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Security Services, including advanced WAF and bot mitigation are leading the vast majority of our customer conversations and public cloud continues to be our strongest software growth area. I will speak to our software growth drivers in more detail later in my remarks.

Systems revenue declined in line with the market, down 5% in the quarter. As expected, with customers adopting a cloud-first mentality, hardware investment and use cases are being carefully evaluated, and we are seeing some elongation of deal timing as a result. That said, we continue to see systems growth opportunities in certain segments of the market, such as high performance, security use case and in emerging markets.

Our services business delivered 4% growth in the quarter and continues to produce robust gross margins, while maintaining world-class customer satisfaction scores. Our services capabilities continued to differentiate F5, as customers application environments become increasingly sophisticated and they recognize the need for reliable and responsive support from their most critical solution providers. We are achieving consistently strong 90% plus attach rates. In fact, the attach rate for the Americas increased 300 basis points in the quarter. As we discussed at our Analyst and Investor Day in March 2018, over time we do expect our services growth rates to slow, as we transition to a higher percentage of subscription and other service offerings.

In summary, we're very pleased with the progress we are seeing in our software transition. Progress that will be augmented as we begin to see contribution from our recently launched as-a-service platform, F5 Cloud Services and as we complete the acquisition of NGINX. I'll speak to both topics in greater detail, after Frank reviews our Q2 results and our outlook for the third quarter. Frank?

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Thank you, Francois and good afternoon, everyone. As Francois noted, we delivered solid revenue and strong EPS growth in the quarter. Second quarter revenue of $545 million was up approximately 2% year-over-year and within our guided range of $543 million to $553 million. GAAP EPS was $1.93 per share. Non-GAAP EPS of $2.57 per share was above our guidance of $2.53 to $2.56.

Q2 product revenue of $238 million was flat year-over-year and accounted for approximately 44% of total revenue. As Francois mentioned, software grew 30% year-over-year and represented approximately 19% of products revenue, up 80 basis points from Q1 as a percent of product revenue. Systems revenue of $192 million made up approximately 81% of product revenue and was down 5% year-over-year and roughly flat sequentially. Services revenue of $307 million, grew 4% year-over-year and represented approximately 56% of total revenue.

On a regional basis in Q2, Americas revenue grew 4% year-over-year and represented 56% of total revenue. EMEA was flat year-over-year and accounted for 25% of overall revenue. APAC revenue grew 1% year-over-year and accounted for 19% of total revenue.

Looking at our bookings by vertical. Enterprise customers represented 65% of product bookings. Service providers accounted for 20%. Our government business in the quarter reflected some modest impact from the government shutdown, representing 16% of product bookings, including 6% from US federal.

In Q2, we had three greater than 10% distributors; Ingram Micro, which accounted for 20% of total revenue, and Arrow and Tech Data, each of which accounted for 10%.

Let's now turn to operating results. GAAP gross margin in Q2 was 83.8%. Non-GAAP gross margin was 85% in line with our expectations. GAAP operating expenses were $314 million. Non-GAAP operating expenses were $273 million. Our GAAP operating margin in Q2 was 26.2% and non-GAAP operating margin was 34.9%, in line with our expectations. Our GAAP effective tax rate for the quarter was 22.7%. Our non-GAAP effective tax rate was 21.8%.

Turning to the balance sheet. In Q2, we generated $194 million in cash flow from operations, which contributed to cash and investments totaling over $1.6 billion at quarter end. DSO at the end of the quarter was 53 days. Capital expenditures for the quarter were $29 million, up sequentially as we continue to build out our new facility in downtown Seattle. Inventory at the end of the quarter was $33.5 million. Deferred revenue increased 15% year-over-year to $1.16 billion, approximately half of the increase over the prior year quarter relates to the adoption of 606.

We ended the quarter with approximately 4,795 employees, up 215 people from Q1 as we continued to hire aggressively as planned in our growth areas, including sales, and research and development. In Q2, we repurchased approximately 617,000 shares of our common stock, an average price of $162.06 per share for a total of $100 million.

Now let me share our guidance for fiscal Q3 of '19. Unless otherwise stated, please note that all of my guidance comments reference non-GAAP operating metrics. Also with NGINX not closed, our guidance today excludes any impact to revenue or costs from the transaction. Overall, we are pleased with the progress we are making with our software transition and remain confident in our position in the market and in the growth opportunities for the business.

