F5 Beat on Revenue and Still Dropped 20%. One Soft Guide Was All It Took for a Stock Up 80% This Year.

F5 (NASDAQ:FFIV | FFIV Price Prediction) reported fiscal fourth-quarter results after the close on October 27, 2026 and beat on both revenue and earnings. In the next session the stock fell 20%. Shares had gained 80% year to date heading into the report. Even after the drop, F5 is still up 43% for the year at $364.96 in October 29 premarket trading, with no bounce at all.

A day later, Fortinet (NASDAQ:FTNT) beat, raised its outlook, and fell about 26% in premarket trading. Two beats followed by two steep drops tells you how much optimism was already in these prices.

What F5 Reported, and What It Promised

Revenue came in at $917.43 million, up 13%, against a $885.10 million consensus. Non-GAAP EPS of $4.42 exceeded the $4.26 estimate. It was F5’s ninth consecutive quarter of double-digit product revenue growth.

The guidance was the problem. F5 guided first-quarter non-GAAP EPS to $4.25 to $4.37, and consensus is at $4.36, near the top of that range. For fiscal 2027, F5 guided revenue growth of 8% to 9% and EPS of $18.00 to $18.30.

CFO Cooper Werner said on the call that gross margin will reflect “the higher component costs we have discussed previously” and that “the biggest driver on OpEx is investments that we are making to drive future growth.” The board signed off on a new $1.5 billion buyback authorization. Keep in mind that an authorization gives F5 permission to buy back stock and does not require it. Doubling AI security specialist sellers in 2027 is a stated plan that has yet to be delivered.

Read-Through for Both Stocks

F5: The core issue is the hardware refresh cycle (customers replacing aging equipment). Werner said replacement revenue “is going to decline over the back half of the year.” Direct AI bookings were well over $100 million, which is still small next to $3.42 billion in annual revenue.

Fortinet: Revenue rose 20% and billings climbed 29%. The stock still trades at about 69 times earnings, a multiple that only works if results keep getting better every quarter.

Hidden Price Hikes Behind the Growth

Part of the growth at both companies comes from higher prices. Fortinet’s CEO Ken Xie said pricing had about a 10% impact on billings growth, and he called prices “stabilized, but not improved yet.” F5 is stockpiling components ahead of a tight memory market. Reuters described the selloff as software stocks failing to meet lofty investor expectations. F5 did not put a dollar figure on AI security revenue for 2027, and it gave no number for product growth beyond calling it double-digit.

Cloudflare (NYSE:NET) is my second-largest position, so I’ve followed application security stocks for years. In my experience, when the market punishes good results like this, it’s usually reacting to the stock price rather than the business.

Was the F5 Selloff Overdone?

Mostly no. It was a fair repricing. At $364.96, F5 trades at about 20 times its guided fiscal 2027 EPS. That’s a reasonable price for a company growing in the high single digits, and the cheap price was the part that went away. If you believe AI security will offset the fading refresh cycle, this level looks fair. If you think the refresh cycle was carrying the growth, there is less room to rebound.

Here is the test you can check: the fiscal first quarter, which ends December 31, 2026. If F5 reports non-GAAP EPS above $4.37 and keeps the 8% to 9% revenue outlook, the drop went too far. A result below $4.36 would show the market was right to sell on a lukewarm outlook after an 80% year.

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