F5, Inc.
Information Technology · Communications Equipment
Structural read: F5 is the load-balancer/ADC incumbent (BIG-IP) repositioning around three legs - hardware refresh on new VELOS/rSeries, NGINX as the dominant open-source web server/reverse proxy with paid Plus tier, and Distributed Cloud as the multi-cloud security + API protection layer.
AI compute build-out raises east-west traffic, API sprawl, and bot/scraper pressure - all addressable by the portfolio, but F5 is not first-mention in AI-infra reflexes.
- Software + SaaS now >50% of revenue; recurring mix lifts gross margins ~82%+
- NGINX install base (~33% of busiest sites) is a free-to-paid funnel for API security
- AI workloads amplify need for inter-service traffic management + API governance
- Buyback + dividend at >20% FCF margin; capital return through cycles
- Distributed Cloud bundles WAF/bot/API into one SKU vs point-tool sprawl
- Cloud-native load balancing ($AMZN ALB, $GOOGL GLB, $MSFT Application Gateway) cannibalizes BIG-IP at the edge of new deployments
- $NET $ZS $S sell adjacent edge/security stacks with cleaner SaaS narratives
- Hardware revenue still cyclical; refresh cycles tied to enterprise capex
- Low single-digit total revenue growth - narrative discount vs pure-play security peers
- AI-infra spend is concentrating at $NVDA + hyperscaler L4/L7, not necessarily F5
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