Share in network traffic management and security firm F5 Networks Inc. dropped in late trading after it warned of ongoing supply chain constraints for the second quarter.
For the quarter ending March 31, F5 reported non-generally accepted accounting practices income of $131 million or $2.13 per share compared to $155 million or $2.50 per share in the same quarter of last year. Revenue came in at $634 million, down 2% year-over-year.
Analysts had predicted non-GAAP EPS of $2.01 on revenue of $634 million.
Highlights in the quarter included F5 launching a new software-as-a-service distributed cloud service platform in February. The solution combines technology F5 acquired from the acquisitions of Volterra Inc. and Shape Security Inc. to provide load balancing, multi-cloud networking, cloud-native edge computing services and a Kubernetes gateway.
Looking forward, F5 predicted revenue growth of between 1.5% to 4%, down from a prior outlook of 4.5% to 8% growth. For its fiscal third quarter, the company expects revenue of between $660 million to $680 million.
As with the previous quarter, F5 once again warned of supply chain constraints. The shortage of semiconductors is not a problem unique to F5 and has as its genesis the COVID-19 pandemic. Intel Corp. Chief Executive Pat Gelsinger warned last year that the shortage will likely drag on until 2023 and attempts to expand production this year have been hampered by a lack of skilled workers.
“Our strong 40% software growth enabled us to deliver above the midpoint of our revenue guidance and at the top end of our non-GAAP earnings per share guidance for the quarter,” François Locoh-Donou, F5’s president and chief executive officer, said in a statement. “While our ability to ship systems remains constrained as a result of semiconductor component shortages, momentum in our software business is strong, driven by customers’ growing need for multi-cloud application security and delivery.”
While F5 beat expectations on both EPS and revenue in the quarter, it was a lower-than-expected outlook due to chip shortages that investors focused on. F5 shares were down 9.75% in late trading to be sitting at $175 as of 5:26 p.m. EDT.