Company Overview - A10 Networks, Inc. (NYSE: ATEN) is scheduled to report its Q1 '25 earnings on May 1 after market close [1] Investment Strategy - The company is positioned for long-term investment, focusing on a mix of growth, value, and dividend-paying stocks, with a particular emphasis on value [1]

Revenue Performance - Total revenue for 2024 was $261.7 million, representing a 4% increase from $251.7 million in 2023[264]. - Products revenue decreased by $1.3 million, or 1%, to $139.8 million in 2024, primarily due to lower demand from service provider and enterprise customers in the Americas and EMEA regions[270]. - Services revenue increased by $11.3 million, or 10%, to $121.9 million in 2024, driven by increased post contract support (PCS) sales in the APJ region[271]. - The Americas region generated $134.4 million, or 51% of total revenue, a 1% increase compared to 2023, mainly due to higher services revenue from enterprise customers[272]. - The APJ region contributed $87.2 million, or 33% of total revenue, reflecting a 12% increase compared to 2023, driven by higher demand from service provider customers[273]. - EMEA region revenue was $40.2 million, or 16% of total revenue, a 3% decrease from 2023, primarily due to lower products revenue from service provider customers[274]. Profitability - Income from operations increased by $5.3 million, or 13.8%, to $44.0 million in 2024[264]. - Net income for 2024 was $50.1 million, a 25.4% increase from $40.0 million in 2023[264]. - Gross profit for 2024 was $210,277 thousand, with a gross margin of 80.4%, down from 80.9% in 2023, primarily due to a 1.7% decrease in services gross margin[281][282]. - Operating expenses increased by 1% from $165,090 thousand in 2023 to $166,309 thousand in 2024, with research and development expenses rising by 5%[284]. Cash Flow and Liquidity - Cash provided by operating activities was $90,492 thousand in 2024, significantly up from $44,514 thousand in 2023, driven by net income of $50,100 thousand[304][306]. - As of December 31, 2024, the company had cash and cash equivalents of $95.1 million and marketable securities of $100.4 million, indicating strong liquidity[296]. - Cash used in investing activities for the year ended December 31, 2024, was $48.4 million, primarily due to purchases of marketable securities totaling $142.8 million and capital expenditures of $12.3 million, partially offset by proceeds from maturities and sales of marketable securities totaling $106.6 million[308]. - Cash used in financing activities for the year ended December 31, 2024, was $44.3 million, primarily for stock repurchases of $30.1 million and cash dividends of $17.8 million, partially offset by $3.6 million from common stock issuances[310]. Investments and Acquisitions - The company acquired ThreatX Protect in February 2025, enhancing its cybersecurity portfolio with WAAP protection[261]. - The company recorded $5.3 million in investment gains in 2024, compared to an immaterial loss in 2023, indicating improved investment performance[293]. - The investment portfolio as of December 31, 2024, had a fair market value of $100.4 million, with a hypothetical 10% change in interest rates expected to have no material impact on its fair value[320]. Research and Development - Research and development expenses increased by $2.5 million in 2024, focusing on cybersecurity and AI technologies[288]. Tax and Foreign Exchange - The provision for income tax increased to $8.0 million in 2024 from $3.8 million in 2023, reflecting higher taxable income[294]. - The company recorded net foreign exchange gains of $2.1 million in 2024 and $0.1 million in 2023, indicating fluctuations in foreign currency exchange rates[319]. - The company has a hedging program to mitigate foreign currency risk, particularly with revenue contracts primarily in U.S. Dollars and costs in local currencies[317]. Revenue Recognition - Revenue is derived from products and services, with significant contributions from hardware, software licenses, and post-contract support services[314]. - The company utilizes multiple performance obligations in contracts, requiring significant judgment to allocate revenue based on standalone selling prices[315].

