F5, Inc.

Good afternoon and welcome to the Five, Inc. Third Quarter Fiscal 2026 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. Also, today's conference is being recorded. If anyone has any objections Please disconnect at this time. I'll now turn the call over to Ms. Suzanne DuLong. Ma'am, you may begin.

Hello and welcome. I'm Suzanne DuLong, F5's Vice President of Investor Relations. We are here to discuss our third quarter fiscal year 2026 financial results. Francois Locoh-Donou, F5's Chairman, President, and CEO, and Cooper Werner, F5's Executive Vice President and CFO, will be making prepared remarks on today's call. Other members of the F5 executive team are also here to answer questions during the Q&A session. Today's press release is available on our website at F5.com, where an archived version of today's audio will be available through October 26, 2026. We will post the slide deck accompanying today's webcast to our IR site following this call. To access the replay of today's webcast by phone, dial 800-770-2030 or 609-800-9909 and use meeting ID 607-6834. The telephonic replay will be available through midnight Pacific time, July 28, 2026. For additional information or follow-up questions, please reach out to me directly at s.dulong at fi.com. Our discussion today will contain forward-looking statements, which include words such as believe, anticipate, expect, and target. These forward-looking statements involve uncertainties and risks that may cause our actual results to differ materially from those expressed or implied by these statements. We have summarized factors that may affect our results in the press release announcing our financial results and in detail in our SEC filings. In addition, we will reference non-GAAP metrics during today's discussion. Please see our full gap to non-gap reconciliation in today's press release and in the appendix of our earnings slide deck. Please note that F5 has no duty to update any information presented in this call. I will now turn the call over to Francois.

Thank you, Suzanne, and hello, everyone. Q3 was another outstanding quarter. We delivered 19% product revenue growth, driving 11% total growth. We have now delivered eight consecutive quarters of double-digit product growth, a signal that F5 is precisely where the market needs us to be. The reason is straightforward. The world runs on applications, including a new generation of AI-powered applications. And the world is changing fast, driving higher demand for application security and delivery. AI is accelerating everything. More traffic. More APIs. More distributed architectures and a dramatically larger attack surface. The complexity our customers are navigating has never been greater. F5 targets this complexity, simplifying and unifying application delivery and security across hybrid multi-cloud environments. We sit at the front door of the world's most critical applications, delivering and securing every app and every API. It's a position we've earned over three decades and one we are strengthening every day. F5 is at the intersection of three secular megatrends, hybrid multicloud adoption, the expanding threat landscape and the AI inference inflection. Our strong Q3 results reflect this trend and F5's alignment with where customers are investing. They also reflect the actions we are taking to drive faster growth. We are converting hybrid multi-cloud adoption into expansion opportunities, competitive displacements, digital sovereignty wins, and platform consolidation wins. We are innovating to ensure we are capitalizing on heightened demand for best-in-class application and API security. And we are building AI momentum with another strong quarter of wins across AI data delivery, AI runtime security, and AI factory load balancing. Our top-line results tell that story clearly. We also continue to execute with discipline, delivering 14% non-gap earnings growth while continuing to invest in innovation and go-to-market capacity to sustain and extend our momentum. Looking ahead, we see strong demand driven by durable tailwinds. As a result, we are raising our fiscal year 2026 outlook to approximately 9% to 10% revenue growth up from 7% to 8%. Cooper will cover more details about our outlook in his remarks. But first, let me bring our growth dynamics to life with customer examples from the quarter. Each one illustrates why the forces reshaping IT are driving growing demand for F5 and reinforcing our critical role at the application delivery and security layer. Accelerating hybrid multi-cloud adoption is fueling multiple growth drivers for F5 across data center build-out and sovereignty, competitive displacement, and platform consolidation. During Q3, a large energy and utilities provider with more than 1,000 mission-critical applications running on F5 expanded its footprint significantly in a major overhaul of its cloud infrastructure across three regions and multiple data centers. When problems with its cloud environment began putting critical services at risk, the customer repatriated those workloads on-premises and onto F5 hardware. This shift reduced its dependency on third-party platforms and