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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 | |
---|---|---|---|---|---|---|---|---|
-0.18 | -1.17% | 15.15 | 15.4399 | 15.095 | 15.40 | 808,041 | 01:00:00 |
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
20-1446869
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
3 West Plumeria Drive, San Jose, California 95134
|
||
(Address of Principal Executive Offices and Zip Code)
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, $0.00001 par value
|
|
ATEN
|
|
New York Stock Exchange
|
Large accelerated filer
|
¨
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
x
|
|
A10 NETWORKS, INC.
FORM 10-Q
TABLE OF CONTENTS
|
|
|
Page No.
|
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
36,067
|
|
|
$
|
40,621
|
|
Marketable securities
|
86,525
|
|
|
87,754
|
|
||
Accounts receivable, net of allowances of $52 and $319, respectively
|
45,397
|
|
|
53,972
|
|
||
Inventory
|
21,081
|
|
|
17,930
|
|
||
Prepaid expenses and other current assets
|
14,509
|
|
|
14,662
|
|
||
Total current assets
|
203,579
|
|
|
214,939
|
|
||
Property and equipment, net
|
8,846
|
|
|
7,262
|
|
||
Goodwill
|
1,307
|
|
|
1,307
|
|
||
Intangible assets
|
2,666
|
|
|
3,748
|
|
||
Other non-current assets
|
12,549
|
|
|
8,620
|
|
||
Total assets
|
$
|
228,947
|
|
|
$
|
235,876
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
5,488
|
|
|
$
|
8,202
|
|
Accrued liabilities
|
20,735
|
|
|
25,291
|
|
||
Deferred revenue
|
59,603
|
|
|
63,874
|
|
||
Total current liabilities
|
85,826
|
|
|
97,367
|
|
||
Deferred revenue, non-current
|
38,470
|
|
|
34,092
|
|
||
Other non-current liabilities
|
2,483
|
|
|
534
|
|
||
Total liabilities
|
126,779
|
|
|
131,993
|
|
||
Commitments and contingencies (Note 2 and Note 6)
|
|
|
|
||||
Stockholders' equity:
|
|||||||
Common stock, $0.00001 par value: 500,000 shares authorized; 76,744 and 74,301 shares issued and outstanding, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in-capital
|
391,998
|
|
|
376,272
|
|
||
Accumulated other comprehensive income (loss)
|
285
|
|
|
(144
|
)
|
||
Accumulated deficit
|
(290,116
|
)
|
|
(272,246
|
)
|
||
Total stockholders' equity
|
102,168
|
|
|
103,883
|
|
||
Total liabilities and stockholders' equity
|
$
|
228,947
|
|
|
$
|
235,876
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Products
|
$
|
30,052
|
|
|
$
|
38,265
|
|
|
$
|
85,067
|
|
|
$
|
105,638
|
|
Services
|
22,781
|
|
|
22,237
|
|
|
67,245
|
|
|
64,760
|
|
||||
Total revenue
|
52,833
|
|
|
60,502
|
|
|
152,312
|
|
|
170,398
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Products
|
7,108
|
|
|
8,790
|
|
|
21,515
|
|
|
24,979
|
|
||||
Services
|
4,812
|
|
|
4,224
|
|
|
13,926
|
|
|
13,106
|
|
||||
Total cost of revenue
|
11,920
|
|
|
13,014
|
|
|
35,441
|
|
|
38,085
|
|
||||
Gross profit
|
40,913
|
|
|
47,488
|
|
|
116,871
|
|
|
132,313
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
22,056
|
|
|
24,539
|
|
|
70,165
|
|
|
77,231
|
|
||||
Research and development
|
15,784
|
|
|
15,505
|
|
|
46,567
|
|
|
49,874
|
|
||||
General and administrative
|
2,854
|
|
|
9,012
|
|
|
17,311
|
|
|
30,464
|
|
||||
Total operating expenses
|
40,694
|
|
|
49,056
|
|
|
134,043
|
|
|
157,569
|
|
||||
Income (loss) from operations
|
219
|
|
|
(1,568
|
)
|
|
(17,172
|
)
|
|
(25,256
|
)
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(30
|
)
|
|
(34
|
)
|
|
(222
|
)
|
|
(99
|
)
|
||||
Interest and other income (expense), net
|
254
|
|
|
(131
|
)
|
|
397
|
|
|
6
|
|
||||
Total non-operating income (expense), net
|
224
|
|
|
(165
|
)
|
|
175
|
|
|
(93
|
)
|
||||
Income (loss) before provision for income taxes
|
443
|
|
|
(1,733
|
)
|
|
(16,997
|
)
|
|
(25,349
|
)
|
||||
Provision for income taxes
|
270
|
|
|
74
|
|
|
873
|
|
|
660
|
|
||||
Net income (loss)
|
$
|
173
|
|
|
$
|
(1,807
|
)
|
|
$
|
(17,870
|
)
|
|
$
|
(26,009
|
)
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.00
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.36
|
)
|
Diluted
|
$
|
0.00
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.36
|
)
|
Weighted-average shares used in computing net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
76,618
|
|
|
72,707
|
|
|
75,611
|
|
|
72,550
|
|
||||
Diluted
|
79,093
|
|
|
72,707
|
|
|
75,611
|
|
|
72,550
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
173
|
|
|
$
|
(1,807
|
)
|
|
$
|
(17,870
|
)
|
|
$
|
(26,009
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on marketable securities
|
27
|
|
|
64
|
|
|
429
|
|
|
(34
|
)
|
||||
Comprehensive income (loss)
|
$
|
200
|
|
|
$
|
(1,743
|
)
|
|
$
|
(17,441
|
)
|
|
$
|
(26,043
|
)
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Shares of common stock issued and outstanding
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance at June 30, 2019 and 2018 and December 31, 2018 and December 31, 2107, respectively
|
76,082
|
|
|
72,707
|
|
|
74,301
|
|
|
71,692
|
|
|||||
|
Common stock issued under employee equity incentive plans
|
662
|
|
|
—
|
|
|
2,443
|
|
|
1,015
|
|
|||||
|
|
Ending balance
|
76,744
|
|
|
72,707
|
|
|
76,744
|
|
|
72,707
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Stockholders' equity
|
|
|
|
|
|
|
|
||||||||||
|
Beginning balance at June 30, 2019 and 2018 and December 31, 2018 and December 31, 2107, respectively
|
$
|
98,326
|
|
|
$
|
98,473
|
|
|
$
|
103,883
|
|
|
$
|
98,386
|
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|||||||||
|
|
Beginning balance
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
Common stock issued under employee equity incentive plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
Ending balance
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Additional paid-in capital:
|
|
|
|
|
|
|
|
|||||||||
|
|
Beginning balance
|
$
|
388,356
|
|
|
$
|
367,524
|
|
|
$
|
