F5 added $60 million to inventory in the three months ended June 30, 2026, nearly three-quarters of its $84.7 million increase in revenue. The infrastructure-software company is growing, but its balance sheet is moving faster than its sales.
The latest 10-Q shows expansion: revenue rose 10.9% to $865.1 million from the comparable three-month period a year earlier, while gross margin widened to 82.2%. Diluted earnings per share rose 11.4% to $3.62, helped in part by a 1.6% reduction in diluted shares.
A separate reading sits below the income statement. Inventory increased 89.6% to $126.9 million, and accounts receivable rose 19.1% to $428.7 million. F5 does not say why those balances grew at different speeds from revenue. The accounting context also shows capital spending up 134.9%, while free-cash-flow margin declined by 0.2 percentage points.
Management attributes the sales increase to customer demand. Its explanation is brief:
"The increase in systems revenue was primarily due to increases in customer demand."
F5, Form 10-Q, filed August 6, 2026
That gives the revenue growth a disclosed operating driver, but it does not explain the inventory build. The company’s cash balance still rose 12.5% year over year to $1.6 billion, so the latest balance sheet is not a simple cash-shortfall story either.
Gross profit grew faster than revenue, up 12.6%, and F5 says product costs rose more slowly because systems revenue grew. Yet operating income increased only 8.6%, with operating margin slipping from 25.2% to 24.7%. Research and development expense rose 20.8% to $164.7 million, giving the company another use for the additional gross profit.
F5 describes the product investment this way:
"The increase in research and development expenses for the three and nine months ended June 30, 2026 was primarily due to an increase in technology costs of $13.5 million and $22.7 million, respectively, and an increase in personnel costs of $10.9 million and $19.5 million, respectively, from the comparable periods in the prior year."
F5, Form 10-Q, filed August 6, 2026
The result is a business producing more sales and a higher gross margin, while spending more to support the business and carrying more inventory and receivables. Cash grew, but the filing’s own cash-flow measures show that investment consumed a larger share of revenue.
F5’s annual history adds some context without resolving the mismatch. Revenue rose from 2.8B in fiscal 2024 to 3.1B in fiscal 2025, and operating margin reached 24.8%, so the latest growth rate is part of a recent acceleration rather than an isolated three-month blip. The current period’s lower operating margin puts the spending question back on the page.
F5’s next quarterly report will provide another balance-sheet snapshot for inventory, receivables, and capital spending. The question the company has not answered is simple: why did inventory nearly double while revenue grew 11%?
Source: F5 Form 10-Q filed August 6, 2026, and the company’s reported fiscal-year results.