Shares in F5 Inc. dropped in late trading today after the application security firm announced layoffs and reported lower-than-expected guidance.

The multicloud security and application delivery firm did, however, top estimates in its latest quarterly earnings report.

For its fiscal second quarter, F5 reported a profit before costs such as stock compensation of $154 million, or $2.53 per share, up from $131 million, or $2.13 per share, a year ago. Revenue came in at $703 million, up from $634 million a year prior. Analysts were expecting an adjusted profit of $2.42 a share and revenue of $698.85 million.

By sector, F5 saw its global services revenue grow 8% year-over-year, while product revenue grew 14%. The company also saw figures “reflecting 43% systems revenue growth and software revenue that was down 13% from the year-ago period.”

Looking forward — and the reason why its share price is down — F5 predicted fiscal third quarter adjusted earnings of $2.78 to $2.90 a share on revenue of $690 million to $710 million. Analysts had expected $3.05 and $747 million.

“We delivered 11% revenue growth in our second quarter as a result of stronger than expected systems shipments and strong global services performance,” François Locoh-Donou, F5’s president and chief executive officer, said in the company’s earnings release. “While customer spending remains pressured by macroeconomic uncertainty near-term, we are differentiated in our ability to help customers tackle the significant challenges ahead, including simplifying their hybrid and multicloud application environments.”

Locoh-Donou added that, given the macro uncertainty lower customer spending, the company now expects low- to mid- single-digit revenue growth in fiscal 2023, with adjusted operating margins of about 30% and adjusted earnings growth of 7% to 11%.

Alongside its earning report, F5 also announced that it’s cutting 9% of its staff. Reuters reported that the company will purge 623 employees and also cut back spending on office space and executive travel.

F5 stock was down nearly 5% in late trading after the company dropped its earning report. The earnings results come after F5 announced a new multicloud networking platform for distributed app delivery in March.

Available through F5 Distributed Cloud Services, the capabilities enable connectivity and security at both the network and the application layers. They make it possible for companies to connect applications hosted at different locations securely, even when running in various computing environments.

The services work by providing enterprises with an integrated services stack that connects applications at both the network and the workload level, F5 said. Companies can manage their distributed applications through a single console, with full networking and application security capabilities and faster provisioning.

Photo: Alon Coen/Wikimedia Commons