UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |----------------------------------------------------------------|------------------------------------------------------------------------------------------------------------- ...

A10 Networks (ATEN) came out with quarterly earnings of $0.25 per share, missing the Zacks Consensus Estimate of $0.27 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -7.41%. A quarter ago, it was expected that this provider of networking technologies would post earnings of $0.13 per share when it actually produced earnings of $0.16, delivering a surprise of 23.08%.Over the last fo ...

A10 Networks, Inc. (NYSE:ATEN) Q4 2023 Results Conference Call February 6, 2024 4:30 PM ET Company Participants Tom Bauman - FNK Investor Relations Dhrupad Trivedi - President and CEO Brian Becker - Chief Financial Officer Conference Call Participants Christian Schwab - Craig-Hallum Capital Anja Soderstrom - Sidoti Hamed Khorsand - BWS Financial Hendi Susanto - Gabelli Funds Operator Good afternoon, and thank you all for joining. I would like to welcome you all to the A10 Networks Fourth Quarter and Full Ye ...

SAN JOSE, Calif.--(BUSINESS WIRE)--A10 Networks, Inc. (NYSE: ATEN), a leading provider of cybersecurity and infrastructure solutions, today announced financial results for its fourth quarter ended December 31, 2023. Fourth Quarter 2023 Financial Summary Revenue of $70.4 million, in-line with guidance and down $7.2 million (9.3%) year-over-year due to market conditions related to North American service provider customers’ capital expenditures. Sequentially, revenue increased 21.9%, reflecting delayed or ...

Q3 2023 Performance - Q3 revenue decreased by 20% year-over-year[7] - Adjusted EBITDA was $14.4 million, representing 24.9% of revenue[8] - GAAP EPS stood at $0.09[8] - Non-GAAP EPS reached $0.16[8] Financial Trends - Q3 2023 revenue was $57.8 million[21] - Non-GAAP gross margin for Q3 2023 was 81.8%[21] - Non-GAAP operating margin for Q3 2023 was 20.6%[21] - Adjusted EBITDA for Q3 2023 was $14.4 million[21] Strategic Outlook - Diversification in revenues and customers mitigates impact of macroeconomic headwinds[9] - Security solutions remain in high demand[9] - The company is positioned to achieve full-year profitability targets[9]

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $57.8 million, a decrease of 20% year-over-year, reflecting industry headwinds [6][13] - Non-GAAP EPS for Q3 2023 was $0.16, down from $0.20 in the same quarter last year [15] - Year-to-date revenue was $181.2 million, down 10.6% year-over-year, with product revenue down 18.7% [16] - Gross margin for Q3 was 81.8%, consistent with expectations, while adjusted EBITDA was $14.4 million, reflecting 24.9% of revenue [14][15] Business Line Data and Key Metrics Changes - Product revenue for Q3 was $30.3 million, representing 52.4% of total revenue, while services revenue was $27.5 million, or 47.6% of total revenue [13] - Year-to-date, product revenue represented approximately 55.5% of total revenue, while services revenue accounted for about 44.5% [16] Market Data and Key Metrics Changes - Revenue from the Americas, including Latin America, was $25.8 million, down 28% year-over-year, primarily due to reduced spending from Tier 1 Service Providers [13][14] - Deferred revenue as of September 30, 2023, was $135.7 million, up 8% year-over-year [14] Company Strategy and Development Direction - The company emphasizes a diversified business model and structural profitability, which has allowed it to outperform the market and support a buyback program and cash dividends [6][9] - A10 launched a new security product, A10 Defend Detector, aimed at enhancing DDoS attack defenses, indicating a focus on innovation in security solutions [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that while market conditions have deteriorated, the company remains confident in its ability to navigate challenges and expects a rebound as the market normalizes [9][12] - The company anticipates Q4 2023 revenue to be between $70 million and $80 million, with expectations for year-over-year growth in full-year 2023 non-GAAP EPS [17] Other Important Information - The company returned $95.2 million to shareholders in the past 12 months through dividends and share repurchases [10] - A quarterly cash dividend of $0.06 per share has been approved, to be paid on December 1, 2023 [17] Q&A Session Summary Question: How long do you think the digestion phase will last? - Management indicated that the challenges faced in Q3 were not primarily due to supply chain issues but rather market conditions affecting purchasing decisions [21][24] Question: How much more room is there to control OpEx and grow EBITDA and EPS? - Management stated that while temporary cost changes are expected due to revenue impacts, they continue to seek efficiencies in G&A and expect OpEx to grow slower than revenue growth [27][29] Question: What is the outlook for Service Provider demand recovery? - Management noted that conversations with Service Provider customers indicate projects are being postponed rather than canceled, and they expect demand to resume as economic conditions normalize [32][34] Question: How is the company expanding its presence in the Enterprise segment? - Management highlighted that the Enterprise segment is growing 5% to 7% year-to-date, driven by the demand for hybrid solutions that integrate on-prem and cloud capabilities [35][36] Question: What factors could trigger the resumption of demand from telco Service Providers? - Management mentioned that network traffic growth and the need for capacity expansion are key drivers for resuming demand, alongside the ability to sell more categories to existing customers [49][51]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | --- | --- | |--------------------------------------------|------------------------------------------------------------------------------- ...

