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FY2026 Q3
Improving
F5, Inc. earnings call
Buzzberg read
AI customer count grew 50% in Q3; AI security customers doubled
F5 delivered an outstanding Q3 (FY26) with 11% revenue growth and 19% product revenue growth, driven by hybrid multicloud expansion, security wins, and AI adoption. The company is raising its full-year guidance, citing strong demand traction. Management also highlighted progress in AI security and data delivery, with a notable uptick in AI-related customer wins. Q3 revenue grew 11% YoY to $865 million, driven by 19% product revenue growth and strong systems demand (+32% YoY).
Buzzberg read AI customer count grew 50% in Q3; AI security customers doubled F5 delivered an outstanding Q3 (FY26) with 11% revenue growth and 19% product revenue growth, driven by hybrid multicloud expansion, security wins, and AI adoption. The company is raising its full-year guidance, citing strong demand traction. Management also highlighted progress in AI security and data delivery, with a notable uptick in AI-related customer wins. Q3 revenue grew 11% YoY to $865 million, driven by 19% product revenue growth and strong systems demand (+32% YoY). Read full analysisCollapse analysis
F5 delivered an outstanding Q3 (FY26) with 11% revenue growth and 19% product revenue growth, driven by hybrid multicloud expansion, security wins, and AI adoption. The company is raising its full-year guidance, citing strong demand traction. Management also highlighted progress in AI security and data delivery, with a notable uptick in AI-related customer wins. Q3 revenue grew 11% YoY to $865 million, driven by 19% product revenue growth and strong systems demand (+32% YoY).
- AI is becoming a material growth driver, with cumulative AI-related customers growing 50% in Q3 and AI security customers doubling sequentially.
- Competitive displacement wins are expanding, reinforced by takeaways in sovereign AI, AI data delivery, and platform security consolidations.
- Guidance for FY26 was raised: revenue now expected +9-10% and EPS $17.21-$17.33 (up from $16.25-$16.55).
Revenue$0.8651B+7% QoQ
EPS$4.73+21% QoQ
Gross margin82.25%Reported
Operating margin24.65%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Guidance
F5 raised FY26 revenue growth outlook to 9-10%
Hardware
Hardware growth of 32% driven by AI and refresh
Show 3 more callouts
AI
AI-powered WAF fastest adoption; 75% run in blocking mode
Software
Software growth expected to reaccelerate to double-digit in FY27
Margins
Gross margin outlook improved for Q4, but FY27 unchanged
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $0.8651B | +7% QoQ |
| EPS | $4.73 | +21% QoQ |
| Gross margin | 82.25% | Reported |
| Operating margin | 24.65% | Reported |
| Free cash flow | $0.2806B | -19% QoQ |
| Capex | $0.0356B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 Q4 | $4.14–$4.26 | $4.20 | Guided |
| EPS | FY2026 | $17.21–$17.33 | $17.27 | Raised |
| Gross margin | FY2026 Q4 | 83%–84% | 83.5% | Raised |
| Revenue | FY2026 Q4 | $0.87B–$0.89B | $0.88B | Guided |
| Revenue | FY2026 | 9%–10% | 9.5% | Raised |
AI, capex & demand read
Management read
Confident
Management expressed confidence in durable structural demand drivers (hybrid multicloud, threat landscape, AI inference) and raised full-year guidance, citing strong customer wins and innovation momentum.
Management AI read
F5 is seeing strong momentum in AI-related demand, with direct AI use cases in data delivery, runtime security, and AI factory load balancing driving wins. Management highlighted a 50% sequential increase in direct AI customer count and a 100% increase in AI security customers, while noting that AI traffic is also indirectly driving expansion in core ADC systems.
Investment and capacity
Capex not discussed in detail; management mentioned Q3 capex of $36 million but provided no forward-looking capex commentary.
all 1 named companies below
Companiesreturns since call
Supply chain
Supply chain
Cooper Werner
F5 sees near-term Q4 gross margin improvement (83-84%) due to better product mix and lower-than-feared component cost increases, but it is maintaining a cautious FY27 gross margin guide of 80-82%, indicating management expects memory/storage price volatility to persist into the next fiscal year. — This signals that memory/SSD spot price stability seen recently may be temporary, and F5 is expecting some cost pressure to return in the next fiscal period.
Evidence
“While we are encouraged by the improved gross margin outlook for Q4, we are not revising our FY27 gross margin guidance of 80 to 82% given the dynamic pricing environment for memory and storage components.”
External signals
Supply-chain alpha · 3returns since call
The post-Mythos threat environment is accelerating migration of F5's AI-powered WAF from monitor mode to blocking mode (75% of adopters), indicating strong customer urgency to deploy zero-day protections at the application layer.
Evidence
“Since launching in Q2, 15% of our distributed cloud WAF customers have adopted the capability, and of those, 75% are running in blocking mode versus monitor mode.”
Q3 hardware growth of 32% YoY, coupled with F5 Insight fleet management adoption, suggests the refresh cycle is being amplified by expansion at the point of refresh and AI-related capacity additions, not just a one-for-one swap.
Evidence
“Q3 systems revenue totaled $240 million, up 32% over Q3 FY25.”
F5 sees near-term Q4 gross margin improvement (83-84%) due to better product mix and lower-than-feared component cost increases, but it is maintaining a cautious FY27 gross margin guide of 80-82%, indicating management expects memory/storage price volatility to persist into the next fiscal year.
Methodology & coverage
Management-only analysis. All 1 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.