F5 ( NASDAQ: FFIV ) is the S&P 500's second-worst performer Wednesday, down 9.9% after fiscal fourth-quarter results where it beat expectations on top and bottom lines but issued guidance to the low side for adjusted earnings.
The company eked out better-than-expected revenue growth of 2.6%, and while adjusted profits of $158M declined from a prior-year $185M, they still easily cleared expectations.
For the coming fiscal year, the company guided to revenue growth of 9-11%, and a "combination of revenue growth and operating leverage will enable us to deliver non-GAAP earnings growth in the low-to-mid teens in fiscal year 2023," CEO François Locoh-Donou said.
Zooming in, the fiscal first-quarter net income outlook amounts to adjusted earnings per share of $2.25-$2.37, its midpoint below consensus expectations for $2.33.
That full-year revenue growth outlook was "the real positive surprise" of the report, Citi said. Still, moderating growth in software revenue raised concerns among F5's Neutral analysts.
The bull thesis has been "centered around the Software transition, with this growth giving little confidence here," says Piper Sandler, which is Neutral and cut its price target to $164 from $173.
Software revenue growth in the quarter moderated significantly from prior quarters, J.P. Morgan said, calling revenue performance "mixed" and suggesting investors would be more concerned about the long-term outlook, once Systems returns to a normalized growth cadence.
Locoh-Donou took a balanced stance about the road ahead: “Over the next year, our business is likely to benefit from tailwinds to our systems business as a result of improving component availability and to bear some weight from macroeconomic headwinds."
For more details, check out Seeking Alpha's transcript of F5's earnings conference call .
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F5 slides 10%, among market's worst, as analysts fret over software revenue growth