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) Details A10 Networks, Inc.'s filing status, commission number, address, stock exchange, and outstanding shares as of July 26, 2023 [Registrant Information and Filing Status](index=1&type=section&id=Registrant%20Information%20and%20Filing%20Status) Details A10 Networks' accelerated filer status, commission number, stock exchange, and outstanding shares as of July 26, 2023 - Company Name: **A10 NETWORKS, INC.**[2](index=2&type=chunk) - Commission File Number: **001-36343**[2](index=2&type=chunk) - Trading Symbol: **ATEN** (New York Stock Exchange)[2](index=2&type=chunk) - Filing Status: Accelerated filer, filed all required reports and submitted Interactive Data Files[2](index=2&type=chunk) - Outstanding Shares (as of July 26, 2023): **74,110,542**[4](index=4&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) Provides a structured overview of the Form 10-Q report, outlining main parts and items [Report Structure Overview](index=3&type=section&id=Report%20Structure%20Overview) Outlines the Form 10-Q report's main parts, covering financial statements, management analysis, risk, controls, and exhibits [Note Regarding Forward-Looking Statements](index=4&type=section&id=NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Defines forward-looking statements and outlines key areas they cover [Identification and Nature of Forward-Looking Statements](index=4&type=section&id=Identification%20and%20Nature%20of%20Forward-Looking%20Statements) Defines forward-looking statements by terminology and outlines their scope, including strategy, revenue, products, and profitability - Forward-looking statements are identified by words like 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'intend,' 'expect,' and similar expressions[6](index=6&type=chunk) - Statements concern strategy, business plan, growth management, revenue recognition, new product plans, customer purchase expectations, and profitability[7](index=7&type=chunk) - Also covers expectations regarding third-party relationships, tax assets, foreign earnings repatriation, future costs, gross margin variability, liquidity, capital requirements, stock repurchase, and dividends[7](index=7&type=chunk) [Risks and Uncertainties](index=4&type=section&id=Risks%20and%20Uncertainties) Highlights that forward-looking statements are subject to risks, uncertainties, and assumptions, advising against undue reliance due to potential material differences - Forward-looking statements are subject to risks, uncertainties, and assumptions, including those detailed in the Annual Report on Form 10-K[8](index=8&type=chunk) - Important factors that could cause actual results to differ include unanticipated market changes, significant declines in global macroeconomic conditions, business interruptions, and execution risks[8](index=8&type=chunk) - Investors should not rely upon forward-looking statements as predictions of future events, as the company cannot guarantee their achievement[9](index=9&type=chunk) [Investor Information and Disclosure](index=5&type=section&id=Investor%20Information%20and%20Disclosure) Informs investors about official channels for disclosing material non-public information and complying with Regulation FD - The investor relations website (https://investors.A10networks.com) is used to post important information for investors[12](index=12&type=chunk) - Other disclosure channels include the company blog (https://www.a10networks.com/blog) and corporate Twitter account (https://twitter.com/A10Networks)[12](index=12&type=chunk) - These platforms are used for disclosing material non-public information and complying with Regulation FD[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the company's unaudited condensed consolidated financial statements and related notes [ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)](index=6&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) Presents unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flows, with detailed accounting notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :------------------ | | **ASSETS** | | | | Cash and cash equivalents | $111,181 | $67,971 | | Marketable securities | $42,730 | $83,018 | | Accounts receivable, net | $69,171 | $72,928 | | Inventory | $20,438 | $19,693 | | Total current assets | $256,465 | $256,991 | | Property and equipment, net | $25,210 | $19,743 | | Total assets | $368,232 | $369,105 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $6,399 | $6,725 | | Accrued liabilities | $22,656 | $37,183 | | Deferred revenue (current) | $78,023 | $74,340 | | Total current liabilities | $107,078 | $118,248 | | Deferred revenue (non-current) | $53,590 | $52,652 | | Total liabilities | $175,294 | $188,093 | | Total stockholders' equity | $192,938 | $181,012 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Provides the company's financial performance, including revenue, gross profit, operating income, and net income for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Operations (Three Months Ended June 30, in thousands, except per share data) | Metric | 2023 | 2022 | Change | % Change | | :------------------------------------ | :----- | :----- | :----- | :------- | | Total Revenue | $65,817 | $67,973 | ($2,156) | (3.2)% | | Gross Profit | $52,354 | $54,488 | ($2,134) | (3.9)% | | Income from Operations | $12,266 | $13,143 | ($877) | (6.7)% | | Net Income | $11,626 | $10,416 | $1,210 | 11.6% | | Basic Net Income Per Share | $0.16 | $0.14 | $0.02 | 14.3% | | Diluted Net Income Per Share | $0.15 | $0.13 | $0.02 | 15.4% | Condensed Consolidated Statements of Operations (Six Months