A10 Networks(ATEN)2025-02-25 21:11Revenue 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].