We also believe, we are well aligned with the long-term trend toward multi-cloud environment and increasing demand for application security. In addition, we are seeing increasing traction with subscription and ELA offerings as they provide customers consumption flexibility and better agility for their ever-evolving software architectures.

With this in mind, we are targeting Q3 of '19 revenue in the range of $550 million to $560 million. We expect gross margins of approximately 85% to 85.5%. We estimate operating expenses of $275 million to $287 million. We anticipate our effective tax rate for the year will remain in the 21% to 22% range, we previously provided for the full fiscal year, with some fluctuation quarter-to-quarter.

Our Q3 earnings target is $2.54 to $2.57 per share. In the quarter, we expect share-based compensation expense of approximately $40 million and $1.7 million in amortization of purchased intangible assets. Capital expenditures are expected in the range of $110 million to $130 million for the year. This range includes approximately $70 million of cost related to our previously announced corporate headquarter move to F5 Tower in downtown Seattle. The initial phase of the move occurred over the last several weeks and we expect to complete the move this summer.

I'll reiterate that we continue to expect NGINX transaction to close in the second calendar quarter, but we have not included any revenue or cost impact from the deal in our guidance. We expect any revenue impact in the quarter will be immaterial and expect to provide contribution details when we report our Q3 quarter results.

With that, I will turn the call back over to Francois. Francois?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Thank you, Frank. I'll spend just a few minutes on the trends we're seeing in the business and highlighting some customer wins from the quarter before we move to Q&A. Focusing first on our 30% software growth. We are accelerating software growth across three vectors. First, we are capitalizing on significant customer demand for security capabilities packaged software. This is particularly true as customers deploy multi-cloud applications, including applications in the public cloud, where the demand for security is even more critical. As a result, security use cases continue to drive our software growth rates and account for a higher share of our overall product business.

In particular, our Anti-Bot and machine-generated traffic monitoring and blocking capabilities is appealing to customers, who continue to face an increasing array of threats. We are also seeing new security use cases emerge, including privileged user access, credential stuffing and zero trust. As an example, during the quarter, we deployed a combination of Access Policy Manager in our advanced WAF at an international energy company. They selected F5 to secure their application access. In other words, applications on their network are secured with an F5 application security policy. For example, F5 provides highly secure access to systems on their oil rigs and oil plants for third parties doing systems maintenance.

The second vector accelerating software growth comes from our subscription and ELA consumption models, which were introduced last year and provide customers flexibility, as they manage to transition to multi-cloud environment. Increasingly, customers are using ELAs to leverage our technology in public clouds. During the quarter, we closed three times the number of opportunities and near that in value compared to the first quarter. Now the overall dollars are still relatively small, ELAs are an important tool for our salesforce and we have a robust third quarter ELA pipeline.

As an example, during Q2, we closed an ELA with an online gaming company. The customer needed the flexibility to deploy advanced WAF and IPI capabilities to protect against layer 7 DDoS, bots and bad actors. Using an ELA consumption model, we replaced other security vendors and gave the customer the flexibility to deploy the needed multi-cloud security application services when and where they want.

Second ELA example came from an airline undergoing digital transformation and pivoting to a multi-cloud approach. This customer preferred an ELA to ensure flexibility as their needs scale. They selected our high performance BIG-IP Virtual Editions as well as BIG-IQ. The same customer also upgraded from the public cloud-native web application firewall to F5's advanced web application firewall. They are using F5 to secure their consumer loyalty application with both bot mitigation and credential stuffing protection. This deployment offers an interesting example of how F5 can work across often siloed teams within an organization as we work successfully with both the network and the security teams.

The third vector for accelerating software growth is our advanced capabilities in automation, orchestration and central management, which resonate with customers facing an increasingly complex combination of environments and sprawling deployments. In fact our ability to unify and simplify deployments is unlocking new spend. For instance, during the quarter, we had a large US payment processor purchase BIG-IQ to manage their global infrastructure deployment of BIG-IP. The customer had come to F5 last year looking for a solution to help them automate their infrastructure and operate at the speed of business. They are now deploying BIG-IQ to manage their global estate of hundreds of BIG-IP instances.

As we move toward the back half of 2019, we believe we will continue to drive software growth with a number of catalysts. First, in Q2 we launched our F5-as-a-service platform and the first SaaS offering running on top of it. F5 Cloud Services is designed to support modern deployment scenarios. These include cloud-native applications and container-based environments with high availability, self-service, enterprise grade SaaS solutions that are easily provisioned and configured within minutes. Launched with a basic DNS service set, we have a number of customers already in free 60-day trials. Later this year, we'll deliver even more F5 enterprise grade SaaS capabilities, including security services designed to protect applications from existing and emerging threats.