Ended June 30, in thousands, except per share data) | Metric | 2023 | 2022 | Change | % Change | | :------------------------------------ | :----- | :----- | :----- | :------- | | Total Revenue | $123,508 | $130,645 | ($7,137) | (5.5)% | | Gross Profit | $99,829 | $104,321 | ($4,492) | (4.3)% | | Income from Operations | $18,433 | $21,145 | ($2,712) | (12.8)% | | Net Income | $15,584 | $16,765 | ($1,181) | (7.0)% | | Basic Net Income Per Share | $0.21 | $0.22 | ($0.01) | (4.5)% | | Diluted Net Income Per Share | $0.21 | $0.21 | $0.00 | 0.0% | [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Details the company's comprehensive income, including net income and other comprehensive income items, for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Net Income | $11,626 | $10,416 | | Unrealized gain (loss) on marketable securities | $593 | ($201) | | Unrealized gain on cash flow hedge | $112 | — | | **Comprehensive Income** | **$12,331** | **$10,215** | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Net Income | $15,584 | $16,765 | | Unrealized gain (loss) on marketable securities | $1,121 | ($977) | | Unrealized gain on cash flow hedge | $147 | — | | **Comprehensive Income** | **$16,852** | **$15,788** | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in stockholders' equity, including stock repurchases, dividends, and net income, for the six months ended June 30, 2023 and 2022 Key Stockholders' Equity Changes (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Beginning balance (Stockholders' equity) | $181,012 | $208,888 | | Repurchase of common stock | ($6,230) | ($31,758) | | Payments for dividends | ($8,880) | ($7,663) | | Net income | $15,584 | $16,765 | | Ending balance (Stockholders' equity) | $192,938 | $194,759 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change | | :------------------------------------ | :----- | :----- | :----- | | Net cash provided by operating activities | $18,722 | $24,740 | ($6,018) | | Net cash provided by investing activities | $37,039 | $17,028 | $20,011 | | Net cash used in financing activities | ($12,551) | ($36,451) | $23,900 | | Net increase in cash and cash equivalents | $43,210 | $5,317 | $37,893 | | Cash and cash equivalents—end of period | $111,181 | $84,242 | $26,939 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Description of Business and Summary of Significant Accounting Policies](index=12&type=section&id=1.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes A10 Networks' business, product offerings, revenue sources, sales strategy, and confirms no material changes to accounting policies - A10 Networks, Inc. provides secure application solutions and services, including Thunder ADC, Lightning ADC, Thunder CGN, Thunder TPS, Thunder SSLi, Thunder CFW, Harmony Controller, and aGalaxy TPS[30](index=30&type=chunk) - Revenue is derived from products (hardware, perpetual software, subscription offerings) and services (post contract support, professional services, training)[31](index=31&type=chunk) - Solutions are sold globally to service providers and enterprises through a high-touch sales organization and distribution channel partners[32](index=32&type=chunk)[34](index=34&type=chunk) - No material changes to significant accounting policies during the three and six months ended June 30, 2023[38](index=38&type=chunk) [Concentration of Credit Risk and Significant Customers](index=13&type=section&id=Concentration%20of%20Credit%20Risk%20and%20Significant%20Customers) Discusses credit risk exposure from financial instruments and identifies significant customer revenue concentrations - Financial instruments subject to credit risk include cash, cash equivalents, marketable securities, and accounts receivable[39](index=39&type=chunk) Significant Customers (Percentage of Total Revenue) | Customer | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Customer A | 25% | 11% | 20% | 10% | | Customer B | * (less than 10%) | 20% | * (less than 10%) | 18% | - As of June 30, 2023, one customer accounted for **33%** of total gross accounts receivable[42](index=42&type=chunk) [2. Leases](index=14&type=section&id=2.%20Leases) Details the company's operating lease arrangements, including right-of-use assets, liabilities, and future payment obligations - The Company leases various operating spaces in the United States, Asia, and Europe under non-cancellable operating lease arrangements expiring through July 2027[44](index=44&type=chunk) Operating Lease Liabilities (June 30, 2023, in thousands) | Metric | Amount | | :-------------------------- | :----- | | Total right-of-use assets | $18,794 | | Total operating lease liabilities | $19,165 | Aggregate Future Lease Payments (as of June 30, 2023, in thousands) | Period | Amount | | :-------------------------- | :----- | | Remainder of 2023 | $2,683 | | 2024 | $5,446 | | 2025 | $4,953 | | 2026 | $4,892 | | 2027 | $2,441 | | Total lease payments | $20,415 | | Present value of lease liabilities | $19,165 | - Weighted-average remaining lease term is **3.84 years**, and the weighted-average discount rate is **3.2%**[49](index=49&type=chunk) [3. Marketable Securities and Fair Value Measurements](index=15&type=section&id=3.