Is a Beat in the Offing for F5 Stock This Earnings Season?

F5 Inc. FFIV is likely to beat expectations when it reports second-quarter fiscal 2025 results on April 28, after market close.

For the second quarter of fiscal 2025, F5 projects non-GAAP earnings per share (EPS) in the range of $3.02-$3.14 (midpoint of $3.08). The Zacks Consensus Estimate for the same is pegged at $3.10, suggesting a year-over-year increase of 6.5%. The figure has remained unchanged for the past 60 days.

FFIV’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average earnings surprise of 8.6%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

FFIV projects its second-quarter fiscal 2025 non-GAAP revenues in the range of $705-$725 million. The Zacks Consensus Estimate for the same is pegged at $716.9 million, suggesting year-over-year growth of 5.2%.

Factors Likely to Influence FFIV’s Q2 Results

FFIV’s Product segment performance in the fiscal second quarter is likely to have been aided by the recovering demand for its software solutions, offset by IT budget cuts amid lingering macroeconomic uncertainties. The growth in its Software revenues has continued in the past few quarters. This trend is likely to have continued in the to-be-reported quarter. Our estimate for Software revenues is pegged at $173.1 million.

Technology refresh activities by customers to refresh aging hardware estates are likely to have boosted the Systems segment sales in the second quarter. Our estimate for Systems revenues is pegged at $151.2 million.

Strong sales across the Software and Systems divisions are likely to have boosted the overall performance of the Product division. Our estimate of $324.3 million for Product revenues indicates an 8% year-over-year increase.

The acceleration in BIG-IP and NGINX subscription software deals is expected to have remained a major growth driver in the to-be-reported quarter. BIG-IP’s data point performance, automation capabilities and lower cost of ownership are likely to have helped F5 win multiple deals in the fiscal second quarter. Moreover, the company is anticipated to have witnessed strong demand for its NGINX subscription as large enterprises continue to adopt the solution for their cloud and Kubernetes workloads.

Additionally, its cost-saving initiatives, which include headcount reduction, eliminating portions of its facilities footprint and travel reduction, are likely to have boosted the bottom line.

Earnings Whispers for F5

Our proven model predicts an earnings beat for F5 this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here.

FFIV’s Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($3.12 per share) and the Zacks Consensus Estimate ($3.10 per share), is +0.69%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

FFIV’s Zacks Rank: FFIV carries a Zacks Rank #3 at present.

Other Stocks With the Favorable Combination

Per our model, Qorvo QRVO, Fortinet FTNT and Advanced Micro Devices AMD also have the right combination of elements to post an earnings beat in their upcoming releases.

Qorvo has an Earnings ESP of +3.42% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is set to report fourth-quarter fiscal 2025 results on April 29. The Zacks Consensus Estimate for Qorvo’s fourth-quarter earnings is pegged at $1.01 per share, revised upward by a penny over the past 30 days. The consensus mark indicates a year-over-year decline of 27.3%. Qorvo shares have tanked 45.6% over the past year.

Fortinet is set to report first-quarter 2025 results on May 7. It has an Earnings ESP of +3.77% and carries a Zacks Rank #3 at present.

The Zacks Consensus Estimate for Fortinet’s first-quarter earnings per share (EPS) is pegged at 53 cents, revised upward by a penny over the past 60 days and indicates year-over-year growth of 23.3%. Shares of Fortinet have risen 56.9% over the past year.

Advanced Micro Devices is set to report first-quarter 2025 results on May 6. It has an Earnings ESP of +1.09% and carries a Zacks Rank #3 at present.

The Zacks Consensus Estimate for Advanced Micro Devices’ first-quarter earnings is pegged at 93 cents per share, unchanged over the past 60 days, indicating an increase of 50% from the year-ago quarter’s reported figure. Shares of Advanced Micro Devices have plunged 40% over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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