Item 1. Financial Statements

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Item 1. Financial Statements

F5, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)


	June 30, 2025		September 30, 2024
ASSETS
Current assets
Cash and cash equivalents	$	1,426,957	$	1,074,602

Accounts receivable, net of allowances of $3,284 and $4,585	359,859		389,024
Inventories	66,920		76,378
Other current assets	631,302		569,467
Total current assets	2,485,038		2,109,471
Property and equipment, net	152,447		150,943
Operating lease right-of-use assets	182,217		178,180
Long-term investments	15,034		8,580
Deferred tax assets	430,632		365,951
Goodwill	2,324,328		2,312,362
Other assets, net	523,803		487,517
Total assets	$	6,113,499	$	5,613,004
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	68,709	$	67,894
Accrued liabilities	281,413		300,076
Deferred revenue	1,201,054		1,121,683
Total current liabilities	1,551,176		1,489,653
Deferred tax liabilities	8,708		7,179
Deferred revenue, long-term	755,908		676,276
Operating lease liabilities, long-term	229,411		215,785
Other long-term liabilities	96,612		94,733
Total long-term liabilities	1,090,639		993,973
Commitments and contingencies (Note 8)
Shareholders' equity
Preferred stock, no par value; 10,000 shares authorized, no shares issued and outstanding	—		—
Common stock, no par value; 200,000 shares authorized, 57,867 and 58,094 shares issued and outstanding	40,744		5,889
Accumulated other comprehensive loss	(18,558)		(20,912)
Retained earnings	3,449,498		3,144,401
Total shareholders' equity	3,471,684		3,129,378
Total liabilities and shareholders' equity	$	6,113,499	$	5,613,004

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per share data)


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Net revenues
Products	$	388,838	$	308,489	$	1,094,531	$	914,510
Services	391,532		387,006		1,183,451		1,154,936
Total	780,370		695,495		2,277,982		2,069,446
Cost of net revenues
Products	88,782		80,813		252,905		248,834
Services	59,846		55,612		177,192		165,093
Total	148,628		136,425		430,097		413,927
Gross profit	631,742		559,070		1,847,885		1,655,519
Operating expenses
Sales and marketing	220,428		205,550		644,524		615,277
Research and development	136,345		124,387		403,424		366,169
General and administrative	78,652		65,950		228,320		197,852
Restructuring charges	—		93		11,321		8,655
Total	435,425		395,980		1,287,589		1,187,953
Income from operations	196,317		163,090		560,296		467,566
Other income, net	16,706		8,529		32,971		24,385
Income before income taxes	213,023		171,619		593,267		491,951
Provision for income taxes	23,111		27,540		91,380		90,469
Net income	$	189,912	$	144,079	$	501,887	$	401,482
Net income per share — basic	$	3.29	$	2.46	$	8.65	$	6.82
Weighted average shares — basic	57,772		58,584		57,989		58,832
Net income per share — diluted	$	3.25	$	2.44	$	8.54	$	6.75
Weighted average shares — diluted	58,492		59,147		58,773		59,461

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Net income	$	189,912	$	144,079	$	501,887	$	401,482
Other comprehensive income (loss):
Foreign currency translation adjustment	3,752		(1,232)		2,354		886
Available-for-sale securities:
Unrealized gains on securities, net of taxes of $0 and $1 for the three months ended June 30, 2025 and 2024, respectively, and $0 and $17 for the nine months ended June 30, 2025 and 2024, respectively	—		9		—		78

Net change in unrealized gains on available-for-sale securities, net of tax	—		9		—		78
Total other comprehensive income (loss)	3,752		(1,223)		2,354		964
Comprehensive income	$	193,664	$	142,856	$	504,241	$	402,446

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited, in thousands)


	Common Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
	Three months ended June 30, 2024
Balances, March 31, 2024	58,609	$	19,029	$	(21,034)	$	2,935,271	$	2,933,266
Exercise of employee stock options	7	175		—		—		175
Issuance of stock under employee stock purchase plan	249	32,135		—		—		32,135
Issuance of restricted stock	299	—		—		—		—
Repurchase of common stock, including excise taxes	(873)	(86,362)		—		(64,246)		(150,608)
Taxes paid related to net share settlement of equity awards	(7)	(1,285)		—		—		(1,285)
Stock-based compensation	—	54,206		—		—		54,206
Net income	—	—		—		144,079		144,079
Other comprehensive loss	—	—		(1,223)		—		(1,223)
Balances, June 30, 2024	58,284	$	17,898	$	(22,257)	$	3,015,104	$	3,010,745

