Stock Quote

A10 Networks Reports 12.7% Organic Growth for Q2 2021

Second Quarter GAAP EPS of $0.08, non-GAAP EPS of $0.13, Driven by Improving Commercial Execution and Favorable Market Conditions; Revenues in the third quarter expected to grow 7% - 12%

A10 Networks (NYSE: ATEN), a leading provider of secure application services and solutions, today announced financial results for its second quarter ended June 30, 2021.

Second Quarter 2021 Financial Summary

  • Revenue of $59.2 million, up 12.7% year-over-year.
  • Improving commercial execution combined with favorable market conditions drove 20% growth in the Americas year-over-year; Japan normalized as expected.
  • Deferred revenue of $116.3 million, up 10.8% year-over-year.
  • GAAP gross margin of 77.0%; non-GAAP gross margin of 77.9% as the company navigated short-term input cost pressures.
  • GAAP net income of $6.6 million, or $0.08 per diluted share, compared with net income of $3.8 million, or $0.05 per diluted share in the second quarter of 2020.
  • Non-GAAP net income of $10.5 million, or $0.13 per diluted share compared with non-GAAP net income of $7.1 million, or $0.09 per diluted share in the second quarter of 2020.
  • Adjusted EBITDA of $13.2 million compared to $9.8 million in the second quarter of 2020.

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

“Our focus on customer-centric product innovation and on driving improvements in commercial execution is beginning to deliver results, with consolidated revenue growing double-digits in the second quarter and EBITDA growing faster than that rate,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “We gained market share, adding new customers and expanding our security-led sales with existing customers. As expected, Japan again grew year-over-year during the quarter. Our customer engagements, strength of funnel and improving execution reinforce our confidence in full year growth targets while building a diversified customer base for the future.”

“We continue to deliver on our strategic goal to deliver leading innovative solutions to the market,” continued Trivedi. “We grew product revenue, which is a leading indicator of future recurring revenue, by 17.6% year-over-year. Year-to-date, recurring revenue has grown faster than our consolidated revenue, and our deferred revenue reached an all-time high, demonstrating our ability to sell differentiated solutions that are meeting the security challenges of today’s world. The growth, combined with an increasingly favorable sales mix, greater contribution of recurring revenue and discipline related to our cost structure is driving significant expansion of our profitability. Our GAAP net income nearly doubled on 12.7% revenue growth, and we generated more than $17.2 million in cash from operating activities during the quarter.”

Based on improved visibility, management today provided guidance for the third quarter. Management now expects third quarter revenue of $60.6 to $63.4 million, with the bottom-line growing at a faster rate than the top-line.

Conference Call Information

A10 Networks will host a conference call today at 4:30 p.m. Eastern time / 1:30 p.m. Pacific time for analysts and investors to discuss its second quarter 2021 financial results. Open to the public, interested parties may access the conference call by dialing (844) 792-3728 or (412) 317-5105. 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 business days and may be accessed by dialing (877) 344-7529 or (412) 317-0088 and entering the passcode 10158446.

Forward-Looking Statements

This press release contains “forward-looking statements,” including statements regarding our strategic focus, demand for our solutions, revenue predictability, financial leverage, growth outlook for Japan, investment in growth initiatives and sales, marketing and R&D, revenue growth and targets, profitability, our customer base and positioning, and our expectations with respect to revenue for the third quarter, including recurring revenue, and our positioning. 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, and its impact on the timing of customer orders and product shipments; members of our management team or a significant number of our global employee base becoming ill with COVID-19; changes in government regulations and mandates to address COVID-19 that may adversely impact our ability to continue to operate without disruption; a significant decline in global macroeconomic conditions that have an adverse impact on our business and financial results; challenges to our infrastructure because of the number of employees working from remote locations; 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, 2021. 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 contain certain non-GAAP financial measures, including non-GAAP net income (loss), non-GAAP net income (loss) per basic and diluted share, non-GAAP gross profit and gross margin, non-GAAP operating income (loss) 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 (loss) excluding: (i) stock-based compensation and related payroll tax, (ii) amortization expense related to acquisition, (iii) non-recurring expenses associated with the litigation settlement and internal investigation expense, (iv) global distribution center transition expense, and (v) non-recurring facilities expense. We define non-GAAP net income per basic and diluted share as our non-GAAP net income (loss) 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 (loss) as our GAAP income (loss) from operations excluding (i) stock-based compensation and related payroll tax, (ii) amortization expense related to acquisition, (iii) non-recurring expenses associated with the litigation settlement and internal investigation expense, (iv) global distribution center transition expense, and (v) non-recurring facilities expense. We define non-GAAP operating margin as our non-GAAP operating income (loss) 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, (iii) non-recurring expenses associated with the litigation settlement and internal investigation expense, (iv) global distribution center transition expense, and (v) non-recurring facilities expense. We define Adjusted EBITDA as our GAAP net income (loss) excluding (i) interest expense (if any), (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense, (iv) provision for income taxes, (v) stock-based compensation and related payroll tax, (vi) litigation settlement and internal investigation expense, (vii) global distribution center transition expense, and (viii) non-recurring facilities expense.

