Shares of F5 Networks jump 5% as focus on cloud software and services continues to fuel growth

Seattle-based F5 Networks saw shares rise more than 5% in after-hours trading Monday after its fiscal fourth quarter earnings report beat expectations.

The company posted revenue of $615 million, up 4%, and non-GAAP earnings per share of $2.59. Wall Street expected revenue of $606 million and EPS of $2.37.

F5 Networks continues to benefit from its move into software and services, expanding beyond its traditional networking hardware business. Software revenue was up 36% from the year-ago quarter.

“Going forward, we expect continued robust software growth from a more diversified base of subscription and SaaS revenue, a software subscription renewals flywheel that is starting to turn with momentum, and true-forward revenue opportunities on a significant percentage of our long-term software subscription contracts,” François Locoh-Donou, president and CEO of F5, said in a statement.

Earlier this year Locoh-Donou laid out the company’s strategy to enable “adaptive applications” that can adapt based on the environment. F5 plans to leverage its traditional application delivery technologies along with its $1 billion acquisition of Shape Security and $670 million acquisition of web server NGINX to position itself as a key player amid a larger trend of automation and artificial intelligence driving advances in software applications and computer networks.

F5 expects to report revenue between $595-to-$615 million in the current quarter, with non-GAAP EPS between $2.26 and $2.38. Both are above Wall Street’s estimates.

Shares of F5 spiked after March, rising to around $155/share in July, before dropping slightly over the last few months.

Locoh-Donou told employees that F5 won’t make layoffs during its fiscal year 2020, which ended in September.