Company Overview - A10 Networks, Inc. (NYSE: ATEN) specializes in cybersecurity and infrastructure solutions, which are essential for ensuring smooth network operations across on-premises setups, hybrid cloud environments, and edge computing [1] Research Principles - Grassroots Trading emphasizes providing objective, unbiased, and balanced research, supported by solid data and free from emotional influences or company preferences [1] - The focus is primarily on small- to mid-cap companies, offering compelling investment insights on often overlooked opportunities [1] - The research also includes periodic identification of potential opportunities in large- and mega-cap companies, broadening the coverage of dynamic equity markets [1]

Q4 2024 Financial Results & Commentary February 4, 2025 Cautionary Statements & Disclosures This presentation and the accompanying oral presentation contain "forward-looking" statements that are based on our management's beliefs and assumptions, including statements regarding our future financial performance, strategy, demand, positioning, capital allocation strategy and value creation, and market and technology trends. Forward-looking statements are subject to known and unknown risks and uncertainties and ...

Financial Data and Key Metrics Changes - A10 Networks reported fourth quarter revenue of $74.2 million, an increase of 5.4% year-over-year, with enterprise revenue growing 8% and service provider revenue increasing 4% [22][23] - For the full year, revenue was $261.7 million, up 4% year-over-year, with non-GAAP net income of $64.8 million or $0.86 per diluted share, compared to $54.9 million or $0.73 per diluted share last year [28][30] - Gross margin for the fourth quarter was 80.7%, aligning with the target range of 80% to 82% [25][31] Business Line Data and Key Metrics Changes - Service provider revenue was up 2.5% for the year, recovering from a nearly 8% decline in the first half [12][22] - Revenue from enterprise customers grew faster at 6% for the year, compared to the consolidated revenue growth of 4% [13][22] - Security-led revenue increased 6% for the quarter and 9% for the year, representing 63% of total revenue [16][28] Market Data and Key Metrics Changes - A10 Networks experienced growth in all key regions, including North America, Asia Pacific, Japan, and EMEA, with North America showing a positive trend after previous softness [17][18] - The company noted a consistent demand in EMEA and Japan, with North America beginning to normalize [18][22] Company Strategy and Development Direction - A10 Networks is focusing on expanding its presence in the enterprise market while continuing to serve service providers, particularly in AI data center development [8][10] - The company aims to drive 65% of its revenue from security-led solutions, with a current representation of 63% [17][28] - Investments in R&D are expected to enhance the cybersecurity sector and align with AI trends, with new products in Bot Protection, DDoS mitigation, and GPU-based AI infrastructure [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in enterprise customers and a recovering service provider market, despite potential short-term volatility [8][12] - The company anticipates a positive trajectory for 2025, with expectations to exceed the long-term growth target of 10% to 12% [60][61] - Management acknowledged external factors such as interest rates and tariffs that could impact future performance [60][61] Other Important Information - A10 Networks ended the year with nearly $200 million in cash and marketable securities, maintaining no debt [20][30] - The Board approved a quarterly cash dividend of $0.06 per share, with ongoing share repurchase programs [31] Q&A Session Summary Question: How did seasonality in Q4 compare to previous years? - Management noted that Q4 seasonality was consistent with previous years, but there was less of a budget flush phenomenon this time [39][40] Question: What new products are coming up this year? - New products include enhancements in DDoS detection, bot management, and AI-oriented solutions, expected to roll out in the second half of the year [45][48] Question: What is the current state of AI revenue? - Management indicated that current products are being used for AI applications, but specific revenue figures will need to be clarified in future quarters [56][58] Question: What is the outlook for OpEx in 2025? - OpEx is expected to increase slightly due to investments in cybersecurity and infrastructure products, while maintaining long-term gross margin and EBITDA targets [62][65] Question: Are there any impacts from tariffs? - Management acknowledged that they are not impervious to tariff impacts but have strategies in place to mitigate these challenges [90][92]