Another catalyst for continued software growth is a new hybrid ELA consumption model we're launching in response to additional use cases. Customers have asked for an ELA that protects their entitlements when they are migrating from hardware to a software and cloud environment. With this new hybrid ELA, we are providing customers even more flexibility and license portability as they contemplate digital transformation and what it means for their businesses. We have already developed pipeline and we are excited about what this new model means for future multi-cloud application services.

Finally, we are increasingly confident in the opportunities enabled by our acquisition of NGINX. We continue to expect the acquisition to close in the second calendar quarter. In the weeks since our initial announcements, internal reaction from both F5 and NGINX has been very positive and initial integration planning is going well. Customers across all theaters are very excited about what they see as the strong potential of the combination and the ability to bridge the divide between NetOps and DevOps. Together, F5 and NGINX will be able to offer solutions that provide the requisite control to satisfy the CIO, while giving application developers the freedom to innovate.

We are excited by the complementarity between F5's cloud-native apps services platform and NGINX controllers. As a result, post close, we expect to converge both on the one product family using the NGINX brand and maintaining the momentum in the NGINX's current offering. This converged offering will address a larger total addressable market and will span a broader set of use cases across DevOps and super NetOps customer personas.

Once closed, we expect our F5 cloud-native team to move under NGINX CEO, Gus Robertson, providing a significant increase to the NGINX engineering team and additional resources to accelerate new product capabilities and use cases. The traction we're getting with our software solutions is perhaps the most demonstrable evidence that F5 is on a path to become the leader in multi-cloud application services.

I mentioned in my opening remarks that customers are increasingly taking a cloud-first approach. We are as well. As our customers contemplate and begin to work across multiple environments, F5's value proposition actually increases. Organizations of all sizes are quickly learning that operating in multiple environments make things more complicated and F5's solutions simplify that complexity with consistent, environment-agnostic policies, automation, orchestration and central management.

I'll speak briefly to our service provider business before we go to Q&A. We continue to drive our network function virtualization or NFV solutions in new areas of service providers business. We are securing DNS and CGNAT wins in growth portions of providers networks and we see wirelined and MSO deals ramping. Recent wins with wireline carriers include DDoS, DNS and firewall services. In addition, we're also seeing opportunities emerged for managed web application firewalls.

We continue to have conversations with mobile operators about 5G and while we continue to see the majority of near-term 5G spend focused on the spectrum and radio portions of the network, we are confident that our spending moves toward the core, there will be increased opportunities for F5.

During Q2, we successfully expanded our use case with a North American communications provider to include security. We are now providing WAF to front end all of their consumer facing websites. The same communications provider was also experiencing numerous outages and network challenges in its field technician network, which was leading to unsatisfactory customer experiences. F5 proposed an Access Policy Manager solution with manageability through BIG-IQ. This allowed the provider to achieve greater scale and reliability, while supporting dual stack connections, allowing for better access and stability for internal users and delivering greater efficiency for remote field technicians.

We're also having discussions with this customer, as they contemplate the move from 4G to 5G and expect that as they transition, our sales motion with them will become more software focused. As is true with another service provider customer as well, where during the quarter, we secured a large systems win to help them handle the increased traffic and deployed NFV functionality with BIG-IP Virtual Editions.

In closing, my thanks to the entire F5 team, our partners, our customers and our shareholders. We are on this journey together. Our customers' digital transformation requires a continuous transformation of our business, and we are embracing that challenge.

With that, operator, we will now open the call to Q&A.

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from line of Paul Silverstein from Cowen. Please go ahead. Your line is open.

Paul Silverstein -- Cowen & Company -- Analyst

Thanks. I appreciate it. First one, Frank. First from a regional perspective, was there anything unique in the quarter in the new region? You had been posting strong growth over the better part of the past six quarters and there was a significant downtick from your previous growth rate in the quarter. Similarly, there was an uptick in the Americas. Can you discuss what's going on regionally and then I've got a follow up?