%20Marketable%20Securities%20and%20Fair%20Value%20Measurements) Provides details on the company's marketable securities portfolio, including fair value measurements and unrealized gains or losses Marketable Securities (as of June 30, 2023, in thousands) | Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :-------------------------------- | :------------- | :--------------------- | :---------------------- | :--------- | | Corporate securities | $1,983 | — | ($3) | $1,980 | | U.S. Treasury and agency securities | $39,858 | $21 | ($99) | $39,780 | | Commercial paper | $950 | $20 | — | $970 | | **Total** | **$42,791** | **$41** | **($102)** | **$42,730** | Marketable Securities (as of December 31, 2022, in thousands) | Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :-------------------------------- | :------------- | :--------------------- | :---------------------- | :--------- | | Corporate securities | $35,137 | — | ($550) | $34,587 | | U.S. Treasury and agency securities | $28,627 | — | ($292) | $28,335 | | Commercial paper | $11,859 | — | — | $11,859 | | Asset-backed securities | $8,331 | — | ($94) | $8,237 | | **Total** | **$83,954** | **—** | **($936)** | **$83,018** | - Total gross unrealized losses on marketable securities decreased from **$936 thousand** as of December 31, 2022, to **$102 thousand** as of June 30, 2023[51](index=51&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - No other-than-temporary impairment charges were recognized during the three and six months ended June 30, 2023 and 2022[56](index=56&type=chunk) [4. Condensed Consolidated Financial Statement Details](index=16&type=section&id=4.%20Condensed%20Consolidated%20Financial%20Statement%20Details) Presents detailed breakdowns of inventory, prepaid expenses, property and equipment, accrued liabilities, and deferred revenue Inventory (in thousands) | Type | June 30, 2023 | December 31, 2022 | | :--------------- | :------------ | :------------------ | | Raw materials | $13,179 | $12,771 | | Finished goods | $7,259 | $6,922 | | **Total inventory** | **$20,438** | **$19,693** | Prepaid Expenses and Other Current Assets (in thousands) | Type | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :------------------ | | Prepaid expenses | $5,315 | $5,310 | | Deferred contract acquisition costs | $6,242 | $6,144 | | Other | $1,388 | $1,927 | | **Total** | **$12,945** | **$13,381** | Property and Equipment, Net (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :------------------ | | Property and equipment, gross | $48,722 | $42,487 | | Less: accumulated depreciation | ($23,512) | ($22,744) | | **Property and equipment, net** | **$25,210** | **$19,743** | Accrued Liabilities (in thousands) | Type | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :------------------ | | Accrued compensation and benefits | $6,597 | $19,832 | | Accrued tax liabilities | $1,864 | $1,635 | | Lease liability | $4,861 | $4,792 | | Other | $9,334 | $10,924 | | **Total** | **$22,656** | **$37,183** | Deferred Revenue (in thousands) | Type | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :------------------ | | Products | $10,870 | $7,782 | | Services | $120,743 | $119,210 | | **Total deferred revenue** | **$131,613** | **$126,992** | | Less: current portion | ($78,023) | ($74,340) | | **Non-current portion** | **$53,590** | **$52,652** | [5. Commitments and Contingencies](index=18&type=section&id=5.%20Commitments%20and%20Contingencies) Outlines the company's contractual obligations, including operating leases, purchase commitments, and indemnification agreements - The Company has non-cancellable operating lease arrangements totaling **$19.2 million** as of June 30, 2023, expiring through July 2027[67](index=67&type=chunk) - Open purchase commitments with third-party contract manufacturers in Taiwan totaled **$19.8 million** as of June 30, 2023[68](index=68&type=chunk) - Provides indemnifications to customers against intellectual property infringement claims; no significant impact on financial statements to date[69](index=69&type=chunk) [6. Equity Incentive Plans, Stock-Based Compensation and Stock Repurchase Program](index=19&type=section&id=6.%20Equity%20Incentive%20Plans%2C%20Stock-Based%20Compensation%20and%20Stock%20Repurchase%20Program) Describes equity incentive plans, stock-based compensation expenses, and details of the ongoing stock repurchase program - The 2023 Stock Incentive Plan was approved on April 26, 2023, replacing the 2014 Plan, with **5,600,236 shares** available for future grant as of June 30, 2023[72](index=72&type=chunk)[73](index=73&type=chunk) Stock-Based Compensation by Type of Award (Six Months Ended June 30, in thousands) | Type of Award | 2023 | 2022 | | :----------------------------- | :----- | :----- | | Stock awards | $6,648 | $5,635 | | Employee stock purchase rights | $566 | $678 | | **Total** | **$7,214** | **$6,313** | - As of June 30, 2023, **$27.6 million** of unrecognized stock-based compensation expense remains, to be recognized over a weighted-average period of **2.21 years**[75](index=75&type=chunk) - Under the 2022 stock repurchase program (authorized up to **$50 million**), **437 thousand shares** were repurchased for **$6.2 million** through June 30, 2023[81](index=81&type=chunk) [7. Net Income Per Share](index=21&type=section&id=7.%20Net%20Income%20Per%20Share) Presents the calculation of basic and diluted net income per share, including weighted-average shares outstanding Net Income Per Share (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Net income | $15,584 | $16,765 | | Weighted-average shares outstanding - basic | 74,009 | 76,343 | | Weighted-average shares outstanding - diluted | 75,512 | 78,809 | | Basic Net Income Per Share | $0.21 | $0.22 | | Diluted Net Income Per Share | $0.21 | $0.21 | - **63 thousand** common shares related to potentially dilutive shares were excluded from diluted EPS calculation for the six months ended June 30, 2023, as their effect would have been anti-dilutive[85](index=85&type=chunk) [8. Income Taxes](index=21&type=section&id=8.