false000158080800015808082024-02-062024-02-06


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________

FORM 8-K
____________________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934

February 6, 2024
Date of Report (Date of earliest event reported)
____________________________________________________________________________
A10 Logo JPEG.jpg
A10 NETWORKS, INC.
(Exact name of the registrant as specified in its charter)
____________________________________________________________________________
Delaware001-3634320-1446869
(State or Other Jurisdiction of Incorporation or Organization)(Commission File Number)(I.R.S. Employer Identification Number)

2300 Orchard Parkway
San Jose, CA 95131
(Address of principal executive offices, including zip code)

(408) 325-8668
(Name and telephone number, including area code, of the person to contact in connection with this report)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
____________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.00001 par value per shareATENNew York Stock Exchange




Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐


Item 2.02    Results of Operations and Financial Condition

On February 6, 2024, A10 Networks, Inc. (the “Company”) issued a press release regarding financial results for the quarter ended December 31, 2023. A copy of the press release is furnished herewith as Exhibit 99.1.

Item 7.01    Regulation FD Disclosure

On February 6, 2024, the Company posted on its website (www.a10networks.com) slides regarding the financial results for the quarter ended December 31, 2023. A copy of the slides is attached as Exhibit 99.2 and the information in Exhibit 99.2 is incorporated herein by reference.

The information in Item 2.02, Item 7.01 and Item 9.01 in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. The information in Item 2.02 shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01    Other Events.

On February 6, 2024, the Company announced that its Board of Directors (the “Board”) declared a quarterly dividend. The quarterly dividend, in the amount of $0.06 per share, will be payable, subject to any prior revocation, on March 1, 2024 to stockholders of record on February 16, 2024. Future dividends will be subject to further review and approval by the Board in accordance with applicable law. The Board reserves the right to adjust or withdraw the quarterly dividend in future periods as it reviews A10’s capital allocation strategy from time-to-time.

Forward Looking Statements

Item 8.01 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, including statements regarding the Company’s dividend program. These forward-looking statements involve risks and uncertainties. These forward-looking statements may be identified by terms such as “will,” “may,” “plans,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the anticipated amount, duration, methods, timing and other aspects of our dividend program and any anticipated benefits or value resulting from any such dividends. These statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, any unforeseen need for capital which may require us to divert funds we may have otherwise used for the dividend program, which may in turn negatively impact our ability to administer the quarterly dividends. In addition, the timing and amount of future dividends, if any, will be made as management deems appropriate and will depend on a variety of factors including stock price, market conditions, corporate and regulatory requirements (including applicable securities laws and regulations and the rules of The New York Stock Exchange), any additional constraints related to material inside information the Company may possess, and capital availability. More information regarding these and other risks, uncertainties and factors is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC, and in other reports filed by the Company with the SEC from time to time. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of the date stated and unless required by law, The Company undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to report the occurrence of unanticipated events other than as required by law or regulation.




Item 9.01    Financial Statements and Exhibits

(d) Exhibits





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 6, 2024
A10 NETWORKS, INC.
By: /s/ Brian Becker
Brian Becker
Chief Financial Officer (Principal Accounting and Financial Officer)



EXHIBIT 99.1
a10logoa.jpg
A10 Networks Reports Financial Results for the Fourth Quarter of 2023

Company Achieves Revenue Guidance, Maintains Strong Profitability and Business Model


SAN JOSE, Calif., February 6, 2024 -- 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 orders from the third quarter as expected.
•Enterprise revenue increased 22.6% year-over-year.
•GAAP gross margin of 81.1%; non-GAAP gross margin of 81.8% as a result of continued focus on operational execution of business model goals in spite of near-term volatility in the market.
•GAAP net income of $17.9 million (representing 25.4% of revenue), or $0.24 per diluted share, compared to net income of $18.0 million (23.2% of revenue) or $0.24 per diluted share in the fourth quarter of 2022.
•Non-GAAP net income of $18.5 million (representing 26.2% of revenue), or $0.25 per diluted share (non-GAAP EPS) compared to non-GAAP net income of $18.4 million (23.7% of revenue) or $0.24 per diluted share in the fourth quarter of 2022.
•The Company repurchased 656,000 shares at an average price of $11.14 for a total of $7.3 million. The Company has $49.7 million remaining on this authorization. The Company also paid $4.4 million in cash dividends.
•The Board of Directors approved a quarterly cash dividend of $0.06 per share, payable on March 1, 2024 to stockholders of record at the close of business on February 16, 2024.