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Hi, Paul. Yes, I think not North America, I think we had a solid quarter, specifically internationally and I'll go to Europe where for the last three quarters, we've got growth -- we've got year-on-year growth rate that were in the 7% to 8% range and this quarter Europe was flat year-on-year. That was concentrated specifically in the UK where I think we saw this uncertainty around Brexit push out some deals. And I think we also had some softness in Germany specifically the sort of Germany-Austria region. And so as a result, we had less than perhaps we would have hoped in Europe.

Overall if you recall Paul, about 18 months ago we felt we were having sort of execution challenges in Europe. We made a lot of progress on those. We made some changes both in leadership and in the way that we had put our formation in Europe. We feel we've made a lot of progress there with these challenges, but these progress are still in the -- with a backdrop of continued macro uncertainty in Europe. And so, I think that that's what we're dealing with, but generally we're happy with the way our team is organized and performing over there. I think this quarter was specific to sort of UK and a little bit in Germany.

And then in Asia-Pacific, we also had less growth than we've had in the last couple of quarters, but we think that's a little bit of lumpiness there. Generally the trajectory for our business in Asia Pacific is north and we continue to expect good growth in that region. There isn't anything macro that we worry about there at the moment.

Paul Silverstein -- Cowen & Company -- Analyst

Hey, Francois, on the (inaudible) comment, which is playing devil's advocate, why now? Brexit has been hanging out there for a while. One would think that last quarter, the quarter before, noted from this quarter that would have presented a challenge to you and other suppliers, i.e. the uncertainty and then I also want to ask you, last quarter you made a comment about lack of manpower in the federal government to actually process the paperwork, which was adversely impacting you from a regular standpoint, but there was an otherwise an issue related to the federal government weakness. So I'm wondering if there's been any change with respect to that?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

On Brexit, Paul, you're right that -- I guess there has been some uncertainty around it, but folks have known that the outcome would be that the UK would exit the European Union. In the last few months, the uncertainty around how that would happen and when you've probably followed all the episodes of this, has increased and a number of companies have been trying to make contingency plans for what will happen in the very short term and so. In the last month of the quarter, in the UK in particular, we saw folks push out decisions, because they wanted to wait until they have clarity on what the real outcome would be.

Specifically on the fed, we did -- we had a reasonable quarter in the fed. We could -- it could have been better, if the government shutdown had not taken place. The impact for us, is we didn't lose any business, but there was some business that wasn't processed in the quarter. Even though the shutdowns ended I think early February, there was some business that we had won that wasn't really processed in the quarter. So there is a few deals that could have come in the quarter, that did not come, but overall we felt we had a reasonable quarter in the fed.

Paul Silverstein -- Cowen & Company -- Analyst

All right. I'll pass it on. Thank you.

Operator

Your next question comes from the line of Alex Kurtz from KeyBanc. Please go ahead. Your line is open.

Alex Kurtz -- KeyBanc -- Analyst

Thanks. Thanks for taking the question. Francois, just on your commentary around the service providers, it sound like were becoming more constructive about the opportunity. I know it's been a challenging vertical over the last couple of years, is something changing there from a demand perspective? Should we start thinking about these group of customers maybe growing faster than the overall business for a period of time?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Alex, I would not conclude that for now. I think we're still cautious about the near-term opportunity with service providers. We felt better about a couple of the North America service providers this quarter than we were in Q1. But overall, if I look at the -- our use cases and spend globally with service providers, I still think we're in the middle of this 4G to 5G transition and that there are good opportunities ahead of us sort of several quarters out, once we see the rollout of 5G radios and the capacity upgrades that -- what will happen for us.

In the meantime though, we are getting a lot of traction with service providers in two areas specifically. NFV, where we're seeing -- them use more and more our virtual solution. So they did contribute to our growth in software as well. And also in security. On a number of use cases, including firewalls, but also things like CGNAT and other use cases. So these two areas, service providers are doing well and hopefully, the 5G (inaudible) will come, but as we said that's a few quarters out.

Alex Kurtz -- KeyBanc -- Analyst

And just to clarify, do you think 5G could be a better dollar opportunity for F5 and 4G was, I know, you weren't here for that, but just talking to the team that still the counts. Is there a sense of this could be at a better dollar opportunity?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

We think so because of the sort of size and scale of these deployments, the fact that we're very well positioned to help things like network slicing that are critical in 5G. And then the way they'll have to handle the traffic. What's going to happen at the edge around processing more and more traffic and applications at the edge. But there are a lot of catalysts that give us belief that this could be a meaningful and perhaps more meaningful than 4G impact on F5.

Alex Kurtz -- KeyBanc -- Analyst

Thank you.