	Three months ended June 30, 2025
Balances, March 31, 2025	57,919	$	40,252	$	(22,310)	$	3,296,103	$	3,314,045
Exercise of employee stock options	4	131		—		—		131
Issuance of stock under employee stock purchase plan	178	35,016		—		—		35,016
Issuance of restricted stock	267	—		—		—		—
Repurchase of common stock, including excise taxes	(488)	(88,588)		—		(36,517)		(125,105)

Taxes paid related to net share settlement of equity awards	(13)	(3,518)		—		—		(3,518)
Stock-based compensation	—	57,451		—		—		57,451
Net income	—	—		—		189,912		189,912
Other comprehensive income	—	—		3,752		—		3,752
Balances, June 30, 2025	57,867	$	40,744	$	(18,558)	$	3,449,498	$	3,471,684

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	Nine months ended June 30, 2024
Balances, September 30, 2023	59,207	$	24,399	$	(23,221)	$	2,799,054	$	2,800,232
Exercise of employee stock options	40	1,264		—		—		1,264
Issuance of stock under employee stock purchase plan	437	53,604		—		—		53,604
Issuance of restricted stock	1,000	—		—		—		—
Repurchase of common stock, including excise taxes	(2,338)	(216,766)		—		(185,432)		(402,198)

Taxes paid related to net share settlement of equity awards	(62)	(9,952)		—		—		(9,952)
Stock-based compensation	—	165,349		—		—		165,349
Net income	—	—		—		401,482		401,482
Other comprehensive income	—	—		964		—		964
Balances, June 30, 2024	58,284	$	17,898	$	(22,257)	$	3,015,104	$	3,010,745

	Nine months ended June 30, 2025
Balances, September 30, 2024	58,094	$	5,889	$	(20,912)	$	3,144,401	$	3,129,378
Exercise of employee stock options	23	830		—		—		830
Issuance of stock under employee stock purchase plan	341	58,188		—		—		58,188
Issuance of restricted stock	948	—		—		—		—
Repurchase of common stock, including excise taxes	(1,459)	(178,805)		—		(196,790)		(375,595)

Taxes paid related to net share settlement of equity awards	(80)	(19,601)		—		—		(19,601)
Stock-based compensation	—	174,243		—		—		174,243
Net income	—	—		—		501,887		501,887
Other comprehensive income	—	—		2,354		—		2,354
Balances, June 30, 2025	57,867	$	40,744	$	(18,558)	$	3,449,498	$	3,471,684

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine months ended June 30,
	2025		2024
Operating activities
Net income	$	501,887	$	401,482
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	174,243		165,349
Depreciation and amortization	67,608		84,062
Non-cash operating lease costs	23,727		24,776
Deferred income taxes	(56,308)		(47,237)

Other	3,918		(3,059)
Changes in operating assets and liabilities (excluding effects of the acquisition of businesses):
Accounts receivable	26,834		34,700
Inventories	9,458		(42,663)
Other current assets	(54,523)		3,246
Other assets	(68,332)		(17,513)
Accounts payable and accrued liabilities	(19,031)		(22,353)
Deferred revenue	159,003		(2,537)
Lease liabilities	(26,886)		(32,339)
Net cash provided by operating activities	741,598		545,914
Investing activities
Purchases of investments	(4,400)		(1,600)
Maturities of investments	—		5,420

Acquisition of businesses, net of cash acquired	(24,170)		(32,939)
Purchases of property and equipment	(27,119)		(24,352)
Net cash used in investing activities	(55,689)		(53,471)
Financing activities
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan	59,018		54,868
Payments for repurchase of common stock, including excise taxes	(377,077)		(400,047)
Taxes paid related to net share settlement of equity awards	(19,601)		(9,952)
Net cash used in financing activities	(337,660)		(355,131)
Net increase in cash, cash equivalents and restricted cash	348,249		137,312
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,442		376
Cash, cash equivalents and restricted cash, beginning of period	1,078,340		800,835
Cash, cash equivalents and restricted cash, end of period	$	1,429,031	$	938,523
Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	$	34,121	$	38,193
Supplemental disclosures of non-cash activities
Right-of-use assets obtained in exchange for lease obligations	$	37,198	$	11,772

The accompanying notes are an integral part of these consolidated financial statements.