Full-Year 2023 Financial Summary
•Revenue of $251.7 million, down $28.6 million (10.2%) year-over-year.
•Enterprise revenue increased 8.6% year-over-year.
•GAAP gross margin of 80.9% vs. 79.7% in 2022; non-GAAP gross margin of 81.7% vs. 80.3% in 2022.
•GAAP net income of $40.0 million (representing 15.9% of revenue), or $0.53 per diluted share.
•Adjusted EBITDA margin of 28.3% vs. 26.8% in 2022.
•Non-GAAP net income of $54.9 million (representing 21.8% of revenue), or $0.73 per diluted share (non-GAAP EPS).

A reconciliation between GAAP and non-GAAP information is contained in the financial statements below.

“Continued strong demand for our solutions and shift to focus on Enterprise customers partially mitigated broadly reported headwinds with Service Provider customers related to depressed capital expenditures and longer sales cycles,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. Revenue from enterprise customers increased 8.6% on a full year basis.

“Simultaneously, A10 continues to deliver solid execution and we believe our business model positions us to navigate this challenging period better than others,” continued Trivedi. “We maintained our target gross margin level of 80 – 82% and EBITDA margin of 26 – 28% despite the revenue challenges, demonstrating our proven ability to allocate resources to the best strategic opportunities for future growth while driving operating efficiencies We were able to deliver flat full year EPS on a constant-currency basis in spite of a challenging macro environment. Over the last three years, we have delivered Adjusted EBITDA growth of 14%. We expect to grow our non-GAAP EPS in 2024 compared to 2023, enabling us to continue investing in future innovative solutions and returning capital to shareholders.”

Conference Call
Management will host a call at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) today, February 6, 2024, to discuss these results. Interested parties may access the conference call by dialing (833) 470-1428 (toll-free) or (404) 975-4839 and referencing access code: 619931.

A live audio webcast of the conference call will be accessible from the “Investor Relations” section of A10 Network’s website at investors.a10networks.com. The webcast will be archived for at least 90 days. A telephonic replay of the conference call will be


available two hours after the conclusion of the live call and will run for seven days and may be accessed by dialing (866) 813-9403 (toll-free) or (929) 458-6194 and entering the passcode 829707.

Forward-Looking Statements
This press release contains “forward-looking statements,” including statements regarding our quarterly dividend payments and repurchase program, strategy, growth, customer opportunities, profitability, and expectations for 2024, including as to non-GAAP EPS, investments and return of capital. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Factors that may cause actual results to differ include any unforeseen need for capital which may require us to divert funds we may have otherwise used for the dividend program or stock repurchase program, which may in turn negatively impact our ability to administer the quarterly dividends or the repurchase of our common stock; a significant decline in global macroeconomic or political conditions that have an adverse impact on our business and financial results; business interruptions related to our supply chain; our ability to manage our business and expenses if customers cancel or delay orders; execution risks related to closing key deals and improving our execution; the continued market adoption of our products; our ability to successfully anticipate market needs and opportunities; our timely development of new products and features; our ability to achieve or maintain profitability; any loss or delay of expected purchases by our largest end-customers; our ability to maintain or improve our competitive position; competitive and execution risks related to cloud-based computing trends; our ability to attract and retain new end-customers and our largest end-consumers; our ability to maintain and enhance our brand and reputation; changes demanded by our customers in the deployment and payment model for our products; continued growth in markets relating to network security; the success of any future acquisitions or investments in complementary companies, products, services or technologies; the ability of our sales team to execute well; our ability to shorten our close cycles; the ability of our channel partners to sell our products; variations in product mix or geographic locations of our sales; risks associated with our presence in international markets; weaknesses or deficiencies in our internal control over financial reporting; our ability to timely file periodic reports required to be filed under the Securities Exchange Act of 1934; and other risks that are described in “Risk Factors” in our periodic filings with the Securities and Exchange Commission, including our Form 10-K filed with the Securities and Exchange Commission on February 27, 2023. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP net income per basic and diluted share (or non-GAAP EPS), non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP operating expenses, Adjusted EBITDA and Adjusted EBITDA margin. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies.

