Goldman Sachs’ Top Growth Investors: 34 Stocks With The Highest Investment For Growth

31. F5, Inc. (NASDAQ:FFIV)

Growth Investment Ratio: 73%

Number of Hedge Fund Holders: 17

F5, Inc. (NASDAQ:FFIV) is one of the few software as a service (SaaS) companies that enables customers to secure their virtual software workloads. This is important in today’s cloud computing-driven era where businesses are increasingly relying on third-party virtual products and services as opposed to setting up costly in-house systems. Cloud computing is particularly important in today’s AI-driven technology industry where a few mega players like Microsoft and Amazon offer a plethora of AI-based cloud services to users. This creates a new market for F5, Inc. (NASDAQ:FFIV)’s software and makes it unsurprising that the stock is up by 40% year-to-date. The momentum surrounding the firm was also evident in its fourth fiscal quarter results that sent the stock soaring by 10%. During the quarter, F5, Inc. (NASDAQ:FFIV)’s $583 million in recurring revenue accounted for 78% of its $747 million in overall revenue. It also guided high-end revenue growth of 5% and an operating margin of 35% for fiscal year 2025, leading to fresh investor optimism but also creating concerns about whether F5, Inc. (NASDAQ:FFIV) could sustain recent deal momentum.

During the Q4 2024 earnings call, F5, Inc. (NASDAQ:FFIV)’s management commented on the variability in its deals and licensing revenue during a fiscal year. Here is what they said:

“So we provided some context on the overall revenue growth seasonality for the year where we said it would be kind of low-single digit growth in the first half of the year in mid-single digits second half. And really, the leading contributor to our overall growth in software as you kind of get an idea that the software growth will also probably be stronger in the second half. And again, that’s tied to that larger renewal base that we have coming up in the second half of the year. And so we’ll see how that plays out over the course of the year. But a lot of these opportunities, as we said, they can be pretty material in size. So in any given quarter, there’s going to be some variability up or down in the growth rate.

And so we wouldn’t prescribe too much emphasis on an individual quarter’s growth outlook, but probably the upper-single digit growth, we feel really good about for software. And again, as Francois noted earlier, we have pretty good line of sight to about two-thirds of the footprint of where that software is going to be coming from because its business we’ve already attracted. So that gives us a lot of confidence in the outlook for the year.”