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F5, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Summary of Significant Accounting Policies

Description of Business

F5, Inc. (the "Company") is a global leader in application delivery and security solutions which enables its customers to deploy, operate, secure, optimize, and govern every application and API across any architecture - on-premises, in the cloud, or at the edge. The Company's cloud, software, and hardware solutions enable its customers to deliver fast, available, and secure digital experiences to their customers at scale. The Company's enterprise-grade application services are available as hardware, software, and software-as-a-service solutions optimized for hybrid, multicloud environments, with modules that can run independently, or as part of an integrated solution on its high-performance appliances. In connection with its solutions, the Company offers a broad range of professional services, including consulting, training, maintenance, and other technical support services.

Basis of Presentation

The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

There have been no changes to the Company's significant accounting policies as of and for the three and nine months ended June 30, 2025, except for the accounting policies for investments and fair value of financial instruments, which have been updated to include equity investments with no readily determinable fair value.

Investments

The Company classifies its debt investments as available-for-sale. Debt investments, consisting of money market funds, corporate and municipal bonds and notes, and the United States government and agency securities, are reported at fair value with the related unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses, credit allowances and impairments due to credit losses are included in other income (expense) in the Company’s consolidated income statements. Debt investments with maturities of less than one year or where management’s intent is to use the investments to fund current operations are classified as short-term investments. Debt investments with maturities of greater than one year are classified as long-term investments.

Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes in price or impairments, or measured using net asset value as a practical expedient to fair value and are classified as long-term investments on the Company's consolidated balance sheets. The Company performs a qualitative assessment on a periodic basis and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in other income (expense) in the Company's consolidated income statements.

Fair Value of Financial Instruments

Short-term and long-term debt investments are recorded at fair value as the underlying securities are classified as available-for-sale with any unrealized gains or losses being recorded to other comprehensive income (loss). The fair value for securities held is determined using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

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New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). This ASU expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its disclosures in the consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). This ASU requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its disclosures in the consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). This ASU requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. In addition, in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarifies the effective date of ASU 2024-03. ASU 2024-03 will be effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its disclosures in the consolidated financial statements.

2. Revenue from Contracts with Customers

Capitalized Contract Acquisition Costs

The table below shows significant movements in capitalized contract acquisition costs (current and noncurrent) for the nine months ended June 30, 2025 and 2024 (in thousands):


	Nine months ended June 30,
	2025		2024
Balance, beginning of period	$	66,258	$	66,468
Additional capitalized contract acquisition costs	34,295		21,553
Amortization of capitalized contract acquisition costs	(28,261)		(26,705)
Balance, end of period	$	72,292	$	61,316

Amortization of capitalized contract acquisition costs was $9.6 million and $8.7 million for the three months ended June 30, 2025 and 2024, respectively, and $28.3 million and $26.7 million for the nine months ended June 30, 2025 and 2024, respectively, and is recorded in Sales and Marketing expense in the accompanying consolidated income statements. There was no impairment of any capitalized contract acquisition costs during any period presented.

Contract Balances

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to the Company's contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations, or for contracts with customers that contain the Company's unconditional rights to consideration, for which the customer has not been billed. These liabilities are classified as current and non-current deferred revenue.

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The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the nine months ended June 30, 2025 and 2024 (in thousands):


	Nine months ended June 30,
	2025		2024
Balance, beginning of period	$	1,797,959	$	1,775,121
Amounts added but not recognized as revenues	1,123,086		966,031

Revenues recognized related to the opening balance of deferred revenue	(964,083)		(968,568)
Balance, end of period	$	1,956,962	$	1,772,584

Remaining Performance Obligations

Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. The composition of unsatisfied performance obligations consists mainly of deferred service revenue, and to a lesser extent, deferred product revenue, for which the Company has an obligation to perform, and has not yet recognized as revenue in the consolidated financial statements. As of June 30, 2025, the total non-cancelable remaining performance obligations under the Company's contracts with customers was $2.0 billion and the Company expects to recognize revenues on 61.4% of these remaining performance obligations over the next 12 months, 23.7% in year two, and the remaining balance thereafter.