A10 Networks considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider to be our core operating performance and are used by the company's management for that purpose.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

We define non-GAAP net income as our GAAP net income excluding: (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) one-time tax planning expense, (iv) cyber incident remediation expense, (v) workforce reduction expense, (vi) income tax benefit from amended returns and (vii) income tax effect of non-GAAP items (i) to (vi) listed above. We define non-GAAP net income per basic and diluted share as our non-GAAP net income divided by our basic and diluted weighted-average shares outstanding. We define non-GAAP gross profit as our GAAP gross profit excluding (i) stock-based compensation and related payroll tax, (ii) cyber incident remediation expense and (iii) workforce reduction expense. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. We define non-GAAP operating income as our GAAP income from operations excluding (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) one-time tax planning expense, (iv) cyber incident remediation expense and (v) workforce reduction expense. We define non-GAAP operating margin as our non-GAAP operating income divided by our GAAP revenue. We define non-GAAP operating


expenses as our GAAP operating expenses excluding (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) one-time tax planning expense, (iv) cyber incident remediation expense and (v) workforce reduction expense. We define Adjusted EBITDA as our GAAP net income excluding (i) interest and other (income) expense, net, (ii) depreciation and amortization expense, (iii) provision for (benefit from) income taxes, (iv) stock-based compensation and related payroll tax, (v) impairment expense, (vi) one-time tax planning expense, (vii) workforce reduction expense, (viii) cyber incident remediation expense and (ix) global distribution center transition expense. We define Adjusted EBITDA margin as our Adjusted EBITDA divided by our GAAP revenue.

Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results.

About A10 Networks
A10 Networks (NYSE: ATEN) provides security and infrastructure solutions for on-premises, hybrid cloud, and edge-cloud environments. Our 7000+ customers span global large enterprises and communications, cloud and web service providers who must ensure business-critical applications and networks are secure, available, and efficient. Founded in 2004, A10 Networks is based in San Jose, Calif. and serves customers globally. For more information, visit A10networks.com and follow us at A10Networks. 

The A10 logo and A10 Networks are trademarks or registered trademarks of A10 Networks, Inc. in the United States and other countries. All other trademarks are the property of their respective owners.






Investor Contact:
Rob Fink / Tom Baumann
FNK IR
646.809.4048 / 646.349.6641
aten@fnkir.com

Brian Becker
Chief Financial Officer
investors@a10networks.com

Source: A10 Networks, Inc.


A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts, on a GAAP Basis)

Three Months Ended December 31,Years Ended December 31,
2023202220232022
Revenue:
Products$40,550 $49,577 $141,082 $173,201 
Services29,867 28,057 110,618 107,137 
Total revenue70,417 77,634 251,700 280,338 
Cost of revenue:
Products9,134 11,793 31,468 40,135 
Services4,140 3,950 16,494 16,697 
Total cost of revenue13,274 15,743 47,962 56,832 
Gross profit57,143 61,891 203,738 223,506 
Operating expenses:
Sales and marketing21,450 22,351 85,976 88,511 
Research and development11,979 16,916 55,229 58,398 
General and administrative5,708 6,358 23,885 23,518 
Total operating expenses39,137 45,625 165,090 170,427 
Income from operations18,006 16,266 38,648 53,079 
Non-operating income (expense):
Interest income1,677 568 5,078 1,304 
Interest and other income (expense), net(584)(464)69 (1,667)
Total non-operating income (expense), net1,093 104 5,147 (363)
Income before income taxes19,099 16,370 43,795 52,716 
Provision for (benefit from) income taxes1,182 (1,660)3,825 5,808 
Net income$17,917 $18,030 $39,970 $46,908 
Net income per share:
Basic$0.24 $0.25 $0.54 $0.62 
Diluted$0.24$0.24$0.53$0.60
Weighted-average shares used in computing net income per share:
Basic74,288 73,560 74,210 75,528 
Diluted74,972 75,392 75,550 77,751 


A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(unaudited, in thousands, except per share amounts)

Three Months Ended December 31,Years Ended December 31,
2023202220232022
GAAP net income$17,917$18,030$39,970$46,908
Non-GAAP items:
Stock-based compensation and related payroll tax2,9223,54614,67413,969
Impairment expense—1,0002,9751,000
One-time tax planning expense500—500—
Workforce reduction expense——4,298—
Cyber incident remediation expense——732—
Income tax benefit from amended returns—(4,176)—(4,176)
Income tax-effect of non-GAAP items (1)
(2,872)—(8,230)—
Total non-GAAP items55037014,94910,793
Non-GAAP net income (1)(2)
$18,467$18,400$54,919$57,701
GAAP net income per share:
Basic$0.24$0.25$0.54$0.62
Diluted$0.24$0.24$0.53$0.60
Non-GAAP items:
Stock-based compensation and related payroll tax0.040.050.190.18
Impairment expense—0.010.040.01
One-time tax planning expense0.01—0.01—
Workforce reduction expense——0.06—
Cyber incident remediation expense——0.01—
Income tax benefit from amended returns—(0.06)—(0.05)
Income tax-effect of non-GAAP items (1)
(0.04)—(0.11)—
Total non-GAAP items0.01—0.200.14
Non-GAAP net income per share: (1)(2)
Basic$0.25$0.25$0.74$0.76
Diluted$0.25$0.24$0.73$0.74
Weighted average shares used in computing net income per share:
Basic74,28873,56074,21075,528
Diluted74,97275,39275,55077,751

