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F5 Networks, Inc. (Nasdaq: FFIV) and NGINX today announced a definitive agreement under which F5 will acquire all of the issued and outstanding shares of NGINX, a private company, for a total enterprise value of Approximately $ 670 million, subject to certain adjustments.
"The acquisition of NGINX by F5 strengthens our growth trajectory by accelerating our software and multi-cloud transformation," said François Locoh-Donou, President and Chief Executive Officer of F5. "By combining F5's world-class portfolio of application security solutions and sophisticated application services to improve the performance, availability and management of NGINX's core software application management and API management solutions, credibility and reliability." Unmatched brand recognition in the DevOps community and a massive open source user base, we are bridging the gap between NetOps and DevOps with consistent application services in a company's multi-cloud environment. "
"We believe that every business can take advantage of the agility and flexibility offered by modern technologies without compromising security, manageability and reliability," said Locoh-Donou. "The combined company will allow every customer, from the application developer to the network engineer, to the security specialist, to have the necessary tools to ensure the availability and security of their applications on all platforms, from corporate datacenters to private and public clouds. "
F5 will enhance NGINX's current offerings with F5 security solutions and integrate cloud-based F5 innovations with NGINX's software load balancing technology, accelerating the time-to-market for F5 application services for modern containerized applications. F5 will also leverage its global sales force, channel infrastructure and partner ecosystem to upgrade NGINX's sales opportunities for the company.
"NGINX and F5 share the same mission and vision. We both believe that apps are at the heart of digital transformation. And we both believe that an end-to-end application infrastructure, from code to client, is needed to deliver applications in a multi-cloud environment, "said Gus Robertson, CEO of NGINX, Inc. for continue this journey by adding the power of NGINX's open source innovation to F5's leadership in the field of ADC and within the scope of the enterprise. F5 is gaining in depth with solutions designed for DevOps, while NGINX is gaining momentum with access to tens of thousands of customers and partners. "
NGINX's thriving open source community was one of the most appealing elements of this combination, and F5 recognizes the trust of the user community in NGINX technology. Open source is a central part of F5's multi-cloud strategy and a driving force for F5's next phase of innovation. As such, F5 is committed to continuing innovation and increasing investment in the NGINX open source project to strengthen the NGINX user communities. F5 expects the combination with NGINX to accelerate the integration of its products into leading open source projects and strengthens its strong technology partnerships with open source vendors.
Upon completion of the acquisition, F5 will retain the NGINX brand. Gus Robertson and the founders of NGINX, Igor Sysoev and Maxim Konovalov, will join F5 and continue to lead NGINX. Robertson will join F5's management team and report to François Locoh-Donou. F5 will maintain NGINX's operations in San Francisco, California and around the world.
details of the transaction
The acquisition of NGINX is expected to increase F5's software revenue growth and software revenue mix in fiscal 2019. It secures F5's objectives for non-earnings growth per share. Two-digit GAAP. In the short term, the company expects that organic acquisition and investment in new and emerging solutions will result in a modest dilution of earnings for the 2019 and 2020 fiscal years.
F5 provided the following regarding its outlook for Horizon 1 (Fiscal Year 2019 to 2020) after completion of the NGINX Acquisition:
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Analysts and investors meeting |
Post-NGINX acquisition |
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| Total revenue growth | Low to medium single digit growth | Average single-digit growth | ||
| Software1 Increase in revenues | 30% -35% + growth | 35% -40% + growth | ||
| Software1 in% of the product turnover of the product | Mid 20s% | 25% to 30% | ||
| Gross margin not in accordance with GAAP | ~ 85% | ~ 85% | ||
| Non-GAAP operating margin | 35% -37% | 33% to 35% | ||
| Non-GAAP EPS | Medium to high growth | Low single digit growth |
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1 |
The software includes standalone virtual editions, including subscriptions and utilities, as well as service offerings. | |
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