分组1 - A10 Networks reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.25 per share, and showing an increase from $0.25 per share a year ago, resulting in an earnings surprise of 24% [1] - The company achieved revenues of $74.2 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.97%, compared to $70.42 million in the same quarter last year [2] - A10 Networks has outperformed the S&P 500 with a 7.1% increase in shares since the beginning of the year, while the S&P 500 gained 1.9% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $61.72 million, and for the current fiscal year, it is $0.91 on revenues of $274.37 million [7] - The Zacks Industry Rank for Communication - Network Software is in the bottom 31% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Revenue Performance - Revenue for Q4 2024 was $74.2 million, a 5% increase from $70.4 million in Q4 2023[6] - Full-year 2024 revenue reached $261.7 million, a 4% increase from $251.7 million in 2023[6] - Enterprise revenue grew 8% year-over-year, while service provider revenue increased by 4%[6] Profitability Metrics - GAAP net income for Q4 2024 was $18.3 million, representing 24.7% of revenue, compared to $17.9 million (25.4% of revenue) in Q4 2023[6] - Non-GAAP net income for Q4 2024 was $23.0 million (30.9% of revenue), up from $18.5 million (26.2% of revenue) in Q4 2023[6] - Adjusted EBITDA for Q4 2024 was $27.3 million, representing 36.8% of revenue, compared to $24.0 million (34.0% of revenue) in Q4 2023[6] - GAAP net income for Q4 2024 was $18,301, compared to $17,917 in Q4 2023, representing a 2.1% increase[20] - Non-GAAP net income for Q4 2024 was $22,955, up from $18,467 in Q4 2023, reflecting a 24.0% growth[20] - Adjusted EBITDA for the year ended December 31, 2024, was $74,532 million, up from $71,173 million in 2023, reflecting an adjusted EBITDA margin of 28.5%[31] - GAAP income from operations for the year ended December 31, 2024, was $43,968 million, compared to $38,648 million in 2023, with an operating margin of 16.8%[29] - EBITDA for the year ended December 31, 2024, was $55,261 million, an increase from $47,994 million in 2023[31] Expenses and Liabilities - GAAP total operating expenses for Q4 2024 were $40,910, compared to $39,137 in Q4 2023, a 4.5% increase[27] - Non-GAAP total operating expenses for 2024 were $149,149, up from $143,770 in 2023, reflecting a 3.7% increase[27] - Total liabilities rose to $200,986 in 2024 from $181,933 in 2023, an increase of 10.5%[22] - Stock-based compensation and related payroll tax for Q4 2024 amounted to $4,811 million, significantly higher than $2,922 million in Q4 2023[29] - The company reported a workforce reduction expense of $1,075 million in 2024, compared to $4,298 million in the previous year[29] Cash and Investments - The company completed Q4 2024 with cash and investments of $195.6 million, up from $159.3 million at the end of 2023[6] - Cash flows from operating activities for 2024 were $90,492, significantly higher than $44,514 in 2023, representing a 103.5% increase[24] Assets and Equity - Total current assets increased to $307,288 in 2024 from $271,824 in 2023, marking a 13.0% rise[22] - Total stockholders' equity increased to $231,829 in 2024 from $207,876 in 2023, a growth of 11.5%[22] Future Outlook - The company plans to launch new security solutions in 2025, leveraging several years of R&D investment[5] - A10 Networks anticipates ongoing normalization of spending from service provider customers in 2025[5] Gross Profit - GAAP gross profit for 2024 was $210,277, compared to $203,738 in 2023, indicating a 3.0% increase[25] - Non-GAAP gross profit for 2024 reached $212,388, up from $205,597 in 2023, a growth of 3.4%[25] Operating Margins - The company experienced a decrease in GAAP operating margin from 25.6% in Q4 2023 to 24.8% in Q4 2024[29] - Non-GAAP operating margin for the year ended December 31, 2024, was 24.2%, slightly down from 24.6% in 2023[29] - Non-GAAP operating income reached $24,282 million in Q4 2024, compared to $21,428 million in Q4 2023, with a non-GAAP operating margin of 32.7%[29] Impairment Expenses - The company did not incur any impairment expenses in 2024, contrasting with $2,975 million in 2023[29]