%20Income%20Taxes) Details the income tax provision and unrecognized tax benefits, primarily consisting of U.S. federal and state taxes Income Tax Provision (in thousands) | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $3,186 | $3,212 | | Six Months Ended June 30 | $4,150 | $4,352 | - The income tax provision primarily consisted of U.S. federal and state taxes[86](index=86&type=chunk) - Unrecognized tax benefits totaled **$7.2 million** as of June 30, 2023, with no material change anticipated over the next twelve months[86](index=86&type=chunk) [9. Geographic Information](index=22&type=section&id=9.%20Geographic%20Information) Provides a breakdown of total revenue by geographic region for the three and six months ended June 30, 2023 and 2022 Total Revenue by Geographic Region (Three Months Ended June 30, in thousands) | Region | 2023 Amount | 2023 % of Total Revenue | 2022 Amount | 2022 % of Total Revenue | | :------------- | :---------- | :---------------------- | :---------- | :---------------------- | | Americas | $36,921 | 56% | $38,553 | 57% | | APJ | $21,982 | 33% | $21,614 | 32% | | EMEA | $6,914 | 11% | $7,806 | 11% | | **Total revenue** | **$65,817** | **100%** | **$67,973** | **100%** | Total Revenue by Geographic Region (Six Months Ended June 30, in thousands) | Region | 2023 Amount | 2023 % of Total Revenue | 2022 Amount | 2022 % of Total Revenue | | :------------- | :---------- | :---------------------- | :---------- | :---------------------- | | Americas | $66,877 | 54% | $71,511 | 55% | | APJ | $37,742 | 31% | $39,403 | 30% | | EMEA | $18,889 | 15% | $19,731 | 15% | | **Total revenue** | **$123,508** | **100%** | **$130,645** | **100%** | [10. Revenue](index=22&type=section&id=10.%20Revenue) Details contract balances, revenue recognized from deferred amounts, and remaining performance obligations Contract Balances (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :------------------ | | Accounts receivable, net | $69,171 | $72,928 | | Deferred revenue, current | $78,023 | $74,340 | | Deferred revenue, non-current | $53,590 | $52,652 | | **Total deferred revenue** | **$131,613** | **$126,992** | - Revenue recognized from deferred revenues at the beginning of the period was **$26.1 million** for Q2 2023 and **$51.3 million** for H1 2023[95](index=95&type=chunk) Remaining Performance Obligations (as of June 30, 2023, in thousands) | Period | Amount | | :-------------------------- | :----- | | Within 1 year | $78,023 | | Next 2 to 3 years | $44,010 | | Thereafter | $9,580 | | **Total** | **$131,613** | [11. Subsequent Events](index=23&type=section&id=11.%20Subsequent%20Events) Discloses significant events occurring after the reporting period, specifically a declared quarterly cash dividend - On July 26, 2023, the Board of Directors declared a quarterly cash dividend of **$0.06 per share**, payable on September 1, 2023[100](index=100&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Provides management's perspective on the company's financial condition, results of operations, liquidity, and capital resources [Overview](index=24&type=section&id=Overview) Reaffirms A10 Networks' position as a secure application solutions provider, detailing products, revenue, sales strategy, and financial position - A10 Networks is a leading provider of secure application solutions and services, including Thunder ADC, CGN, TPS, SSLi, CFW, Harmony Controller, and aGalaxy TPS[103](index=103&type=chunk) - Revenue is derived from products (hardware, software licenses, subscriptions) and services (PCS, professional services, training), primarily through distribution channel partners[104](index=104&type=chunk) - For Q2 2023, **56%** of total revenue was from the Americas (**48%** from the US), **33%** from APJ (**19%** from Japan), and **11%** from EMEA[109](index=109&type=chunk) - Purchases by the ten largest end-customers accounted for **51%** of total revenue for the three months ended June 30, 2023[110](index=110&type=chunk) - As of June 30, 2023, the company had **$111.2 million** in cash and cash equivalents and **$42.7 million** in marketable securities[111](index=111&type=chunk) - The company plans to continue investing in product development, global sales, marketing, and channel partner programs for long-term growth[111](index=111&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, covering revenue, costs, gross profit, operating expenses, and income taxes for the periods presented [Revenue](index=27&type=section&id=Revenue) Analyzes total revenue by source and customer type, highlighting changes for the three and six months ended June 30, 2023 and 2022 Total Revenue by Source (Three Months Ended June 30, in thousands) | Metric | 2023 Amount | 2023 % of Total Revenue | 2022 Amount | 2022 % of Total Revenue | Change Amount | % Change | | :------- | :---------- | :---------------------- | :---------- | :---------------------- | :------------ | :------- | | Products | $39,090 | 59% | $41,475 | 61% | ($2,385) | (6)% | | Services | $26,727 | 41% | $26,498 | 39% | $229 | 1% | | **Total revenue** | **$65,817** | **100%** | **$67,973** | **100%** | **($2,156)** | **(3)%** | Total Revenue by Source (Six Months Ended June 30, in thousands) | Metric | 2023 Amount | 2023 % of Total Revenue | 2022 Amount | 2022 % of Total Revenue | Change Amount | % Change | | :------- | :---------- | :---------------------- | :---------- | :---------------------- | :------------ | :------- | | Products | $70,272 | 57% | $78,520 | 60% | ($8,248) | (11)% | | Services | $53,236 | 43% | $52,125 | 40% | $1,111 | 2% | | **Total revenue** | **$123,508** | **100%** | **$130,645** | **100%** | **($7,137)** | **(5)%** | - Total