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EX-99.1 2 atenq22020exhibit991.htm EX-99.1 Document

EXHIBIT 99.1

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A10 Networks Reports Second Quarter 2020 Financial Results
Second Quarter Revenue of $52.5 Million; GAAP Net Income of $3.8 Million, GAAP EPS of $0.05, non-GAAP Net Income of $7.1 Million, non-GAAP EPS of $0.09 and Cash Flow from Operations of $10.5 Million

SAN JOSE, Calif., July 28, 2020 -- A10 Networks (NYSE: ATEN), a leading provider of secure application services and solutions, today announced financial results for its second quarter ended June 30, 2020.

Second Quarter 2020 Financial Summary
1.Revenue of $52.5 million, up 7% year-over-year.
2.GAAP gross margin of 78.2%; non-GAAP gross margin of 78.8%.
3.GAAP operating expenses of $37.2 million, declined sequentially from $41.8 million in the first quarter of 2020; non-GAAP operating expenses of $34.1 million.
4.GAAP net income of $3.8 million, or $0.05 per share, compared with GAAP net loss of $(5.8) million, or $(0.08) per share in the second quarter of 2019; non-GAAP net income of $7.1 million, or $0.09 per basic and diluted share.
5.Adjusted EBITDA of $9.8 million, an improvement of more than $8.4 million compared with $1.3 million in Adjusted EBITDA in the second quarter last year.
6.Ended the quarter with $143.4 million in cash, cash equivalents and marketable securities, compared to $129.9 million dollars as of December 31, 2019.

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

“A10 continues to make progress on our business model transformation, resulting in improved earnings power, amidst an uncertain environment,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “To date, we have successfully navigated the challenges related to the pandemic and associated economic disruptions. Demand remains strong, though sales cycles, particularly in Asia, have been elongated. Increasingly, our global footprint and customer mix serve as important and durable competitive advantages. We were able to offset revenue declines from Japan and Asia Pacific regions



with improvements from North America and EMEA. We maintain a strong market position with service providers and their investment cycles which can last multiple years and result in variable demand levels within a 90-day period.”

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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 2020 financial results and outlook for its third quarter 2020. Open to the public, investors may access the call by dialing +1-844-792-3728 or +1-412-317-5105. A live audio webcast of the conference call will be accessible from the “Investor Relations” section of the A10 Networks website atinvestors.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 call, will run for five business days, and may be accessed by dialing +1-877-344-7529 or +1-412-317-0088 and entering the passcode 10145938. The supplemental financials will be accessible from the “Investor Relations” section of the A10 Networks website prior to the commencement of the conference call.

Forward-Looking Statements
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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.




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





Investor Contact:
Rob Fink
FNK IR
646.809.4048
aten@fnkir.com

Tom Constantino
Chief Financial Officer
investors@a10networks.com
Source: A10 Networks, Inc.




A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts, on a GAAP Basis)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Revenue:
Products $ 29,214 $ 26,785 $ 59,950 $ 55,015
Services 23,286 22,404 46,314 44,464
Total revenue 52,500 49,189 106,264 99,479
Cost of revenue:
Products 6,544 6,891 13,485 14,407
Services 4,878 4,380 10,079 9,114
Total cost of revenue 11,422 11,271 23,564 23,521
Gross profit 41,078 37,918 82,700 75,958
Operating expenses:
Sales and marketing 18,476 23,626 39,097 48,109
Research and development 13,450 14,617 28,765 30,783
General and administrative 5,237 6,099 11,132 14,457
Total operating expenses 37,163 44,342 78,994 93,349
Income (loss) from operations 3,915 (6,424) 3,706 (17,391)
Non-operating income (expense):
Interest expense (1) (37) (1) (192)
Interest and other income, net 228 776 459 143
Total non-operating income (expense), net 227 739 458 (49)
Income (loss) before provision for income taxes 4,142 (5,685) 4,164 (17,440)
Provision for income taxes 334 86 653 603
Net income (loss) $ 3,808 $ (5,771) $ 3,511 $ (18,043)
Net income (loss) per share:
Basic $ 0.05 $ (0.08) $ 0.04 $ (0.24)
Diluted $ 0.05 $ (0.08) $ 0.04 $ (0.24)
Weighted-average shares used in computing net income (loss) per share:
Basic 78,178 75,712 78,119 75,263
Diluted 79,982 75,712 79,930 75,263












A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(unaudited, in thousands, except per share amounts)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
GAAP net income (loss) $ 3,808 $ (5,771) $ 3,511 $ (18,043)
Non-GAAP adjustments:
Stock-based compensation and related payroll tax 3,075 5,049 6,316 8,945
Amortization expense related to acquisition 253 253 506 506
Litigation and investigation expense — 173 30 1,049
Non-recurring facilities expense — — 795 —
Non-GAAP net income (loss) $ 7,136 $ (296) $ 11,158 $ (7,543)
GAAP net income (loss) per share:
Basic $ 0.05 $ (0.08) $ 0.04 $ (0.24)
Diluted $ 0.05 $ (0.08) $ 0.04 $ (0.24)
Non-GAAP adjustments:
Stock-based compensation and related payroll tax 0.04 0.07 0.08 0.12
Amortization expense related to acquisition 0.00 0.01 0.01 0.01
Litigation and investigation expense — 0.00 0.00 0.01
Non-recurring facilities expense — — 0.01 —
Non-GAAP net income (loss) per share:
Basic $ 0.09 $ (0.00) $ 0.14 $ (0.10)
Diluted $ 0.09 $ (0.00) $ 0.14 $ (0.10)
Weighted-average shares used in computing non-GAAP net income (loss) per share:
Basic $ 78,178 $ 75,712 $ 78,119 $ 75,263
Diluted $ 79,982 $ 75,712 $ 79,930 $ 75,263