See Note 12, Segment Information, for disaggregated revenue by significant customer and geographic region, as well as disaggregated product revenue by systems and software.

3. Fair Value Measurements

In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.

The levels of fair value hierarchy are:

Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date that the Company has the ability to access.

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Unobservable inputs for which there is little or no market data available. These inputs reflect management's assumptions of what market participants would use in pricing the asset or liability.

Level 1 investments are valued based on quoted market prices in active markets and include the Company's cash equivalent investments. Level 2 investments, which include investments that are valued based on quoted prices in markets that are not active, broker or dealer quotations, actual trade data, benchmark yields or alternative pricing sources with reasonable levels of price transparency, include the Company's certificates of deposit, corporate bonds and notes, municipal bonds and notes, U.S. government securities, U.S. government agency securities and international government securities. Fair values for the Company's level 2 investments are based on similar assets without applying significant judgments. In addition, all of the Company's level 2 investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.

A financial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or

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updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at June 30, 2025 and September 30, 2024, were as follows (in thousands):


				Gross Unrealized						Classification on Balance Sheet
June 30, 2025	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	760,409	$	—	$	—	$	760,409	$	760,409	$	—	$	—





Total debt investments		$	760,409	$	—	$	—	$	760,409	$	760,409	$	—	$	—
Changes in fair value recorded in other net income (expense)
Equity investments	*							$	15,034	$	—	$	—	$	15,034
Total equity investments								15,034		—		—		15,034
Total investments								$	775,443	$	760,409	$	—	$	15,034

Equity investments presented in the table above include investments without readily determinable fair values that are measured at fair value using net asset value ("NAV") as a practical expedient, or are measured at cost with adjustments for observable changes in price or impairments. The equity investments are not classified within the fair value hierarchy.


				Gross Unrealized						Classification on Balance Sheet
September 30, 2024	Fair Value Level	Cost or Amortized Cost		Gains		Losses		Aggregate Fair Value		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Changes in fair value recorded in other comprehensive income (loss)
Money Market Funds	Level 1	$	437,273	$	—	$	—	$	437,273	$	437,273	$	—	$	—





Total debt investments		$	437,273	$	—	$	—	$	437,273	$	437,273	$	—	$	—
Changes in fair value recorded in other net income (expense)
Equity investments	**							$	8,580	$	—	$	—	$	8,580
Total equity investments								8,580		—		—		8,580
Total investments								$	445,853	$	437,273	$	—	$	8,580

** The fair value of this equity investment is measured at NAV which approximates fair value and is not classified within the fair value hierarchy.

The Company uses the fair value hierarchy for financial assets and liabilities. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value due to their short-term nature.

Interest income from cash, cash equivalents, and investments was $10.1 million and $8.9 million for the three months ended June 30, 2025 and 2024, respectively, and $29.7 million and $25.0 million for the nine months ended June 30, 2025 and 2024, respectively. Interest income is included in other income (expense), net on the Company's consolidated income statements. Unrealized losses on investments held for a period greater than 12 months at June 30, 2025 and September 30, 2024 were not material.

The Company invests in debt securities that are rated investment grade. The Company reviews the individual debt securities in its portfolio to determine whether a credit loss exists by comparing the extent to which the fair value is less than the amortized cost and considering any changes to ratings of a debt security by a ratings agency. The Company determined that as of June 30, 2025, there were no credit losses on any investments within its portfolio.

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Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

The Company's non-financial long-lived assets, which include goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis. These non-financial assets are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. The Company reviews goodwill for impairment annually, during the second quarter of each fiscal year, or as circumstances indicate the possibility of impairment. The Company monitors the carrying value of tangible and intangible long-lived assets for impairment whenever events or changes in circumstances indicate its carrying amount may not be recoverable.

Impairment charges related to non-financial long-lived assets for the three and nine months ended June 30, 2025 and 2024 were not material.

4. Business Combinations

Fiscal Year 2025 Acquisitions

During the second and third quarters of fiscal 2025, the Company completed two acquisitions. The acquired assets and assumed liabilities of the acquisitions were not material and the Company recorded $12.0 million of goodwill as a result of the acquisitions. The acquisitions did not have a material impact to the Company's operating results.

