F5 Inc Q3 2025 Earnings Call Transcript

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

Question: Tim Long - Barclays - Analyst : Hi, thanks for the time here. Two, if I could. First, on the hardware side. Could you talk a little bit about, obviously, a lot of strength here, a lot of things going on with maybe tariffs and pull-ins and end of life and good competitive environment. So you kind of break down that you talked about the applications and the region there, but some of the other factors that may be contributed and how you think the sustainability of that will be going into next year? And then second, on the software side, could you just touch on kind of pipeline and how you're thinking about renewals and new deal activity heading into the end of the fiscal year.

Question: Michael Ng - Goldman Sachs - Analyst : Hi, good afternoon, thanks for the question. I just have two. First, on the hardware piece. It's encouraging to hear that you expect systems revenue to be up next year. In the past, you've talked a little bit about how much of the installed base was on the legacy iSeries and VIPRION. I was just wondering if you could talk about where you are today and how much of that systems or fresh we should expect over the next couple of years? And then second, just on software kind of relatedly, could you see software revenue growth in fiscal '26 just given the very strong term renewals that we've seen this year.

Question: Samik Chatterjee - JPMorgan - Analyst : All right. And on to my second question, you anticipate hardware to grow strongly in 2026. How much of that strength is this newfound shift where people are using systems instead of software that you would otherwise expect for them to use software, like you saw in this particular quarter? Was this unexpected? And is this a trend that you think might continue?

Question: George Notter - Wolfe Research - Analyst : I was just curious on kind of an update on some of the newer products. I was thinking about the NVIDIA DPU product. I think you mentioned it earlier in the monologue. Can you just remind me, is that GA now? How have you guys priced that? How significant can that be in the context of your model? Just anything you can say on progress there? And then a similar question on the AI Gateway platform. I know you're just getting into the marketplace right now. I'm just curious on initial views, feedback on the product, what perspective can you share.

Question: James Fish - Piper Sandler Companies - Analyst : Francois, you keep talking about the non-refresh piece on systems growing faster, but let's be frank, most of the systems is refresh. So really, the crux of my question though is, can you just help us with how big essentially the non-refresh pieces and really like trying to understand how much of an AI benefit you're seeing today?

Question: James Fish - Piper Sandler Companies - Analyst : Understood. And maybe if I could follow up there. appreciate that added color. How are you thinking about maybe the magnitude of customers that on tech refresh could actually become more virtual or even given the nearly 40% growth here, and we talked about this in the piece we did earlier this week. But what inning of refresh do you think we're actually in?

Question: Simon Leopold - Raymond James - Analyst : I guess one of the things I'm curious about is you've cautioned us in the past about your service provider or telco vertical, having a tendency towards lumpiness. And this was a particularly strong quarter. It looks like it was up more than 40% sequentially and nice year-over-year growth. How should we be thinking about that should we take this as more of a one-off? Or is there some new trending that we should think about? And then I've got a quick follow-up.

Question: Simon Leopold - Raymond James - Analyst : And then I want to see if you could talk a little bit more about how to think about the longer-term trends or fiscal '26 expectations for services in that I would have thought we'd see some correlation to the stronger hardware business, but maybe there's a lag effect. And I'm assuming there's very little correlation to your software stand-alone business, so how should we think about services trending?

Question: Ryan Koontz - Needham & Company - Analyst : First, just a clarification. When you talk about tech refresh, I assume you're talking about F5 to F5 legacy to modern product. Second question I have is regarding your our modest price increase you've talked about phasing in kind of where are you in terms of that way can make its way through the model? And what's been the customer feedback on that relative to some of your competitors moves?