Company Delivers Revenue Growth YoY and Expands Earnings Per Share

A10 Networks, Inc. (NYSE: ATEN), a leading provider of cybersecurity and infrastructure solutions, today announced financial results for its first quarter ended March 31, 2024.

First Quarter 2024 Financial Summary

• Revenue of $60.7 million, in-line with expectations and up 5.2% year-over-year.
• GAAP gross margin of 81.1%; non-GAAP gross margin of 81.9% as a result of continued focus on operational execution of business model goals in spite of near-term volatility in the market.
• GAAP net income of $9.7 million (16.0% of revenue), or $0.13 per diluted share, compared to net income of $4.0 million (6.9% of revenue) or $0.05 per diluted share in the first quarter of 2023.
• Non-GAAP net income of $12.7 million (21.0% of revenue), or $0.17 per diluted share (non-GAAP EPS) compared to non-GAAP net income of $9.9 million (17.2% of revenue) or $0.13 per diluted share in the first quarter of 2023.
• The Company returned $7.5 million to investors, having repurchased 230,500 shares at an average price of $13.19 for a total of $3.0 million and having paid $4.5 million in cash dividends in the quarter.
• The Board of Directors approved a quarterly cash dividend of $0.06 per share, payable June 3, 2024 to stockholders of record at the close of business on May 15, 2024.

A reconciliation between GAAP and non-GAAP information is contained in the financial statements below.

“A10 continued to successfully navigate market volatility, as our diversification enabled us to address near-term Service Provider fluctuations, delivering solid first quarter results in-line with expectations,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “Our service provider customers are committed to improving network throughput and security, and A10’s solutions are designed into long-term initiatives that help them achieve their mission critical goals. When investments are made, we benefit, as we did in this quarter. The economic environment remains somewhat unpredictable and the first quarter represents an encouraging data point.”

“Recent and ongoing investments to better position A10 to target the evolving needs of the enterprise market are beginning to show results,” continued Trivedi. “Deferred revenue grew faster in Q1 than overall revenue, representative of the buying behavior of the enterprise customer base. We believe enterprise revenue will continue to grow throughout the year based on active pipeline and customer engagements. Security solutions continue to be in demand, and security solutions were 61% of A10’s consolidated revenue, in line with our long-term strategic goal. Simultaneously, we have continued to invest in R&D to address the evolving needs of our customers including AI solutions.”

“A10’s focus on diversification, both in terms of customer type and region, continues to provide a durable foundation as we navigate this period of volatility,” concluded Trivedi. “Our business model enables us to maintain solid profitability, even while we increase R&D investments to drive future growth, allowing us to continue to return capital to shareholders.”

Conference Call

Management will host a call at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) today, April 30, 2024, to discuss these results. Interested parties may access the conference call by dialing (833) 470-1428 (toll-free) or (404) 975-4839 and referencing access code: 948155.

A live audio webcast of the conference call will be accessible from the “Investor Relations” section of A10 Network’s website at investors.a10networks.com. The webcast will be archived for at least 90 days. A telephonic replay of the conference call will be available two hours after the conclusion of the live call and will run for 14 days and may be accessed by dialing (866) 813-9403 (toll-free) or (929) 458-6194 and entering the passcode 824974.

Forward-Looking Statements

This press release contains “forward-looking statements,” including statements regarding our quarterly dividend payments and stock repurchase program, strategy, growth, customer opportunities, profitability, revenue and expectations for 2024, market trends, investments and return of capital. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Factors that may cause actual results to differ include any unforeseen need for capital which may require us to divert funds we may have otherwise used for the dividend program or stock repurchase program, which may in turn negatively impact our ability to administer the quarterly dividends or the repurchase of our common stock; a significant decline in global macroeconomic or political conditions that have an adverse impact on our business and financial results; business interruptions related to our supply chain; our ability to manage our business and expenses if customers cancel or delay orders; execution risks related to closing key deals and improving our execution; the continued market adoption of our products; our ability to successfully anticipate market needs and opportunities; our timely development of new products and features; our ability to achieve or maintain profitability; any loss or delay of expected purchases by our largest end-customers; our ability to maintain or improve our competitive position; competitive and execution risks related to cloud-based computing trends; our ability to attract and retain new end-customers and our largest end-consumers; our ability to maintain and enhance our brand and reputation; changes demanded by our customers in the deployment and payment model for our products; continued growth in markets relating to network security; the success of any future acquisitions or investments in complementary companies, products, services or technologies; the ability of our sales team to execute well; our ability to shorten our close cycles; the ability of our channel partners to sell our products; variations in product mix or geographic locations of our sales; risks associated with our presence in international markets; weaknesses or deficiencies in our internal control over financial reporting; our ability to timely file periodic reports required to be filed under the Securities Exchange Act of 1934; and other risks that are described in “Risk Factors” in our periodic filings with the Securities and Exchange Commission, including our Form 10-K filed with the Securities and Exchange Commission on February 29, 2024. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP net income per basic and diluted share (or non-GAAP EPS), non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP operating expenses, Adjusted EBITDA and Adjusted EBITDA margin. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies.

A10 Networks considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider to be our core operating performance and are used by the company's management for that purpose.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

We define non-GAAP net income as our GAAP net income excluding: (i) stock-based compensation and related payroll tax, (ii) restructuring expense, (iii) cyber incident remediation expense and (iv) income tax effect of non-GAAP items (i) to (iii) listed above. We define non-GAAP net income per basic and diluted share as our non-GAAP net income divided by our basic and diluted weighted-average shares outstanding. We define non-GAAP gross profit as our GAAP gross profit excluding (i) stock-based compensation and related payroll tax, (ii) restructuring expense and (iii) cyber incident remediation expense. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. We define non-GAAP operating income as our GAAP income from operations excluding (i) stock-based compensation and related payroll tax, (ii) restructuring expense and (iii) cyber incident remediation expense. We define non-GAAP operating margin as our non-GAAP operating income divided by our GAAP revenue. We define non-GAAP operating expenses as our GAAP operating expenses excluding (i) stock-based compensation and related payroll tax, (ii) restructuring expense and (iii) cyber incident remediation expense. We define Adjusted EBITDA as our GAAP net income excluding (i) interest and other (income) expense, net, (ii) depreciation and amortization expense, (iii) provision for income taxes, (iv) stock-based compensation and related payroll tax, (v) restructuring expense and (vi) cyber incident remediation expense. We define Adjusted EBITDA margin as our Adjusted EBITDA divided by our GAAP revenue.

Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results.

About A10 Networks

A10 Networks (NYSE: ATEN) provides security and infrastructure solutions for on-premises, hybrid cloud, and edge-cloud environments. Our 7000+ customers span global large enterprises and communications, cloud and web service providers who must ensure business-critical applications and networks are secure, available, and efficient. Founded in 2004, A10 Networks is based in San Jose, Calif. and serves customers globally. For more information, visit A10networks.com and follow us at A10Networks.

The A10 logo and A10 Networks are trademarks or registered trademarks of A10 Networks, Inc. in the United States and other countries. All other trademarks are the property of their respective owners.

Source: A10 Networks, Inc.

Net income and earnings per share excluding adjustments are non-GAAP financial measures presented as supplemental financial measures to enable a user of the financial information to understand the impact of these adjustments on reported results. These financial measures should not be considered an alternative to net income, operating income, cash flows provided by operating activities, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our adjusted net income and earnings per share may not be comparable to similarly titled measures of another company because companies may not all calculate adjusted net income and earnings per share in the same manner.

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