F5 issues downbeat forecast on weak demand for IT-related services

F5 on Monday reported disappointing quarterly sales and gave a downbeat earnings forecast, as it grappled with weak demand for its software products used in cloud and security applications, sending its shares down 10% in extended trading.

Security and IT services firms have come under pressure as companies curb their technology spending due to economic uncertainties.

The business environment continued to be challenging as "customers remain cautious and are forecasting largely flat IT budgets for calendar 2024," F5 CEO Francois Locoh-Donou said in a statement.

The company forecast revenue of $675 million to $695 million for its fiscal third quarter, with the mid-point falling below analysts' estimate of $694.8 million, according to LSEG data.

Adjusted per share earnings forecast of $2.89 to $3.01 also came in below expectations of $3.09.

F5 had announced cuts to its workforce and reduced some office space in April last year, citing muted tech spending by customers.

In the Jan to March period, revenue declined more than 3% to $681.4 million, missing expectations of $685.4 million. Adjusted earnings were 4 cents higher than expected at $2.91 per share.

F5 expects full-year fiscal 2024 revenue growth at flat to down 2% from flat to low-single-digit decline it had expected previously.

It, however, raised its growth forecast for full-year adjusted earnings per share to a range of 7% to 9% from its previous range of 6% to 8%.