F5, Inc.

Good afternoon and welcome to the F5, Inc. 4th Quarter Fiscal 2026 Financial Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 with your hand. To withdraw your question, press star 1 again. 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're here to discuss our fourth quarter and 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. Thank you. For additional information or follow-up questions, please reach out to me directly at s.dulong at f5.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've 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-gap 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. Fiscal 2026 was an exceptional year for F5, and Q4 closed it out with strong execution and accelerating strategic momentum. We delivered Q4 revenue of $917 million, up 13% year over year, and above the top end of our guidance range. Importantly, that top-line performance was powered by product revenue growth of 23%. With Q4, we have now delivered nine consecutive quarters of double-digit product revenue growth, a clear signal that our customers are choosing F5 consistently and at scale. For the full year, total revenue reached $3.4 billion, representing 11% annual growth, including 19% product revenue growth. These results reflect three megatrends we have consistently highlighted. Hybrid Multicloud Adoption, the Expanding Threat Landscape, and Accelerating AI Inference. We called these trends early and we built for them. Our FY26 results demonstrate how these trends are actively reshaping customer behavior right now. They also frame our FY27 revenue outlook. Against an FY26 baseline that finished well above our main investor event expectations, we are guiding to FY27 growth of 8-9%. We expect to deliver a third consecutive year of double-digit product revenue growth in FY27, providing a solid foundation to our outlook. Cooper will elaborate on additional guidance details in his remarks. Before I highlight some customer wins from the quarter, I want to speak to another factor driving confidence in our outlook, the pace and quality of our innovation and the structural position it is reinforcing. The fundamental truth of modern enterprise security is that you cannot enforce consistent runtime protection without being in the data path. For three decades, F5 has built and defended exactly that position in the flow of traffic for many of the world's largest enterprise application environments. That footprint is the foundation. What we are building on it is the advantage. In the last six months, that advantage has become more pronounced because the threat environment has fundamentally changed. Frontier AI has accelerated vulnerability discovery to machine speed, expanding the attack surface through APIs, agents, and AI models, while compressing the time available to respond. More than 70,000 vulnerabilities were discovered and published through September this year. This is up roughly 50% over all of 2025. NIST reported a 208% year-over-year surge in vulnerabilities between July and September alone. Meantime to exploit has collapsed to negative seven days. A typical 43-day patching cycle is now a liability. Customers know it, and security is increasingly leading our customer conversations. An investment is moving away from fragmented point products towards converged platforms that enforce consistent policy in real time across every environment where applications and AI run. That is precisely where F5 is differentiating. In less than six months since launching in March, we ended Q4 with more than 300 customers deploying our AI-powered WAF capabilities. And more than 75% of these deployments are operating in blocking mode. That figure matters. It means customers are not just evaluating AI-assisted security. They are trusting it to stop malicious activity in production. Let me make that real with something that happened just last week. On Wednesday, two critical vulnerabilities were disclosed in PHP, the software behind roughly 70% of the world's websites. Thank you very much. After the disclosure, our researchers hit an F5 protected application with multiple attack variations. Our AI-powered WAF stopped every one of them in blocking mode while letting legitimate traffic through. Our customers did not have to write a new rule, and they stayed protected while they patched. That is the shift we are betting on. Security that adapts at the speed of the attacker, not the patch cycle. We are applying that same AI-based detection capabilities to API security, moving protection beyond status signatures and rules to models that identify and stop malicious API requests in real time. As AI agents drive more machine-to-machine activity, APIs have become the primary pathways agents use to reach models, data, and critical business systems. Protecting those interactions at runtime is becoming essential, and F5 is already doing it. Protecting customers at runtime is one dimension of our advantage. Strengthening the software itself is another. We are leveraging frontier, open-source, and open-weight AI models to identify and remediate vulnerabilities in our own code base faster than was ever previously possible. We are continuously scanning more than 140 million lines of code with F5 built AI harnesses and leveraging AI to remediate thousands of vulnerabilities. As a result, in just the last three months, we have implemented engineering fixes that previously would have taken seven years of work. In Q4, as part of an accelerated security cadence, we delivered two software updates focused entirely on remediating vulnerabilities before they can be exploited. And we are pairing that accelerated cadence with F5 Insight, our solution for fleet-wide visibility, upgrade orchestration, and lifecycle management across big IP environments. Launched in March, F5 Insight has gained the trust of more than 200 customers with automated fleet management already dramatically reducing upgrade times and operational risk. Together, accelerated critical releases