(1)For 2023, we adopted presenting non-GAAP net income impacted for the income tax effect of excluding non-GAAP items. In the three and twelve months ended December 31, 2023, the income tax effect represents a non-GAAP profit before tax rate of 18.0%. For the three months ended December 31, 2022, the income tax effect of excluding non-GAAP items would be $889 thousand and non-GAAP net income adjusted for the income tax effect of excluding non-GAAP items would be $17,511 thousand, representing a $0.01 decrease in reported non-GAAP net income per share in the table above. The income tax effect of $889 thousand represents a non-GAAP profit before tax rate of 4.3%. For the twelve months ended December 31, 2022, the income tax effect of excluding non-GAAP items would be $6,765 thousand and non-GAAP net income adjusted for the income tax effect of excluding non-GAAP items would be


$50,936 thousand, representing a $0.09 decrease in reported non-GAAP net income per share in the table above. The income tax effect of $6,765 thousand represents a non-GAAP profit before tax rate of 10.0%.

(2)Net income and earnings per share excluding adjustments are non-GAAP financial measures presented as supplemental financial measures to enable a user of the financial information to understand the impact of these adjustments on reported results. These financial measures should not be considered an alternative to net income, operating income, cash flows provided by operating activities, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our adjusted net income and earnings per share may not be comparable to similarly titled measures of another company because companies may not all calculate adjusted net income and earnings per share in the same manner.



A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value, on a GAAP Basis)

As of December 31, 2023As of December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$97,244 $67,971 
Marketable securities62,056 83,018 
Accounts receivable, net of allowances of $405 and $32, respectively74,307 72,928 
Inventory23,522 19,693 
Prepaid expenses and other current assets14,695 13,381 
Total current assets271,824 256,991 
Property and equipment, net29,876 19,743 
Goodwill 1,307 1,307 
Deferred tax assets, net62,725 63,183 
Other non-current assets24,077 27,881 
Total assets$389,809 $369,105 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$7,024 $6,725 
Accrued and other liabilities21,388 37,183 
Deferred revenue, current82,657 74,340 
Total current liabilities111,069 118,248 
Deferred revenue, non-current58,677 52,652 
Other non-current liabilities12,187 17,193 
Total liabilities181,933 188,093 
Stockholders' equity:
Common stock, $0.00001 par value: 500,000 shares authorized; 89,003 and 87,123 shares issued and 74,359 and 73,738 shares outstanding, respectively1 1 
Treasury stock, at cost: 14,645 and 13,384 shares, respectively(150,909)(134,934)
Additional paid-in-capital486,958 466,927 
Dividends paid(37,619)(19,802)
Accumulated other comprehensive loss(71)(726)
Accumulated deficit(90,484)(130,454)
Total stockholders' equity207,876 181,012 
Total liabilities and stockholders' equity$389,809 $369,105 
 
 



A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands, on a GAAP Basis)
 
 
Years Ended December 31,
20232022
Cash flows from operating activities:
Net income$39,970 $46,908 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization9,346 7,381 
Stock-based compensation14,081 13,331 
Provision for doubtful accounts and sales returns(699)(36)
Other non-cash items(628)793 
Changes in operating assets and liabilities:
Accounts receivable(679)(10,065)
Inventory(6,302)2,035 
Prepaid expenses and other assets(1,850)1,627 
Accounts payable(2,999)103 
Accrued and other liabilities(20,801)(1,338)
Deferred revenue14,342 5,361 
Net cash provided by operating activities43,781 66,100 
Cash flows from investing activities:
Proceeds from sales of marketable securities57,432 6,252 
Proceeds from maturities of marketable securities61,583 71,045 
Purchases of marketable securities(93,778)(55,411)
Purchases of property and equipment(10,896)(10,799)
Net cash provided by investing activities14,341 11,087 
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans4,943 7,038 
Repurchases of common stock(15,975)(79,257)
Payments for dividends(17,817)(15,922)
Net cash used in financing activities(28,849)(88,141)
Net increase (decrease) in cash and cash equivalents29,273 (10,954)
Cash and cash equivalents—beginning of period67,971 78,925 
Cash and cash equivalents—end of period$97,244 $67,971 
Non-cash investing and financing activities:
Transfers between inventory and property and equipment$2,473 $733 
Purchases of property and equipment included in accounts payable$3,298 $230 



