FFIV · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

F5, INC. · 2026-08-06 · Importance 54 · Surprise 40

Gross margin increased to 82.2% for the quarter ended June 30, 2026 from 81.0% in the prior-year quarter, while nine-month gross margin increased to 81.7% from 81.1%. Quarterly gross profit increased $79.8 million to $711.5 million, and nine-month gross profit increased $195.1 million to $2.043 billion. Product gross margin declined to 79.8% from 77.2%? No—the reported product cost was 20.2% of product revenue versus 22.8% previously, implying product gross margin improved to 79.8% from 77.2%, while service gross margin was 85.1% versus 84.7%. Product cost of revenue increased 5.3% in the quarter and 9.4% year to date, below product-revenue growth because of systems revenue growth and mix.

Key facts

• Cost of net product revenues for the three months ended June 30, 2026: $93,498 (in thousands). source
• Gross profit for the three months ended June 30, 2026: $711,513 (in thousands). source
• Cost of net service revenues for the three months ended June 30, 2026: $60,066 (in thousands). source
• Cost of net product revenues increased $23.8 million, or 9.4%, for the nine months ended June 30, 2026 from the comparable period in the prior year primarily due to systems revenue growth. source
• Cost of net service revenues increased $2.4 million, or 1.4%, for the nine months ended June 30, 2026 from the comparable period in the prior year. source
• Total cost of net revenues increased $4.7 million, or 5.3%, for the three months ended June 30, 2026 from the comparable period in the prior year. source
• Gross margin (as a percentage of net revenues) for the three months ended June 30, 2026: 82.2%. source
• Total cost of net service revenues increased $0.2 million, or 0.4%, for the three months ended June 30, 2026 from the comparable period in the prior year. source