F5 warns breach that alarmed governments will weigh on sales, shares slide

(Reuters) -Cybersecurity firm F5 forecast annual revenue below Wall Street estimates on Monday, warning that a recent systems breach that triggered alarm over potential risks to U.S. and UK government systems would hurt demand for its services. Shares of the company, which serves most of the Fortune 500 firms in some capacity, were down 5.8% in after-hours trading. F5 disclosed earlier this month that hackers had "long-term, persistent access" to certain company systems, including the source code for one of its key cybersecurity services. Reuters later reported that two people briefed on the investigation attributed the breach to state-backed hackers from China. U.S. officials have said federal networks were among those targeted in the hack's aftermath and have urged immediate action. "F5 anticipates some near-term disruption to sales cycles as customers focus on assessing and remediating their environments following the recent security incident," it said on Monday. The company has not seen any impact to demand yet, executives said on a post-earnings call. The incident primarily affected BIG-IP customers in two ways. Some had to rapidly upgrade to latest releases following the disclosure of the incident, CEO Francois Locoh-Donou said on the call. The other was a small subset of customers that faced limited data exfiltration and were notified with details. Initial feedback indicated the data was not sensitive, Locoh-Donou said. F5 forecast full-year revenue growth of 0% to 4%, with any demand impacts expected to be more pronounced in the first half, before normalizing in the second half of fiscal year 2026. That was below the average analyst estimate of a 4.8% increase, according to data compiled by LSEG. It forecast first-quarter revenue between $730 million and $780 million, including potential disruption from the U.S. government shutdown. That was also below the estimate of $791 million. (Reporting by Nithyashree R B in Bengaluru and Juby Babu in Mexico City; Editing by Anil D'Silva, Maju Samuel and Shilpi Majumdar)

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