F5, Inc. (NASDAQ:FFIV) Q3 2023 Earnings Call Transcript

Francois Locoh-Donou: Yes. Can you just repeat the first part — the beginning of the question?

Sebastien Naji: Yeah. Just maybe could you talk a little bit about how competition has changed as you entered some of these new markets around API security, multi-cloud networking, et cetera?

Francois Locoh-Donou: Yeah. Thank you. So like — so in API security, it’s a nascent market. There are a few start-ups that are in the mix, but what — a couple of things about API security. One is it is a big data problem because you have a lot of API — companies are dealing with a lot of API calls, and detecting threat patterns requires really being able to find a needle in a haystack sometimes with sophisticated attackers. And so to really win in API security, you really have to have AI and ML capabilities as well as the capacity to mitigate these attacks. And where F5 is differentiated is in our ability both to discover APIs and all the API patterns and then to protect against API attacks and mitigate potential attacks.

And we’re seeing that players that don’t have the capabilities to do both don’t have the same kind of competitive position. So that’s where the landscape is in API security. And we’re progressing quickly as well in the market now with distributed cloud. In the multi-cloud networking space, it’s again an emerging market, but we think it’s going to grow rapidly because we’re seeing most of our customers are now using multiple clouds. In our latest state of application security — state of applications strategy report, we found that close to 90% of our customers are now using multiple clouds. And increasingly, they need to connect applications or portion of applications across these clouds. And what we’re seeing in the competitive landscape there is there are a couple of players that have capabilities to do that really at Layer 3, at the networking layers, maybe Layer 3, Layer 4.

But we are seeing increasingly enterprise need not just Layer 3 to Layer 4 networking, but also Layer 7 security to really connect these applications securely and one has to go with the other. And essentially, F5 is now with all of the integrations we’ve made on our Distributed Cloud, taking from our organic innovation and thinking from our acquisitions, from Shape and Treadstack and Volterra and some capabilities from BIG-IP, we’re essentially the only player today that can secure application and APIs across cloud, across any environment and connect these applications and APIs across cloud in any environment securely. And we think that, that is where this market is going to play out going forward. So we’re pretty excited about our opportunity in the space.

Sebastien Naji: Great. Thank you. That’s very helpful.

Operator: Thank you. This concludes today’s call. You may now disconnect.