Operator

Your next question comes from line of Samik Chatterjee from JPMorgan. Please go ahead. Your line is open.

Samik Chatterjee -- JPMorgan -- Analyst

Hi. Thank you. Francois, I just wanted to clarify I think in your comments about the system revenue being down 5%, you mentioned you were seeing some elongation of deal timing. Is it primarily you're seeing kind of them evaluating other solutions or potentially evaluating kind of a move to the cloud. Or is it more just kind of a pause in spending that you're seeing. If you could just clarify what you're seeing there?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Hi, Samik. It's not a -- I wouldn't characterize it as a pause in spending. The phenomenon there is that as customers adopt a stance that is more software-first or cloud-first, they do scrutinize their spend on hardware more and as a result the approval cycles for hardware are getting elongated and I think that's what we're seeing really is the dynamics in large enterprise organizations for those that have made a decision to go software first or to a cloud first from the time we have a project that a team has approved and want to go forward to the time that transaction can be processed. There's a lot more scrutiny on it. That's what I was referring to.

Samik Chatterjee -- JPMorgan -- Analyst

Okay. Got it. And just a quick second one. You referred to the launch of the cloud-native product as well as the service offering in the quarter. When you're going and kind of looking at these kind of asking your customers to look at these products, are they kind of opting to wait for the NGINX controller to be available that you mentioned you will kind of put them together and have a converged offering or I mean what are you seeing in terms of customer behavior and is the NGINX controller being kind of a deciding factor and they would rather wait for it or kind of close the deal even before it?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Okay. So Samik, I think there was an announcement in the quarter about F5 Cloud Services, which is I think a pretty important milestone because it's the first software-as-a-service offering of F5 and I can talk later about what I see as catalyst for F5 Cloud Services. But I think your question is specifically between NGINX and the cloud-native application services platform that F5 has been developing.

So on that, it's actually fairly straightforward, the NGINX brings to the table elements of the portfolio that are not in the virtual ADC space. So they're completely complementary to what we've been doing and it's really their API Gateway technology what they've been doing in web server and app server space and those are completely new adjacent times for F5.

In the virtual ADC space specifically, NGINX has a controller that is in the market and we -- our cloud-native app services platform, was really based on a controller that we have built organically, but hadn't been launched in the market yet. And so, we've been in the initial stages of integration planning and where we're headed with that is, there is significant complementarity between the two in the sense that the NGINX controller appeals to a, I would say a fairly sophisticated DevOps audience, whereas our controller was more targeted -- it was a mainstream enterprise buyers that really wanted an easy way to control their data planes.

And so what we're doing is, we're going to start with the NGINX controller because it is in the market, it is in use with customers and we of course want to maintain and accelerate that momentum. But we are going to rapidly port the capabilities of our controller to the NGINX controller, so that the combined offering can target a larger addressable market from the very sophisticated DevOps users all the way to the less sophisticated that want an easy capability with all the analytics that come with it. So we're pretty excited about that potential acceleration of the combined offering.

Samik Chatterjee -- JPMorgan -- Analyst

Okay. That is very clear. Thanks, Francois. Thank you.

Operator

Your next question comes from line of Sami Badri from Credit Suisse. Please go ahead. Your line is open.

Sami Badri -- Credit Suisse -- Analyst

Great. Thank you. So the software revenue and then the watermark that you're starting to reach every single quarter is very commendable. But I think the one thing, I just want to try to understand is on margins. It looks like, on a sequential basis, there is a little bit of pressure now the operating margin that you hit this quarter makes sense given your aggressive (inaudible) on specifically non-GAAP gross margins. Can you just walk us through what exactly is happening on the cost side? Just because, you think that a software ramps up dramatically more you see some margin expansion and we just want to get a better idea on what exactly is going on?

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Hi Sami. It's Frank. Let me start with that one. It's actually right in line with our expectations. What we have said was sort of 85% to 85.5%. So we were at the lower end of that range, but it was exactly as we expected to come on board. Over a long period of time as we scaled the software business, the actual inherent margin in there on the gross side, it is higher than the hardware business. And so, as we talked about it in 2018, as we get even further into closer to Horizon 2, you should see some of the impacts of that investment start to make its way, as additional component of our product revenue comes from software and is a better driver for an expansion in that gross margin side. But I just go back to say, but this is exactly what we expected and how we talked about that in guides last quarter.