Financial Data and Key Metrics Changes - Third quarter revenue was $66.7 million, an increase of 15.5% year-over-year [21] - Year-to-date revenue was $187.5 million, up 3.4% year-over-year [25] - Non-GAAP net income for the quarter was $15.9 million or $0.21 per diluted share, compared to $12 million or $0.16 per diluted share in the year-ago quarter [24] - Gross margin in the third quarter was 81.3%, in line with the target range of 80% to 82% [23] - Adjusted EBITDA was $17.8 million for the quarter, reflecting 26.7% of revenue [23] Business Line Data and Key Metrics Changes - Enterprise revenue increased 5% year-to-date and is up 9% on a trailing 12-month basis [9] - Service provider revenue was up 2% year-to-date after being down in the first half of 2024 [11] - Security-led revenue increased 10% year-to-date [12][49] Market Data and Key Metrics Changes - North American service provider segment remains volatile, but overall trends are encouraging [11] - Deferred revenue increased 6%, demonstrating stronger product sales and continued demand for cyber-led solutions [22] Company Strategy and Development Direction - Company focuses on diversification to drive predictable performance and navigate challenging conditions [10] - Plans to expand security-led offerings and integrate AI capabilities throughout the portfolio [13][16] - Aiming to create integrated solutions that reduce cybersecurity risk and improve user experience [15] Management Comments on Operating Environment and Future Outlook - Management is cautiously optimistic that the worst is behind in the North American service provider market [12] - Investments in R&D are expected to enhance growth profile and lead to additional solutions [30] - Company is confident in its strategy and ability to translate incremental revenue into higher profitability [30] Other Important Information - Cash generated from operations was $21 million in the quarter, keeping the company on track for full-year targets [20] - The Board approved a quarterly cash dividend of $0.06 per share [29] - Company continues to target gross margins of 80% to 82% and adjusted EBITDA margins of 26% to 28% on a full-year basis [29] Q&A Session Summary Question: Demand outlook for service provider segment - Management expects some level of volatility but overall trend is improving and stabilizing [34] Question: Insights on enterprise revenue growth - Focus is on large enterprises, and the dollar-based growth is expected to continue [37][38] Question: Accounts receivable increase and management plan - Management is not concerned with the trend, attributing it to timing of the year [40][42] Question: Clarification on service provider volatility and optimism - North American business is volatile, but overall trends and customer conversations are more favorable than before [44][46] Question: Future expectations for security-led business growth - Near-term expectations for security-led growth are between 10% to 12% [51] Question: Strategic alternatives regarding M&A - Company is actively exploring scalable assets and partnerships to accelerate growth [52] Question: Margin profile and new solutions - Company aims to maintain gross margins of 80% to 82% while expanding product categories [55] Question: Cash position and buyback strategy - Company prioritizes reinvestment in business but remains open to opportunistic buybacks [58][59]

Core Viewpoint - A10 Networks reported quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.22 per share, but showing an improvement from $0.16 per share a year ago [1][2] Financial Performance - The company posted revenues of $66.72 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.99% and increasing from $57.78 million year-over-year [2] - Over the last four quarters, A10 Networks has exceeded consensus revenue estimates two times [2] - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $69.86 million, and for the current fiscal year, it is $0.81 on revenues of $256.7 million [7] Stock Performance - A10 Networks shares have increased approximately 15.7% since the beginning of the year, compared to the S&P 500's gain of 24.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Communication - Network Software industry is currently in the top 37% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact A10 Networks' stock performance [5]