and F5 Insight's automated deployment capabilities create a faster path from vulnerability to protection F5's differentiation in this fundamentally new threat environment is showing up in our pipeline and our wins. It's also being reflected by the analyst community. In July, F5 was named a leader in SecureIQ Labs' Cloud WAP Cyber Risk Validation Comparative Report. In September, IDC named F5 a leader in its market scape for worldwide WAP platforms. And also in September, just four months after we launched the F5 AI security platform, Gartner recognized F5 as one of only two market shapers in AI application security. Three recognitions in three months. We believe this progression reflects both the pace of our innovation and strength of our market position. Our application delivery and security platform is one platform, one policy framework, one management plane. We deliver consistent security and delivery policy from data center to edge to cloud for every app, every API, and every AI workload the enterprise runs. No point product vendor can replicate that position, and we are investing and innovating to extend it. Before I pass the call to Cooper, let me bring our differentiation to life with a few customer wins from the quarter. Each one shows why the megatrends reshaping IT are translating directly into demand for F5. I will start with wins driven by hybrid multi-cloud adoption which is driving demand for F5 across data center build-out, digital sovereignty, competitive displacement, and platform consolidation. Customers operating across on-premises, co-location and cloud environments cannot meet data residency and compliance requirements with disconnected point tools. They need consistent policy enforced everywhere, and that requires a converged platform. That fact is showing up directly in our business. 29% of our top 1,000 customers now deploy three or more F5 product families, up from 22% in 2025, and we are seeing strong platform traction across all theaters. In an eight-figure win from Q4, a large regional North American financial institution selected F5 as its unified application delivery and security platform across its on-premises, co-location, and cloud environments. The customer had accumulated a fragmented architecture over time, including two incumbent ADC providers and two separate cloud security and CDN tool sets. This approach created policy inconsistency and operational complexity that sovereignty and compliance requirements increasingly prohibit. Following a competitive evaluation, F5 consolidated the entire estate, displacing all four incumbent vendors. BIG-IP anchors high-performance application delivery across on-premises and co-location environments. Distributed Cloud WAP, Data Intelligence, and CDN extend consistent protection into the cloud. F5 Insight centralizes visibility and management across their full environment. One platform, one policy framework from on-premises to cloud. In another win from the quarter, a central bank technology authority in Asia selected F5 as the unified platform for a national financial services cloud built to keep critical banking infrastructure under domestic control. Following a rigorous public sector tender on technical merit and cost, F5 displaced two incumbent application delivery competitors. Big IP powers high-performance traffic management and high-availability delivery across the customer's own data centers. Distributed Cloud WAP, data intelligence, and CDN extend consistent application security and API protection into the cloud, all managed through a single F5 management plane. The expanding threat landscape continues to accelerate demand for F5, and the data from our own solutions tell the story. In Q4, F5 distributed cloud telemetry recorded an 84% year-over-year increase in WAF requests and a 103% surge in API security events. Frontier AI models have escalated the threat level for organizations globally. As a result, the volume and velocity of attacks at the application layer is compounding and organizations are taking action to defend themselves. During Q4, a leading European financial institution determined that signature-based tools could no longer keep pace with the speed and scale of AI-driven threats. Following a competitive evaluation, the customers standardized on F5 as their single application delivery and security vendor across EMEA, APAC, and the Americas. They deployed our AI-powered WAF and bot defense on distributed cloud alongside advanced WAF on BIG-IP. This approach established proactive, signature-less virtual patching across their global digital banking infrastructure. The ability to consolidate onto a single vendor while maintaining consistent protection across every region and every environment was the decisive factor. This win reflects both the urgency customers feel around post-mythos threat velocity and the growing demand for platform standardization at global scale. The expanding threat landscape is also driving demand for purpose-built API security. A central bank and financial regulator in our APAC region selected distributed cloud API security to protect a rapidly expanding API ecosystem, underpinning the nation's digital payment and banking infrastructure. The customer had invested in an API management platform, expecting it to provide sufficient security, but shadow APIs were going undetected and critical banking APIs were exposed to operational and reputational risk. Tightening regulatory requirements made the status quo untenable. Following a competitive proof of concept, F5 displaced three security incumbents. Distributed Cloud API Security now delivers automated discovery across public, external, and internal APIs. F5 brings real-time OWASP API Top 10 threat mitigation that integrates seamlessly with the customer's existing BIG-IP infrastructure, deepening F5's platform footprint in a strategically important regulated account. Finally, the AI inference inflection is driving multiple vectors of growth. The center of gravity in enterprise AI