F5 Inc at Barclays Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tim Long - Barclays - Analyst : Great. Thank you. A little discussion with Frantois outside, seeing a lot of AI discussion today. So we'll start there for those that haven't heard the full spiel. But maybe if you guys could just talk a little bit about the F5 position kind of both maybe if you can touch on hardware and software products and services that you're feeding into the AI opportunity?

Question: Tim Long - Barclays - Analyst : Okay. Great. Yeah, that's helpful. Suzanne and I were joking about the whole hardware or software. I don't -- never understood Wall Street craziness about the two when they're both very high margin. But is this much more of a hardware opportunity because the speeds and technical capabilities that you need with like your purpose-built hardware? Is that why we're seeing a little bit more hardware event to the potential AI business?

Question: Tim Long - Barclays - Analyst : Okay. Great. And you mentioned the NVIDIA partnership. Can you just talk a little bit about kind of how that was formed and what you think the opportunity is there and kind of timeline of that impacting F5?

Question: Tim Long - Barclays - Analyst : And I'm guessing if I'm not an NVIDIA AI user, I'm using some kind of custom ASICs. That same type of application would be needed, the same traffic management. It's not just an NVIDIA stack that --

Question: Tim Long - Barclays - Analyst : Right. Okay. Great. Maybe last quick one. Does it matter Ethernet InfiniBand from the networking layer or any other type of interconnect, you still need similar type of traffic management?

Question: Tim Long - Barclays - Analyst : Yeah, okay. Excellent. Maybe we could touch on software. I think one of the big takeaways in the last quarter or two has been kind of the return of renewals and deal flow. So maybe touch on that. Kind of what do you think is driving that? Are there specific products or customer sets? Or is it just macro is getting better? How do you view that kind of recovery that we've seen in this software business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 11:05PM, FFIV.OQ - F5 Inc at Barclays Global Technology Conference

Question: Tim Long - Barclays - Analyst : Okay. Maybe if you could touch on kind of cross-sell opportunities now that you have more security-based products or genic and just a lot of different tools that you can add when these things are up for renewals. So how does that conversation normally go with customers, and what are some common maybe packages or upsells that you guys would see?

Question: Tim Long - Barclays - Analyst : Okay. Yeah, I think in the early days of these term subscriptions, that second bullet point on consumption was the one that really exceeded what you guys were thinking and that caused the true forwards and some of the funky seasonality in the business. Is that business mature enough now generally that it's a little bit more predictable from a consumption and usage basis, or are you still coming across customers that you see a lot more utility to it and are willing and able to consume at a much higher rate?

Question: Tim Long - Barclays - Analyst : Right. Okay. Yeah. As a hardware guy, it was a lot of fun to learn about 606. Changed my modeling. You did mention, Tom, the distributed cloud and the 800 customers. Could you just talk a little bit -- or, Frantois, about kind of the complexion of that? What -- I know there's the transition from Silverline. But what are you seeing with new activity, new customers? Is it -- are there any other meaningful things that you think will cause this business to be much more successful than maybe Silverline had been?

Question: Tim Long - Barclays - Analyst : Okay.

Question: Tim Long - Barclays - Analyst : Okay. Maybe one more on software, NGINX as a service. I think this has been a good acquisition. If there's any questions, it's probably been more about the monetization level of it. But maybe -- I know it's a relatively new offering, but what's kind of the early feedback? And what do you think that does for this part of the business?

Question: Tim Long - Barclays - Analyst : Okay. Maybe pivoting to security for a little bit. I think when you gave the numbers, it was relatively flat last year, but there's been funky numbers with the pandemic and whatnot. So maybe just talk about your security opportunity, standalone bundled. You have a lot of different offerings, should be a relatively higher growth end market for F5. So maybe talk about the opportunities there and when we should see that returning to more reasonable growth?

Question: Tim Long - Barclays - Analyst : Okay, great. Maybe just a quick one on hardware. I think the guidance calls for growth this year. It's been -- again, with backlog and everything, it's been challenged. And Frantois, you did talk about how hardware is playing more of a role in the AI portion. But more broadly around hardware, I know there's been some competitor dislocation as well. So what's your outlook there? And what do you think are going to be the key drivers of that hardware business in the next year or two?

Question: Tim Long - Barclays - Analyst : Okay. Maybe a few kind of customer areas. Federal government, always been an important business for F5. With the change in administration, do you think there's going to be more positive drivers there? And I'd imagine we're -- it seems like we're at the space where we're going to see a lot more sovereign AI-type applications, so back to the AI piece. So what's your outlook for that business, that segment?

Question: Tim Long - Barclays - Analyst : Okay. Great. And then telco is another one where it's been a rough go for most companies in that area, but it does feel like it's starting to get better. So are you seeing that? Are you expecting that maybe your service provider telco business could start to positively inflect? And would you think that would be hardware led as well? I think they're -- tend to be a little bit more hardware.

Question: Tim Long - Barclays - Analyst : Right. Yeah, it's good that they do seem to be catching up a little bit. So we're only 30 seconds out. So we'll -- I think we'll wrap it there. So thank you both so much for spending the time with us.