376,272
|
|
|
$
|
355,533
|
|
|
|
Common stock issued under employee equity incentive plans
|
245
|
|
|
—
|
|
|
3,505
|
|
|
1,269
|
|
||||
|
|
Stock-based compensation
|
3,397
|
|
|
2,333
|
|
|
12,221
|
|
|
13,055
|
|
||||
|
|
Ending balance
|
$
|
391,998
|
|
|
$
|
369,857
|
|
|
$
|
391,998
|
|
|
$
|
369,857
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|||||||||
|
|
Beginning balance
|
$
|
258
|
|
|
$
|
(221
|
)
|
|
$
|
(144
|
)
|
|
$
|
(123
|
)
|
|
|
Unrealized gain (loss) on marketable securities, net of tax
|
27
|
|
|
64
|
|
|
429
|
|
|
(34
|
)
|
||||
|
|
Ending balance
|
$
|
285
|
|
|
$
|
(157
|
)
|
|
$
|
285
|
|
|
$
|
(157
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Accumulated deficit:
|
|
|
|
|
|
|
|
|||||||||
|
|
Beginning balance
|
$
|
(290,289
|
)
|
|
$
|
(268,831
|
)
|
|
$
|
(272,246
|
)
|
|
$
|
(257,025
|
)
|
|
|
Cumulative effect adjustment from adoption of ASU 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
12,396
|
|
||||
|
|
Net income (loss)
|
173
|
|
|
(1,807
|
)
|
|
(17,870
|
)
|
|
(26,009
|
)
|
||||
|
|
Ending balance
|
$
|
(290,116
|
)
|
|
$
|
(270,638
|
)
|
|
$
|
(290,116
|
)
|
|
$
|
(270,638
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total stockholders' equity
|
$
|
102,168
|
|
|
$
|
99,063
|
|
|
$
|
102,168
|
|
|
$
|
99,063
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(17,870
|
)
|
|
$
|
(26,009
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
7,433
|
|
|
6,020
|
|
||
Stock-based compensation
|
12,221
|
|
|
13,055
|
|
||
Other non-cash items
|
(422
|
)
|
|
152
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
8,735
|
|
|
(3,144
|
)
|
||
Inventory
|
(4,222
|
)
|
|
1,550
|
|
||
Prepaid expenses and other assets
|
468
|
|
|
(868
|
)
|
||
Accounts payable
|
(3,172
|
)
|
|
806
|
|
||
Accrued and other liabilities
|
(9,183
|
)
|
|
(1,482
|
)
|
||
Deferred revenue
|
107
|
|
|
4,219
|
|
||
Other
|
—
|
|
|
183
|
|
||
Net cash used in operating activities
|
(5,905
|
)
|
|
(5,518
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Proceeds from sales of marketable securities
|
22,189
|
|
|
23,194
|
|
||
Proceeds from maturities of marketable securities
|
33,449
|
|
|
41,732
|
|
||
Purchases of marketable securities
|
(53,852
|
)
|
|
(67,754
|
)
|
||
Purchase of investment
|
—
|
|
|
(1,000
|
)
|
||
Purchases of property and equipment
|
(3,939
|
)
|
|
(2,252
|
)
|
||
Net cash used in investing activities
|
(2,153
|
)
|
|
(6,080
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of common stock under employee equity incentive plans
|
3,505
|
|
|
1,269
|
|
||
Other
|
(1
|
)
|
|
(76
|
)
|
||
Net cash provided by financing activities
|
3,504
|
|
|
1,193
|
|
||
Net decrease in cash and cash equivalents
|
(4,554
|
)
|
|
(10,405
|
)
|
||
Cash and cash equivalents - beginning of period
|
40,621
|
|
|
46,567
|
|
||
Cash and cash equivalents - end of period
|
$
|
36,067
|
|
|
$
|
36,162
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Inventory transfers to property and equipment
|
$
|
1,070
|
|
|
$
|
925
|
|
Purchases of property and equipment included in accounts payable
|
$
|
459
|
|
|
$
|
78
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||
Customers
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Customer A (a distribution channel partner)
|
|
16%
|
|
*
|
|
11%
|
|
*
|
Customer B (a distribution channel partner)
|
|
*
|
|
16%
|
|
*
|
|
14%
|
Customer C (a distribution channel partner)
|
|
11%
|
|
*
|
|
13%
|
|
*
|
|
|
September 30, 2019
|
||
Operating leases
|
|
|||
Right-of-use assets:
|
|
|||
|
Other non-current assets
|
$
|
4,076
|
|
Total right-of-use assets
|
$
|
4,076
|
|
|
|
|
|
||
Lease liabilities:
|
|
|||
|
Accrued liabilities
|
$
|
2,392
|
|
|
Other non-current liabilities
|
1,997
|
|
|
Total operating lease liabilities
|
$
|
4,389
|
|
Remainder of 2019
|
$
|
930
|
|
|
2020
|
1,924
|
|
||
2021
|
1,314
|
|
||
2022
|
344
|
|
||
Total lease payments
|
4,512
|
|
||
Less: imputed interest
|
(123
|
)
|
||
Present value of lease liabilities
|
$
|
4,389
|
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
|
|
|
|
|||||
Operating lease costs
|
$
|
821
|
|
|
$
|
2,566
|
|
|
Short-term lease costs
|
138
|
|
|
413
|
|
|||
Total lease costs
|
$
|
959
|
|
|
$
|
2,979
|
|
|
|
|
|
|
|
|
September 30, 2019
|
||
|
|
||
Weighted-average remaining term (years)
|
2.02
|
|
|
Weighted-average discount rate
|
3.13
|
%
|
|
|
Nine Months Ended September 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|||
|
Operating cash flows from operating leases
|
$
|
2,934
|
|
|
|
|
||
|
Right-of-use assets obtained in exchange for new lease liabilities
|
$
|
549
|
|
2019
|
$
|
3,907
|
|
|
2020
|
1,921
|
|
||
2021
|
1,194
|
|
||
2022
|
313
|
|
||
Total
|
$
|
7,335
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||||||||||
Certificates of deposit
|
|
$
|
11,098
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
11,114
|
|
|
$
|
11,000
|
|
|
$
|
7
|
|
|
$
|
(3
|
)
|
|
$
|
11,004
|
|
Corporate securities
|
|
51,289
|
|
|
226
|
|
|
(5
|
)
|
|
51,510
|
|
|
46,442
|
|
|
11
|
|
|
(116
|
)
|
|
46,337
|
|
||||||||
U.S. Treasury and agency securities
|
|
5,735
|
|
|
1
|
|
|
(1
|
)
|
|
5,735
|
|
|
1,748
|
|
|
—
|
|
|
(12
|
)
|
|
1,736
|
|
||||||||
Commercial paper
|
|
4,482
|
|
|
3
|
|
|
(1
|
)
|
|
4,484
|
|
|
12,327
|
|
|
1
|
|
|
(5
|
)
|
|
12,323
|
|
||||||||
Asset-backed securities
|
|
13,636
|
|
|
46
|
|
|
—
|
|
|
13,682
|
|
|
16,381
|
|
|
5
|
|
|
(32
|
)
|
|
16,354
|
|
||||||||
Total
|
|
$
|
86,240
|
|
|
$
|
292
|
|
|
$
|
(7
|
)
|
|
$
|
86,525
|
|
|
$
|
87,898
|
|
|
$
|
24
|
|
|
$
|
(168
|
)
|
|
$
|
87,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Less than 1 year
|
$
|
44,550
|
|
|
$
|
44,708
|
|
Mature in 1 - 3 years
|
41,690
|
|
|
41,817
|
|
||
Total
|
$
|
86,240
|
|
|
$
|
86,525
|
|
|
|
|
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