A10 NETWORKS, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
(unaudited, in thousands, except percentages)

Three Months Ended December 31,Years Ended December 31,
2023202220232022
GAAP gross profit$57,143$61,891$203,738$223,506
GAAP gross margin81.1%79.7%80.9%79.7%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax4414141,8141,662
Workforce reduction expense——42—
Cyber incident remediation expense——3—
Non-GAAP gross profit$57,584$62,305$205,597$225,168
Non-GAAP gross margin81.8%80.3%81.7%80.3%



A10 NETWORKS, INC.
RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES
TO NON-GAAP TOTAL OPERATING EXPENSES
(unaudited, in thousands)
 
Three Months Ended December 31,Years Ended December 31,
2023202220232022
GAAP total operating expenses$39,137$45,625$165,090$170,427
Non-GAAP adjustments:
Stock-based compensation and related payroll tax(2,481)(3,132)(12,860)(12,307)
Impairment expense——(2,975)—
One-time tax planning expense(500)—(500)—
Workforce reduction expense——(4,256)—
Cyber incident remediation expense——(729)—
Non-GAAP total operating expenses$36,156$42,493$143,770$158,120
 



A10 NETWORKS, INC.
RECONCILIATION OF GAAP INCOME FROM OPERATIONS
TO NON-GAAP OPERATING INCOME
(unaudited, in thousands, except percentages)

Three Months Ended December 31,Years Ended December 31,
2023202220232022
GAAP income from operations$18,006$16,266$38,648$53,079
GAAP operating margin25.6%21.0%15.4%18.9%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax2,9223,54614,67413,969
Impairment expense——2,975—
One-time tax planning expense500—500—
Workforce reduction expense——4,298—
Cyber incident remediation expense——732—
Non-GAAP operating income$21,428$19,812$61,827$67,048
Non-GAAP operating margin30.4%25.5%24.6%23.9%
 





A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME TO
EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(unaudited, in thousands)

Three Months Ended December 31,Years Ended December 31,
20232022202320222021
GAAP net income$17,917$18,030$39,970$46,908$94,887
GAAP net income margin25.4%23.2%15.9%16.7%37.9%
Exclude: Interest and other (income) expense, net(1,093)(104)(5,147)3631,746
Exclude: Depreciation and amortization2,5012,4739,3468,0128,907
Exclude: Provision for (benefit from) income taxes1,182(1,660)3,8255,808(63,245)
EBITDA20,50718,73947,99461,09142,295
Exclude: Stock-based compensation and related payroll tax2,9223,54614,67413,96915,031
Exclude: Impairment expense——2,975——
Exclude: One-time tax planning expense500—500——
Exclude: Workforce reduction expense——4,298——
Exclude: Cyber incident remediation expense——732——
Exclude: Global distribution center transition expense————5,063
Adjusted EBITDA$23,929$22,285$71,173$75,060$62,389
Adjusted EBITDA margin34.0%28.7%28.3%26.8%25.0%