We have included our non-GAAP net income (loss), non-GAAP gross profit and gross margin, non-GAAP operating income (loss) 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,

 

2021

 

 

2020

 

2021

 

 

2020

Revenue:

 

 

 

 

 

 

 

Products

$

34,363

 

 

 

$

29,214

 

 

$

64,903

 

 

 

$

59,950

 

Services

24,805

 

 

 

23,286

 

 

49,108

 

 

 

46,314

 

Total revenue

59,168

 

 

 

52,500

 

 

114,011

 

 

 

106,264

 

Cost of revenue:

 

 

 

 

 

 

 

Products

8,215

 

 

 

6,544

 

 

15,301

 

 

 

13,485

 

Services

5,415

 

 

 

4,878

 

 

10,828

 

 

 

10,079

 

Total cost of revenue

13,630

 

 

 

11,422

 

 

26,129

 

 

 

23,564

 

Gross profit

45,538

 

 

 

41,078

 

 

87,882

 

 

 

82,700

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

19,749

 

 

 

18,476

 

 

38,841

 

 

 

39,097

 

Research and development

13,491

 

 

 

13,450

 

 

27,472

 

 

 

28,765

 

General and administrative

5,082

 

 

 

5,237

 

 

10,329

 

 

 

11,132

 

Total operating expenses

38,322

 

 

 

37,163

 

 

76,642

 

 

 

78,994

 

Income from operations

7,216

 

 

 

3,915

 

 

11,240

 

 

 

3,706

 

Non-operating income (expense):

 

 

 

 

 

 

 

Interest and other income (expense), net

(112

)

 

 

227

 

 

(1,295

)

 

 

458

 

Total non-operating income (expense), net

(112

)

 

 

227

 

 

(1,295

)

 

 

458

 

Income before provision for income taxes

7,104

 

 

 

4,142

 

 

9,945

 

 

 

4,164

 

Provision for income taxes

488

 

 

 

334

 

 

672

 

 

 

653

 

Net income

$

6,616

 

 

 

$

3,808

 

 

$

9,273

 

 

 

$

3,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.09

 

 

 

$

0.05

 

 

$

0.12

 

 

 

$

0.04

 

Diluted

$

0.08

 

 

 

$

0.05

 

 

$

0.12

 

 

 

$

0.04

 

Weighted-average shares used in computing net income per share:

 

 

 

 

 

 

 

Basic

76,774

 

 

 

78,178

 

 

76,745

 

 

 

78,119

 

Diluted

79,316

 

 

 

79,982

 

 

79,501

 

 

 

79,930

 

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,

 

2021

 

2020

 

2021

 

2020

GAAP net income

$

6,616

 

 

$

3,808

 

 

$

9,273

 

 

$

3,511

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation and related payroll tax

 

2,612

 

 

 

3,075

 

 

 

7,232

 

 

 

6,316

 

Amortization expense related to acquisition

 

252

 

 

 

253

 

 

 

505

 

 

 

506

 

Litigation and investigation expense

 

 

 

 

 

 

 

 

 

 

30

 

Non-recurring facilities expense

 

 

 

 

 

 

 

 

 

 

795

 

Global distribution center transition expense

 

1,036

 

 

 

 

 

 

2,947

 

 

 

 

Non-GAAP net income

$

10,516

 

 

$

7,136

 

 

$

19,957

 

 

$

11,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.09

 

 

$

0.05

 

 

$

0.12

 

 

$

0.04

 

Diluted

$

0.08

 

 

$

0.05

 

