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Share Name | Share Symbol | Market | Type |
---|---|---|---|
A10 Networks Inc | NYSE:ATEN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.04 | -0.26% | 15.33 | 15.41 | 14.95 | 15.40 | 1,289,026 | 21:29:45 |
Demand for security solutions drives 20.7% product revenue growth and 57.4% improvement in net income, enabling growth investments and the return of $7.2 million to shareholders via buybacks and dividend
Company reiterates full-year guidance
A10 Networks (NYSE: ATEN), a leading provider of cybersecurity and infrastructure solutions, today announced financial results for its second quarter and six-month period ended June 30, 2022.
Second Quarter 2022 Financial Summary
A reconciliation between GAAP and non-GAAP information is contained in the financial statements below.
“Continued strong demand for our proprietary, security-led solutions, combined with sustained business execution, resulted in 14.9% top-line growth and overall performance that exceeded our ‘Rule of 40’ target,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “The increasing threat of cyberattacks, exacerbated by geopolitical events in Europe, Asia and elsewhere, make our security and infrastructure solutions a growing priority even as certain non-security investments are reprioritized due to macroeconomic concerns. We are capturing market share through better technology that helps our customers to achieve their business goals and we continue to invest in strategic growth opportunities. Simultaneously, our proven business model, including gross profit margins exceeding 80% and Adjusted EBITDA margins of 26% enable us to deliver consistent shareholder returns through share repurchases and a quarterly cash dividend.”
“We have been able to successfully navigate supply chain challenges and input cost pressures, as evidenced by our stable gross margins, and we expect these challenges will persist for some time,” continued Trivedi. “We reiterate our full year targets around top line growth of 10 – 12% and expanding EBITDA in the range of 26 – 28% of revenue. Our targeted, strategic investments in technology are enabling us to capture market share, while our diversity of revenue and cybersecurity solutions serve as catalysts for durable growth, even amidst macroeconomic conditions.”
Conference Call
Management will host a call at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) today, August 2, 2022, to discuss these results. Interested parties may access the conference call by dialing (844) 200-6205 (toll-free) or (929) 526-1599 and entering passcode 598873.
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 107391.
Forward-Looking Statements
This press release contains “forward-looking statements,” including statements regarding our anticipated future financial results, quarterly dividend payments, drivers of growth, demand, supply chain challenges, positioning, growth and EBITDA expectations. 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 the impact of the COVID-19 pandemic on our business and the business of our customers; 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 March 8, 2022. 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), this press release and the accompanying tables and Exhibit 99.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this release contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP operating expenses, and Adjusted EBITDA. 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) amortization expense related to acquisition and (iii) global distribution center transition expense. 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, and (ii) global distribution center transition 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) amortization expense related to acquisition and (iii) global distribution center transition 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) amortization expense related to acquisition and (iii) global distribution center transition expense. We define Adjusted EBITDA as our GAAP net income excluding (i) interest expense (if any), (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense, (iv) benefit from (provision for) income taxes, (v) stock-based compensation and related payroll tax and (vi) global distribution center transition expense.
We have included our non-GAAP net income, non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP operating expenses and Adjusted EBITDA in this press release. 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 secure application services and solutions for on-premises, multi-cloud and edge-cloud environments at hyperscale. Our mission is to enable service providers and enterprises to deliver business-critical applications that are secure, available and efficient for multi-cloud transformation and 5G readiness. We deliver better business outcomes that support investment protection, new business models and help future-proof infrastructures, empowering our customers to provide the most secure and available digital experience. Founded in 2004, A10 Networks is based in San Jose, Calif. and serves customers globally. For more information, visit https://www.a10networks.com/ and follow us @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.