Fiscal Year 2024 Acquisitions

During the second quarter of fiscal 2024, the Company completed two acquisitions. The acquired assets and assumed liabilities of the acquisitions were not material and the Company recorded $23.6 million of goodwill as a result of the acquisitions. The measurement period for the two acquisitions lapsed during the second quarter of fiscal 2025. The Company recorded an immaterial adjustment to consideration exchanged for the purchase of the acquired companies within the post-close measurement period. The acquisitions did not have a material impact to the Company's operating results. 

5. Balance Sheet Details

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of the Company's cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows for the periods presented (in thousands):


	June 30, 2025		September 30, 2024
Cash and cash equivalents	$	1,426,957	$	1,074,602
Restricted cash included in other assets, net	2,074		3,738
Total cash, cash equivalents and restricted cash	$	1,429,031	$	1,078,340

Inventories

Inventories consist of the following (in thousands):


	June 30, 2025		September 30, 2024
Finished goods	$	28,230	$	27,922
Raw materials	38,690		48,456
	$	66,920	$	76,378

Other Current Assets

Other current assets consist of the following (in thousands):


	June 30, 2025		September 30, 2024
Unbilled receivables	$	460,172	$	401,104
Prepaid expenses	88,660		93,467
Capitalized contract acquisition costs	35,258		32,681
Other	47,212		42,215
	$	631,302	$	569,467

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Other Assets, Net

Other assets, net consist of the following (in thousands):


	June 30, 2025		September 30, 2024
Intangible assets	$	88,479	$	111,576
Unbilled receivables	328,828		277,965
Capitalized contract acquisition costs	37,034		33,577
Other	69,462		64,399
	$	523,803	$	487,517

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	June 30, 2025		September 30, 2024
Payroll and benefits	$	168,404	$	171,571
Operating lease liabilities, current	30,407		33,779
Income and other tax accruals	38,590		45,247
Other	44,012		49,479
	$	281,413	$	300,076

Other Long-term Liabilities

Other long-term liabilities consist of the following (in thousands):


	June 30, 2025		September 30, 2024
Income taxes payable	$	84,649	$	85,461

Other	11,963		9,272
	$	96,612	$	94,733

6. Debt Facilities

Revolving Credit Agreement

On January 31, 2020, the Company entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") that provides for a senior unsecured revolving credit facility in an aggregate principal amount of $350.0 million (the "Revolving Credit Facility"). The Company has the option to increase commitments under the Revolving Credit Facility from time to time, subject to certain conditions, by up to $150.0 million. Historically, borrowings under the Revolving Credit Facility bore interest at a rate equal to, at the Company's option, (a) LIBOR, adjusted for customary statutory reserves, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio, or (b) an alternate base rate determined in accordance with the Revolving Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on the Company's leverage ratio. On May 26, 2023, the Company amended the Revolving Credit Agreement as a result of the cessation of the LIBOR borrowing reference rate. The amendment modified and directly replaced the LIBOR borrowing reference rate within the Revolving Credit Agreement to the Secured Overnight Financing Rate (SOFR). After the amendment, borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company's option, (a) SOFR plus 0.10%, plus an applicable margin of 1.125% to 1.75% depending on the Company's leverage ratio, or (b) an alternate base rate determined in accordance with the Revolving Credit Agreement, plus an applicable margin of 0.125% to 0.750% depending on the Company's leverage ratio. The Revolving Credit Agreement also requires payment of a commitment fee calculated at a rate per annum of 0.125% to 0.300% depending on the Company's leverage ratio on the undrawn portion of the Revolving Credit Facility. Commitment fees incurred during the three and nine months ended June 30, 2025 were not material.

On January 31, 2025, the Company's Revolving Credit Facility, with an aggregate principal amount of $350.0 million, expired. At the time of expiration, there were no outstanding borrowings under the Revolving Credit Facility.

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7. Leases

The majority of the Company's operating lease payments relate to its corporate headquarters in Seattle, Washington, which includes approximately 515,000 square feet of office space. The lease commenced in April 2019 and expires in 2033 with an option for renewal. The Company also leases additional office and lab space for product development and sales and support personnel in the United States and internationally. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of the Company's operating lease expenses for the three and nine months ended June 30, 2025 and 2024 were as follows (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Operating lease expense	$	10,067	$	10,101	$	30,117	$	30,594
Short-term lease expense	740		699		2,250		2,065
Variable lease expense	5,715		5,557		17,229		17,532
Total lease expense	$	16,522	$	16,357	$	49,596	$	50,191

Variable lease expense primarily consists of common area maintenance, real estate taxes and parking expenses.