 

$

0.12

 

 

$

0.04

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation and related payroll tax

 

0.04

 

 

 

0.04

 

 

 

0.09

 

 

 

0.08

 

Amortization expense related to acquisition

 

0.00

 

 

 

0.00

 

 

 

0.01

 

 

 

0.01

 

Litigation and investigation expense

 

 

 

 

 

 

 

 

 

 

0.00

 

Non-recurring facilities expense

 

 

 

 

 

 

 

 

 

 

0.01

 

Global distribution center transition expense

 

0.01

 

 

 

 

 

 

0.04

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.14

 

 

$

0.09

 

 

$

0.26

 

 

$

0.14

 

Diluted

$

0.13

 

 

$

0.09

 

 

$

0.25

 

 

$

0.14

 

Weighted-average shares used in computing non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

76,774

 

 

$

78,178

 

 

$

76,745

 

 

$

78,119

 

Diluted

$

79,316

 

 

$

79,982

 

 

$

79,501

 

 

$

79,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, on a GAAP Basis)

 

 

 

 

 

June 30,

2021

 

December 31,

2020

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

67,949

 

 

 

$

83,281

 

 

Marketable securities

98,860

 

 

 

74,851

 

 

Accounts receivable, net of allowances of $193 and $41, respectively

50,219

 

 

 

51,051

 

 

Inventory

19,084

 

 

 

20,730

 

 

Prepaid expenses and other current assets

14,523

 

 

 

12,390

 

 

Total current assets

250,635

 

 

 

242,303

 

 

Property and equipment, net

9,148

 

 

 

7,888

 

 

Goodwill

1,307

 

 

 

1,307

 

 

Intangible assets, net

141

 

 

 

862

 

 

Other non-current assets

34,907

 

 

 

38,451

 

 

Total assets

$

296,138

 

 

 

$

290,811

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Accounts payable

$

5,661

 

 

 

$

4,851

 

 

Accrued liabilities

27,763

 

 

 

36,930

 

 

Deferred revenue

69,918

 

 

 

65,999

 

 

Total current liabilities

103,342

 

 

 

107,780

 

 

Deferred revenue, non-current

46,409

 

 

 

42,700

 

 

Other non-current liabilities

21,882

 

 

 

24,357

 

 

Total liabilities

171,633

 

 

 

174,837

 

 

Commitments and contingencies

 

 

 

Stockholders' equity:

Common stock, $0.00001 par value: 500,000 shares authorized; 76,554 and 76,346 shares issued and outstanding, respectively

1

 

 

 

1

 

 

Treasury stock, at cost: 6,825 and 5,578 shares, respectively

(48,623

)

 

 

(37,410

)

 

Additional paid-in-capital

436,112

 

 

 

425,534

 

 

Accumulated other comprehensive income (loss)

(9

)

 

 

98

 

 

Accumulated deficit

(262,976

)

 

 

(272,249

)

 

Total stockholders' equity

124,505

 

 

 

115,974

 

 

Total liabilities and stockholders' equity

$

296,138

 

 

 

$

290,811

 

 

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands, on a GAAP Basis)

 

 

Six Months Ended June 30,

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income

$

9,273

 

 

 

$

3,511

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

4,753

 

 

 

6,096

 

 

Stock-based compensation

6,891

 

 

 

6,009

 

 

Other non-cash items

531

 

 

 

(423

)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

882

 

 

 

8,442

 

 

Inventory

1,499

 

 

 

(92

)

 

Prepaid expenses and other assets

(1,200

)

 

 

2,662

 

 

Accounts payable

821

 

 

 

(776

)

 

Accrued and other liabilities

(11,642

)

 

 

(6,610

)

 

Deferred revenue

7,628

 

 

 

3,834

 

 

Net cash provided by operating activities

19,436

 

 

 

22,653

 

 

Cash flows from investing activities:

 

 

 

Proceeds from sales of marketable securities

2,865

 

 

 

3,160

 

 

Proceeds from maturities of marketable securities

48,586

 

 

 

16,549

 

 

Purchases of marketable securities

(76,141

)

 

 

(12,982

)

 

Purchases of property and equipment

(2,443

)

 

 

(1,549

)

 

Net cash provided by (used in) investing activities

(27,133

)

 

 

5,178

 

 

Cash flows from financing activities:

 

 

 