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts, on a GAAP Basis)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Revenue:
Products
$
41,475
$
34,363
$
78,520
$
64,903
Services
26,498
24,805
52,125
49,108
Total revenue
67,973
59,168
130,645
114,011
Cost of revenue:
Products
9,518
8,215
18,151
15,301
Services
3,967
5,415
8,173
10,828
Total cost of revenue
13,485
13,630
26,324
26,129
Gross profit
54,488
45,538
104,321
87,882
Operating expenses:
Sales and marketing
21,773
19,749
44,555
38,841
Research and development
14,235
13,491
27,122
27,472
General and administrative
5,337
5,082
11,499
10,329
Total operating expenses
41,345
38,322
83,176
76,642
Income from operations
13,143
7,216
21,145
11,240
Non-operating income (expense), net:
Interest income
184
96
304
241
Other income (expense), net
301
(208
)
(332
)
(1,536
)
Total non-operating income (expense), net
485
(112
)
(28
)
(1,295
)
Income before provision for income taxes
13,628
7,104
21,117
9,945
Provision for income taxes
3,212
488
4,352
672
Net income
$
10,416
$
6,616
$
16,765
$
9,273
Net income per share:
Basic
$
0.14
$
0.09
$
0.22
$
0.12
Diluted
$
0.13
$
0.08
$
0.21
$
0.12
Weighted-average shares used in computing net income per share:
Basic
75,893
76,774
76,343
76,745
Diluted
78,306
79,316
78,809
79,501
A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(unaudited, in thousands, except per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
GAAP net income
$
10,416
$
6,616
$
16,765
$
9,273
Non-GAAP adjustments:
Stock-based compensation and related payroll tax
2,944
2,612
6,625
7,232
Amortization expense related to acquisition
—
252
—
505
Global distribution center transition expense
—
1,036
—
2,947
Non-GAAP net income
$
13,360
$
10,516
$
23,390
$
19,957
GAAP net income per share:
Basic
$
0.14
$
0.09
$
0.22
$
0.12
Diluted
$
0.13
$
0.08
$
0.21
$
0.12
Non-GAAP adjustments:
Stock-based compensation and related payroll tax
0.04
0.04
0.09
0.09
Amortization expense related to acquisition
—
0.00
—
0.01
Global distribution center transition expense
—
0.01
—
0.04
Non-GAAP net income per share:
Basic
$
0.18
$
0.14
$
0.31
$
0.26
Diluted
$
0.17
$
0.13
$
0.30
$
0.25
Weighted-average shares used in computing non-GAAP net income per share:
Basic
75,893
76,774
76,343
76,745
Diluted
78,306
79,316
78,809
79,501
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value, on a GAAP Basis)
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
84,242
$
78,925
Marketable securities
82,551
106,117
Accounts receivable, net of allowances of $447 and $543, respectively
67,908
61,795
Inventory
21,926
22,462
Prepaid expenses and other current assets
15,038
14,720
Total current assets
271,665
284,019
Property and equipment, net
15,046
10,692
Goodwill
1,307
1,307
Deferred tax assets, net
65,557
65,773
Other non-current assets
30,990
31,294
Total assets
$
384,565
$
393,085
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
5,567
$
6,852
Accrued liabilities
36,870
36,101
Deferred revenue
80,022
73,132
Total current liabilities
122,459
116,085
Deferred revenue, non-current
47,848
48,499
Other non-current liabilities
19,499
19,613
Total liabilities
189,806
184,197
Stockholders' equity:
Common stock, $0.00001 par value: 500,000 shares authorized; 85,626 and 84,717 shares issued and 75,962 and 77,423 shares outstanding, respectively
1
1
Treasury stock, at cost: 9,664 and 7,294 shares, respectively
(87,435
)
(55,677
)
Additional paid-in-capital
455,539
446,035
Dividends paid
(11,543
)
(3,880
)
Accumulated other comprehensive income
(1,206
)
(229
)
Accumulated deficit
(160,597
)
(177,362
)
Total stockholders' equity
194,759
208,888
Total liabilities and stockholders' equity
$
384,565
$
393,085
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands, on a GAAP Basis)
Six Months Ended June 30,
2022
2021
Cash flows from operating activities:
Net income
$
16,765
$
9,273