Sami Badri -- Credit Suisse -- Analyst

Got it. Thank you, and then, the -- I think one thing on NGINX, there's a lot of commentary on bringing in NGINX and integrating it, and going to market more under the NGINX umbrella and unifying the offering. But one other kind of follow-up question to a lot of this narrative, is -- will there be any type of cannibalistic dynamics by doing this with the existing F5 business and just to kind of use a historical or illustrative example, as if everybody was moving physical ADC to virtually ADC, there could be an element of cannibalism, right to the revenue streams. Is there anything like that could potentially emerge by integrating NGINX and going to market with that brand and integrating all F5 services and NGINX together? Could there be potentially any type of cannibalistic dynamics to your revenue stream by doing that?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

I think the short answer to that Sami is, we don't think so. So just to be clear NGINX does not address -- so if one wants to go from their current mode of deployment of using ADC as part of their infrastructure to support multiple applications, but they want to go from a hardware ADC to a virtual ADC, we already cover that today with our Virtual Editions and we do that very well, which is why in part our software has been growing at the rate it has. It's because of what we're doing in Virtual Editions, the introduction of our cloud edition and BIG-IQ platform that provide better centralized management and automation and orchestration, and the flexible consumption that would give people around our enterprise license agreements that allow them to have license portability. All of these things address the use case of how do you go to virtualize ADC deployment, and we're doing very well there.

The NGINX capabilities really are more of an augmentation of that, than a cannibalization of that. And if you look at the use cases they're addressing, it's really DevOps folks who want to build their load balancing or ADC capabilities much closer to the application logic as part of new DevOps environment and that isn't a cannibalization of the things we do today. It's rather a new growth area for new applications that are being built and deployed either on-prem or in the public cloud.

Sami Badri -- Credit Suisse -- Analyst

Got it. Got it. Thank you very much for those answers.

Operator

Your next question comes from the line of Simon Leopold from Raymond James. Please go ahead. Your line is open.

Simon Leopold -- Raymond James -- Analyst

Great. Thanks very much for taking the question. I have two. One is pretty simple. In the quarter you did $100 million share repurchase, but you do have this acquisition. Just want to get a revisit of your plans in terms of share buybacks, given the long standing pattern had been around $150 million a quarter. Now we see a couple of quarters at $100 million. Want to get a better understanding of how to think about it going forward and then I have a follow-up on the verticals?

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Sure, Simon. So as we discussed on March 11th when we talked about the cancelling of our automatic share repurchase program, our viewpoint really hasn't changed. And so we do view our cash balance as a very strategic asset for us. And we're going to use that opportunistically. It may be for additional share repurchases that we're not just going to automatically do, but be opportunistic about. It may be for additional acquisitions or it may be for other activities. So for the time, we've talked about, we're suspending the automatic share repurchase, but we're going to be opportunistic with additional share repurchases in the future.

Simon Leopold -- Raymond James -- Analyst

Thanks. And Francois, in your prepared remarks I had the impression that you were pleasantly surprised about the telco results this quarter. Kind of getting back to a trend we had observed during much of fiscal '18 of just over $100 million versus $76-ish million in the prior quarter. And so I understand that what you said about the outlook, but if we look at the March quarter, if you were pleasantly surprised by the telco improvement, was there an unpleasant surprise offsetting it. What was weaker than you expected in the quarter? And maybe elaborate on what trends would be in that aspect of the business.

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Hey, Simon. So I'll start with the last part of your question. What was weaker than I expected in the quarter was Europe. So I thought we could have done better and I think as I said the dynamic in the last month of the quarter was weaker than we would have thought. And there was a little bit we could have done more in the fed. But again I think we had kind of anticipated that because of the shutdown. As it relates to service providers, I wasn't necessarily pleasantly surprised, I think what we were trying to point to is, in our first quarter service providers were particularly weak and I felt that the interpretation of that was perhaps too strong because the service provider segment is naturally lumpy. And so I think we wanted to point out that we came back to numbers in the service providers space that are more in line with historical mix for F5. But that being said, I am still cautious about the service provider segment for the next few quarters because of the transition dynamics we've talked to.

Simon Leopold -- Raymond James -- Analyst

And what's your expectation for the behavior from Europe over the next few quarters?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

My expectation is, I think we continue to make very good progress on our own internal execution with the changes we've made. So we've grown very confident in Chad Whalen our Global Head of Sales has gone very confident about the leadership team and the formation of the resources that we have in place there. I have a little bit of caution specifically around the UK and Germany based upon what we've seen. But overall, I think with the changes we've made and the hiring we've had in Europe, our expectation would be that we continue to grow in Europe.

