F5 Networks expands into online security services

How well do you understand technology?

If your tech knowledge stops at Computer Science 101, comprehending what F5 Networks does might be a little trying.

Essentially, its chief product is designed to ensure that applications are delivered over data networks quickly and securely, while staying available for use.

So if you’re doing a banking transaction online and the bank is one of F5’s clients, the Seattle company’s job is to ensure that the pages load quickly, that the financial information is secure, and that the transaction gets efficiently processed. Never mind how.

F5’s financial performance for 2014 was strong enough to place it fourth in The Seattle Times’ 24th annual ranking of publicly traded companies based in the Northwest.

The data-networking industry in which F5 operates has gone through many innovations in the past decade. The rise of virtualization, cloud computing and now software-defined networking has kept industry evolving and innovating.

Inside a board room at F5’s headquarters overlooking the picturesque Elliott Bay, one F5 executive reflected on the vast changes that have rocked the data-networking sector. The room’s windowed walls present Elliott Bay on one side and a bare room housing a tall array of blinking servers on the other.

The contrast underscores F5’s place between networks and the applications deployed all over the world.

“The market is changing at an incredible pace,” said Manny Rivelo, executive vice president of strategic affairs at F5 Networks. “Every five years, I look at it and say, ‘I’ve never seen so much innovation and transformation.’ This is the most I’ve ever seen.”

Software-defined networking, an emerging trend, is a technology that, among other things, allows multiple networks to be centrally controlled by software. The technology has major implications for the way networks operate. As Rivelo puts it, “Software-defined networking is really all about taking your data center and making it cloudlike.”

But it’s not necessarily alarming for F5. One analyst said it actually plays to F5’s strengths.

“F5 is an application layer company, and software-defined networking is all about the application, so they’re right in the control plane of that architecture,” said Alex Henderson, managing director of data networking and optical research at Needham & Co. who has covered F5 since its inception.

Recently F5 has entered its security platform into the market to ensure that application delivery, user access and even data centers are secure from attacks.

While new, “it’s a big piece of who we are because an application has to be available, but it also has to be secure,” Rivelo said.

One analyst was initially doubtful of F5’s prospects. “I was very skeptical that they could be successful in security,” said Zeus Kerravala, principal analyst at ZK Research, who has covered F5 for 15 years and was previously a customer and reseller of their products. “It’s a very old market with a lot of legacy players; hard to get into as a new vendor. But they have legitimized themselves as a security vendor today.”

F5’s sales increased by $580 million from 2011 to 2014. The 2014 fiscal year saw the biggest year-to-year percentage increase of any of these years, with its sales increasing by nearly 17 percent to $1.7 billion.

In turn, its profit increased by $70 million from 2011 to 2014, with fiscal 2014 profit measuring at $311 million.

“F5 is a very profitable company considering the size of the organization they are,” Kerravala said.

In 2014, F5 had 3,834 employees, who are presumably happy. In December 2014, F5 ranked fourth in Glassdoor’s annual, unscientific, best-places-to-work list, as part of its Employees’ Choice Awards for large companies.

“It’s been a great company,” Henderson said. “John McAdam has been probably the best CEO of any company in the networking category.”

But 2015 will see another major change for F5. This one, however, is internal: McAdam is stepping down as CEO next month after nearly 15 years at the helm.

Replacing him as CEO is Rivelo, who plans to keep close to the company’s core ideals.

“Our vision is, wherever a customer wants to deploy their applications, we want to help them,” Rivelo said. “And we want that application to be fast, secure and available. That is our mission.”