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,712
4,753
Stock-based compensation
6,313
6,891
Other non-cash items
113
531
Changes in operating assets and liabilities:
Accounts receivable
(5,580
)
882
Inventory
(31
)
1,499
Prepaid expenses and other assets
(2,163
)
(1,200
)
Accounts payable
(1,283
)
821
Accrued liabilities
655
(11,642
)
Deferred revenue
6,239
7,628
Net cash provided by operating activities
24,740
19,436
Cash flows from investing activities:
Proceeds from sales of marketable securities
4,550
2,865
Proceeds from maturities of marketable securities
39,148
48,586
Purchases of marketable securities
(21,649
)
(76,141
)
Purchases of property and equipment
(5,021
)
(2,443
)
Net cash provided by (used in) investing activities
17,028
(27,133
)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans
2,970
3,578
Repurchase of common stock
(31,758
)
(11,213
)
Payments for dividends
(7,663
)
—
Net cash used in financing activities
(36,451
)
(7,635
)
Net increase (decrease) in cash and cash equivalents
5,317
(15,332
)
Cash and cash equivalents—beginning of period
78,925
83,281
Cash and cash equivalents—end of period
$
84,242
$
67,949
Non-cash investing and financing activities:
Transfers between inventory and property and equipment
$
567
$
146
Purchases of property and equipment included in accounts payable
$
1
$
11
A10 NETWORKS, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
(unaudited, in thousands, except percentages)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
GAAP gross profit
$
54,488
$
45,538
$
104,321
$
87,882
GAAP gross margin
80.2
%
77.0
%
79.9
%
77.1
%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax
331
303
759
944
Global distribution center transition expense
—
252
—
525
Non-GAAP gross profit
$
54,819
$
46,093
$
105,080
$
89,351
Non-GAAP gross margin
80.6
%
77.9
%
80.4
%
78.4
%
A10 NETWORKS, INC.
RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES
TO NON-GAAP TOTAL OPERATING EXPENSES
(unaudited, in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
GAAP total operating expenses
$
41,345
$
38,322
$
83,176
$
76,642
Non-GAAP adjustments:
Stock-based compensation and related payroll tax
(2,613
)
(2,309
)
(5,866
)
(6,288
)
Amortization expense related to acquisition
—
(252
)
—
(505
)
Global distribution center transition expense
—
(784
)
—
(2,422
)
Non-GAAP total operating expenses
$
38,732
$
34,977
$
77,310
$
67,427
A10 NETWORKS, INC.
RECONCILIATION OF GAAP INCOME FROM OPERATIONS
TO NON-GAAP OPERATING INCOME
(unaudited, in thousands, except percentages)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
GAAP income from operations
$
13,143
$
7,216
$
21,145
$
11,240
GAAP operating margin
19.3
%
12.2
%
16.2
%
9.9
%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax
2,944
2,612
6,625
7,232
Amortization expense related to acquisition
—
252
—
505
Global distribution center transition expense
—
1,036
—
2,947
Non-GAAP operating income
$
16,087
$
11,116
$
27,770
$
21,924
Non-GAAP operating margin
23.7
%
18.8
%
21.3
%
19.2
%
A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME TO
EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(unaudited, in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
GAAP net income
$
10,416
$
6,616
$
16,765
$
9,273
Exclude: Interest and other (income) expense, net
(485
)
112
28
1,295
Exclude: Depreciation and amortization expense
1,868
2,340
3,712
4,753
Exclude: Provision for income taxes
3,212
488
4,352
672
EBITDA
15,011
9,556
24,857
15,993
Exclude: Stock-based compensation and related payroll tax
2,944
2,612
6,625
7,232
Exclude: Global distribution center transition expense
—
1,036
—
2,947
Adjusted EBITDA
$
17,955
$
13,204
$
31,482
$
26,172
View source version on businesswire.com: https://www.businesswire.com/news/home/20220802006014/en/
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.
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