In January 2021, F5 Networks announced that it will buy Volterra for $440 million; the acquisition was made public on Jan 25 by F5 Networks and Volterra.
Key Takes:
- F5 Networks acquires Volterra for $440 million (Networks Volterra 440m)
- The acquisition will create a new product called Edge 2.0 with advanced security and scalability features for enterprises
- F5 Networks raised sales expectations to 7-8% CAGR for the next two fiscal years and predicts double-digit growth in revenue and non-GAAP EPS
- The company plans to buy back $1 billion in shares over the next two years, including a $500 million accelerated repurchase in FY21
- Shares went up 1.4% after the acquisition was announced
- F5 Networks is shifting to a data-driven approach with the acquisition of Volterra
F5 Networks is a solutions provider and cybersecurity company that protects our daily apps on the internet. Volterra, on the other hand, is a multi-cloud management platform, a start-up that will now become part of the F5 Networks and their digital products. [F5 Networks Volterra 440M]
The CEO of F5, François Locoh-Donou, is thrilled about the acquisition of Volterra. He sees it as an opportunity to create a game-changing product called Edge 2.0 that will offer enterprise customers top-notch security and scalability features.
The newly formed F5+Volterra Edge 2.0 is an enterprise application security platform that addresses the security challenges faced by existing edge solutions that run on content delivery networks. With this innovative solution, businesses can have peace of mind knowing that their internet operations are secure and protected.
“Being able to have a platform stack, networking, and application security together, and then have it commonly managed made my life as an architect… much easier because operational lifecycle is one of the biggest challenges edge computing presents, especially as you scale into thousands of locations,” said James Feger, one of the VPs at F5 Networks.
“When we started researching and understanding what Volterra had, a lot of the challenges that I had in my past life were solved,” he added.
F5 Networks has raised its sales expectations for the next two fiscal years to 7-8% CAGR, up from 6-7% previously. The company predicts double-digit growth in both revenue and non-GAAP EPS over the long term and plans to repurchase $1 billion in shares over the next two years, including a $500 million accelerated repurchase in FY21.
An analyst from Needham rated F5 Networks a Buy with a target price of $235, indicating the potential for growth and investment opportunities in the technology sector. To show how well the stock performs, their shares went up 1.4% – the daily closing was registered at $207.25 on the 25th of January, as soon as the company made the announcement of acquiring Volterra for $440M. [F5 Networks Volterra 440M]
F5 Networks on Shift to Data-Driven Approach with Volterra
“We think the shift to software and subscription has been understating growth and the shift to application-driven growth from data center spending-driven sluggishness is a major positive…
We think FFIV will re-rate higher by multiple turns as growth accelerates and margins expand.” [F5 Networks Volterra 440M]
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