F5 to Acquire Volterra to Create the First Edge 2.0 Platform for Enterprises and Service Providers

F5, Volterra, Service Providers, application security and delivery, edge-as-a-service platform, multi-cloud application security and delivery, digital experiences, network and secure applications across multi-cloud and the edge.
  • F5 raises revenue outlook, reiterates Horizon 2 non-GAAP operating and EPS targets, and reaffirms commitment to $1 billion in share repurchases
  • F5 expects first quarter fiscal year 2021 GAAP and non-GAAP revenue growth of approximately 10% with GAAP and non-GAAP revenue between $623 to $626 million, and non-GAAP earnings per share above the top end of its prior guidance range of $2.26 to $2.381F5 Networks (NASDAQ: FFIV), the leader in application security and delivery, and Volterra, the first universal edge-as-a-service platform, today announced a definitive agreement under which F5 will acquire all issued and outstanding shares of privately held Volterra for approximately $440 million in cash and approximately $60 million in deferred consideration and assumed unvested incentive compensation to founders and employees. With the addition of Volterra’s technology platform, F5 is creating an edge platform built for enterprises and service providers that will be security-first and app-driven with unlimited scale.

    In connection with the transaction, F5 raised its Horizon 2 (fiscal years 2021 and 2022) and long-term revenue outlook, and reiterated its Horizon 2 operating targets, including its commitment to achieving double-digit non-GAAP earnings per share growth. The company also reiterated its commitment to return $1 billion of capital over the next two years, including the initiation of a $500 million accelerated share repurchase in fiscal year 2021. In addition, F5 released a preview of its first quarter fiscal year 2021 financial results stating it expects GAAP and non-GAAP revenue in a range of $623 to $626 million, driven in part, by approximately 68% GAAP, and 70% non-GAAP, software revenue growth.

    “Current edge solutions are simply inadequate for today’s enterprise customers. It’s time to break out of closed edge systems that only perpetuate the pain of building, running, and securing apps,” said François Locoh-Donou, President and CEO, F5. “With Volterra, we advance our Adaptive Applications vision with an Edge 2.0 platform that solves the complex multi-cloud reality enterprise customers confront. Our platform will create a SaaS solution that solves our customers’ biggest pain points. The success of F5’s software transformation has put us in a position to deliver on the potential of Edge 2.0 and redefine our competitive position.”

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    “I am excited to work closely alongside François and the F5 team to help pioneer the evolution of the edge to deliver more adaptive, dynamic application experiences for all of our customers,” said Ankur Singla, Founder and CEO, Volterra. “With our platform, we will extend F5’s application security leadership to the edge, thereby expanding our combined reach in the fastest growing segment of F5’s $28 billion 2023 total addressable market.”

    Volterra enables a new Edge 2.0 open edge platform that will transform F5’s leadership position in enterprise application security and delivery, addressing the challenges inherent with first-generation edge solutions. F5’s Edge 2.0 platform will be:

    • Security-first: Delivering industry-leading security instead of commodity security added to a CDN or cloud.
    • App-driven: Providing universal, “build once, deploy globally” app delivery. This software-defined edge based on industry standard containers and APIs removes multi-cloud complexity.
    • Unlimited in scale: Edge 2.0 breaks apps out of the “CDN jail” of closed edge platforms, running all services on any server, across all clouds and data centers.

    The boards of directors of both F5 and Volterra have approved the transaction, which is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the first quarter of calendar year 2021.

    Upon closing of the transaction, Ankur Singla, and the Volterra leadership team will join F5 in key management roles. Volterra will remain located in its current Santa Clara headquarters.

    F5 Business Outlook Update

    The addition of Volterra accelerates F5’s total revenue growth expectations. As a result, F5 is updating its Horizon 2 (fiscal years 2021 and 2022) total revenue growth CAGR to 7% to 8%, from 6% to 7%, and its long-term revenue growth target to double digits from 8% to 9%. F5 maintained its commitment to deliver operating leverage through the “Rule of 40” and its target to achieving double-digit non-GAAP EPS growth in Horizon 2.

    In addition, F5 reiterates its commitment to $1 billion in share repurchases in the next two years, including a $500 million accelerated share repurchase in fiscal year 2021.

    Preliminary Q1 Fiscal Year 2021 Results

    F5 also released a preview of its first quarter fiscal year 2021 financial results. Based on currently available information, the company estimates the following results for the quarter ended December 31, 2020.

    • GAAP and non-GAAP revenue between $623 and $626 million, representing growth of approximately 10% over the prior year period2
    • GAAP and non-GAAP software revenue growth of approximately 68% and 70%, respectively3
    • Systems revenue growth of approximately 5%
    • GAAP and non-GAAP product revenue growth between approximately 22% to 23%2
    • Global services revenue growth slightly better than flat
    • Non-GAAP EPS above the top end of its prior guidance of $2.26 to $2.381

    “We are on track to deliver our best quarterly results since we embarked on our transformation, with approximately 10% revenue growth fueled by continued strong software demand along with resilience in our systems business,” added Locoh-Donou.

    F5 Live Conference Call & Webcast Details

    F5 will host a live webcast and conference call to discuss the transaction and its preliminary first quarter fiscal year 2021 results with investors and analysts beginning at 5:15 p.m. ET, or 2:15 p.m. PT, today, January 7, 2021. The live webcast link can be accessed from the investor relations portion of f5.com. The audio-only version of the live call can be accessed by dialing (833) 714-0927 for callers in the U.S. and Canada or +1 (778) 560-2886 for listeners from other countries. Please use Meeting ID: 8879455.

    The webcast and call will be recorded, and replays will be available as follows:

    Replay Via Webcast: Access via the investor relations portion of F5’s website.

    Replay Via Phone: (800) 585-8367 (US & Canada) or +1 (416) 621-4642 (outside of the U.S. and Canada) available January 7, 2021 through January 8, 2021. Use Meeting ID: 8879455.

    Transaction Advisors

    Foros acted as financial advisor to F5. Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to F5, and Goodwin Procter LLP acted as legal advisor to Volterra.


    F5 is currently working through the accounting close process for the quarter ended December 31, 2020 and an estimate of GAAP earnings per share is not yet available. The company expects to provide GAAP earnings per share for the quarter ended December 31, 2020 with its final results announcement, expected on January 26, 2021.

    F5 is currently working through the accounting close process for the quarter ended December 31, 2020 and therefore a reconciliation of revenue on a GAAP to non-GAAP basis is not yet available. This reconciliation is expected to be available and provided with the company’s final results announcement, expected on January 26, 2021.

    Following its acquisition of Shape Security, to provide transparency to what F5 management believes reflects its ongoing business results, for the four quarters following the acquisition, F5 is reporting both GAAP and non-GAAP revenue. Non-GAAP revenue excludes the impact of the purchase accounting write-down on Shape’s assumed deferred revenue.