Financial Data and Key Metrics Changes - Total revenue for the second quarter was $69.4 million, an increase of 15% year over year [12] - Non-GAAP net income for the quarter was $15.5 million or $0.21 per diluted share, compared to $13.2 million or $0.18 per diluted share in the same quarter last year [14] - EBITDA as a percentage of revenue grew year over year, reflecting a strong operational performance despite aggressive investments [10] Business Line Data and Key Metrics Changes - Product revenue for the quarter was $39.2 million, representing 56% of total revenue, while services revenue was $30.2 million or 44% of total revenue [12] - Enterprise revenue grew by 8% year over year, while service provider revenue increased by 14% [8] Market Data and Key Metrics Changes - The company experienced improved demand from data center expansions and AI infrastructure investments, particularly in the service provider segment [9] - Total deferred revenue increased to $144.4 million, indicating strong uptake of the company's portfolio [13] Company Strategy and Development Direction - The company is strategically aligned with the evolving cybersecurity landscape and emphasizes high performance and advanced security [6] - A focus on diversification across verticals and geographies enhances resilience and allows the company to capitalize on secular tailwinds in AI and cybersecurity [8] - The company aims to dynamically allocate resources to address changing market conditions while preserving profitability and shareholder returns [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic positioning, particularly in light of increased demand for cybersecurity solutions and AI-related spending [18] - The company remains comfortable in its ability to deliver annual revenue growth in the high single-digit range [9] Other Important Information - The company ended the quarter with $367.4 million in cash, cash equivalents, and marketable securities, compared to $195.6 million in the previous year [16] - The Board approved a quarterly cash dividend of $0.06 per share to be paid on September 2, 2025 [17] Q&A Session Summary Question: How should we think about the potential to sustain recent momentum and the sustainability of the service provider segment? - Management indicated that product revenue growth is a strong indicator of customer preference and future growth, with positive signs in service provider performance outside North America [23][26] Question: Can you provide insights on how linearity played out this quarter and any insights on July? - Management noted that there was no unexpected burst of activity in the third month of the quarter and that customer activity is on track for the third quarter [28][29] Question: How should we think about the potential contributions from the recent Microsoft award? - Management emphasized the importance of the long-term partnership with Microsoft and the relevance of their solutions to a global leader in cloud networking [34] Question: Does ATN see tailwinds from telcos raising CapEx following recent legislation? - Management acknowledged that increased CapEx could provide a tailwind, particularly in North America, while also focusing on selling more security solutions [39] Question: Can you elaborate on the AI global leaders mentioned in the press release? - Management confirmed that there are multiple customers involved, including both North American and international players, who are building new AI infrastructure [42][43] Question: What percentage of revenue is AI-driven? - Management indicated that current growth is primarily from customers building new data centers for AI traffic, with significant revenue expected in 2026 and beyond [48] Question: Can you provide insights on enterprise revenue growth by customer vertical and geography? - Management highlighted strong growth in enterprise revenue in North America, particularly among large enterprise customers in sectors like finance and technology [54][56] Question: How are conversations going with existing and prospective customers regarding ThreatX? - Management noted that ThreatX has been well integrated into the portfolio and is seen as a relevant solution for customers, although it is still early to quantify its impact [59][60]

Financial Data and Key Metrics Changes - A10 Networks reported first quarter revenue of $66.1 million, reflecting a 9% year-over-year increase [12] - Non-GAAP net income for the quarter was $15 million, or $0.20 per diluted share, compared to $12.7 million, or $0.17 per diluted share in the same quarter last year [15] - Gross margin for the first quarter was 80.9%, consistent with the company's target range of 80% to 82% [15] - Adjusted EBITDA was $19.5 million, representing 29.5% of revenue [15] Business Line Data and Key Metrics Changes - Enterprise revenue grew by 18% year-over-year, while service provider revenue increased by 3% [6][12] - On a trailing twelve-month basis, enterprise revenue increased by 12%, indicating a solid foundation for future growth [6] - Product revenue accounted for 54% of total revenue, while services revenue made up 46% [13] Market Data and Key Metrics Changes - North America showed relatively strong performance, while Asia Pacific results were impacted by a strong Q1 last year due to large infrastructure projects in Japan [13] - Overall market conditions have improved and stabilized, with service provider customer growth driven by demand for greater data center capacity [6][11] Company Strategy and Development Direction - A10 Networks is focusing on expanding its presence and capabilities with enterprise customers, particularly through the acquisition of ThreatX Protect to enhance its cybersecurity portfolio [8][10] - The company aims to address non-discretionary security and capacity requirements, positioning itself to benefit from the rise of AI and its associated demands [6][10] - A10 Networks continues to target gross margins of 80% to 82% and adjusted EBITDA margins of 26% to 28% for the full year [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while there may be delays in order timing due to market conditions, these are expected to be temporary [6] - The company remains optimistic about its strategic position and believes it is well-positioned to outpace the market in terms of revenue growth and profitability as conditions stabilize [11][20] Other Important Information - Total deferred revenue increased by 8% to $152.7 million, reflecting confidence from customers in A10's solutions [14] - The company ended the quarter with $355.8 million in cash, cash equivalents, and marketable securities, significantly up from $195.6 million at the end of 2024 [16] Q&A Session Summary Question: Impact of tariffs on customer conversations - Management indicated that there is caution among customers regarding macroeconomic conditions, but spending patterns are not completely frozen [25][27] Question: Visibility on AI data center initiatives - Management noted that they have reasonable visibility into large AI build-outs, but companies are modulating their plans based on financials [28][29] Question: Anticipated revenue growth - Management expressed comfort with expectations of high single-digit revenue growth for the year, pending macroeconomic shifts [34] Question: Competitive landscape in AI-driven product portfolio - Management stated that competitive dynamics remain similar, with partnerships evolving as service providers build out AI data centers [35] Question: Growth in enterprise revenue - Management clarified that the growth in enterprise revenue was influenced by a soft Q1 last year, with multiple customers contributing to the increase [39] Question: Caution among service provider customers - Management acknowledged broad-based caution among service provider customers, although some are more aggressive in their spending [40][41] Question: Sales and marketing expenses - Management indicated that the decrease in sales and marketing expenses was a strategic decision to manage costs while investing in R&D [42] Question: Full year EBITDA target - Management remains confident in achieving an EBITDA margin of 26% to 28% despite potential fluctuations in input costs [46][47] Question: Diversification of contract manufacturing partners - Management is actively working on diversifying manufacturing partners to build a more resilient supply chain [49][50] Question: Exchange rate impacts - Management noted that while exchange rates can pose revenue risks, project timelines are typically not heavily influenced by short-term fluctuations [51][53] Question: Product refresh outlook - Management clarified that product refresh cycles are part of normal business operations and do not indicate a significant change in customer outlook [58][59] Question: Tariff impact on pricing negotiations - Management stated that any tariff impact would require discussions with customers to determine how to share the burden, but specifics are uncertain until more information is available [61][62]