September 30, 2019
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||
Corporate securities
|
$
|
1,647
|
|
|
$
|
(1
|
)
|
|
$
|
900
|
|
|
$
|
—
|
|
|
$
|
2,547
|
|
|
$
|
(1
|
)
|
U.S. Treasury and agency securities
|
6,999
|
|
|
(5
|
)
|
|
1,489
|
|
|
(1
|
)
|
|
8,488
|
|
|
(6
|
)
|
||||||
Asset-backed securities
|
1,000
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
1,006
|
|
|
—
|
|
||||||
Total
|
$
|
9,646
|
|
|
$
|
(6
|
)
|
|
$
|
2,395
|
|
|
$
|
(1
|
)
|
|
$
|
12,041
|
|
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
December 31, 2018
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||
Certificates of deposit
|
$
|
2,997
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,997
|
|
|
$
|
(3
|
)
|
Corporate securities
|
29,435
|
|
|
(68
|
)
|
|
7,601
|
|
|
(48
|
)
|
|
37,036
|
|
|
(116
|
)
|
||||||
U.S. Treasury and agency securities
|
992
|
|
|
(7
|
)
|
|
744
|
|
|
(5
|
)
|
|
1,736
|
|
|
(12
|
)
|
||||||
Commercial paper
|
9,888
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
9,888
|
|
|
(5
|
)
|
||||||
Asset-backed securities
|
8,499
|
|
|
(15
|
)
|
|
4,758
|
|
|
(17
|
)
|
|
13,257
|
|
|
(32
|
)
|
||||||
Total
|
$
|
51,811
|
|
|
$
|
(98
|
)
|
|
$
|
13,103
|
|
|
$
|
(70
|
)
|
|
$
|
64,914
|
|
|
$
|
(168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Cash
|
|
$
|
34,977
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,977
|
|
|
$
|
39,113
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,113
|
|
Cash equivalents
|
|
1,090
|
|
|
—
|
|
|
—
|
|
|
1,090
|
|
|
1,508
|
|
|
—
|
|
|
—
|
|
|
1,508
|
|
||||||||
Certificates of deposit
|
|
—
|
|
|
11,114
|
|
|
—
|
|
|
11,114
|
|
|
—
|
|
|
11,004
|
|
|
—
|
|
|
11,004
|
|
||||||||
Corporate securities
|
|
—
|
|
|
51,510
|
|
|
—
|
|
|
51,510
|
|
|
—
|
|
|
46,337
|
|
|
—
|
|
|
46,337
|
|
||||||||
U.S. Treasury and agency securities
|
|
—
|
|
|
5,735
|
|
|
—
|
|
|
5,735
|
|
|
—
|
|
|
1,736
|
|
|
—
|
|
|
1,736
|
|
||||||||
Commercial paper
|
|
—
|
|
|
4,484
|
|
|
—
|
|
|
4,484
|
|
|
—
|
|
|
12,323
|
|
|
—
|
|
|
12,323
|
|
||||||||
Asset-backed securities
|
|
—
|
|
|
13,682
|
|
|
—
|
|
|
13,682
|
|
|
—
|
|
|
16,354
|
|
|
—
|
|
|
16,354
|
|
||||||||
Total
|
|
$
|
36,067
|
|
|
$
|
86,525
|
|
|
$
|
—
|
|
|
$
|
122,592
|
|
|
$
|
40,621
|
|
|
$
|
87,754
|
|
|
$
|
—
|
|
|
$
|
128,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
|
||||||
Raw materials
|
$
|
8,197
|
|
|
$
|
7,979
|
|
Finished goods
|
12,884
|
|
|
9,951
|
|
||
Total inventory
|
$
|
21,081
|
|
|
$
|
17,930
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
Prepaid expenses
|
$
|
7,324
|
|
|
$
|
6,679
|
|
Deferred contract acquisition costs
|
5,360
|
|
|
6,564
|
|
||
Other
|
1,825
|
|
|
1,419
|
|
||
Total prepaid expenses and other current assets
|
$
|
14,509
|
|
|
$
|
14,662
|
|
|
Useful Life
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
(in years)
|
|
|
|
|
||||
Equipment
|
1 - 3
|
|
$
|
50,490
|
|
|
$
|
49,804
|
|
Software
|
1 - 3
|
|
4,459
|
|
|
4,088
|
|
||
Furniture and fixtures
|
1 - 3
|
|
967
|
|
|
967
|
|
||
Leasehold improvements
|
2 - 8
|
|
3,869
|
|
|
3,832
|
|
||
Construction in progress
|
|
|
2,450
|
|
|
160
|
|
||
Property and equipment, gross
|
|
|
62,235
|
|
|
58,851
|
|
||
Less: accumulated depreciation
|
|
|
(53,389
|
)
|
|
(51,589
|
)
|
||
Property and equipment, net
|
|
|
$
|
8,846
|
|
|
$
|
7,262
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
5,050
|
|
|
$
|
(3,282
|
)
|
|
$
|
1,768
|
|
|
$
|
5,050
|
|
|
$
|
(2,525
|
)
|
|
$
|
2,525
|
|
Patents
|
2,936
|
|
|
(2,038
|
)
|
|
$
|
898
|
|
|
2,936
|
|
|
(1,713
|
)
|
|
1,223
|
|
|||||
Total intangible assets
|
$
|
7,986
|
|
|
$
|
(5,320
|
)
|
|
$
|
2,666
|
|
|
$
|
7,986
|
|
|
$
|
(4,238
|
)
|
|
$
|
3,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|||||
Remainder of 2019
|
|
$
|
361
|
|
|||
2020
|
|
1,442
|
|
||||
2021
|
|
863
|
|
||||
Total
|
|
$
|
2,666
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
Accrued compensation and benefits
|
$
|
11,127
|
|
|
$
|
15,283
|
|
Accrued tax liabilities
|
3,047
|
|
|
4,455
|
|
||
Lease liability
|
2,392
|
|
|
—
|
|
||
Other
|
4,169
|
|
|
5,553
|
|
||
Total accrued liabilities
|
$
|
20,735
|
|
|
$
|
25,291
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
Deferred revenue:
|
|
|
|
||||
Products
|
$
|
6,813
|
|
|
$
|
5,216
|
|
Services
|
91,260
|
|
|
92,750
|
|
||
Total deferred revenue
|
98,073
|
|
|
97,966
|
|
||
Less: current portion
|
(59,603
|
)
|
|
(63,874
|
)
|
||
Non-current portion
|
$
|
38,470
|
|
|
$
|
34,092
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Stock-based compensation by type of award:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
$
|
153
|
|
|
$
|
291
|
|
|
$
|
494
|
|
|
$
|
922
|
|
Stock awards
|
2,981
|
|
|
2,042
|
|
|
10,977
|
|
|
6,976
|
|
||||
Employee stock purchase rights (1)
|
263
|
|
|
—
|
|
|
750
|
|
|
5,157
|
|
||||
|
$
|
3,397
|
|
|
$
|
2,333
|
|
|
$
|
12,221
|
|
|
$
|
13,055
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation by category of expense:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
317
|
|
|
$
|
187
|
|
|
$
|
1,099
|
|
|
$
|
1,277
|
|
Sales and marketing
|
1,166
|
|
|
619
|
|
|
4,347
|
|
|
4,085
|
|
||||
Research and development
|
1,498
|
|
|
960
|
|
|
4,422
|
|
|
5,345
|
|
||||
General and administrative
|
416
|
|
|
567
|
|
|
2,353
|
|
|
2,348
|
|
||||
|
$
|
3,397
|
|
|
$
|
2,333
|
|
|
$
|
12,221
|
|
|
$
|
13,055
|
|
|
|
|
|
|
|
|
|
(1)
|
Amount for the nine months ended September 30, 2018 includes $4.1 million of accelerated stock-based compensation expense. In March 2018, as a result of a suspension of the 2014 Purchase Plan due to our non-timely filing status, all unrecognized stock-based compensation expense related to the 2014 Purchase Plan was accelerated and recognized within the condensed consolidated statement of operations.
|