Proceeds from issuance of common stock under employee equity incentive plans

3,578

 

 

 

5,609

 

 

Repurchase of common stock

(11,213

)

 

 

(13,336

)

 

Net cash used in financing activities

(7,635

)

 

 

(7,727

)

 

Net increase (decrease) in cash and cash equivalents

(15,332

)

 

 

20,104

 

 

Cash and cash equivalents—beginning of period

$

83,281

 

 

 

$

45,742

 

 

Cash and cash equivalents—end of period

$

67,949

 

 

 

$

65,846

 

 

 

 

 

 

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,

 

2021

 

2020

 

2021

 

2020

GAAP gross profit

$

45,538

 

 

$

41,078

 

 

$

87,882

 

 

$

82,700

 

GAAP gross margin

 

77.0

%

 

 

78.2

%

 

 

77.1

%

 

 

77.8

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation and related payroll tax

 

303

 

 

 

298

 

 

 

944

 

 

 

799

 

Global distribution center transition expense

 

252

 

 

 

 

 

 

525

 

 

 

 

Non-GAAP gross profit

$

46,093

 

 

$

41,376

 

 

$

89,351

 

 

$

83,499

 

Non-GAAP gross margin

 

77.9

%

 

 

78.8

%

 

 

78.4

%

 

 

78.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A10 NETWORKS, INC.

RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES TO

TO NON-GAAP TOTAL OPERATING EXPENSES

(unaudited, in thousands)

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

GAAP total operating expenses

$

38,322

 

 

$

37,163

 

 

$

76,642

 

 

$

78,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation and related payroll tax

 

2,309

 

 

 

2,777

 

 

 

6,288

 

 

 

5,517

 

Amortization expense related to acquisition

 

252

 

 

 

253

 

 

 

505

 

 

 

506

 

Litigation and investigation expense

 

 

 

 

 

 

 

 

 

 

30

 

Non-recurring facilities expense

 

 

 

 

 

 

 

 

 

 

795

 

Global distribution center transition expense

 

784

 

 

 

 

 

 

2,422

 

 

 

 

Non-GAAP total operating expenses

$

34,977

 

 

$

34,133

 

 

$

67,427

 

 

$

72,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

2021

 

2020

 

2021

 

2020

GAAP income from operations

$

7,216

 

 

$

3,915

 

 

$

11,240

 

 

$

3,706

 

GAAP operating margin

 

12.2

%

 

 

7.5

%

 

 

9.9

%

 

 

3.5

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation and related payroll tax

 

2,612

 

 

 

3,075

 

 

 

7,232

 

 

 

6,316

 

Amortization expense related to acquisition

 

252

 

 

 

253

 

 

 

505

 

 

 

506

 

Litigation and investigation expense

 

 

 

 

 

 

 

 

 

 

30

 

Non-recurring facilities expense

 

 

 

 

 

 

 

 

 

 

795

 

Global distribution center transition expense

 

1,036

 

 

 

 

 

 

2,947

 

 

 

 

Non-GAAP operating income

$

11,116

 

 

$

7,243

 

 

$

21,924

 

 

$

11,353

 

Non-GAAP operating margin

 

18.8

%

 

 

13.8

%

 

 

19.2

%

 

 

10.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

2021

 

2020

 

2021

 

2020

GAAP net income

$

6,616

 

 

$

3,808

 

 

$

9,273

 

 

$

3,511

 

Exclude: Interest and other (income) expense, net

112

 

 

(227

)

 

1,295

 

 

(458

)

Exclude: Depreciation and amortization expense

2,340

 

 

2,785

 

 

4,753

 

 

6,096

 

Exclude: Provision for income taxes

488

 

 

334

 

 

672

 

 

653

 

EBITDA

9,556

 

 

6,700

 

 

15,993

 

 

9,802

 

Exclude: Stock-based compensation and related payroll tax

2,612

 

 

3,075

 

 

7,232

 

 

6,316

 

Exclude: Litigation and investigation expense

 

 

 

 

 

 

30

 

Exclude: Non-recurring facilities expense

 

 

 

 

 

 

795

 

Exclude: Global distribution center transition expense

1,036

 

 

 

 

2,947

 

 

 

Adjusted EBITDA

$

13,204

 

 

$

9,775

 

 

$

26,172

 

 

$

16,943

 

 

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.