Simon Leopold -- Raymond James -- Analyst

Great. Thank you for taking the questions.

Operator

Your next question comes from line of Michael Genovese from MKM Partners. Please go ahead. Your line is open.

Michael Genovese -- MKM Partners -- Analyst

Thanks very much. Francois, hi, I wanted to check in and go back to the presentation when you acquired NGINX and gave the post NGINX Horizon 1 guidance and just check in and see if those guide posts are still going to be applicable after today?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Hi, Mike. Yes, they are.

Michael Genovese -- MKM Partners -- Analyst

So generally speaking, post acquisition we should model in for this year, next year, a little bit faster revenue growth, but a little bit of dilution in EPS. So I just want to make sure that we're factoring in the acquisition correctly?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

That's correct.

Michael Genovese -- MKM Partners -- Analyst

Okay. That's all for me. Thank you.

Operator

Your next question comes from line of Rod Hall from Goldman Sachs. Please go ahead. Your line is open.

Rod Hall -- Goldman Sachs -- Analyst

Yeah, hi guys. Thanks for the question. I guess I had two. I wanted to start off with the OpEx lines particularly R&D. We continue to see R&D creeping up a little bit, especially if we look over a multi-year period and you've just bought NGNIX. So I'm just wondering how much more R&D do you think you need to spend to integrate that and to continue to push products forward. Should we anticipate that the R&D line continues to grow as a percentage of sales for a while or does that stabilize in a few quarters? And then I have a follow-up to that.

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Hi, Rod. I think, you'll see the R&D line pick up a little more over the next few quarters, both because of the NGINX acquisition and additional investments that we want to make to catalyze or capitalize on the opportunities in front of us. Specifically, in the case of NGINX, beyond the organic investment there, we want to port security capabilities into the NGINX platform, fairly quickly. We want to accelerate what they've been doing in the API management space. It's a big market. It's a big opportunity there. They didn't have the resources to fully capitalize on the opportunity first. We're going to accelerate that same on the application server space. So all of these things should pick up.

And then in security, we also are going to continue to make more investments. We've had very strong traction in security in the first half of 2019, both for our on-prem offerings, and increasingly our managed services security offering in the server line and our cloud services in security and software services.

And as you know that the market and security is of course moving more to software and then as-a-services and cloud. And so we've got some exciting offerings and we're going to push ahead with those opportunities. That being said, all of that -- all of those investments have just gone through. They were considered when we gave a revised Horizon 1 guidance of operating profit between 33% and 35% for Horizon 1. So all of that accounted into what you should expect.

Rod Hall -- Goldman Sachs -- Analyst

So are you, just to clarify that Francois, you're saying that it creeps up the next couple of quarters and it stabilizes or does it creep up peak and come back off, just can you give us some idea on trajectory what we ought to be thinking?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

I think it stabilizes. Well, we're not giving specific guidance for next year. But essentially, I think it stabilizes to get into that 33%, 35% range for Horizon 1.

Rod Hall -- Goldman Sachs -- Analyst

Okay. And then I -- my follow-up was with regards to service providers, the telco revenue, I mean, if we -- if our calculations are right, I guess they are. I mean, you're right back to the revenue -- absolute revenue level you were at two quarters ago, and you guys had said last quarter after the big deterioration in that revenue line, you thought it'd take a couple quarters to get back. And we kind of had the impression from you that was pretty concentrated the deterioration of that revenue. So I just wonder, any color you could give on what happened there? Was there a project that you thought would be delayed longer that came back or did -- that one or two carriers that deteriorated in revenue terms had new projects? Just give us any color on why that snapped back so much more quickly than you thought it would?

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Well it was, Rod, it was pretty concentrated. And we've had good projects this quarter. Around a couple of carriers where we had this specific softness. My comments overall are related to the opportunity that we see in service provider. And you know I think the levels where we're at today are not the levels where we would like to be 18 months down the road when we -- the 5G opportunities truly -- were truly mainstream.

Rod Hall -- Goldman Sachs -- Analyst

Okay. Thanks, Francois.

Operator

Your next question comes from line of Catharine Trebnick from Dougherty. Please go ahead. Your line is open.

