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F5 Networks CEO Francois Locoh-Donou (F5 Photo)

F5 Networks beat Wall Street expectations for its third quarter as the company continues to transition its business to focus more on cloud computing.

F5 reported net profits of $150.1 million, or $2.44 per share, on $542.2 million in revenue. Analysts surveyed in advanced by Yahoo Finance expected F5 to post earnings of $2.39 per share on $540.6 million in revenue.

“I’m pleased with results for the third quarter,” François Locoh-Donou, F5’s president and CEO said in a statement. “We continue to see momentum in our security and software business, traction in our public cloud offerings and customer excitement around new multi-cloud application solutions like BIG-IP Cloud Edition.”

Revenue only rose 4 percent over this time last year, but the slow growth was foreshadowed earlier this year when F5 laid out its strategy for transitioning from a focus on hardware to software. The company forecasted single-digit revenue growth over the next few years. It appears investors are happy with the transition as the company’s stock has risen approximately 30 percent since the beginning of the year.

The Seattle-based company rose to prominence thanks to its expertise in networking and application-delivery products designed for on-premises data centers, but fewer companies are building data centers these days and the ones still operating data centers are shifting important workloads to cloud providers like Amazon Web Services and Microsoft Azure.

As it shifts to offer more application-delivery services for customers running public cloud and hybrid cloud strategies, F5 sees an opening to win business because it isn’t tied to a single cloud provider. The biggest companies all use multiple cloud options, and F5 is betting that its ramped up application security software to help protect applications deployed across multiple operating environments will be a draw for potential customers.

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