Q4 2023 Financial Results & Commentary February 6, 2024

 
Cautionary Statements & Disclosures This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on our management’s beliefs and assumptions, including statements regarding our future financial performance, strategy, demand, positioning, capital allocation strategy and value creation, and market and technology trends. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Factors that may cause actual results to differ include any unforeseen need for capital which may require us to divert funds we may have otherwise used for the dividend program or stock repurchase program, which may in turn negatively impact our ability to administer the quarterly dividends or the repurchase of our common stock; a significant decline in global macroeconomic or political conditions that have an adverse impact on our business and financial results; business interruptions related to our supply chain; our ability to manage our business and expenses if customers cancel or delay orders; execution risks related to closing key deals and improving our execution; the continued market adoption of our products; our ability to successfully anticipate market needs and opportunities; our timely development of new products and features; our ability to achieve or maintain profitability; any loss or delay of expected purchases by our largest end-customers; our ability to maintain or improve our competitive position; competitive and execution risks related to cloud-based computing trends; our ability to attract and retain new end-customers and our largest end-consumers; our ability to maintain and enhance our brand and reputation; changes demanded by our customers in the deployment and payment model for our products; continued growth in markets relating to network security; the success of any future acquisitions or investments in complementary companies, products, services or technologies; the ability of our sales team to execute well; our ability to shorten our close cycles; the ability of our channel partners to sell our products; variations in product mix or geographic locations of our sales; risks associated with our presence in international markets; weaknesses or deficiencies in our internal control over financial reporting; our ability to timely file periodic reports required to be filed under the Securities Exchange Act of 1934; and other risks that are described in “Risk Factors” in our periodic filings with the Securities and Exchange Commission, including our Form 10-K filed with the Securities and Exchange Commission on February 27, 2023. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. This presentation and the accompanying oral presentation also include certain non-GAAP financial measures including Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, Adjusted EBITDA and Non-GAAP EPS. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titles measures presented by other companies. A10 Networks considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider to be our core operating performance and are used by the company’s management for that purpose. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We define non-GAAP net income as our GAAP net income excluding: (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) one-time tax planning expense, (iv) cyber incident remediation expense, (v) workforce reduction expense (vi) income tax benefit from amended returns and (vi) income tax effect of excluding non-GAAP items (i) to (vi) listed above. We define non-GAAP net income per basic and diluted share as our non-GAAP net income divided by our basic and diluted weighted-average shares outstanding. We define non-GAAP gross profit as our GAAP gross profit excluding (i) stock-based compensation and related payroll tax, (ii) cyber incident remediation expense and (iii) workforce reduction expense. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. We define non-GAAP operating income as our GAAP income from operations excluding (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) one-time tax planning expense, (iv) cyber incident remediation expense and (v) workforce reduction expense. We define non-GAAP operating margin as our non-GAAP operating income divided by our GAAP revenue. We define non-GAAP operating expenses as our GAAP operating expenses excluding (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) cyber incident remediation expense and (iv) workforce reduction expense. We define Adjusted EBITDA as our GAAP net income excluding (i) interest and other (income) expense, net, (ii) depreciation and amortization expense, (iii) one-time tax planning expense, (iv) provision for (benefit from) income taxes, (v) stock-based compensation and related payroll tax, (vi) impairment expense, (vii) workforce reduction expense, (viii) cyber incident remediation expense and (ix) global distribution center transition expense. We define Adjusted EBITDA margin as our Adjusted EBITDA divided by our GAAP revenue. A reconciliation between GAAP and non-GAAP financial measures can be found in the appendix to this document and in the accompanying financial results press release.

 
Agenda ▪ Q4 and FY2023 Overview ▪ Q4 Financial Performance ▪ FY 2024 Outlook

 
Q4’23: Expanded Profitability Despite Revenue Headwinds Revenue Overview • Q4 revenue decreased 9.3% year-over-year • Continued challenges from tier-one Service Providers in North America partially offset by strength with Enterprise customers • Enterprise customer revenue up 23%; Service provider customer revenue down 24% Consistent Profitability • Adjusted EBITDA was $23.9 million, or 34.0% of revenue • GAAP EPS of $0.24 • Non-GAAP EPS of $0.25 Key Takeaways • Increased focus on Enterprise customers • Met revenue guidance • Demonstrated earnings power even amidst revenue challenges with record gross margin and Adjusted EBITDA margin ahead of plan despite lower revenue • Security solutions remain in high demand See Appendix for reconciliation to most comparable GAAP financial measures.

 
Quarterly Revenue & Adjusted EBITDA Operating Income is a Non-GAAP Financial Measure. See Appendix for reconciliation to most comparable GAAP financial measures. $77.6 $57.7 $65.8 $57.8 $70.4 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Revenue, $ Millions $22.9 $15.5 $17.4 $14.4 $23.9 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Adjusted EBITDA, $ Millions $77.6 $70.4 Q4'22 Q4'23 Revenue, $ Millions $22.9 $23.9 Q4'22 Q4'23 Adjusted EBITDA, $ Millions

 
Full-Year Revenue & Non-GAAP Operating Income Operating Income is a Non-GAAP Financial Measure. See Appendix for reconciliation to most comparable GAAP financial measures. $212.6 $225.5 $250.0 $280.3 $251.7 2019 2020 2021 2022 2023 Revenue, $ Millions $2.6 $35.3 $54.0 $67.0 $61.8 2019 2020 2021 2022 2023 Non-GAAP Operating Income, $ Millions