revenue decreased by **$2.2 million (3%)** for the three months ended June 30, 2023, primarily due to a **$2.3 million** decrease from enterprise customers, partially offset by a **$0.1 million** increase from service provider customers[123](index=123&type=chunk)[125](index=125&type=chunk) - Total revenue decreased by **$7.1 million (5%)** for the six months ended June 30, 2023, primarily due to an **$8.1 million** decrease from service provider customers, partially offset by a **$0.9 million** increase from enterprise customers[127](index=127&type=chunk) - Services revenue increased due to higher PCS sales from a growing installed customer base, especially in the Americas region[125](index=125&type=chunk)[128](index=128&type=chunk) [Cost of Revenue, Gross Profit and Gross Margin](index=29&type=section&id=Cost%20of%20Revenue%2C%20Gross%20Profit%20and%20Gross%20Margin) Examines changes in cost of revenue, gross profit, and gross margin for products and services for the periods presented Cost of Revenue (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change | % Change | | :--------------- | :----- | :----- | :----- | :------- | | Products | $15,519 | $18,151 | ($2,632) | (14.5)% | | Services | $8,160 | $8,173 | ($13) | (0.2)% | | **Total cost of revenue** | **$23,679** | **$26,324** | **($2,645)** | **(10.0)%** | - Products cost of revenue decreased due to lower products revenue[133](index=133&type=chunk) - Services cost of revenue remained relatively stable, driven by the mix of services delivered[134](index=134&type=chunk) Gross Profit and Gross Margin (Six Months Ended June 30, in thousands) | Metric | 2023 Amount | 2023 Gross Margin | 2022 Amount | 2022 Gross Margin | Change Amount | Change Gross Margin | | :---------------- | :---------- | :---------------- | :---------- | :---------------- | :------------ | :------------------ | | Products | $54,753 | 77.9% | $60,369 | 76.9% | ($5,616) | 1.0% | | Services | $45,076 | 84.7% | $43,952 | 84.3% | $1,124 | 0.4% | | **Total gross profit** | **$99,829** | **80.8%** | **$104,321** | **79.9%** | **($4,492)** | **0.9%** | - Products gross margin increased by **1.0%** for the six months ended June 30, 2023, primarily due to the Company's cost savings efforts[137](index=137&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Details changes in sales and marketing, research and development, and general and administrative expenses for the periods presented Operating Expenses (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change | % Change | | :-------------------------- | :----- | :----- | :----- | :------- | | Sales and marketing | $43,202 | $44,555 | ($1,353) | (3.0)% | | Research and development | $25,630 | $27,122 | ($1,492) | (5.5)% | | General and administrative | $12,564 | $11,499 | $1,065 | 9.3% | | **Total operating expenses** | **$81,396** | **$83,176** | **($1,780)** | **(2.1)%** | - Sales and marketing expenses decreased due to lower personnel costs[141](index=141&type=chunk) - Research and development expenses decreased due to lower personnel costs but are expected to increase in 2023 for strategic investments in cybersecurity technology[143](index=143&type=chunk) - General and administrative expenses increased for the six-month period due to an increase in personnel costs from higher headcount[144](index=144&type=chunk) [Non-Operating Income (Expense), Net](index=32&type=section&id=Non-Operating%20Income%20%28Expense%29%2C%20Net) Discusses changes in interest income and other income/expense, net, for the six months ended June 30, 2023 and 2022 Non-Operating Income (Expense), Net (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change | % Change | | :------------------------------------ | :----- | :----- | :----- | :------- | | Interest income | $1,635 | $304 | $1,331 | 437.8% | | Other income (expense), net | ($334) | ($332) | ($2) | 0.6% | | **Non-operating income (expense), net** | **$1,301** | **($28)** | **$1,329** | (4,746.4)% | - The favorable change was primarily driven by foreign exchange gains (fluctuations in Japanese Yen vs. U.S. Dollar) and increased interest income[147](index=147&type=chunk) [Provision for Income Taxes](index=32&type=section&id=Provision%20for%20Income%20Taxes) Presents the income tax provision for the three and six months ended June 30, 2023 and 2022, primarily from U.S. federal and state taxes Provision for Income Taxes (in thousands) | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $3,186 | $3,212 | | Six Months Ended June 30 | $4,150 | $4,352 | - The income tax provision primarily consisted of U.S. federal and state taxes[148](index=148&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, working capital, and ability to meet future cash needs, including stock repurchases and dividends - As of June 30, 2023, the company had **$111.2 million** in cash and cash equivalents and **$42.7 million** in marketable securities[149](index=149&type=chunk) - Working capital was **$149.4 million** as of June 30, 2023[149](index=149&type=chunk) - Existing cash and marketable securities are believed to be sufficient to meet anticipated cash needs for at least the next 12 months and beyond[150](index=150&type=chunk) - Under the 2022 stock repurchase program, **$6.2 million** was used to repurchase **0.4 million shares** during the three and six months ended June 30, 2023[152](index=152&type=chunk) - A quarterly cash dividend of **$0.06 per share ($4.4 million)** was paid in Q2 2023, with another **$0.06 per share** dividend declared for September 1, 2023[153](index=153&type=chunk) [Statements of Cash Flows](index=33&type=section&id=Statements%20of%20Cash%20Flows) Analyzes