|
Number of Shares
(thousands)
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
(years)
|
|
Aggregate Intrinsic Value
(thousands)
|
|||||
Outstanding as of December 31, 2018
|
4,674
|
|
|
$
|
5.19
|
|
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Exercised
|
(624
|
)
|
|
$
|
2.94
|
|
|
|
|
|
||
Canceled
|
(106
|
)
|
|
$
|
9.15
|
|
|
|
|
|
|
|
Outstanding as of September 30, 2019
|
3,944
|
|
|
$
|
5.44
|
|
|
4.67
|
|
$
|
7,559
|
|
Vested and exercisable as of September 30, 2019
|
3,608
|
|
|
$
|
5.33
|
|
|
4.33
|
|
$
|
7,301
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
(thousands)
|
|
Weighted-Average Grant Date Fair Value
|
|
Weighted-Average Remaining Vesting Term
(years)
|
|||
Nonvested as of December 31, 2018
|
5,974
|
|
|
$
|
6.51
|
|
|
|
Granted
|
2,623
|
|
|
$
|
7.15
|
|
|
|
Released
|
(1,496
|
)
|
|
$
|
6.61
|
|
|
|
Canceled
|
(900
|
)
|
|
$
|
6.52
|
|
|
|
Nonvested as of September 30, 2019
|
6,201
|
|
|
$
|
6.76
|
|
|
1.7
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic and diluted net income (loss) per share
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
173
|
|
|
$
|
(1,807
|
)
|
|
$
|
(17,870
|
)
|
|
$
|
(26,009
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic
|
76,618
|
|
|
72,707
|
|
|
75,611
|
|
|
72,550
|
|
||||
Effect of dilutive potential common shares from stock options, stock awards and employee stock purchase plan
|
2,475
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average shares outstanding - diluted
|
79,093
|
|
|
72,707
|
|
|
75,611
|
|
|
72,550
|
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.36
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options, restricted stock units and employee stock purchase rights
|
9,290
|
|
|
8,546
|
|
|
9,235
|
|
|
9,395
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States
|
$
|
19,584
|
|
|
$
|
27,003
|
|
|
$
|
52,962
|
|
|
$
|
78,124
|
|
Japan
|
15,157
|
|
|
14,023
|
|
|
43,203
|
|
|
38,971
|
|
||||
Asia Pacific, excluding Japan
|
8,379
|
|
|
9,331
|
|
|
26,368
|
|
|
27,436
|
|
||||
EMEA
|
6,546
|
|
|
8,119
|
|
|
20,345
|
|
|
20,038
|
|
||||
Other
|
3,167
|
|
|
2,026
|
|
|
9,434
|
|
|
5,829
|
|
||||
Total revenue
|
$
|
52,833
|
|
|
$
|
60,502
|
|
|
$
|
152,312
|
|
|
$
|
170,398
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
United States
|
$
|
7,902
|
|
|
$
|
5,525
|
|
Japan
|
2,931
|
|
|
1,108
|
|
||
Other
|
2,089
|
|
|
629
|
|
||
Total
|
$
|
12,922
|
|
|
$
|
7,262
|
|
|
|
|
|
•
|
A decrease in total deferred revenue of $4.0 million primarily due to the removal of the current limitation on contingent revenue that would have accelerated revenue recognition for certain of our historical revenue contracts; and
|
•
|
Recognition of a deferred commissions asset of $8.4 million due to the requirement under the new standard to recognize incremental customer acquisition costs in our condensed consolidated statement of operations as the related performance obligations are met as compared to the previous recognition to expense as incurred.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Accounts receivable, net
|
$
|
45,397
|
|
|
$
|
53,972
|
|
Deferred revenue, current
|
59,603
|
|
|
63,874
|
|
||
Deferred revenue, non-current
|
38,470
|
|
|
34,092
|
|
|
|
September 30, 2019
|
||
|
|
|
||
Within 1 year
|
$
|
59,603
|
|
|
Next 2 to 3 years
|
30,417
|
|
||
Thereafter
|
8,053
|
|
||
|
Total
|
$
|
98,073
|
|
|
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
our ability to provide customers with improved benefits relating to their applications;
|
•
|
our ability to maintain an adequate rate of revenue growth and other factors contributing to such growth;
|
•
|
our ability to successfully anticipate market needs and opportunities;
|
•
|
our business plan and our ability to effectively manage our growth;
|
•
|
our plans to expand our sales efforts;
|
•
|
our plans to introduce new products;
|
•
|
our ability to timely file financial, periodic and current reports required by the Exchange Act;
|
•
|
loss or delay of expected purchases by our largest end-customers;
|
•
|
our ability to further penetrate our existing customer base;
|
•
|
our ability to displace existing products in established markets;
|
•
|
continued growth in markets relating to network security;
|
•
|
our ability to timely and effectively scale and adapt our existing technology;
|
•
|
our ability to innovate new products and bring them to market in a timely manner;
|
•
|
our ability to expand internationally and any related impact on profitability;
|
•
|
the effects of increased competition in our market and our ability to compete effectively;
|
•
|
the effects of seasonal trends on our results of operations;
|
•
|
our expectations concerning relationships with third parties;
|
•
|
the attraction, retention and growth of qualified employees and key personnel;
|
•
|
our ability to achieve or maintain profitability while continuing to invest in our sales, marketing and research and development teams;
|
•
|
our expectations regarding our future expenses;
|
•
|
our exploration of strategic alternatives;
|
•
|
variations in product mix or geographic locations of our sales;
|
•
|
fluctuations in currency exchange rates;
|
•
|
tariffs affecting us;
|
•
|
increased cost requirements of being a public company and future sales of substantial amounts of our common stock in the public markets;
|
•
|
the cost and potential outcomes of litigation;
|
•
|
our ability to maintain, protect, and enhance our brand and intellectual property;
|
•
|
future acquisitions of or investments in complementary companies, products, services or technologies;
|
•
|
our ability to effectively integrate operations of entities we have acquired or may acquire; and
|
•
|
actions relating to the remediation of identified material weaknesses.