restored confidence in the reliability of its delivery infrastructure. A European government agency wanted to standardize delivery and security across a growing multi-cloud environment, while keeping select applications on premises for privacy and compliance. F5 delivered a sovereign by design architecture with consistent delivery, stronger security, and simpler operations across their multi-cloud environment. The customer refreshed and expanded their big IP footprint. They also added distributed cloud services, including AI-powered WAF to automate policy and advance threat protection. In an example that highlights both a competitive displacement and an AI data delivery win, we displaced an incumbent at a Fortune 100 global enterprise technology provider. The customer was looking to strengthen the delivery and security layer in front of its S3 compatible cloud storage service across 45 data centers worldwide. They selected BIG-IP for its ability to deliver the availability, resilience, and security required to support their AI and data intensive workloads at global scale. The expanding threat landscape also continues to create significant tailwinds for F5. In the last several years, the front lines of cyber defense have shifted to the application layer. Attacks on IT assets grew more than 60% over the last three years. but in that same timeframe, the volume of application layer attacks surged 140%. This is where F5 plays and as attacks at this layer continue to grow, our relevance and opportunity grow too. During Q3, a multi-brand telecommunications provider replaced a fragmented collection of security tools with distributed cloud services. The customer consolidated web application and API protection Bot Defense, and DDoS Mitigation on F5. We displaced both a SaaS-only competitor and a cloud-native toolset. F5's automated API discovery aligned with the customer's shift to microservices, reducing latency and keeping sensitive traffic off the public internet. Our unified management layer lowered operational overhead, supporting the customer's cost reduction goals and establishing F5 as an always-on security layer across their digital operations. In a similar consolidation win, a large multinational healthcare company pursuing a hybrid cloud strategy identified critical security gaps with their incumbent provider. Following a competitive evaluation, distributed cloud services displaced the incumbent, providing web application and API protection, DDoS Mitigation, and Bot Defense on a unified platform. Since deployment, threats that previously evaded detection are now being identified and blocked. F5 improved security outcomes while reducing operational costs by consolidating multiple functions. Frontier AI models have escalated the threat level for organizations globally, creating a new layer of urgency on top of existing security demand. Customers know the threat equation has changed and early movers are already strengthening their defenses. For instance, a major European retail banking institution, an existing F5 customer, accelerated plans to upgrade its application security infrastructure as the potential for AI-driven attacks escalated. The customer had been evaluating AI-based WAP solutions for nearly a year, and F5's AI-powered approach, including machine learning-based threat detection, granular per-application policy controls, and behavioral bot defense, differentiated us from their incumbent provider. In the first phase of their upgrade, they are deploying distributed cloud services as the front door to their application environments, creating a consistent, scalable, on-premises bot defense architecture. This foundation can be extended to every new environment that deploy, mitigating both agentic and traditional bot attacks. We saw the same urgency play out in Asia, where one of the region's largest financial institutions and a longstanding F5 customer accelerated its application security strategy amidst rising AI-driven attacks and zero-day vulnerabilities. The customer doubled down on F5 as a strategic security vendor, deploying our AI-powered WAF to automate threat detection and accelerate virtual patching at scale. Finally, the AI inference inflection is driving demand for F5, both indirectly as customers expand hybrid multi-cloud deployments, and directly through our three AI use cases, AI data delivery, AI runtime security, and AI Factory Load Balancing. Momentum is building across all three. In fact, our cumulative total customer count for direct AI use cases grew 50% just in Q3, underscoring the accelerating pace of demand. A few notable wins from the quarter illustrate our traction. In AI data delivery, we are accelerating secure AI data pipelines ensuring storage, networking, and data delivery, and keeping AI clusters fully utilized across hybrid and multi-cloud deployments. Earlier, I highlighted an AI data delivery win and competitive takeout. In another sizable win during the quarter, a leading autonomous systems manufacturer selected S5 over a competitor to handle escalating data volumes and throughput demand. The customer previously deployed F5 to repatriate AI training data from