GAAP net income was $55.7 million ($0.68 per diluted share), compared to $48.2 million ($0.59 per diluted share) in the prior quarter and $29.3 million ($0.36 per diluted share) in the first quarter a year ago.
Excluding the impact of stock-based compensation net of tax, non-GAAP net income was $72.2 million ($0.88 per diluted share), compared to $63.9 million ($0.79 per diluted share) in the prior quarter and $41.4 million ($0.52 per diluted share) in the first quarter of fiscal 2010.
Both GAAP and non-GAAP results reflect reinstatement of the R&D tax credit passed by Congress in December. A reconciliation of GAAP net income to non-GAAP net income is included on the attached Consolidated Statements of Operations.
“Coming off a very strong fourth quarter, the company achieved solid revenue and earnings growth in the first quarter of fiscal 2011,” said John McAdam, F5 president and chief executive officer. “Product revenue was up nearly 44 percent from the first quarter of fiscal 2010, and service revenue grew more than 35 percent during the same period. On a regional basis, all geographies delivered sequential and year-over-year gains, led by Asia Pacific where revenue was up 11 percent from the prior quarter and 62 percent from the first quarter a year ago. Underpinning the continued strength in our service business, deferred revenue grew 10.9 percent to $287.8 million from the previous quarter.
“Solid revenue growth, stable gross margins and disciplined execution enabled us to achieve a non-GAAP operating margin of just over 38 percent. Consistent with our policy of hiring behind revenue, we added 120 new employees, approximately half of them in sales and sales support,” McAdam said.
During the first quarter F5 generated $103 million in cash from operations, and after repurchasing 197,644 shares of its outstanding common stock, the company ended the quarter with $952 million in cash and investments.
For the current quarter, ending March 31, management has set a revenue goal of $275 million to $280 million with a GAAP earnings target of $0.65 to $0.67 per diluted share. Excluding stock-based compensation expense, the company’s non-GAAP earnings target is $0.84 to $0.86 per diluted share.
About F5 Networks
F5 Networks is the global leader in Application Delivery Networking (ADN), focused on ensuring the secure, reliable, and fast delivery of applications. F5's flexible architectural framework enables community-driven innovation that helps organizations enhance IT agility and dynamically deliver services that generate true business value. F5's vision of unified application and data delivery offers customers an unprecedented level of choice in how they deploy ADN solutions. It redefines the management of application, server, storage, and network resources, streamlining application delivery and reducing costs. Global enterprise organizations, service and cloud providers, and Web 2.0 content providers trust F5 to keep their business moving forward. For more information, go to www.f5.com.