has shifted decisively from training models to operationalizing inference. Industry analysts estimate that industry spending on AI inference has reached $23 billion, surpassing training-related spend of $19 billion. Within our customer base, 78% of organizations now run their own inferencing and 77% say inference, not training, is their main AI activity. The AI inference inflection is benefiting F5 across two dimensions, through our direct AI use cases and indirectly across our business. During Q4, we saw accelerating demand across our three direct AI use cases, AI data delivery, AI runtime security, and AI factory load balancing. Direct AI use case bookings for the year more than doubled from the first half to well over $100 million in FY26. This is up nearly 300% year over year. In addition, in FY26, our active direct AI use case customer count grew 4x to more than 200. Those numbers reflect strong momentum today, and we see significant runway ahead as enterprises move from AI experimentation into production at scale. In AI data delivery, we are accelerating secure AI data pipelines, ensuring high throughput storage, networking, and data delivery that keeps AI clusters fully utilized across hybrid and multi-cloud deployments. and demand is scaling. Customers deployed 29.2 terabits of F5 powered AI data delivery capacity in Q4 alone. This is up nearly 250% year over year with our banking, financial services and healthcare verticals leading adoption. In an AI data delivery win from Q4, a large conglomerate spanning energy, Retail and Digital Services in our APAC region put a planned BIG-IP capacity expansion out to competitive evaluation. F5 successfully defended and grew the account against three challengers. BIG-IP is now the single high-throughput control point for data moving between storage and GPU compute at scale. In AI runtime security, we are safeguarding AI applications, APIs, and models from abuse, data leaks, and attacks like prompt injection. We are delivering real-time threat defense, red teaming, and robust guardrails. And we are seeing a noticeable uptick in momentum that we believe reflects AI moving from pilots into production. In addition, open-weight models now account for 34% of enterprise token volume. Because safety and guardrail behaviors vary widely across open-weight models, enterprises cannot rely on the models for security. Protection must be enforced in the inference path. Customers are choosing F5 because best-in-class security for AI models requires runtime protection that hyperscalers and frontier model providers cannot deliver. Runtime protection at scale and with specificity is precisely where F5 is differentiated. In a milestone win, a global AI infrastructure leader selected F5 AI guardrails as the production safety layer for up to 500 AI models hosted on its flagship model platform. The customer's requirements were exacting. Out-of-the-box protection against prompt injection and sensitive data leakage, custom guardrails built to their own framework, and self-hosted deployment at scale. With the EU AI Act mandating in-production monitoring of frontier AI models, the urgency was regulatory as well as operational. This customer also selected F5 as a launch partner in its zero-trust AI agent security architecture, embedding F5 at the center of how they think about AI safety at scale. AI is moving so fast that new threats emerge almost monthly and customers are turning existing F5 capabilities against them. Recently, one of the world's largest financial institutions used its F5 bot defense to solve a problem that barely existed six months ago. Thank you for joining us. Thank you for watching. 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 cost. While this remains our most nascent direct AI opportunity, we saw a notable pickup in activity in Q4. Earlier this month, we announced that Indosat Oredu Hutchison, one of Southeast Asia's largest telecommunications providers, selected F5 to power the Indosat Intelligence Suite. This is an enterprise AI platform purpose-built to solve a challenge we are hearing consistently across regulated markets. Enterprises are ready to move AI from pilot to production, but cannot do so without sovereignty, governance, and cost predictability in place. The Indosat Intelligence Suite addresses all three, giving businesses governed access to more than 300 open and closed AI models through a single interface. BigIP Next for Kubernetes provides the infrastructure layer delivering tenant isolation, container security, and GPU-aware load balancing to optimize latency and token throughput at scale. For organizations with data residency requirements, workloads can be processed in-market with policy governing what can be routed to global models. Thank you very much. Where Indosat is solving the model access and governance challenge, Telenor is solving the infrastructure governance challenge, including how to operate shared sovereign GPU capacity securely across multiple tenants while meeting European data residency and compliance requirements. Big IP Next for Kubernetes on NVIDIA Bluefield 3 DPUs delivers secure multi-tenancy, policy-based traffic control, and real-time observability directly in the AI service path, preserving host CPU capacity for AI workloads. Together, Indosat and Telenor illustrate that as AI factories transition from infrastructure projects into commercial service platforms, service providers need a governed, policy-enforced delivery layer, and F5's AI factory load balancing offers a proven solution. I noted we also continue to benefit from indirect AI demand. While it's challenging to quantify, as AI adoption accelerates broadly, it is generating exponentially more traffic, driving higher security requirements and accelerating digital sovereignty investments, all of which are showing up in systems demand and the rapid adoption of solutions like our AI-powered WAF. Now, I will turn the call over to Cooper, who will walk through our Q4 results and our outlook.