F5 Networks is assuring its employees that it won’t make layoffs during its current fiscal year, ending in September, saying it wants to give them confidence in the future of their jobs despite the unprecedented economic uncertainty in the world.
François Locoh-Donou, president and CEO of the Seattle-based networking and security technology company, made the announcement during F5’s earnings conference call Monday afternoon, after the company beat analysts’ expectations for its fiscal second quarter.
“In this time of adversity, and difficulty, we want to remove any worry our employees may have about their jobs or providing for their families,” Locoh-Donou said on the call. “We believe having this certainty will enable us to better focus on our customers and their needs.”
The move is unusual but not unprecedented. Other networking and security technology companies, Palo Alto Networks and Cisco Systems, have made similar pledges. In terms of its time frame, F5’s promise goes further than Salesforce CEO Marc Benioff did in his recent pledge that the company won’t make “significant” layoffs for at least 90 days.
F5’s ability to make the pledge stems, in part, from strategic changes inside the company. Locoh-Donou said the overhaul of F5’s business in recent years, taking the company beyond hardware and further into software and services, has put it in a better position to withstand the economic crisis caused by COVID-19.
The company posted a 7% increase in quarterly revenue, to $585.6 million, and profits of $135.9 million, or $2.23 per share, on a non-GAAP basis, excluding the financial impact of its $1 billion acquisition of Shape Security, announced last year. Analysts surveyed in advance had expected revenue of $559 million and profits of $1.95 per share, according to Yahoo Finance.
The results included 96% growth in the software revenue. About 65% of the company’s revenue in the quarter was recurring, reflecting its shift to subscription-based services that provide a more reliable income stream than hardware does.
F5 saw both positive and negative impacts from the COVID-19 pandemic, Locoh-Donou said. Some of its corporate customers pulled back, pushing deals into the next quarter, while others moved quickly to finish deals with the company, or increased their usage of F5’s networking technology to enable remote work.
“We are confident that, though there may be macro uncertainty around the second half of our fiscal year, we have built a resilient business that will allow us to weather that uncertainty without making substantial changes to our workforce,” Locoh-Donou said during the conference call.
Headquartered in a new office tower in downtown Seattle, F5 employed 5,825 people globally as of the end of March, including 1,400 in the Seattle region, with $821 million in cash and short-term investments. The company is continuing to hire, currently recruiting for 300 positions globally, and conducting interviews virtually.
Two major acquisitions have expanded F5’s business beyond the enterprise hardware appliances that traditionally formed the core of its business. The acquisition of Shape Security was completed in January, following the $670 million acquisition of web server company NGNIX last year.