A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, on a GAAP Basis)
June 30, 2020 December 31, 2019
ASSETS
Current assets:    
Cash and cash equivalents $ 65,846 $ 45,742
Marketable securities 77,544 84,180
Accounts receivable, net of allowances of $818 and $52, respectively 45,895 53,566
Inventory 22,159 22,384
Prepaid expenses and other current assets 11,342 15,067
Total current assets 222,786 220,939
Property and equipment, net 7,033 7,656
Goodwill 1,307 1,307
Intangible assets, net 1,584 2,305
Other non-current assets 39,898 41,846
Total assets $ 272,608 $ 274,053
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:    
Accounts payable $ 6,850 $ 7,592
Accrued liabilities 23,493 27,756
Deferred revenue 65,915 62,233
Total current liabilities 96,258 97,581
Deferred revenue, non-current 39,083 38,931
Other non-current liabilities 26,407 28,754
Total liabilities 161,748 165,266
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value: 500,000 shares authorized; 77,519 and 77,580 shares issued and outstanding, respectively 1 1
Treasury stock, at cost (18,226) (4,890)
Additional paid-in-capital 415,166 403,490
Accumulated other comprehensive income (loss) 473 251
Accumulated deficit (286,554) (290,065)
Total stockholders' equity 110,860 108,787
Total liabilities and stockholders' equity $ 272,608 $ 274,053









A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands, on a GAAP Basis)
Six Months Ended June 30,
  2020 2019
Cash flows from operating activities:
Net income (loss) $ 3,511 $ (18,043)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 6,096 4,982
Stock-based compensation 6,009 8,824
Other non-cash items (432) (310)
Changes in operating assets and liabilities:
Accounts receivable 8,442 8,802
Inventory (92) (5,045)
Prepaid expenses and other assets 2,662 63
Accounts payable (776) (434)
Accrued and other liabilities (6,610) (9,372)
Deferred revenue 3,834 (175)
Other 9 123
Net cash provided by (used in) operating activities 22,653 (10,585)
Cash flows from investing activities:
Proceeds from sales of marketable securities 3,160 16,134
Proceeds from maturities of marketable securities 16,549 19,250
Purchases of marketable securities (12,982) (29,557)
Purchases of property and equipment (1,549) (2,303)
Net cash provided by investing activities 5,178 3,524
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans 5,609 3,260
Repurchase of common stock (13,336) —
Other — (2)
Net cash provided by (used in) financing activities (7,727) 3,258
Net increase (decrease) in cash and cash equivalents 20,104 (3,803)
Cash and cash equivalents—beginning of period $ 45,742 $ 40,621
Cash and cash equivalents—end of period $ 65,846 $ 36,818











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,
  2020 2019 2020 2019
GAAP gross profit $ 41,078 $ 37,918 $ 82,700 $ 75,958
GAAP gross margin 78.2 % 77.1 % 77.8 % 76.4 %
Non-GAAP adjustments:
Stock-based compensation and related payroll tax 298 468 799 792
Non-GAAP gross profit $ 41,376 $ 38,386 $ 83,499 $ 76,750
Non-GAAP gross margin 78.8 % 78.0 % 78.6 % 77.2 %

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,
  2020 2019 2020 2019
GAAP total operating expenses $ 37,163 $ 44,342 $ 78,994 $ 93,349
Non-GAAP adjustments:
Stock-based compensation and related payroll tax 2,777 4,581 5,517 8,153
Amortization expense related to acquisition 253 253 506 506
Litigation and investigation expense — 173 30 1,049
Non-recurring facilities expense — — 795 —
Non-GAAP total operating expenses $ 34,133 $ 39,335 $ 72,146 $ 83,641


















RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS
TO NON-GAAP OPERATING INCOME (LOSS)
(unaudited, in thousands, except percentages)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
GAAP income (loss) from operations $ 3,915 $ (6,424 ) $ 3,706 $ (17,391 )
GAAP operating margin 7.5 % (13.1 )% 3.5 % (17.5 )%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax 3,075 5,049 6,316 8,945
Amortization expense related to acquisition 253 253 506 506
Litigation and investigation expense — 173 30 1,049
Non-recurring facilities expense — — 795 —
Non-GAAP operating income (loss) $ 7,243 $ (949 ) $ 11,353 $ (6,891 )
Non-GAAP operating margin 13.8 % (1.9 )% 10.7 % (6.9 )%


RECONCILIATION OF GAAP NET INCOME (LOSS) TO
EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(unaudited, in thousands)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
GAAP net income (loss) $ 3,808 $ (5,771 ) $ 3,511 $ (18,043 )
Exclude: Interest expense 1 37 1 192
Exclude: Interest and other (income) expense, net (228 ) (776 ) (459 ) (143 )
Exclude: Depreciation and amortization expense 2,785 2,535 6,096 4,982
Exclude: Provision for income taxes 334 86 653 603
EBITDA 6,700 (3,889 ) 9,802 (12,409 )
Exclude: Stock-based compensation and related payroll tax 3,075 5,049 6,316 8,945
Exclude: Litigation and investigation expense — 173 30 1,049
Exclude: Non-recurring facilities expense — — 795 —
Adjusted EBITDA $ 9,775 $ 1,333 $ 16,943 $ (1,909 )