growth plus non-GAAP operating margins will total at least 40 by fiscal year 2022

The company is also setting long-term (circa 2025) targets, which include:

* Total revenue growth between 8% to 9%

* Software revenue growth of more than 20%

* Software representing at least 75% of product revenue

* Non-GAAP operating margin in the mid-30s%

* Sustained double-digit non-GAAP EPS growth

Other financial and operational highlights that will be discussed include:

* Commitment to return $1 billion of capital over the next two years, including the initiation of an accelerated share repurchase of $500 million in fiscal year 2021

* Commitment to share repurchases of $500 million in fiscal year 2022

* Beginning in FY23, an intention to return 50% of free cash flow to shareholders via share repurchases

* Successful integration of both the NGINX and Shape acquisitions, including compelling early momentum with fiscal year 2020 revenue growth of 109% and 35% respectively

* The leading position F5 has achieved in application security with an estimated $750+ million in total non-GAAP security-related revenue including allocation from bundled offerings and services revenue

Analyst and Investor Meeting presentations will begin at approximately 1:00 p.m. ET on November 18, 2020. To attend F5's virtual Analyst and Investor Meeting webcast with live Q&A, please register at https://investors.f5.com/Investor-Day/default.aspx. Once registered, you will receive an email with information about how to access the webcast. Please note, all participants must register in advance.

The event replay will be available following the live event webcast on the investor relations portion of F5's website.