public cloud to on-premises data centers, deploying BIG-IP in front of their AI storage environment to improve latency. With exploding data volumes and throughput demand, the customer needed additional capacity. F5 outperformed the competitor, simplifying connectivity and storage sharing across their data centers, and expanding our role as the trusted traffic layer between storage and compute. In AI runtime security, we are safeguarding AI applications, APIs and models from abuse, data leaks and attacks like prompt injection. We are also delivering real-time threat defense, red-seaming models and robust guardrails. In Q3, a US-based professional sports league was rolling out AI-powered applications to analyze highly sensitive data, including player health information and team strategy insights. With competitive integrity and league trust on the line, they needed confidence that their applications could be proactively tested for vulnerabilities and protected continuously in production. The customer deployed AI guardrails and AI red team on-premises to validate applications before launch and defend them at runtime. Our breadth of functional coverage beat out a competitor and enabled the league to standardize on F5 as their single trusted vendor. In AI factory load balancing, we are optimizing traffic and GPU utilization both across and within AI factories, increasing token throughput, reducing time to first token, and lowering per token costs. In a Q3 AI factory load balancing win, a service provider in our EMEA region selected F5 to power its sovereign AI factory, purpose-built to deliver GPU as a service, and AI Model as a Service. To support these offerings at scale, the customer deployed Big IP Next for Kubernetes, distributed cloud services and NGINX, enabling secure multi-tenancy, traffic segmentation, token governance and large language model API endpoint protection. Before I pass the call to Cooper, I will speak to innovation at F5. The customer examples I shared highlight what we are hearing consistently from customers. They are modernizing their architectures and at the same time, the requirements for application delivery and security are rising. That's exactly why we are innovating to lead the next generation of capabilities and get them deployed with customers faster so they are ready as requirements intensify. Frontier AI has fundamentally altered both sides of the security equation. In the post-mythos era, attackers can use AI to discover vulnerabilities, develop exploits, and vary attacks at a speed and scale that was previously impossible. This is compressing the time between vulnerability discovery and exploitation and forcing every enterprise to rethink how it protects its applications. In this environment, Security cannot depend only on identifying a vulnerability and issuing a patch after the fact. Customers increasingly need runtime protection, the ability to detect malicious behavior and stop attacks while their applications, APIs, models, and agents are running. This is precisely where F5 is accelerating innovation. Our AI-powered capabilities in distributed cloud WAF use a layered detection engine to assess the intent and risk of each request, moving customers beyond static signatures and manual policy tuning. Since launching in Q2, 15% of our distributed cloud WAF customers have adopted the capability, and of those, 75% are running in blocking mode versus monitor mode. That shift from monitor to block reflects growing customer urgency around zero-day threats and it's warranted. In real-world use, our AI-powered WAF is already stopping zero-day attacks without requiring new signatures. We are applying the same urgency to the security of our own products. This quarter, we shipped our first hardened software release as part of a new monthly, rather than quarterly, cadence. We are hardening our software releases by applying advanced and preview frontier models to vulnerability discovery and remediation. As a result, we are finding and fixing issues faster. More importantly, we are getting those fixes into customers' hands faster. This is a rigorous approach that we believe sets S5 apart in the world of security. But delivering fixes faster only matters if customers can deploy them. That is why we also introduced new fleet management capabilities in F5 Insight. F5 Insight gives customers visibility into software versions, security posture, and update readiness across their big IT estates with guided workflows that simplify upgrades and patching. F5 Insight was launched last quarter, and the strong early uptake is evidence that customers want a faster, more operationally practical way to reduce risk. Together, these innovations create a continuous defense model for the AI era. We are using AI to identify risk earlier, protecting applications at runtime, delivering hardened software releases faster, and helping customers deploy those protections across their environments. This is how F5 is turning the disruption created by frontier AI into stronger security and greater resilience for our customers. Now, I will turn the call over to Cooper, who will walk through our Q3 results and our outlook.