|
|
||||||||||||||||||||
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|||||||||||||||
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
30,052
|
|
|
56.9
|
%
|
|
$
|
38,265
|
|
|
63.2
|
%
|
|
$
|
(8,213
|
)
|
|
(21.5
|
)%
|
Services
|
22,781
|
|
|
43.1
|
|
|
22,237
|
|
|
36.8
|
|
|
544
|
|
|
2.4
|
|
|||
Total revenue
|
52,833
|
|
|
100.0
|
|
|
60,502
|
|
|
100.0
|
|
|
(7,669
|
)
|
|
(12.7
|
)
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
7,108
|
|
|
13.5
|
|
|
8,790
|
|
|
14.5
|
|
|
(1,682
|
)
|
|
(19.1
|
)
|
|||
Services
|
4,812
|
|
|
9.1
|
|
|
4,224
|
|
|
7.0
|
|
|
588
|
|
|
13.9
|
|
|||
Total cost of revenue
|
11,920
|
|
|
22.6
|
|
|
13,014
|
|
|
21.5
|
|
|
(1,094
|
)
|
|
(8.4
|
)
|
|||
Gross profit
|
40,913
|
|
|
77.4
|
|
|
47,488
|
|
|
78.5
|
|
|
(6,575
|
)
|
|
(13.8
|
)
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
22,056
|
|
|
41.7
|
|
|
24,539
|
|
|
40.6
|
|
|
(2,483
|
)
|
|
(10.1
|
)
|
|||
Research and development
|
15,784
|
|
|
29.9
|
|
|
15,505
|
|
|
25.6
|
|
|
279
|
|
|
1.8
|
|
|||
General and administrative
|
2,854
|
|
|
5.4
|
|
|
9,012
|
|
|
14.9
|
|
|
(6,158
|
)
|
|
(68.3
|
)
|
|||
Total operating expenses
|
40,694
|
|
|
77.0
|
|
|
49,056
|
|
|
81.1
|
|
|
(8,362
|
)
|
|
(17.0
|
)
|
|||
Income (loss) from operations
|
219
|
|
|
0.4
|
|
|
(1,568
|
)
|
|
(2.6
|
)
|
|
1,787
|
|
|
(114.0
|
)
|
|||
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense
|
(30
|
)
|
|
(0.1
|
)
|
|
(34
|
)
|
|
(0.1
|
)
|
|
4
|
|
|
(11.8
|
)
|
|||
Interest and other income (expense), net
|
254
|
|
|
0.5
|
|
|
(131
|
)
|
|
(0.2
|
)
|
|
385
|
|
|
293.9
|
|
|||
Total non-operating income (expense), net
|
224
|
|
|
0.4
|
|
|
(165
|
)
|
|
(0.3
|
)
|
|
389
|
|
|
235.8
|
|
|||
Income (loss) before provision for income taxes
|
443
|
|
|
0.8
|
|
|
(1,733
|
)
|
|
(2.9
|
)
|
|
2,176
|
|
|
(125.6
|
)
|
|||
Provision for income taxes
|
270
|
|
|
0.5
|
|
|
74
|
|
|
0.1
|
|
|
196
|
|
|
264.9
|
|
|||
Net income (loss)
|
$
|
173
|
|
|
0.3
|
%
|
|
$
|
(1,807
|
)
|
|
(3.0
|
)%
|
|
$
|
1,980
|
|
|
(109.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
|||||||||||||||
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
85,067
|
|
|
55.9
|
%
|
|
$
|
105,638
|
|
|
62.0
|
%
|
|
$
|
(20,571
|
)
|
|
(19.5
|
)%
|
|
Services
|
67,245
|
|
|
44.1
|
|
|
64,760
|
|
|
38.0
|
|
|
2,485
|
|
|
3.8
|
|
|
|||
Total revenue
|
152,312
|
|
|
100.0
|
|
|
170,398
|
|
|
100.0
|
|
|
(18,086
|
)
|
|
(10.6
|
)
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
21,515
|
|
|
14.2
|
|
|
24,979
|
|
|
14.7
|
|
|
(3,464
|
)
|
|
(13.9
|
)
|
|
|||
Services
|
13,926
|
|
|
9.1
|
|
|
13,106
|
|
|
7.7
|
|
|
820
|
|
|
6.3
|
|
|
|||
Total cost of revenue
|
35,441
|
|
|
23.3
|
|
|
38,085
|
|
|
22.4
|
|
|
(2,644
|
)
|
|
(6.9
|
)
|
|
|||
Gross profit
|
116,871
|
|
|
76.7
|
|
|
132,313
|
|
|
77.6
|
|
|
(15,442
|
)
|
|
(11.7
|
)
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
70,165
|
|
|
46.1
|
|
|
77,231
|
|
|
45.4
|
|
|
(7,066
|
)
|
|
(9.1
|
)
|
|
|||
Research and development
|
46,567
|
|
|
30.6
|
|
|
49,874
|
|
|
29.3
|
|
|
(3,307
|
)
|
|
(6.6
|
)
|
|
|||
General and administrative
|
17,311
|
|
|
11.3
|
|
|
30,464
|
|
|
17.9
|
|
|
(13,153
|
)
|
|
(43.2
|
)
|
|
|||
Total operating expenses
|
134,043
|
|
|
88.0
|
|
|
157,569
|
|
|
92.6
|
|
|
(23,526
|
)
|
|
(14.9
|
)
|
|
|||
Loss from operations
|
(17,172
|
)
|
|
(11.3
|
)
|
|
(25,256
|
)
|
|
(14.8
|
)
|
|
8,084
|
|
|
(32.0
|
)
|
|
|||
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense
|
(222
|
)
|
|
(0.2
|
)
|
|
(99
|
)
|
|
(0.1
|
)
|
|
(123
|
)
|
|
124.2
|
|
|
|||
Interest and other income (expense), net
|
397
|
|
|
0.3
|
|
|
6
|
|
|
0.1
|
|
|
391
|
|
|
6,516.7
|
|
|
|||
Total non-operating income (expense), net
|
175
|
|
|
0.1
|
|
|
(93
|
)
|
|
(0.1
|
)
|
|
268
|
|
|
(288.2
|
)
|
|
|||
Loss before income taxes
|
(16,997
|
)
|
|
(11.2
|
)
|
|
(25,349
|
)
|
|
(14.9
|
)
|
|
8,352
|
|
|
(32.9
|
)
|
|
|||
Provision for income taxes
|
873
|
|
|
0.5
|
|
|
660
|
|
|
0.4
|
|
|
213
|
|
|
32.3
|
|
|
|||
Net loss
|
$
|
(17,870
|
)
|
|
(11.7
|
)%
|
|
$
|
(26,009
|
)
|
|
(15.3)%
|
|
$
|
8,139
|
|
|
(31.3
|
)%
|
|
|
Three Months Ended September 30,
|
|
|
|||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|||||||||||||||
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
30,052
|
|
|
57
|
%
|
|
$
|
38,265
|
|
|
63
|
%
|
|
$
|
(8,213
|
)
|
|
(21
|
)%
|
Services
|
22,781
|
|
|
43
|
|
|
22,237
|
|
|
37
|
|
|
544
|
|
|
2
|
|
|||
Total revenue
|
$
|
52,833
|
|
|
100
|
%
|
|
$
|
60,502
|
|
|
100
|
%
|
|
$
|
(7,669
|
)
|
|
(13
|
)%
|
Revenue by geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
19,584
|
|
|
37
|
%
|
|
$
|
27,003
|
|
|
45
|
%
|
|
$
|
(7,419
|
)
|
|
(27
|
)%
|
Japan
|
15,157
|
|
|
29
|
|