cash flow changes from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2023 | 2022 | Change | | :------------------------------------ | :----- | :----- | :----- | | Operating activities | $18,722 | $24,740 | ($6,018) | | Investing activities | $37,039 | $17,028 | $20,011 | | Financing activities | ($12,551) | ($36,451) | $23,900 | | **Net increase in cash and cash equivalents** | **$43,210** | **$5,317** | **$37,893** | - Cash provided by operating activities decreased primarily due to cash outflows from changes in accrued liabilities (**$17.1 million**) and inventory (**$1.7 million**), partially offset by deferred revenue (**$4.6 million**)[157](index=157&type=chunk) - Cash provided by investing activities increased significantly due to higher proceeds from sales and maturities of marketable securities (**$86.8 million**) compared to purchases (**$44.7 million**)[161](index=161&type=chunk) - Cash used in financing activities decreased due to lower common stock repurchases (**$6.2 million** in 2023 vs. **$31.8 million** in 2022)[162](index=162&type=chunk) [Contractual Obligations](index=34&type=section&id=Contractual%20Obligations) Details the company's contractual obligations, including operating lease arrangements and uncertain tax liabilities - Contractual obligations include non-cancellable operating lease arrangements totaling **$19.2 million** as of June 30, 2023, expiring through July 2027[163](index=163&type=chunk) - The Company has **$7.2 million** of tax liabilities related to uncertain tax positions as of June 30, 2023, with the timing of settlement not reliably estimable[163](index=163&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Confirms financial statements adhere to U.S. GAAP and that no material changes occurred in significant accounting policies - Condensed consolidated financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions[164](index=164&type=chunk) - No material changes to the Company's significant accounting policies occurred during the six months ended June 30, 2023[164](index=164&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Discloses the company's exposure to market risks, specifically foreign currency and interest rate fluctuations [Foreign Currency Risk](index=35&type=section&id=Foreign%20Currency%20Risk) Discusses exposure to foreign currency exchange rate fluctuations, particularly with the Japanese Yen, British Pound, and Euro - The company's results are subject to fluctuations due to changes in foreign currency exchange rates, primarily the Japanese Yen, British Pound, and Euro against the U.S. Dollar[165](index=165&type=chunk)[166](index=166&type=chunk) - Net foreign exchange gains were **$2.2 million** for the three months ended June 30, 2023 (vs. **$0.4 million** in 2022)[167](index=167&type=chunk) - Net foreign exchange losses were **$0.1 million** for the six months ended June 30, 2023 (vs. **$0.2 million** in 2022)[167](index=167&type=chunk) - A hypothetical **10%** change in exchange rates would not have a significant impact on consolidated results of operations[167](index=167&type=chunk) [Interest Rate Sensitivity](index=35&type=section&id=Interest%20Rate%20Sensitivity) Addresses market risk from interest rate changes, primarily affecting the marketable securities portfolio, with hypothetical fair value analysis - Exposure to market risk for interest rate changes primarily relates to marketable securities, which include corporate securities, U.S. Treasury and agency securities, commercial paper, and asset-backed securities[168](index=168&type=chunk) - As of June 30, 2023, the investment portfolio had an aggregate amortized cost of **$42.8 million** and a fair value of **$42.7 million**[168](index=168&type=chunk) - A hypothetical **10%** change in interest rates would not have a material impact on interest expense[168](index=168&type=chunk) Hypothetical Fair Values of Marketable Securities (as of June 30, 2023, in thousands) | Interest Rate Shift | Fair Value | | :------------------ | :--------- | | -150 BPS | $43,222 | | -100 BPS | $43,058 | | -50 BPS | $42,894 | | Current (0 BPS) | $42,730 | | +50 BPS | $42,566 | | +100 BPS | $42,402 | | +150 BPS | $42,238 | [ITEM 4. CONTROLS AND PROCEDURES](index=36&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Details management's evaluation of disclosure controls and procedures and changes in internal control over financial reporting [Management's Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Management's%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) States management's conclusion on the effectiveness of disclosure controls and procedures as of June 30, 2023 - Management, with CEO and CFO participation, evaluated disclosure controls and procedures as of June 30, 2023[169](index=169&type=chunk) - Disclosure controls and procedures were concluded to be effective at the reasonable assurance level[171](index=171&type=chunk) - The condensed consolidated financial statements present fairly, in all material respects, and conform with U.S. GAAP[171](index=171&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports no material changes in internal control over financial reporting during the three months ended June 30, 2023 - No material changes in internal control over financial reporting were identified during the three months ended June 30, 2023[172](index=172&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=36&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Acknowledges that control systems provide reasonable, not absolute, assurance due to inherent limitations and resource constraints - Management does not expect disclosure controls or