Supplemental balance sheet information related to the Company's operating leases was as follows (in thousands, except lease term and discount rate):


	June 30, 2025			September 30, 2024
Operating lease right-of-use assets, net	$	182,217		$	178,180

Operating lease liabilities, current1	30,407			33,779
Operating lease liabilities, long-term	229,411			215,785
Total operating lease liabilities	$	259,818		$	249,564

Weighted average remaining lease term (in years)	7.8			7.9
Weighted average discount rate	3.15		%	2.94		%

(1)Current portion of operating lease liabilities is included in accrued liabilities on the Company's consolidated balance sheets.

As of June 30, 2025, the future operating lease payments for each of the next five years and thereafter is as follows (in thousands):


Fiscal Years Ending September 30:	Operating Lease Payments
2025 (remainder)	$	7,801
2026	40,832
2027	39,799
2028	34,959
2029	32,076
2030	31,617
Thereafter	109,357
Total lease payments	296,441
Less: imputed interest	(36,623)
Total lease liabilities	$	259,818

Operating lease liabilities above do not include sublease income. As of June 30, 2025, the Company expects to receive sublease income of $8.2 million, which consists of $0.7 million to be received for the remainder of fiscal 2025 and $7.5 million to be received over the eight fiscal years thereafter.

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As of June 30, 2025, the Company had no significant operating leases that were executed but not yet commenced.

8. Commitments and Contingencies

Guarantees and Product Warranties

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, resellers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has entered into indemnification agreements with its officers and directors and certain other employees, and the Company's bylaws contain similar indemnification obligations to the Company's agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

The Company offers warranties of one year for its systems product offerings. Additional warranty coverage can be purchased by customers through service maintenance agreements in yearly increments. The Company accrues for warranty costs as part of its cost of sales based on associated material product costs and technical support labor costs. Accrued warranty costs as of June 30, 2025 and September 30, 2024 were not material.

Commitments

In October 2022, the Company entered into an unconditional purchase commitment with one of its suppliers for the delivery of systems components. Under the terms of the agreement, the Company is obligated to purchase $10.0 million of component inventory annually, with a total committed amount of $40.0 million over a four-year term. As of June 30, 2025, the Company had no remaining purchase commitments under the third year of the agreement. The Company's total non-cancelable long-term purchase commitments outstanding as of June 30, 2025 was $10.0 million.

The Company leases its facilities under operating leases that expire at various dates through 2036. There have been no material changes in the Company's lease obligations compared to those discussed in Note 7 to its annual consolidated financial statements.

Legal Proceedings

Lynwood Investment CY Limited v. F5 Networks et al.

On June 8, 2020, Lynwood Investment CY Limited ("Lynwood") filed a lawsuit in the United States District Court for the Northern District of California ("District Court") against the Company and certain affiliates, along with other defendants. In its complaint, Lynwood claims to be the assignee of all rights and interests of Rambler Internet Holding LLC ("Rambler"), and alleges that the intellectual property in the NGINX software originally released by the co-founder of NGINX in 2004 belongs to Rambler (and therefore Lynwood, by assignment) because the software was created and developed while the co-founder was employed by Rambler. Lynwood asserted 26 causes of action against the various defendants, including copyright infringement, violation of trademark law, tortious interference, conspiracy, and fraud. The complaint sought damages, disgorgement of profits, declarations of copyright and trademark ownership, trademark cancellations, and injunctive relief. Lynwood also initiated several trademark opposition and cancellation proceedings before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office, which have all since been suspended.

In August and October 2020, the Company and the other defendants filed motions to dismiss Lynwood’s case. On March 25 and 30, 2021, the District Court granted the Company’s and the other defendants’ motions to dismiss with leave to amend. Lynwood filed its amended complaint on April 29, 2021, seeking the same relief against the Company and other defendants. On May 27, 2021, the Company and other defendants filed a consolidated motion to dismiss.