 
58% 42% Q4’23 $70.2 million Quarterly Revenue by Customer Vertical 69.2% 56.4% 67.4% 49.7% 58.4% 30.8% 43.6% 32.6% 50.3% 41.6% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Enterprise Service Provider

 
Quarterly Revenue by Geography 49% 49% 48% 53% 57% 50% 53% 52% 56% 45% 57% 39% 34% 35% 28% 32% 34% 33% 27% 33% 37% 26% 12% 17% 17% 19% 11% 16% 14% 21% 11% 19% 16% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 $ Millions Americas APJ EMEA 57% 26% 16% Q4’23 $70.2 million

 
Consistent Value Creation Business Model Revenue Growth Capital Allocation

 
Appendix

 
Financial Performance Trends Numbers may not sum due to rounding. Please refer to the supplemental financials posted in the “Investor Relations” section of the A10 Networks website at investors.a10networks.com Gross Margin %, Operating Margin %, Adjusted EBITDA and EPS are Non-GAAP Financial Measures. See Appendix for reconciliation to most comparable GAAP financial measures. $ Millions (except EPS) Q1’20 Q2’20 Q3’20 Q4’20 FY 2020 Q1’21 Q2’21 Q3’21 Q4’21 FY 2021 Q1’22 Q2’22 Q3’22 Q4’22 FY 2022 Q1’23 Q2’23 Q3’23 Q4’23 FY 2023 Revenue $53.8 $52.5 $56.6 $62.7 $225.5 $54.8 $59.2 $65.4 $70.7 $250.0 $62.7 $68.0 $72.1 $77.6 $280.3 $57.7 $65.8 $57.8 $70.4 $251.7 Non-GAAP Gross Margin % 78.3% 78.8% 77.6% 79.6% 78.6% 78.9% 77.9% 80.4% 80.7% 79.6% 80.2% 80.6% 80.2% 80.3% 80.3% 83.1% 80.2% 81.8% 81.8% 81.7% Non-GAAP Operating Margin % 7.6% 13.8% 17.8% 22.1% 15.6% 19.7% 18.8% 22.2% 24.8% 21.6% 18.6% 23.7% 27.0% 25.5% 23.9% 23.1% 23.1% 20.6% 30.4% 24.6% Adjusted EBITDA (non- GAAP) $7.2 $9.8 $12.5 $16.1 $45.6 $13.0 $13.2 $16.8 $19.4 $62.4 $13.5 $18.0 $21.3 $22.3 $75.1 $15.5 $17.4 $14.4 $23.9 $71.2 Non-GAAP EPS $0.05 $0.09 $0.13 $0.18 $0.44 $0.12 $0.13 $0.17 $0.20 $0.63 $0.13 $0.17 $0.20 $0.24 $0.74 $0.13 $0.19 $0.16 $0.25 $0.73 Ending Cash & Marketable Securities $142.9 $143.4 $159.1 $158.1 $158.1 $161.0 $166.8 $187.5 $185.0 $185.0 $164.7 $166.8 $127.8 $151.0 $151.0 $144.5 $153.9 $169.0 $159.3 $159.3

 
GAAP to Non-GAAP – Gross Margin and EPS Numbers may not sum due to rounding. EPS data is presented on a basic and diluted basis. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. % of Revenue except EPS Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Dec 31 2022 Dec 31 2023 Gross Margin % - GAAP 79.5% 80.2% 79.5% 79.7% 82.3% 79.5% 80.9% 81.1% 79.7% 80.9% Stock-based compensation 0.7% 0.5% 0.7% 0.5% 0.8% 0.6% 0.9% 0.6% 0.6% 0.7% Gross Margin % - Non-GAAP 80.2% 80.6% 80.2% 80.3% 83.1% 80.2% 81.8% 81.8% 80.3% 81.7% EPS $ - GAAP 0.08$ 0.13$ 0.16$ 0.24$ 0.05$ 0.15$ 0.09$ 0.24$ 0.60$ 0.53$ Stock-based compensation 0.05 0.04 0.05 0.05 0.05 0.05 0.06 0.04 0.18 0.19 One-time tax planning expense - - - - - - - 0.01 - 0.01 Impairment of investment - - - 0.01 - - - - 0.01 - Capitalized project impairment - - - - - - 0.04 - - 0.04 Workforce reduction severance - - - - 0.03 - 0.03 - - 0.06 Cyber incident remediation expense - - - - 0.02 (0.01) - - - 0.01 Tax benefit from amended returns - - - (0.06) - - - - (0.06) - Income tax effect of non-GAAP items (starting Mar-23) - - - - (0.02) (0.00) (0.06) (0.05) - (0.12) EPS $ - Non-GAAP 0.13$ 0.17$ 0.20$ 0.24$ 0.13$ 0.19$ 0.16$ 0.25$ 0.74$ 0.73$ Year Ended

