A10 Networks(US:ATEN)2023-02-07 23:41Financial Data and Key Metrics Changes - Fourth quarter revenue reached a record $77.6 million, up 9.9% year-over-year [17] - Full-year revenue was a record $280.3 million, up 12.1% year-over-year [20] - Non-GAAP net income for Q4 was $18.4 million, or $0.24 per share, up 12% year-over-year [19] - Non-GAAP gross margin for the year was 80.3%, consistent with the previous year [20] - Adjusted EBITDA for Q4 was a record $22.3 million, reflecting 28.7% of revenue [18] Business Line Data and Key Metrics Changes - Product revenue for Q4 was $49.6 million, representing 63.9% of total revenue, up 13.5% year-over-year [17] - Services revenue for Q4 was $28.1 million, or 36.1% of total revenue [17] - On a trailing 12-month basis, product revenue increased by 17% [10] Market Data and Key Metrics Changes - Revenue from North America was $41.2 million, up 21.8% [17] - Revenue in Japan increased approximately 8% year-over-year in Q4 on a constant currency basis [17] - Deferred revenue was $127 million as of December 31, 2022, up 45% year-over-year [17] Company Strategy and Development Direction - The company focuses on critical network infrastructure and security solutions, which continue to drive growth [10] - A10 aims to maintain a disciplined, flexible, and opportunistic capital allocation strategy [15] - The management emphasizes organic growth while remaining open to M&A opportunities that align with strategic goals [38] Management Comments on Operating Environment and Future Outlook - Management noted extended cycles in customer decision-making, particularly in North America, due to economic concerns [26] - The company expects full-year 2023 revenue growth to outpace its peer set while achieving profitability targets [21] - Management expressed confidence in achieving profitability targets despite economic headwinds [14] Other Important Information - The company returned over $95 million to shareholders in 2022 through cash dividends and stock repurchases [15] - A quarterly dividend of $0.06 per share was approved, to be paid on March 1, 2023 [21] - The company ended the year with nearly $151 million in cash and no debt [15] Q&A Session Summary Question: What are you seeing regarding extended cycles affecting revenue targets? - Management indicated that extended cycles are particularly relevant to North American customers, who are cautious due to economic factors [26] Question: Are you experiencing increased competition or pricing pressure? - Management clarified that there is no significant pricing pressure and that customer decisions are influenced more by CapEx cycles and risk perception [28] Question: How much of the expenses are within your control? - Management stated that they have been able to flex their cost structure to ensure that expense growth remains lower than revenue growth [32] Question: Have you seen changes in customer decision-making due to the macro environment? - Management noted increased scrutiny in the decision-making process, particularly for modernization projects, while revenue-generating projects continue to move forward [36] Question: Are you actively looking for M&A opportunities? - Management confirmed they are evaluating opportunities but prioritize organic growth first [38] Question: Can you provide insight into revenue growth visibility for the upcoming year? - Management indicated that the first half of the year may be softer, with larger deals potentially shifting to the latter part of the year [41]