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A10 Networks, Inc. Reports Second Quarter 2016 Results

July 28, 2016

SAN JOSE, Calif.--(BUSINESS WIRE)-- A10 Networks, Inc. (NYSE: ATEN), a technology leader in application networking and security, today announced financial results for its second quarter ended June 30, 2016.

Second Quarter 2016 Financial Highlights

  • Record revenue of $57.1 million, up 20 percent year-over-year
  • Enterprise revenue of $32.0 million, increased 16 percent year-over-year
  • Product revenue of $38.8 million, up 16 percent year-over-year
  • Cash and marketable securities increased to $113.7 million, up from $96.2 million at June 30, 2015

“We delivered record revenue as our high-end security and cloud-ready Thunder solutions continued to drive growth,” said Lee Chen, president and chief executive officer of A10 Networks. “We also significantly improved our bottom-line results and we believe we are on track to meet our financial goals for the year. In addition to our strong performance in the quarter, we took a strategic step to accelerate the A10 Harmony vision and expand our addressable market with the acquisition of Appcito. Appcito is a cloud-native subscription service that maximizes the agility and improves the visibility and security of enterprise applications deployed in the cloud. Appcito fits into our vision to become the most comprehensive secure application services company in the industry and helps customers become more secure and agile as they bridge traditional and cloud application environments.”

Total revenue for the second quarter grew to $57.1 million, up 20 percent when compared with $47.5 million in the second quarter of 2015. On a GAAP basis, A10 Networks reported a net loss for the second quarter 2016 of $4.9 million, or $0.08 per share, compared with a net loss of $10.0 million, or $0.16 per share, in the second quarter of 2015. Non-GAAP net loss for the second quarter of 2016 was $1.1 million, or $0.02 per share, compared with a non-GAAP net loss of $5.3 million, or $0.09 per share, in the second quarter of 2015.

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

Prepared Materials and Conference Call Information

A10 Networks has made available a presentation with management’s prepared remarks on its second quarter 2016 financial results. These materials are accessible from the “Investors” section of A10 Networks website at investors.a10networks.com.

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 2016 results and outlook for its third quarter of 2016. 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 “Investors” section of A10 Networks website at investors.a10networks.com. The webcast will be archived for a period of one year. A telephonic replay of the conference call will be available one hour 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 10089132. The press release and supplemental financials will be accessible from A10 Networks website prior to the commencement of the conference call.

Forward-Looking Statements

This press release contains “forward-looking statements,” including statements regarding our ability to meet our financial goals for the year, the anticipated benefits of our acquisition of Appcito, including expanding our addressable market. 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 continued market adoption of our products, our ability to successfully anticipate market needs and opportunities, our timely development of new products and features, any loss or delay of expected purchases by our largest end-customers, our ability to attract and retain new end-customers, continued growth in markets relating to network security, our ability to hire, retain and motivate qualified personnel, 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, our ability to achieve or maintain profitability while continuing to invest in our sales, marketing and research and development teams, variations in product mix or geographic locations of our sales, fluctuations in currency exchange rates, risks associated with our significant presence in international markets, the cost and potential outcomes of existing and future litigation, increased cost requirements of being a public company and future sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, and litigation risks and costs.

More information about potential factors that could affect the company's business and financial results is included in our annual and quarterly reports on file with the SEC. These filings are available on the SEC's website at https://www.sec.gov/ and the company’s website.

All forward-looking statements in this press release are based on information available to the company as of the date hereof. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

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 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. We define non-GAAP net income (loss) as our net income (loss) excluding: (i) stock-based compensation and (ii) amounts paid in settlement of litigation, and other legal expenses associated with these settlements.

We have included non-GAAP net income (loss) in this press release. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure attached to this release.

About A10 Networks

A10 Networks (NYSE: ATEN) is a leader in application networking and security, providing a range of high-performance application networking solutions that help organizations ensure that their data center applications and networks remain highly available, accelerated and secure. Founded in 2004, A10 Networks is based in San Jose, Calif., and serves customers globally with offices worldwide. For more information, visit a10networks.com and @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 property of their respective owners.

