Network traffic management and security firm F5 Networks Inc. has the wind in its sails today, with its stock up more than 5% after reporting third-quarter financial results that came in above expectations.

The company reported a profit before certain costs such as stock compensation of $2.76 per share on revenue of $652 million, up 12% from the same period one year ago. That was better than expected, with Wall Street analysts modeling earnings of just $2.45 per share on lower revenue of $623 million.

It was also better than F5 Networks’ own forecast issued three months ago that called for revenue of between $620 million and $650 million.

F5 Networks is a supplier of network security and traffic management tools for large enterprises. In recent times the company has made an aggressive push into software and services, moving beyond its traditional business model that was based on hardware sales. That push has been driven by a wave of acquisitions of companies such as Volterra Inc., which it snapped up for a reported $500 million in January.

F5 President and Chief Executive François Locoh-Donou indicated that strategy is working. He cited “robust software growth” as well as resilient demand for hardware systems as the driving force behind the company’s strong revenue increase.

“Customers’ traditional applications are generating more revenue and more engagement than ever before,” the CEO said. “At the same time, customers also are accelerating adoption of modern application architectures, like Kubernetes, for new applications. With our expanded application security and delivery portfolio, we are uniquely positioned to solve our customers’ most significant modern and traditional application challenges.”

The strong quarter may help to ease some of the pressure F5 has been feeling. Last November, the well-known activist investor firm Elliott Management Corp. revealed it had taken a sizable stake in F5 in order to push for changes that would ultimately boost the company’s profitability. Elliott Management famously pushed and succeeded in getting EMC Corp. to sell itself to Dell Technologies Inc. for $67 billion back in 2016.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE that Elliott can’t really have much to moan about in F5’s recent performance.

“Network demands are growing across the world and F5 is riding that demand wave,” Mueller said. “After spending close to $1.3 billion on restructuring its business earlier in the full year, F5 broke the $1 billion barrier in services revenue. Now all eyes on if it can extend this growth in the next quarter.”

F5 expressed confidence that it will do just that. For the fourth quarter, executives have called for earnings of $2.68 to $2.80 per share on revenue of between $660 million to $680 million. Wall Street analysts had targeted earnings of $2.71 per share on revenue of $662 million for the fourth quarter.

Photo: F5 Networks