 
GAAP to Non-GAAP – Operating Income Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. Q3’23 $ Millions Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Dec 31 2022 Dec 31 2023 Income from operations $ - GAAP 8.0$ 13.1$ 15.7$ 16.3$ 6.2$ 12.3$ 2.2$ 18.0$ 53.1$ 38.6$ Stock-based compensation 3.7 2.9 3.8 3.5 4.0 3.5 4.3 2.9 14.0 14.7 One-time tax planning expense - - - - - - - 0.5 - 0.5 Capitalized project impairment - - - - - - 3.0 - - 3.0 Workforce reduction severance - - - - 1.9 - 2.4 - - 4.3 Cyber incident remediation expense - - - - 1.4 (0.6) - - - 0.7 Income from operations $ - Non-GAAP 11.7$ 16.1$ 19.5$ 19.8$ 13.4$ 15.2$ 11.9$ 21.4$ 67.0$ 61.8$ % of Revenue Income from operations % - GAAP 12.8 % 19.3 % 21.7 % 21.0 % 10.7 % 18.6 % 3.8 % 25.6 % 18.9 % 15.4 % Stock-based compensation 5.9 % 4.3 % 5.3 % 4.6 % 6.9 % 5.4 % 7.5 % 4.1 % 5.0 % 5.8 % One-time tax planning expense —% —% —% —% —% —% —% 0.7 % —% 0.2 % Capitalized project impairment —% —% —% —% —% —% 5.1 % —% —% 1.2 % Workforce reduction severance —% —% —% —% 3.2 % —% 4.2 % —% —% 1.7 % Cyber incident remediation expense —% —% —% —% 2.3 % (0.9)% —% —% —% 0.3 % Income from operations % - Non-GAAP 18.6 % 23.7 % 27.0 % 25.5 % 23.1 % 23.1 % 20.6 % 30.4 % 23.9 % 24.6 % Year Ended

 
GAAP to Non-GAAP – Adjusted EBITDA Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. $ Millions Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Dec 31 2022 Dec 31 2023 GAAP net income 6.3$ 10.4$ 12.1$ 18.0$ 4.0$ 11.6$ 6.5$ 17.9$ 46.9$ 40.0$ Exclude: Interest income and other (income) expense, net 0.5 (0.5) 0.4 (0.1) 1.2 (2.5) (2.8) (1.1) 0.4 (5.1) Exclude: Depreciation & amortization expense 1.8 1.9 1.8 2.5 2.1 2.2 2.5 2.5 8.0 9.3 Exclude: Provision (benefit) for income taxes 1.1 3.2 3.1 (1.7) 1.0 3.2 (1.5) 1.2 5.8 3.8 EBITDA 9.8 15.0 17.5 18.7 8.3 14.5 4.7 20.5 61.1 48.0 Exclude: Stock-based compensation 3.7 2.9 3.8 3.5 4.0 3.5 4.3 2.9 14.0 14.7 Exclude: One-time tax planning expense - - - - - - - 0.5 - 0.5 Exclude: Capitalized project impairment - - - - - - 3.0 - - 3.0 Exclude: Workforce reduction severance - - - - 1.9 - 2.4 - - 4.3 Exclude: Cyber incident remediation expense - - - - 1.4 (0.6) - - - 0.7 Adjusted EBITDA - Non-GAAP 13.5$ 18.0$ 21.3$ 22.3$ 15.5$ 17.4$ 14.4$ 23.9$ 75.1$ 71.2$ Year Ended

 
v3.24.0.1
Cover
Feb. 06, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Feb. 06, 2024
Entity Registrant Name A10 NETWORKS, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-36343
Entity Tax Identification Number 20-1446869
Entity Address, Address Line One 2300 Orchard Parkway
Entity Address, City or Town San Jose
Entity Address, State or Province CA
Entity Address, Postal Zip Code 95131
City Area Code 408
Local Phone Number 325-8668
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, $0.00001 par value per share
Trading Symbol ATEN
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001580808
A10 Networks (NYSE:ATEN)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more A10 Networks Charts.
A10 Networks (NYSE:ATEN)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more A10 Networks Charts.