F5 Accelerates Revenue with Network Security

F5, which got its start with a load balancer product, is now making a lot of its money from security technologies.

By Sean Michael Kerner | Posted Oct 31, 2014
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F5 was once just a load balancing company, but over time the vendor has evolved into much more, with complete Application Delivery Controller (ADC) and security technologies. In fact, for F5's fiscal 2014, security was one of the key drivers of revenue growth.

F5 reported its fourth quarter and full fiscal 2014 earnings on October 29. Fourth quarter revenue was reported at $465.3 million for an 18 percent year-over-year gain. For the full year, revenue was reported at $1.74 billion for a 17 percent year-over-year gain. Looking forward, the company provided first quarter fiscal 2014 guidance for revenue in a range of $460 million to $470 million.

John McAdam, CEO of F5, also announced just prior to his company's earnings that he intends to retire at the end of 2015. But McAdam emphasizes that his company has a secure foundation.

"Our security solutions are driving a significant number of sales wins, including many multimillion-dollar transactions," McAdam said. "Approximately 36 percent of our total product sales last year included one or more security products, and this represents 41 percent growth over fiscal 2013."

F5 has multiple security solutions, including its Big-IP Application Security Manager (ASM) traditional firewall product.

"ASM sales have grown significantly in the year, and we have won several large transactions where we replaced the incumbent competitive solutions," McAdam said.

F5 has also expanded its security portfolio with a Secure Web Gateway product and completed the acquisition of defense.Net, a DDoS protection vendor.

While security is a key driver for growth, network acceleration by way of TCP protocol optimization is another important factor. McAdam said that F5 added seven specific TCP optimizations last year in its TMOS operating system's Vancouver and Alpine releases.

"These optimizations improve TCP performance when the network is experiencing packet loss and/or network congestion, typically caused by the explosion of mobile data traffic," McAdam said. "This allows for significant cost savings by the mobile service provider, as well as providing a faster service to subscribers."

The opportunity for F5 in 2014 is also likely to come by way of refreshes from the company's existing customer base.

"Our installed base currently includes over 75,000 systems that have been installed for 3 years or more, approximately 40 percent of the installed base, which is clearly a good refresh opportunity," McAdam said.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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