The District Court granted the consolidated motion to dismiss without leave to amend on August 16, 2022 and entered final judgment against Lynwood on September 9, 2022. Following the District Court’s order granting the consolidated motion to dismiss and final judgment in the Company’s favor, the District Court subsequently granted the Company attorneys' fees of over $0.8 million, which Lynwood appealed to the Ninth Circuit Court of Appeals. The dismissal appeal and the fees appeal were heard by the Ninth Circuit Court of Appeals ("Court of Appeals") on December 7, 2023. On November 7, 2024, the Court of Appeals partially affirmed the dismissal by affirming dismissal of the state law claims and remanding a portion of the copyright claim to the District Court. The Court of Appeals also vacated the fees award because of the remand.

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On December 2, 2024, the Court of Appeals issued its mandate returning the matter to the District Court for further proceedings on the remaining portion of the copyright claim. The parties are engaged in a first phase of discovery ordered by the Court in a March 7th case management conference that is focused on whether any NGINX Plus code was written by individuals employed by Rambler before the end of 2011. On May 19, 2025, the Company and the other defendants answered Lynwood’s second amended complaint filed April 7, 2025, which was limited to the remaining portion of the copyright claim focused on NGINX Plus per the Court’s March 7th order. The Company intends to continue vigorously defending the litigation.

In addition to the above matters, the Company is subject to a variety of legal proceedings, claims, investigations, and litigation arising in the ordinary course of business, including intellectual property litigation. Management believes that the Company has meritorious defenses to the allegations made in its pending cases and intends to vigorously defend these lawsuits; however, the Company is unable to currently determine if an unfavorable outcome is probable or estimate any potential amount or range of possible loss of these or similar matters. There are many uncertainties associated with any litigation and these actions or other third-party claims against the Company may cause it to incur costly litigation and/or substantial settlement charges that could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.

The Company records an accrual for loss contingencies for legal proceedings when it believes that an unfavorable outcome is both (a) probable and (b) the amount or range of any possible loss is reasonably estimable. The Company has not recorded any accrual for loss contingencies associated with such legal proceedings or the investigations discussed above.

9. Income Taxes

The Company's tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items in the related period.

The effective tax rate was 10.8% and 15.4% for the three and nine months ended June 30, 2025, respectively, compared to 16.0% and 18.4% for the three and nine months ended June 30, 2024, respectively. The decrease in the effective tax rate for the three and nine months ended June 30, 2025 as compared to the three and nine months ended June 30, 2024 is primarily due to changes in unrecognized tax benefits and tax impacts of stock-based compensation.

At June 30, 2025, the Company had $84.8 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. It is anticipated that the Company’s existing liabilities for unrecognized tax benefits will change within the next twelve months due to audit settlements or the expiration of statutes of limitations. The Company does not expect these changes to be material to the consolidated financial statements. The Company recognizes interest and, if applicable, penalties for any uncertain tax positions as a component of income tax expense.

The Company and its subsidiaries are subject to U.S. federal income tax as well as the income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for fiscal years through September 30, 2018. Major jurisdictions where there are wholly owned subsidiaries of F5, Inc. which require income tax filings include the United Kingdom, Singapore, Israel, and India. The earliest periods open for review by local taxing authorities are fiscal years 2022 for the United Kingdom, 2019 for Singapore, 2019 for Israel, and 2018 for India. The Company is under audit by the Internal Revenue Service for fiscal year 2019, by various states for fiscal years 2018 through 2023, and by various foreign jurisdictions including India for fiscal years 2018 to 2024, Israel for fiscal years 2019 to 2022, Saudi Arabia for fiscal years 2015 to 2020, and Singapore for fiscal years 2019 to 2023.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. The Company is currently evaluating the impact of the new legislation but does not expect a material impact to the consolidated financial statements in the current fiscal year.

10. Shareholders' Equity

Common Stock Repurchase

On October 25, 2024, the Company announced that its Board of Directors authorized an additional $1.0 billion for its common stock share repurchase program. This authorization is incremental to the existing $6.4 billion program, initially approved in October 2010 and expanded in subsequent fiscal years. Acquisitions for the share repurchase programs will be made from time to time in private transactions, accelerated share repurchase programs, or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time.

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The following table summarizes the Company's repurchases and retirements of its common stock under its Stock Repurchase Program (in thousands, except per share data):


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Shares repurchased	488		873		1,459		2,338
Average price per share	$	256.23	$	171.98	$	256.99	$	171.11
Amount repurchased	$	125,010	$	150,018	$	375,029	$	400,047

As of June 30, 2025, the Company had $1,047.4 million remaining authorized to purchase shares under its share repurchase program.

11. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. The Company's nonvested restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents and are not considered participating securities that should be included in the computation of earnings per share under the two-class method.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Numerator
Net income	$	189,912	$	144,079	$	501,887	$	401,482
Denominator
Weighted average shares outstanding — basic	57,772		58,584		57,989		58,832
Dilutive effect of common shares from stock options and restricted stock units	720		563		784		629
Weighted average shares outstanding — diluted	58,492		59,147		58,773		59,461
Basic net income per share	$	3.29	$	2.46	$	8.65	$	6.82
Diluted net income per share	$	3.25	$	2.44	$	8.54	$	6.75

Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were not material for the three and nine months ended June 30, 2025 and 2024.

12. Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Management has determined that the Company is organized as, and operates in, one reportable operating segment.

Revenues by Geographic Location and Other Information

The Company does business in three main geographic regions: the Americas (primarily the United States); Europe, the Middle East, and Africa (EMEA); and the Asia Pacific region (APAC). The Company's chief operating decision-maker reviews financial information presented on a consolidated basis accompanied by information about net product revenues and revenues by geographic region. The Company's foreign offices conduct sales, marketing, research and development, and support activities. Revenues are attributed by geographic location based on the location of the end user customer.

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The following presents revenues by geographic region (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Americas:
United States	$	411,093	$	361,820	$	1,192,270	$	1,075,742
Other	19,878		21,026		66,800		69,059
Total Americas	430,971		382,846		1,259,070		1,144,801
EMEA	202,073		190,661		620,431		562,410
APAC	147,326		121,988		398,481		362,235
	$	780,370	$	695,495	$	2,277,982	$	2,069,446

The Company continues to offer its products through a range of consumption models, from physical systems to software solutions and managed services. The following presents net product revenues by systems and software (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Net product revenues
Systems revenue	$	180,855	$	129,845	$	519,968	$	406,873
Software revenue	207,983		178,644		574,563		507,637
Total net product revenue	$	388,838	$	308,489	$	1,094,531	$	914,510

The following customers accounted for more than 10% of total net revenue:


	Three months ended June 30,				Nine months ended June 30,
	2025		2024		2025		2024
Ingram Micro, Inc.	17.0	%	15.7	%	16.7	%	16.5	%



Synnex Corporation	18.4	%	15.9	%	17.6	%	16.0	%
Carahsoft Technology Corporation	—		10.5	%	—		—

The Company tracks assets by physical location. Long-lived assets consist of property and equipment, net, and are shown below (in thousands):


	June 30, 2025		September 30, 2024
Americas:
United States	$	113,409	$	112,420
Other	1,624		1,773
Total Americas	115,033		114,193
EMEA	20,801		21,970
APAC	16,613		14,780
	$	152,447	$	150,943

13. Restructuring Charges

In the first quarters of fiscal 2025 and 2024, the Company initiated restructuring plans to match strategic and financial objectives and optimize resources for long term growth, including reduction in force programs. For the three months ended December 31, 2024 and 2023, the Company recorded restructuring charges of $11.3 million and $9.8 million, respectively. The Company did not record any significant subsequent charges related to the first quarter of fiscal 2025 and 2024 restructuring plans.

In the third quarter of fiscal 2023, the Company initiated a restructuring plan to better align strategic and financial objectives, optimize operations, and drive efficiencies for long-term growth and profitability, including a reduction in force affecting approximately 620 employees, or approximately 9% of the Company’s global workforce as of April 19, 2023. This included $53.2 million in severance benefits costs and related employer payroll taxes, and $3.5 million in charges related to the

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reduction of its leased facility space. The Company incurred $56.7 million in restructuring costs and did not record any significant subsequent charges related to the third quarter of fiscal 2023 restructuring plan.

During the nine months ended June 30, 2025 and 2024, the following activity was recorded (in thousands):


	Nine months ended June 30,
	2025		2024
Employee Severance, Benefits and Related Costs
Accrued expenses, beginning of period	$	—	$	3,496
Restructuring charges1	11,321		8,655
Cash payments	(11,274)		(11,615)
Accrued expenses, end of period	$	47	$	536

(1) Includes restructuring charges and adjustments for in period relief of unused benefits and foreign currency fluctuations.

Charges related to employee severance, benefits, and related costs are reflected in the restructuring charges line item on the Company's consolidated income statements.

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