F5 Inc. (FFIV Quick QuoteFFIV - Free Report) is scheduled to report first-quarter fiscal 2025 earnings after market close on Jan. 28, 2025.

For the first quarter of fiscal 2025, F5 projects non-GAAP earnings per share (EPS) in the range of $3.29-$3.41 (midpoint of $3.35). The Zacks Consensus Estimate for the same is pegged at $3.37, suggesting a year-over-year decline of 1.75%. The figure has remained unchanged for the past 60 days.

FFIV’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average earnings surprise of 8.44%.

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FFIV projects its first-quarter fiscal 2025 non-GAAP revenues in the range of $705-$725 million. The Zacks Consensus Estimate for the same is pegged at $715.8 billion, suggesting year-over-year growth of 3.34%.

Factors to Consider for FFIV

FFIV’s Product segment performance in the fiscal first quarter is likely to have been aided by the recovering demand for its software solutions, offset by IT budget cuts amid lingering macroeconomic uncertainties. The growth in F5’s Software revenues has continued in the past few quarters. This trend is likely to have continued in the to-be-reported quarter. Our estimate for Software revenues is pegged at $172.3 million.

The acceleration in BIG-IP and NGINX subscription software deals is expected to have remained a major growth driver in the to-be-reported quarter. BIG-IP’s data point performance, automation capabilities and the lower cost of ownership are likely to have helped F5 win multiple deals in the fiscal first quarter. Moreover, FFIV is anticipated to have witnessed strong demand for its NGINX subscription as large enterprises continue to adopt the solution for their cloud and Kubernetes workloads.

Additionally, the company’s cost-saving initiatives, which include headcount reduction, eliminating portions of its facilities footprint and travel reduction, are likely to have boosted the bottom line.

However, the persistent macroeconomic uncertainty and its impact on customer spending are expected to have affected FFIV’s fiscal first-quarter revenues, especially the Systems sub-divisions of the Product segment. The Systems subdivision registered a decline of 2.8% in revenues in the fourth quarter of fiscal 2024. This trend is likely to have persisted in the fiscal first quarter as well. Our estimate of $136.5 million for System division revenues indicates year-over-year growth of 0.8%.

In the to-be-reported quarter, the Product division’s revenues are likely to have been hurt by the softened demand for its Systems products, offset by the growth in the Software division. Our estimate of $308.7 million for Product revenues indicates a 0.9% year-over-year increase.

What Our Model Says About FFIV

Our proven model does not conclusively predict an earnings beat for FFIV this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though FFIV currently carries a Zacks Rank #2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, AMETEK (AME Quick QuoteAME - Free Report) , Science Applications (SAIC Quick QuoteSAIC - Free Report) and ServiceNow (NOW Quick QuoteNOW - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

ServiceNow has an Earnings ESP of +1.70% and sports a Zacks Rank #1 at present. The company is slated to report fourth-quarter 2024 results on Jan. 29.  You can see the complete list of today’s Zacks #1 Rank stocks here.

AME has an Earnings ESP of +0.54% and a Zacks Rank #2 at present. The company is slated to report fourth-quarter 2024 results on Feb. 4.

PayPal has an Earnings ESP of +2.41% and a Zacks Rank #3 at present. The company is slated to report fourth-quarter fiscal 2025 results on Feb. 4.