|
14,023
|
|
|
23
|
|
|
1,134
|
|
|
8
|
|
|||
Asia Pacific, excluding Japan
|
8,379
|
|
|
16
|
|
|
9,331
|
|
|
16
|
|
|
(952
|
)
|
|
(10
|
)
|
|||
EMEA
|
6,546
|
|
|
12
|
|
|
8,119
|
|
|
13
|
|
|
(1,573
|
)
|
|
(19
|
)
|
|||
Other
|
3,167
|
|
|
6
|
|
|
2,026
|
|
|
3
|
|
|
1,141
|
|
|
56
|
|
|||
Total revenue
|
$
|
52,833
|
|
|
100
|
%
|
|
$
|
60,502
|
|
|
100
|
%
|
|
$
|
(7,669
|
)
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|||||||||||||||
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent of Total Revenue
|
|
Amount
|
|
Percent
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
85,067
|
|
|
56
|
%
|
|
$
|
105,638
|
|
|
62
|
%
|
|
$
|
(20,571
|
)
|
|
(19
|
)%
|
Services
|
67,245
|
|
|
44
|
|
|
64,760
|
|
|
38
|
|
|
2,485
|
|
|
4
|
|
|||
Total revenue
|
$
|
152,312
|
|
|
100
|
%
|
|
$
|
170,398
|
|
|
100
|
%
|
|
$
|
(18,086
|
)
|
|
(11
|
)%
|
Revenue by geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
North America
|
$
|
52,962
|
|
|
35
|
%
|
|
$
|
78,124
|
|
|
46
|
%
|
|
$
|
(25,162
|
)
|
|
(32
|
)%
|
Japan
|
43,203
|
|
|
28
|
|
|
38,971
|
|
|
23
|
|
|
4,232
|
|
|
11
|
|
|||
Asia Pacific, excluding Japan
|
26,368
|
|
|
17
|
|
|
27,436
|
|
|
16
|
|
|
(1,068
|
)
|
|
(4
|
)
|
|||
EMEA
|
20,345
|
|
|
13
|
|
|
20,038
|
|
|
12
|
|
|
307
|
|
|
2
|
|
|||
Other
|
9,434
|
|
|
7
|
|
|
5,829
|
|
|
3
|
|
|
3,605
|
|
|
62
|
|
|||
Total revenue
|
$
|
152,312
|
|
|
100
|
%
|
|
$
|
170,398
|
|
|
100
|
%
|
|
$
|
(18,086
|
)
|
|
(11
|
)%
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Products
|
$
|
7,108
|
|
|
$
|
8,790
|
|
|
$
|
(1,682
|
)
|
|
(19.1
|
)%
|
Services
|
4,812
|
|
|
4,224
|
|
|
588
|
|
|
13.9
|
|
|||
Total cost of revenue
|
$
|
11,920
|
|
|
$
|
13,014
|
|
|
$
|
(1,094
|
)
|
|
(8.4
|
)%
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Products
|
$
|
21,515
|
|
|
$
|
24,979
|
|
|
$
|
(3,464
|
)
|
|
(13.9
|
)%
|
Services
|
13,926
|
|
|
13,106
|
|
|
820
|
|
|
6.3
|
|
|||
Total cost of revenue
|
$
|
35,441
|
|
|
$
|
38,085
|
|
|
$
|
(2,644
|
)
|
|
(6.9
|
)%
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|||||||||||||||
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
|||||||||
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Products
|
$
|
22,944
|
|
|
76.3
|
%
|
|
$
|
29,475
|
|
|
77.0
|
%
|
|
$
|
(6,531
|
)
|
|
(0.7
|
)%
|
Services
|
17,969
|
|
|
78.9
|
|
|
18,013
|
|
|
81.0
|
|
|
(44
|
)
|
|
(2.1
|
)
|
|||
Total gross profit
|
$
|
40,913
|
|
|
77.4
|
%
|
|
$
|
47,488
|
|
|
78.5
|
%
|
|
$
|
(6,575
|
)
|
|
(1.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|||||||||||||||
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
|
Amount
|
|
Gross Margin
|
|||||||||
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Products
|
$
|
63,552
|
|
|
74.7
|
%
|
|
$
|
80,659
|
|
|
76.4
|
%
|
|
$
|
(17,107
|
)
|
|
(1.7
|
)%
|
Services
|
53,319
|
|
|
79.3
|
|
|
51,654
|
|
|
79.8
|
|
|
1,665
|
|
|
(0.5
|
)
|
|||
Total gross profit
|
$
|
116,871
|
|
|
76.7
|
%
|
|
$
|
132,313
|
|
|
77.6
|
%
|
|
$
|
(15,442
|
)
|
|
(0.9
|
)%
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Sales and marketing
|
$
|
22,056
|
|
|
$
|
24,539
|
|
|
$
|
(2,483
|
)
|
|
(10.1
|
)%
|
Research and development
|
15,784
|
|
|
15,505
|
|
|
279
|
|
|
1.8
|
|
|||
General and administrative
|
2,854
|
|
|
9,012
|
|
|
(6,158
|
)
|
|
(68.3
|
)
|
|||
Total operating expenses
|
$
|
40,694
|
|
|
$
|
49,056
|
|
|
$
|
(8,362
|
)
|
|
(17.0
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Sales and marketing
|
$
|
70,165
|
|
|
$
|
77,231
|
|
|
$
|
(7,066
|
)
|
|
(9.1
|
)%
|
Research and development
|
46,567
|
|
|
49,874
|
|
|
(3,307
|
)
|
|
(6.6
|
)
|
|||
General and administrative
|
17,311
|
|
|
30,464
|
|
|
(13,153
|
)
|
|
(43.2
|
)
|
|||
Total operating expenses
|
$
|
134,043
|
|
|
$
|
157,569
|
|
|
$
|
(23,526
|
)
|
|
(14.9
|
)%
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash (used in) provided by:
|
|
|
|
||||
Operating activities
|
$
|
(5,905
|
)
|
|
$
|
(5,518
|
)
|
Investing activities
|
(2,153
|
)
|
|
(6,080
|
)
|
||
Financing activities
|
3,504
|
|
|
1,193
|
|
||
Net decrease in cash and cash equivalents
|
$
|
(4,554
|
)
|
|
$
|
(10,405
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
|
|
|
|
|
|
Fair Value as of
|
|
|
|
|
|
|
||||||||||||||
|
(150 BPS)
|
|
(100 BPS)
|
|
(50 BPS)
|
|
9/30/2019
|
|
50 BPS
|
|
100 BPS
|
|
150 BPS
|
||||||||||||||
Marketable securities
|
$
|
87,418
|
|
|
$
|
87,120
|
|
|
$
|
86,823
|
|
|
$
|
86,525
|
|
|
$
|
86,227
|
|
|
$
|
85,929
|
|
|
$
|
85,631
|
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
Are designed and operated to provide reasonable assurance regarding the reliability of our financial reporting and our process for the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