internal control over financial reporting to prevent or detect all error and fraud[173](index=173&type=chunk) - A control system can provide only reasonable, not absolute, assurance due to resource constraints and inherent limitations[173](index=173&type=chunk) - Controls may become inadequate over time due to changes in conditions or deterioration in compliance[173](index=173&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents other information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=37&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) States the company's involvement in legal proceedings and management's assessment of potential losses - The company is involved in various legal proceedings with uncertain outcomes[176](index=176&type=chunk) - Management assesses the probability and amount of potential losses, recording a liability when a loss is probable and reasonably estimable[176](index=176&type=chunk) - Judgments may differ from actual outcomes due to inherent uncertainties in legal processes, potentially impacting business and financial results[176](index=176&type=chunk) [ITEM 1A. RISK FACTORS](index=37&type=section&id=ITEM%201A.%20RISK%20FACTORS) Refers readers to the Annual Report on Form 10-K for risk factors, noting no material changes since December 31, 2022 - Investors should review risk factors in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2022[177](index=177&type=chunk) - No material changes to the risk factors disclosed in the 2022 Annual Report on Form 10-K have occurred[177](index=177&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=37&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details the 2022 stock repurchase program and summarizes repurchase activity for the second quarter of 2023 - The Board of Directors authorized a new **$50 million** share repurchase program (the '2022 Program') on November 1, 2022, for a 12-month period[178](index=178&type=chunk) - Repurchases may occur in open market, privately negotiated transactions, or block trades, funded by existing cash and operating activities[178](index=178&type=chunk) Share Repurchase Activity (Three Months Ended June 30, 2023, in thousands, except per share amounts) | Periods | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) | | :------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :----------------------------------------------------------------------------------------- | | April 1 - 30, 2023 | 282 | $14.54 | 282 | $45,899 | | May 1 - 31, 2023 | 155 | $13.78 | 155 | $43,770 | | June 1 - 30, 2023 | — | — | — | $43,770 | | **Total** | **437** | | | **$43,770** | [ITEM 5. OTHER INFORMATION](index=37&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Discloses CEO trading plans adopted under Rule 10b5-1(c) for selling common stock - On June 12, 2023, CEO Dhrupad Trivedi adopted a Rule 10b5-1(c) trading plan to sell up to **60,606 shares** between November 7-9, 2023[182](index=182&type=chunk) - A previous Rule 10b5-1(c) trading plan for the CEO, dated November 10, 2022, terminated on June 30, 2023, with no shares sold[182](index=182&type=chunk) [ITEM 6. EXHIBITS](index=38&type=section&id=ITEM%206.%20EXHIBITS) Provides a list of exhibits filed with the report, including corporate governance documents and certifications - Exhibits include Amended and Restated Certificate of Incorporation (3.1) and Bylaws (3.2)[184](index=184&type=chunk) - Certifications of CEO and CFO pursuant to Section 302 (31.1, 31.2) and Section 906 (32.1, 32.2) of the Sarbanes-Oxley Act are filed[184](index=184&type=chunk) - Inline XBRL Document Set for financial statements (101) and cover page (104) are included[184](index=184&type=chunk) - Section 906 certifications (32.1 and 32.2) are not deemed filed with the SEC[185](index=185&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) Confirms the official signing of the Form 10-Q report by the company's President, CEO, and CFO on August 1, 2023 [Report Signatures](index=39&type=section&id=Report%20Signatures) Confirms the official signing of the Form 10-Q report by the company's President, CEO, and CFO on August 1, 2023 - The report was signed by Dhrupad Trivedi, President and Chief Executive Officer, and Brian Becker, Chief Financial Officer[187](index=187&type=chunk) - The signing date for the report was August 1, 2023[187](index=187&type=chunk)

A10 Networks, Inc. (NYSE:ATEN) Q2 2023 Earnings Conference Call July 26, 2023 4:30 PM ET Company Participants Rob Fink - Managing Partner, FNK Investor Relations Dhrupad Trivedi - President & Chief Executive Officer Brian Becker - Chief Financial Officer Conference Call Participants Gray Powell - BTIG Hamed Khorsand - BWS Financial Anja Soderstrom - Sidoti Hendi Susanto - Gabelli Funds Operator Good afternoon. Thank you for attending today's A10 Networks' Second Quarter 2023 Financial Results. My name is Co ...

Q2 2023 Performance - Q2 revenue increased by 14.1% sequentially compared to Q1 2023[7] - Adjusted EBITDA was $17.4 million, representing 26.4% of revenue[7] - Non-GAAP EPS was $0.19, compared to $0.17 in the previous period[7] Revenue and Profitability Trends - Q2 2023 revenue was $65.8 million[9] - Non-GAAP net income for Q2 2023 was $14.5 million[9] - The company demonstrated earnings power despite revenue challenges[8] - Security solutions remain in high demand[8] Customer Vertical Revenue - In Q2 2023, Enterprise accounted for 32.6% of revenue, while Service Provider accounted for 67.4% of revenue, with total revenue reaching $65.8 million[11] Financial Metrics - Non-GAAP gross margin for Q2 2023 was 80.2%[14] - Non-GAAP operating margin for Q2 2023 was 23.1%[14]