Catharine Trebnick -- Dougherty -- Analyst

Oh, thanks for taking my question. Back to the service provider. Any -- which regions you think are tracking faster as far as getting ready to implement 5G? And then where do you think you're best positioned, North America, because you have such good relationships with top tier carriers one or and how are you doing in Asia-Pac versus EEMA? Thank you.

Chad Whalen -- Executive Vice President, Worldwide Sales

Hi Catherine, this is Chad Whalen.

Catharine Trebnick -- Dougherty -- Analyst

Hi.

Chad Whalen -- Executive Vice President, Worldwide Sales

I think -- how are you?

Catharine Trebnick -- Dougherty -- Analyst

Good.

Chad Whalen -- Executive Vice President, Worldwide Sales

From a service provider perspective, I think that we've across the different theaters, we're seeing motions kind of isolated to certain countries outside of North America. And I would say that there's been a stronger movement in some of the APAC region as opposed to maybe throughout Europe. And here in North America, there's there's deep interest in what's going on with 5G planning. Both in terms of core capacity for an enhanced mobile broadband, which is kind of the first service that they're launching, but more importantly for us, is the new architectures that include MEC at the edge and we're spending a lot of time and that's a forcing function for what we're doing around our virtual software offerings. So we're seeing it kind of broad base, but I would say from a concentration perspective, North America and Asia-Pac are probably furthest along.

Catharine Trebnick -- Dougherty -- Analyst

And are you seeing any different competitors spring up in this area, especially when it comes to the NFV piece of it, combining GNAT, and DDoS and DTI. Are you seeing any other -- I mean who do you typically see when you're competing at that level? Thanks.

Chad Whalen -- Executive Vice President, Worldwide Sales

Well, you know from in many parts of the globe that the network equipment providers are kind of the key access into the carriers. And so Nokia, Ericsson, Samsung is new and has made a pretty marketable impression in APCJ and we're expecting that to continue in EMEA. In terms of new entrants, on the software side Affirmed Networks has been around for some time. We see them some more, but it's typically the same players that we're seeing and have seen in the 4G space that are transitioning to 5G?

Catharine Trebnick -- Dougherty -- Analyst

All right. Thank you.

Operator

Your next question comes from the line of Ittai Kidron from Oppenheimer. Please go ahead. Your line is open.

Vinod Srinivasaraghavan -- Oppenheimer -- Analyst

Hi. This is Vinod on for Ittai. Thanks for taking the question. I have another NGINX question. I know it's early in the planning and integration projects, but now that you're converging NGINX with cloud-native, how does your go-to-market approach change? Are you going to be adopting their approach?

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Hi, Vinod. So the approach that we have around the NGINX opportunity is, we are going to integrate their sales force, which has been -- I would say for the most part an inside sales motion. We're going to integrate that organization into Chad Whalen, global sales organization and we're going to complement that inside sales motion with the enterprise high touch sales motion that F5 has had in place and excels at. And I think with the combination of these two capabilities, we're going to be able to touch both the low end deals, as well as more and more, the high end, high touch deals because one of the things that we think is going to accelerate as we monetize NGINX at scale is that with the acceleration of their controller capabilities with the new resources that we are putting in, NGINX is going to have access to deals of, I think, increasing size, as well as large -- larger deals in the enterprise space. And so, we really think we're going to need both motions, both motions are going to be in the single organized -- organizational umbrella under Chad Whalen and we've already started to think about the governance and collaboration between these organizations to make that very smooth.

Vinod Srinivasaraghavan -- Oppenheimer -- Analyst

Great. Thanks for the color.

Operator

And that's all the questions we have time for today. Thank you for joining. This concludes today's conference call. You may now disconnect.

Duration: 53 minutes

Call participants:

Suzanne DuLong -- Vice President, Investor Relations

Francois Locoh-Donou -- President, Chief Executive Officer, and Director

Frank Pelzer -- Executive Vice President and Chief Financial Officer

Paul Silverstein -- Cowen & Company -- Analyst

Alex Kurtz -- KeyBanc -- Analyst

Samik Chatterjee -- JPMorgan -- Analyst

Sami Badri -- Credit Suisse -- Analyst

Simon Leopold -- Raymond James -- Analyst

Michael Genovese -- MKM Partners -- Analyst

Rod Hall -- Goldman Sachs -- Analyst

Catharine Trebnick -- Dougherty -- Analyst

Chad Whalen -- Executive Vice President, Worldwide Sales

Vinod Srinivasaraghavan -- Oppenheimer -- Analyst

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