•
|
Executive Management Communications to Reinforce Compliance - Our Chief Executive Officer and Chief Financial Officer, at the direction of our Board of Directors, have in communications to personnel continued to reinforce the importance of adherence to our policies and procedures regarding ethics and compliance and the importance of identifying misconduct and raising and communicating concerns.
|
•
|
Changes to Our Executive Management and Sales Personnel - We have hired new personnel, who have enabled improved lines of communication across business functions to address areas of identified gaps in expertise.
|
•
|
Training Practices - We initiated development of a comprehensive training program relating to revenue recognition and contract review and have begun to deploy elements of the training to our sales personnel.
|
•
|
Credit Policies and Procedures - We evaluated our practices regarding extension of credit to customers and evaluation of customer creditworthiness. The improved practices have been implemented and we are in the process of testing the effectiveness of those practices.
|
•
|
Revenue Recognition Policies and Procedures - We have evaluated our revenue recognition policies and procedures and are implementing improvements.
|
•
|
Implementation and Enhancement of Entity Level Controls - We are implementing additional controls in our quarterly/annual financial reporting process, including enhanced sub-certifications by all sales personnel, as well as other key personnel in our finance, human resources, and legal functions. The enhanced sub-certifications include specific documentation related to the identification of non-standard revenue arrangements. We have also enhanced our insider trading policy and related communications to employees.
|
•
|
fluctuations in and timing of purchases from, or loss of, large customers;
|
•
|
the budgeting cycles and purchasing practices of end-customers;
|
•
|
our ability to attract and retain new end-customers;
|
•
|
changes in demand for our products and services, including seasonal variations in customer spending patterns or cyclical fluctuations in our markets;
|
•
|
our reliance on shipments at the end of our quarters;
|
•
|
variations in product mix or geographic locations of our sales, which can affect the revenue we realize for those sales;
|
•
|
the timing and success of new product and service introductions by us or our competitors;
|
•
|
our ability to increase the size of our distribution channel and to maintain relationships with important distribution channel partners;
|
•
|
our ability to improve our overall sales productivity and successfully execute our marketing strategies;
|
•
|
the effect of currency exchange rates on our revenue and expenses;
|
•
|
the cost and potential outcomes of existing and future litigation;
|
•
|
expenses related to our facilities;
|
•
|
the effect of discounts negotiated by our largest end-customers for sales or pricing pressure from our competitors;
|
•
|
changes in the growth rate of the application networking or security markets or changes in market needs;
|
•
|
inventory write downs, which may be necessary for our older products when our new products are launched and adopted by our end-customers; and
|
•
|
our ability to expand internationally and domestically;
|
•
|
our ability to implement our cost reduction plan; and
|
•
|
our third-party manufacturers’ and component suppliers’ capacity to meet our product demand forecasts on a timely basis, or at all.
|
•
|
Companies that sell products in the traditional ADC market, such as F5 Networks, Inc. (“F5 Networks”) and Citrix Systems, Inc. (“Citrix Systems”);
|
•
|
Companies that sell open source, software-only, cloud-based ADC services, such as Avi Networks Inc. (“Avi Networks”), NGINX Inc. (“NGiNX”), and HAProxy Technologies, Inc. (“HAProxy”) as well as many startups;
|
•
|
Companies that sell CGN products, which were originally designed for other networking purposes, such as edge routers and security appliances from vendors like Cisco Systems, Inc. (“Cisco Systems”), Juniper Networks, Inc. (“Juniper Networks”) and Fortinet, Inc. (“Fortinet”);
|
•
|
Companies that sell traditional DDoS protection products, such as Arbor Networks, Inc., a subsidiary of NetScout Systems, (“Arbor Networks”) and Radware, Ltd. (“Radware”);
|
•
|
Companies that sell SSL decryption and inspection products, such as Symantec Corporation (through its acquisition of Blue Coat Systems Inc. in 2016) and F5 Networks; and
|
•
|
Companies that sell certain network security products, including Secure Web Gateways, SSL Insight/SSL Intercept, data center firewalls and Office 365 proxy solutions.
