A10 Networks Reports Fourth Quarter and Full Year 2024 Financial Results

Solid Performance Driven by Demand Improvement from Service Providers and Continued Execution in Enterprise Business

A10 Networks, Inc. (NYSE:ATEN), a leading provider of cybersecurity and infrastructure solutions, today announced financial results for its fourth quarter and full year ended December 31, 2024.

Fourth Quarter 2024 Financial Summary

• Revenue of $74.2 million, compared to $70.4 million in the fourth quarter of 2023, representing a 5% increase.
• Enterprise revenue grew 8% for the quarter year-over-year, and service provider revenue grew 4%.
• GAAP gross margin of 79.9%; non-GAAP gross margin of 80.7%.
• GAAP net income was $18.3 million (24.7% of revenue), or $0.24 per diluted share, compared to net income of $17.9 million (25.4% of revenue) or $0.24 per diluted share in the fourth quarter of 2023.
• Non-GAAP net income of $23.0 million (30.9% of revenue), or $0.31 per diluted share (non-GAAP EPS) compared to non-GAAP net income of $18.5 million (26.2% of revenue) or $0.25 per diluted share in the fourth quarter of 2023.
• Adjusted EBITDA was $27.3 million (36.8% of revenue) compared to $24.0 million (34.0% of revenue) in the fourth quarter of 2023.
• The Company completed the quarter with cash and investments of $195.6 million, up from $159.3 million as of December 31, 2023. A10 generated $25.7 million in cash from operations during the quarter.
• The Company returned $10.2 million to investors, having repurchased 360,000 shares at an average price of $15.99 per share for a total of $5.8 million and having paid $4.4 million in cash dividends in the quarter.
• The Board of Directors approved a quarterly cash dividend of $0.06 per share, payable March 3, 2025, to stockholders of record at the close of business on February 14, 2025.

Full-Year 2024 Financial Summary

• Revenue of $261.7 million, up $10.0 million (4.0%) compared to $251.7 million in 2023.
• GAAP net income of $50.1 million (representing 19.2% of revenue), or $0.67 per diluted share.
• Non-GAAP net income of $64.8 million (representing 24.8% of revenue) or $0.86 per diluted share compared to $54.9 million (representing 21.8% of revenue), or $0.73 per diluted share (non-GAAP EPS).
• Adjusted EBITDA margin of 28.5% vs. 28.3% in 2023.

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

"The demand from service provider customers improved throughout the second half of 2024, and we enter 2025 with growing optimism of an ongoing normalization of spending from these customers," commented Dhrupad Trivedi, A10 Network's President and Chief Executive Officer. "AI continues to serve as a significant catalyst for spending in general, and for A10 customer's priorities in particular, because of the efficiency of our high throughput, low latency solutions for all operating environments. Our solutions lower the total cost of ownership, utilizing less power and integrated security capabilities, creating a durable competitive advantage within energy-hungry AI data centers."

"Simultaneously, we delivered significant growth with enterprise customers, and we are investing heavily to further enhance our offerings for these customers," added Trivedi. "During the coming year, we anticipate launching solutions to further expand our security offerings. We view 2025 as a year that will benefit from several years of R&D investment, furthering our competitive position with both service provider and enterprise customers."

"As we drive the company transformation to a more agile engineering and delivery model, focused on security and efficiency, we have transformed our processes and systems," concluded Trivedi. "The continued focus on operational excellence and long-term business model provides a strong foundation for a durable business model delivering consistent returns for all our stakeholders."

Conference Call

Management will host a call today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) to discuss the results.

Interested parties may access the conference call by dialing (833) 470-1428 (toll-free) or (404) 975-4839 and referencing access code: 475407.

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 596790.

About A10 Networks

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

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

Forward-Looking Statements

This press release contains "forward-looking statements," including statements regarding our quarterly dividend payments, strategy, including as to AI, growth, demand, positioning, products, profitability, revenue expectations for 2025, market trends and investments. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Factors that may cause actual results to differ include any unforeseen need for capital which may require us to divert funds we may have otherwise used for the dividend program, which may in turn negatively impact our ability to administer the quarterly dividends; a significant decline in global macroeconomic or political conditions that have an adverse impact on our business and financial results; business interruptions related to our supply chain; our ability to manage our business and expenses if customers cancel or delay orders; execution risks related to closing key deals and improving our execution; the continued market adoption of our products; our ability to successfully anticipate market needs and opportunities; our timely development of new products and features; our ability to achieve or maintain profitability; any loss or delay of expected purchases by our largest end-customers; our ability to maintain or improve our competitive position; competitive and execution risks related to cloud-based computing trends; our ability to attract and retain new end-customers and our largest end-consumers; our ability to maintain and enhance our brand and reputation; changes demanded by our customers in the deployment and payment model for our products; continued growth in markets relating to network security; the success of any future acquisitions or investments in complementary companies, products, services or technologies; the ability of our sales team to execute well; our ability to shorten our close cycles; the ability of our channel partners to sell our products; variations in product mix or geographic locations of our sales; risks associated with our presence in international markets; weaknesses or deficiencies in our internal control over financial reporting; our ability to timely file periodic reports required to be filed under the Securities Exchange Act of 1934; and other risks that are described in "Risk Factors" in our periodic filings with the Securities and Exchange Commission, including our Form 10-K filed with the Securities and Exchange Commission on February 29, 2024. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-GAAP Financial Measures

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

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

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

We define non-GAAP net income as our GAAP net income excluding: (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) tax planning expense, (iv) workforce reduction expense, (v) cyber incident remediation expense, (vi) one-time legal expense and (vii) income tax effect of non-GAAP items (i) to (vi) listed above. We define non-GAAP net income per basic and diluted share as our non-GAAP net income divided by our basic and diluted weighted-average shares outstanding. We define non-GAAP gross profit as our GAAP gross profit excluding (i) stock-based compensation and related payroll tax, (ii) workforce reduction expense and (iii) cyber incident remediation expense. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. We define non-GAAP operating expenses as our GAAP operating expenses excluding (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) tax planning expense, (iv) workforce reduction expense, (v) cyber incident remediation expense and (vi) one-time legal expense. We define non-GAAP operating income as our GAAP income from operations excluding (i) stock-based compensation and related payroll tax, (ii) impairment expense, (iii) tax planning expense, (iv) workforce reduction expense, (v) cyber incident remediation expense and (vi) one-time legal expense. We define non-GAAP operating margin as our non-GAAP operating income divided by our GAAP revenue. We define Adjusted EBITDA as our GAAP net income excluding (i) interest and other income, net, (ii) depreciation and amortization expense, (iii) provision for income taxes, (iv) stock-based compensation and related payroll tax, (v) impairment expense, (vi) tax planning expense, (vii) workforce reduction expense, (viii) cyber incident remediation expense and (ix) one-time legal expense. We define Adjusted EBITDA margin as our Adjusted EBITDA divided by our GAAP revenue.

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

Source: A10 Networks, Inc.

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Investor Contact:

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FNK IR

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Brian Becker

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