A10 Networks(ATEN) - 2024 Q1 - Quarterly Results

Financial Highlights A10 Networks reported Q1 2024 revenue of $60.7 million, a 5.2% YoY increase, with significant growth in GAAP and Non-GAAP net income and EPS Q1 2024 Key Financial Metrics (YoY Comparison) | Financial Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $60.7M | $57.7M | +5.2% YoY | | GAAP Gross Margin | 81.1% | 82.3% | -1.2 p.p. | | Non-GAAP Gross Margin | 81.9% | 83.1% | -1.2 p.p. | | GAAP Net Income | $9.7M | $4.0M | +142.5% YoY | | Non-GAAP Net Income | $12.7M | $9.9M | +28.3% YoY | | GAAP Diluted EPS | $0.13 | $0.05 | +160.0% YoY | | Non-GAAP Diluted EPS | $0.17 | $0.13 | +30.8% YoY | Management Commentary CEO Dhrupad Trivedi emphasized successful market navigation through diversification, enterprise growth, and continued focus on security and R&D investments - Successfully navigated market volatility, with diversification enabling the company to address near-term fluctuations in the Service Provider segment[3] - Investments in the enterprise market are yielding results, with deferred revenue growing faster than overall revenue, indicating positive buying behavior from enterprise customers[3] - Security solutions remain a strategic focus, accounting for 61% of consolidated revenue in the quarter[3] - The company maintains solid profitability while increasing R&D investments to address evolving customer needs, including AI solutions[3] Shareholder Returns A10 Networks returned $7.5 million to shareholders in Q1 2024 through share repurchases and cash dividends, with a $0.06 per share dividend approved Q1 2024 Capital Return Summary | Activity | Amount | Details | | :--- | :--- | :--- | | Share Repurchases | $3.0M | 230,500 shares at an average price of $13.19 | | Cash Dividends Paid | $4.5M | - | | Total Returned | $7.5M | - | - The Board of Directors approved a quarterly cash dividend of $0.06 per share, payable on June 3, 2024[2] Financial Statements (GAAP) GAAP financial statements for Q1 2024 show increased revenue and net income, stable balance sheet assets and liabilities, and improved operating cash flow Consolidated Statements of Operations Q1 2024 total net revenue increased to $60.7 million, with gross profit at $49.2 million and net income significantly rising to $9.7 million Q1 2024 vs Q1 2023 Income Statement Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total net revenue | $60,675 | $57,691 | | Products Revenue | $30,069 | $31,182 | | Services Revenue | $30,606 | $26,509 | | Gross profit | $49,231 | $47,475 | | Income from operations | $7,213 | $6,167 | | Net income | $9,726 | $3,958 | | Diluted EPS | $0.13 | $0.05 | Consolidated Balance Sheets As of March 31, 2024, total assets reached $395.7 million, with $122.9 million in cash, stable liabilities, and increased stockholders' equity Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $122,909 | $97,244 | | Total current assets | $276,098 | $271,824 | | Total assets | $395,658 | $389,809 | | Total current liabilities | $112,860 | $111,069 | | Total liabilities | $181,349 | $181,933 | | Total stockholders' equity | $214,309 | $207,876 | Consolidated Statements of Cash Flows Q1 2024 net cash from operations significantly improved to $32.4 million, with $7.4 million used in financing, ending with $122.9 million cash Q1 2024 vs Q1 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $32,444 | $(846) | | Net cash provided by investing activities | $643 | $5,367 | | Net cash used in financing activities | $(7,422) | $(3,973) | | Net increase in cash and cash equivalents | $25,665 | $548 | | Cash and cash equivalents—end of period | $122,909 | $68,519 | Reconciliation of GAAP to Non-GAAP Measures Non-GAAP measures provide a clearer view of core operating performance by excluding specific items, with detailed reconciliations for key financial metrics - The company uses non-GAAP measures to provide a view of operating performance exclusive of unusual events or factors not directly affecting core operations[7] - Key adjustments to GAAP figures include stock-based compensation, restructuring expenses, cyber incident remediation expenses, and their income tax effects[9] Net Income Reconciliation Q1 2024 Non-GAAP net income was $12.7 million ($0.17 per diluted share), adjusted primarily for stock-based compensation and tax effects GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP net income | $9,726 | $3,958 | | Stock-based compensation | $3,989 | $3,970 | | Restructuring expense | $— | $1,861 | | Cyber incident remediation | $— | $1,353 | | Income tax-effect | $(970) | $(1,215) | | Non-GAAP net income | $12,745 | $9,927 | Gross Profit and Operating Expenses Reconciliation Q1 2024 Non-GAAP gross profit was $49.7 million (81.9% margin), while Non-GAAP operating expenses increased to $38.5 million GAAP to Non-GAAP Gross Profit Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP gross profit | $49,231 | $47,475 | | Non-GAAP gross profit | $49,702 | $47,964 | | Non-GAAP gross margin | 81.9% | 83.1% | GAAP to Non-GAAP Operating Expenses Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP total operating expenses | $42,018 | $41,308 | | Non-GAAP total operating expenses | $38,500 | $34,613 | Operating Income Reconciliation Q1 2024 Non-GAAP operating income was $11.2 million (18.5% margin), a decrease from Q1 2023 due to higher expenses GAAP to Non-GAAP Operating Income Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP income from operations | $7,213 | $6,167 | | Non-GAAP operating income | $11,202 | $13,351 | | Non-GAAP operating margin | 18.5% | 23.1% | EBITDA and Adjusted EBITDA Reconciliation Q1 2024 Adjusted EBITDA was $13.9 million, reconciled from GAAP net income with standard and non-GAAP adjustments GAAP Net Income to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP net income | $9,726 | $3,958 | | EBITDA | $9,905 | $8,273 | | Adjusted EBITDA | $13,894 | $15,457 | Other Information This section provides supplementary information including conference call details, forward-looking statement disclaimers, and a business overview Conference Call Information Details for the April 30, 2024, investor conference call, including dial-in and webcast information, are provided for results discussion - Management hosted a conference call on April 30, 2024, to discuss the financial results, with details provided for live access and replay[4] Forward-Looking Statements The report contains forward-looking statements on strategy and growth, subject to risks detailed in the company's SEC filings - The report contains forward-looking statements regarding strategy, growth, and profitability, which are subject to known and unknown risks and uncertainties[5] - Readers are advised to consult the "Risk Factors" section in the company's periodic SEC filings for a comprehensive list of potential risks[6]