Financial Performance - Total net revenue for the three months ended September 30, 2024, was $66.721 million, a 15.5% increase from $57.775 million in the same period of 2023[14]. - Net income for the three months ended September 30, 2024, was $12.637 million, compared to $6.469 million for the same period in 2023, representing a 95.5% increase[14]. - Gross profit for the nine months ended September 30, 2024, was $150.971 million, up from $146.595 million in the same period of 2023, reflecting a growth of 3.2%[14]. - Basic net income per share for the three months ended September 30, 2024, was $0.17, compared to $0.09 for the same period in 2023, marking an increase of 88.9%[14]. - Total revenue for the three months ended September 30, 2024, was $66.721 million, a 15.5% increase from $57.775 million in the same period of 2023[97]. - Total revenue for the nine months ended September 30, 2024, was $187.492 million, compared to $181.283 million for the same period in 2023, reflecting a growth of 3.7%[97]. - Net income for the nine months ended September 30, 2024, was $31,839 million, compared to $22,053 million for the same period in 2023, representing a 44% increase[23]. Expenses and Costs - Operating expenses for the three months ended September 30, 2024, totaled $43.239 million, slightly down from $44.557 million in the same period of 2023, indicating a decrease of 2.9%[14]. - Total cost of net revenue for the three months ended September 30, 2024, was $13.039 million, an increase from $11.009 million in the same period of 2023, representing a rise of 18.4%[14]. - Research and development expenses for the three months ended September 30, 2024, were $15,734 million, down from $17,620 million in the same period last year, a decrease of 10.7%[14]. - Stock-based compensation expense for the three months ended September 30, 2024, was $4,180 thousand, compared to $3,966 thousand for the same period in 2023[77]. - Stock-based compensation expense for the nine months ended September 30, 2024, was $12,284 million, up from $11,180 million in 2023, which is a 10% increase[23]. Cash Flow and Equity - Cash provided by operating activities for the nine months ended September 30, 2024, was $64,782 thousand, an increase of 55% from $41,783 thousand in the same period of 2023[23]. - The company reported a net cash used in financing activities of $35,771 thousand for the nine months ended September 30, 2024, compared to $19,045 thousand in the same period of 2023, indicating an increase in cash outflow[23]. - Total stockholders' equity increased to $196,922 thousand as of September 30, 2023, up from $192,938 thousand at June 30, 2023, reflecting a growth of approximately 1.5%[18]. - Total stockholders' equity as of September 30, 2024, was $217,270 million, compared to $207,876 million at the end of 2023, reflecting a growth of 4%[21]. - The company’s cash and cash equivalents decreased to $78,063 thousand at the end of the period from $104,152 thousand at the beginning, representing a decrease of approximately 25%[23]. Customer and Market Information - The company serves over 7000 customers globally, including large enterprises, communications, cloud and web service providers, and government organizations[26]. - The company’s customer base spans various industries, including telecommunications, technology, industrial, retail, financial, gaming, education, and government[29]. - As of September 30, 2024, one customer accounted for 41% of total gross accounts receivable, up from 19% as of December 31, 2023[41]. - The Americas region generated $34.3 million in revenue for the three months ended September 30, 2024, compared to $25.8 million in the same period of 2023, a growth of 32.5%[94]. Future Outlook and Plans - The company plans to introduce new products and continue investing in sales, marketing, and research and development[5]. - Future expectations include maintaining profitability while managing growth and potential acquisitions of complementary companies[5]. - The company expects to continue expanding its market presence and enhancing its product offerings to address evolving cybersecurity challenges[26]. Deferred Revenue and Liabilities - Deferred revenue as of September 30, 2024, was $144,219,000, up from $141,334,000 as of December 31, 2023[69]. - Deferred revenue, current, increased to $89.509 million as of September 30, 2024, compared to $82.657 million as of December 31, 2023, representing an increase of 8.9%[98]. - Total accrued liabilities increased to $29,985,000 as of September 30, 2024, from $21,388,000 as of December 31, 2023[68]. Marketable Securities and Investments - The company holds marketable securities with a fair value of $104,043,000 as of September 30, 2024, compared to $62,056,000 as of December 31, 2023[52]. - The total allowance for credit losses increased to $1,171 thousand as of September 30, 2024, from $405 thousand as of December 31, 2023, marking a significant increase of 189.9%[62]. - The company recorded foreign exchange related net losses of $32 thousand for the three months ended September 30, 2024, compared to net gains of $300 thousand for the same period in 2023[59].