|
•
|
longer operating histories;
|
•
|
the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products and services at a greater range of prices including through selling at zero or negative margins;
|
•
|
the ability to incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our products, including through product bundling or closed technology platforms;
|
•
|
broader distribution and established relationships with distribution channel partners in a greater number of worldwide locations;
|
•
|
access to larger end-customer bases;
|
•
|
the ability to use their greater financial resources to attract our research and development engineers as well as other employees of ours;
|
•
|
larger intellectual property portfolios; and
|
•
|
the ability to bundle competitive offerings with other products and services.
|
•
|
greater difficulty in enforcing contracts and accounts receivable collection and possible longer collection periods;
|
•
|
increased expenses incurred in establishing and maintaining office space and equipment for our international operations;
|
•
|
greater difficulty in recruiting local experienced personnel, and the costs and expenses associated with such activities;
|
•
|
general economic and political conditions in these foreign markets;
|
•
|
economic uncertainty around the world, including continued economic uncertainty as a result of sovereign debt issues in Europe and the United Kingdom’s decision to exit the European Union (commonly referred to as “Brexit”);
|
•
|
management communication and integration problems resulting from cultural and geographic dispersion;
|
•
|
risks associated with trade restrictions and foreign legal requirements, including the importation, certification, and localization of our products required in foreign countries;
|
•
|
greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties;
|
•
|
the uncertainty of protection for intellectual property rights in some countries;
|
•
|
greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including antitrust regulations, the U.S. Foreign Corrupt Practices Act (“FCPA”), and any trade regulations ensuring fair trade practices; and
|
•
|
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements.
|
•
|
disruption of our business;
|
•
|
distraction of our management and employees;
|
•
|
difficulty in recruiting, hiring, motivating, and retaining talented and skilled personnel, such as a successor to our current president and chief executive officer;
|
•
|
difficulty in maintaining or negotiating and consummating new, business or strategic relationships or transactions;
|
•
|
increased stock price volatility; and
|
•
|
increased costs and advisory fees.
|
•
|
a loss of existing or potential end-customers or channel partners;
|
•
|
delayed or lost revenue;
|
•
|
a delay in attaining, or the failure to attain, market acceptance;
|
•
|
the expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate, or work around errors or defects, to address and eliminate vulnerabilities, to remediate harms potentially caused by those vulnerabilities, or to identify and ramp up production with third-party providers;
|
•
|
an increase in warranty claims, or an increase in the cost of servicing warranty claims, either of which would adversely affect our gross margins;
|
•
|
harm to our reputation or brand; and
|
•
|
litigation, regulatory inquiries, or investigations that may be costly and further harm our reputation.
|
•
|
expenditures of significant financial and product development resources in efforts to analyze, correct, eliminate or work around errors and defects or to address and eliminate vulnerabilities;
|
•
|
loss of existing or potential end-customers or distribution channel partners;
|
•
|
delayed or lost revenue;
|
•
|
delay or failure to attain market acceptance;
|
•
|
indemnification obligations under our agreements with resellers, distributors and/or end-customers;
|
•
|
an increase in warranty claims compared with our historical experience or an increased cost of servicing warranty claims, either of which would adversely affect our gross margin; and
|
•
|
litigation, regulatory inquiries, or investigations that may be costly and harm our reputation.
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
expected timing and amount of the release of tax valuation allowances;
|
•
|
expiration of, or detrimental changes in, research and development tax credit laws;
|
•
|
tax effects of stock-based compensation;
|
•
|
costs related to intercompany restructurings;
|
•
|
changes in tax laws, regulations, accounting principles or interpretations thereof;
|
•
|
future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates; or
|
•
|
examinations by US federal, state or foreign jurisdictions that disagree with interpretations of tax rules and regulations in regard to positions taken on tax filings.
|
•
|
announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
significant volatility in the market price and trading volume of technology companies in general and of companies in our industry;
|
•
|
fluctuations in the trading volume of our shares or the size of our public float;
|
•
|
actual or anticipated changes or fluctuations in our results of operations;
|
•
|
whether our results of operations meet the expectations of securities analysts or investors;
|
•
|
actual or anticipated changes in the expectations of investors or securities analysts;
|
•
|
litigation or investigations involving us, our industry, or both;
|
•
|
regulatory developments in the United States, foreign countries or both;
|
•
|
general economic conditions and trends;
|
•
|
major catastrophic events;
|
•
|
sales of large blocks of our common stock; or
|
•
|
departures of key personnel.
|
•
|
a classified Board of Directors with three-year staggered terms, with declassification phasing in over a period of three years, beginning with our 2018 annual meeting of stockholders, which could delay the ability of stockholders to change the membership of a majority of our Board of Directors until our Board of Directors is completely declassified;
|
•
|
the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preference and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors;
|
•
|
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
the requirement that a special meeting of stockholders may be called only by the chairman of our Board of Directors, our Chief Executive Officer, our secretary, or a majority vote of our Board of Directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
|
•
|
the requirement for the affirmative vote of holders of at least 66-2/3% of the voting power of all of the then-outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
|
•
|
the ability of our Board of Directors, by majority vote, to amend the bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and
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•
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advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or not to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
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Exhibit
Number
|
|
Description
|
10.1
|
|
Letter Agreement, dated as of July 26, 2019, among A10 Networks, Inc., VIEX Opportunities Fund, LP - Series One, VIEX Opportunities Fund, LP - Series Two, VIEX GP, LLC, VIEX Special Opportunities Fund II, LP, VIEX Special Opportunities GP II, LLC, VIEX Special Opportunities Fund III, LP, VIEX Special Opportunities GP III, LLC, VIEX Capital Advisors, LLC and Eric Singer
|
31.1
|
|
|
31.2
|
|
|
32.1*
|
|
|
32.2*
|
|
|
101.INS
|
|
XBRL Instant Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Extension Labels Linkbase Document
|
101.PRE
|
|
XBRL Extension Presentation Linkbase Document
|
|
*
|
The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10‑Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of A10 Networks, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10‑Q, irrespective of any general incorporation language contained in such filing.
|
|
A10 NETWORKS, INC.
|
|
By: /s/ Lee Chen
|
|
Lee Chen
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
|
By: /s/ Tom Constantino
|
|
Tom Constantino
|
|
Executive Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
|
1 Year A10 Networks Chart |
1 Month A10 Networks Chart |
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