 

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

   
Three Months Ended
June 30,
Six Months Ended
June 30,
2016   2015 2016   2015
Revenue:  
Products $ 38,797 $ 33,331 $ 75,171 $ 63,847
Services 18,333   14,205     35,763     27,706  
Total revenue 57,130 47,536 110,934 91,553
Cost of revenue:
Products 9,804 7,909 18,502 14,972
Services 4,405   3,692     8,934     7,415  
Total cost of revenue 14,209   11,601     27,436     22,387  
Gross profit 42,921 35,935 83,498 69,166
Operating expenses:
Sales and marketing 26,773 24,962 53,541 49,484
Research and development 14,486 13,671 29,263 27,980
General and administrative 7,230 5,703 13,891 13,230
Litigation and settlement expense 202   1,025     1,993     1,470  
Total operating expenses 48,691   45,361     98,688     92,164  
Loss from operations (5,770 ) (9,426 ) (15,190 ) (22,998 )
Other income (expense), net:
Interest expense (126 ) (104 ) (252 ) (231 )
Interest income and other income (expense), net 1,020   (216 )   1,235     (189 )
Total other income (expense), net 894   (320 )   983     (420 )
Loss before provision for income taxes (4,876 ) (9,746 ) (14,207 ) (23,418 )
Provision for income taxes 59   231     263     293  
Net loss $ (4,935 ) $ (9,977 )   $ (14,470 )   $ (23,711 )
Net loss per share:
Basic and diluted $ (0.08 ) $ (0.16 )   $ (0.22 )   $ (0.38 )
Weighted-average shares used in computing net loss per share:
Basic and diluted 64,861   61,945     64,584     61,690  
 

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Unaudited, in thousands, except per share amounts)

   
Three Months Ended
June 30,
Six Months Ended
June 30,
2016   2015 2016   2015
GAAP net loss $ (4,935 ) $ (9,977 ) $ (14,470 )   $ (23,711 )
Stock-based compensation 3,869 4,005 8,481 8,638
Litigation and settlement expense   686   836   686  
Non-GAAP net loss $ (1,066 ) $ (5,286 ) $ (5,153 ) $ (14,387 )
Non-GAAP net loss per share, basic and diluted $ (0.02 ) $ (0.09 ) $ (0.08 ) $ (0.23 )
Weighted average shares used in computing net loss per share, basic and diluted 64,861   61,945   64,584   61,690  
 

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

   

     June 30,     
2016

December 31,
2015
 
ASSETS
Current Assets:
Cash and cash equivalents $ 28,632 $ 98,117
Marketable securities 85,069
Accounts receivable, net of allowances 39,348 57,778
Inventory 14,333 18,291
Prepaid expenses and other current assets 5,427   5,064  
Total current assets

172,809

179,250
Property and equipment, net 8,917 8,903
Goodwill and Intangible Assets 7,086 867
Other non-current assets 3,681   3,531  
Total Assets $ 192,493   $ 192,551  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 7,782 $ 10,508
Accrued liabilities 28,830 27,757
Deferred revenue, current 51,384   49,572  
Total current liabilities 87,996 87,837
Deferred revenue, non-current 24,379 23,232
Other non-current liabilities 1,162   1,414  
Total Liabilities 113,537   112,483  
 
Stockholders’ Equity
Common stock and additional paid-in capital 315,157 301,887
Accumulated other comprehensive income 88
Accumulated deficit (236,289 ) (221,819 )
Total Stockholders' Equity 78,956   80,068  
Total Liabilities And Stockholders' Equity $ 192,493   $ 192,551  
 

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 
Six Months Ended June 30,
2016   2015
Cash flows from operating activities:
Net loss $ (14,470 ) $ (23,711 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 3,717 4,673
Stock-based compensation 8,481 8,638
Other non-cash items 1,051 273
Changes in operating assets and liabilities:
Accounts receivable, net 17,535 7,723
Inventory 2,846 1,861
Prepaid expenses and other assets (479 ) 44
Accounts payable (2,668 ) (3,048 )
Accrued liabilities 348 (1,619 )
Deferred revenue 2,960 8,559
Other (65 ) 84  
Net cash provided by operating activities 19,256   3,477  
Cash flows from investing activities:
Purchases of marketable securities (92,682 )
Proceeds from sales and maturities of marketable securities 7,609
Payment for acquisition (4,380 )
Purchases of property and equipment (2,588 ) (1,811 )
Net cash used in investing activities (92,041 ) (1,811 )
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans, net of repurchases 3,350 2,626
Other (50 )  
Net cash provided by financing activities 3,300   2,626  
Net increase (decrease) in cash and cash equivalents (69,485 ) 4,292
Cash and cash equivalents—beginning of period 98,117   91,905  
Cash and cash equivalents—end of period $ 28,632   $ 96,197  

Investor Contact:
The Blueshirt Group
Maria Riley, 415-217-7722
investors@a10networks.com
or
Media Contact:
A10 Networks
Ben Stricker, +1-916-842-9813
bstricker@a10networks.com

Source: A10 Networks, Inc.

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