F5 slides 10%, amongst market’s worst, as analysts fret over software program development (NASDAQ:FFIV)

F5 (NASDAQ:FFIV) is the S&P 500’s second-worst performer Wednesday, down 9.9% after fiscal fourth-quarter outcomes the place it beat expectations on prime and backside traces however issued steerage to the low aspect for adjusted earnings.

The corporate eked out better-than-expected income development of two.6%, and whereas adjusted earnings of $158M declined from a prior-year $185M, they nonetheless simply cleared expectations.

For the approaching fiscal 12 months, the corporate guided to income development of Sep 11%, and a “mixture of income development and working leverage will allow us to ship non-GAAP earnings development within the low-to-mid teenagers in fiscal 12 months 2023,” CEO François Locoh-Donou stated.

Zooming in, the fiscal first-quarter internet earnings outlook quantities to adjusted earnings per share of $2.25-$2.37, its midpoint under consensus expectations for $2.33.

That full-year income development outlook was “the actual constructive shock” of the report, Citi stated. Nonetheless, moderating development in software program income raised issues amongst F5’s Impartial analysts.

The bull thesis has been “centered across the Software program transition, with this development giving little confidence right here,” says Piper Sandler, which is Impartial and minimize its worth goal to $164 from $173.

Software program income development within the quarter moderated considerably from prior quarters, J.P. Morgan stated, calling income efficiency “blended” and suggesting traders could be extra involved concerning the long-term outlook, as soon as Programs returns to a normalized development cadence.

Locoh-Donou took a balanced stance concerning the street forward: “Over the subsequent 12 months, our enterprise is prone to profit from tailwinds to our programs enterprise because of bettering part availability and to bear some weight from macroeconomic headwinds.”

For extra particulars, try Looking for Alpha’s transcript of F5’s earnings convention name.