F5 Networks Inc (FFIV)’s First Quarter 2015 Earnings Conference Call Transcript

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Question and Answer Session

Operator

The first questions comes from Jayson Noland, Robert Baird. Your line is open.

Jayson Noland, Robert Baird

Great, thank you. John, any additional color on the large deals? I know you said fad but is there a certain vertical you could call out and was complexity part of it? Or just a confusion around architectural change or…?

John McAdam, President and Chief Executive Officer

No, we obviously checked in a big way and really — and this is sounding weird — but really there was nothing complex that we could see. We just saw — the more we looked at the pipeline going through the quarter, you could see that the forecasted deals weren’t moving along as fast as they should. This was only in the Americas by the way and the enterprise and then in Federal as well. No vertical that stood out, just generally across the board. And then we were not talking about a significant number of million dollar deals but they obviously make a difference.

Jayson Noland, Robert Baird

And those didn’t become smaller deals, they should got pushed out into Q2?

John McAdam, President and Chief Executive Officer

That’s correct. Yes.

Jayson Noland, Robert Baird

Thank you.

Operator

Next question from Ehud Gelblum from Citigroup. Your line is open.

Ehud Gelblum, Citigroup

Just wanted to clarify a couple of things. John, you talked about software 44% growth that was you were talking about virtual edition software as opposed to software…?

John McAdam, President and Chief Executive Officer

So 44% was the total software and that includes virtualization, and that includes modules and areas like vCMP within the ADC solution. And the other thing I said was that the fastest growing was the virtualization ADC. However, the security module software is a pretty significant part of that growth as well.

Ehud Gelblum, Citigroup

Cool. Can you give us a sense as to how large is the security module part of that?

John McAdam, President and Chief Executive Officer

No, we don’t give out that specific, but I don’t have them on hand anyway but we typically don’t give that out. But security, you are going to hear me talking again a few times in the call and that still remains our biggest driver and I think that’s going to be the case for a while.

Ehud Gelblum, Citigroup

Okay interesting. I did want to drill down…

John McAdam, President and Chief Executive Officer

Because if you take the Gi firewall for example. You see that these were pretty significant deals and of course the security module ASM associate with them and that’s pretty expensive.

Ehud Gelblum, Citigroup

Totally. I was trying to drill down little bit on some of the Gi firewall wins. You talked about wins in Tier 1 service provider for that. Can you give us a sense as to who you beat out? I can guess, I mean, is this beating out Juniper SRX or who you are beating out? And was this new opportunities that you brought in for or was this existing opportunity where you replace someone and the sale of it was for functionality, features? Can you give us a sense as to what that opportunity looks like?

John McAdam, President and Chief Executive Officer

Yes. So typically and the one that I was talking specifically on this call and we have seen Gi firewall deals over that one wave, the one I was referring to for U.S Tier 1 providers and nobody mentioned customer names of course. The $2 million plus Gi firewall deals was directly related to frankly I think it’s about two years we’ve been working with this particular service provider on our orchestration road map so the initial orders and that opportunity that can be big obviously is only when we execute properly.

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