F5 has been on a digital transformation journey that has changed its product portfolio, revenue mix and focus from hardware to software and services. The company's customer experience had to evolve with the transformation.
Speaking on F5's third quarter earnings conference call, CEO Francois Locoh-Donou noted that demand is stabilizing, and its transformation is paying off. Locoh-Donou said:
"Over the last several years, we have invested both organically and inorganically to build a portfolio of SaaS and managed services called F5 Distributed Cloud Services. Since launching distributed cloud in February of '22, we have been expanding our offerings and building momentum for multiple security use cases."
Today, F5 has a bevy of product lines including F5 BIG-IP, F5 NGINX and F5 Distributed Cloud Services that have expanded beyond hardware to optimizing and securing applications and APIs. For the fiscal third quarter, F5 reported revenue of $703 million, up 4% from a year ago. Net income in the third quarter was $89 million, or $1.48 a share. Non-GAAP earnings were $3.21 a share.
For the fourth fiscal quarter, F5 expects to deliver revenue in the range of $690 million to $710 million, with non-GAAP earnings of $3.15 to $3.27 a share.
Indeed, F5's results highlight a company that has become more diversified. In an interview on DisrupTV Episode 331, Mika Yamamoto, Executive Vice President and Chief Customer Engagement and Marketing Officer at F5, and Kara Sprague, Executive Vice President and Chief Product Officer at F5, outlined how customer experience at F5 had to evolve as the company transformed.
Here's a look at the key lessons from F5's CX transformation.
Connect the data dots across silos. Yamamoto said for F5 to connect its digital and customer experience it had to connect its data on the back end. "As I dove in, I realized on our website there was this contact me form and people would fill out their information it would go into the ether," she said. "We needed to connect our data on the back end realize that if customers were actually trying to engage with us, we had to take that data and hand it to somebody to do something with it."
F5 created a data office and took more than 70 databases and starting cleaning information. "When we put all the information, we realized we had five Microsofts. Turns out there's only one," she said.
Digital transformation requires data at the foundation and automating as many processes as possible. "If our processes aren't clean, if our data's isn't clean then we're not listening to the voice of the customer and taking out friction points across the company," said Yamamoto.
Focus on application capital. "What we're pushing at F5 is that we are now in the era of application capital. Applications are the drivers of value from not just the companies that are application-centric but for all companies and all geographies all Industries," said Sprague.
F5's business used to revolve around perpetual hardware licenses. Today F5 is more oriented around software as a service and managed services. It's a land and expand model with a customer success function that's engaged. "I'm working more on the product side and making sure our portfolio can do what we want it to do which is secure, deliver and optimize any app any API anywhere," said Sprague.
"An important strength of the F5 model is that we now deploy in hardware, in software and software-as-a-service. And we're seeing that customers really value the flexibility that they have in the F5 model," said Locoh-Donou.
How does application capital apply to CX?
"If you think about where we were before we could rely on a discrete product that was deployable. It was a tangible asset. It was hardware. Then we could have software. There were human beings and digital to both sell, implement and support," explained Yamamoto. "Today, it's an expectation of customers that they can engage with us digitally and so the website becomes really important as a place where people can gather information, get access to online self-serve support through articles or chat bots."
Listen to your customers--and the data they provide. Yamamoto said F5 is also capturing the voice of the customer to get insights for the product and support teams. There are the obvious listening channels such as social channels. "You've got this complexity of engagement with the customer," said Yamamoto. "We're monitoring web traffic and who's engaging with us, and we want to make sure we connect the dots when we're engaging."
And then there's listening to what customers are doing.
"A lot of it is taking what we get to learn about our customer and creating some accountability," said Yamamoto, adding that signals from telemetry provide feedback on what features are being used in products. "We actually listen to those signals for a customer to tell us through their actions either positively or negatively. We've got to be able to connect those dots to be able to be proactive and anticipate what our customers need," said Yamamoto.
