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A10 Networks Reports Third Quarter 2017 Financial Results; Board of Directors Authorizes New Share Repurchase Program
[October 26, 2017]

A10 Networks Reports Third Quarter 2017 Financial Results; Board of Directors Authorizes New Share Repurchase Program


A10 Networks, Inc. (NYSE: ATEN (News - Alert)), a Secure Application Services™ company, today announced financial results for its third quarter ended Sept. 30, 2017.

Third Quarter 2017 Financial Summary

  • Revenue of $61.4 million, compared with $55.1 million in third quarter 2016
  • GAAP net loss of $2.7 million, or $0.04 per basic share
  • Non-GAAP net income of $2.1 million, or $0.03 per diluted share

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

"We delivered a strong third quarter and are pleased with the team's execution. Revenue exceeded our initial and revised guidance and increased 12% year-over-year to reach $61.4 million. Our top-line performance was driven by solid demand and the team's improved execution as we began to see the initial progress from some of the recent changes we implemented in the quarter," said Lee Chen, president and chief executive officer of A10 Networks (News - Alert). "We are making solid progress, but still have a lot of work ahead of us in order to continue to capitalize on the fast-growing areas of our market. The share repurchase authorization announced today reflects our confidence in our market opportunities and our commitment to enhancing shareholder value."

Prepared Materials and Conference Call Information

A10 Networks has made available a presentation with management's prepared remarks on its third quarter 2017 financial results and supplemental financial information. These materials are accessible from the "Investor Relations" 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 third quarter 2017 results and outlook for its fourth quarter of 2017. 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 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 10112610. The press release and supplemental financials will be accessible from the 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 continue to improve our execution, increase the effectiveness of our go-to-market activities, support growth for our expanding product portfolio, penetrate and expand into the cloud and security markets, and drive growth and shareholder value. 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 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 attract and retain new end-customers, our ability to maintain and enhance our brand and reputation, continued growth in markets relating to network security, management and analysis, 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 and risks associated with our presence in international markets.

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 table 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 loss excluding: (i) stock-based compensation, (ii) amortization expense related to acquisition and (iii) amounts paid in settlement of litigation, and other legal expenses associated with these settlements.

We have included our 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 Secure Application Services™ company, 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: www.a10networks.com and @A10Networks.

The A10 logo, A10 Networks, A10 Harmony, Thunder and A10 Lightning and Secure Application Services 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)
 
  Three Months Ended   Nine Months Ended
September 30, September 30,
2017   2016 2017   2016
Revenue:
Products $ 39,389 $ 35,275 $ 111,195 $ 110,446
Services 22,030   19,793   64,199   55,556  
Total revenue 61,419   55,068   175,394   166,002  
Cost of revenue:
Products 9,119 8,795 26,973 27,297
Services 4,640   4,153   13,623   13,087  
Total cost of revenue 13,759   12,948   40,596   40,384  
Gross profit 47,660   42,120   134,798   125,618  
Operating expenses:
Sales and marketing 26,930 24,331 78,754 77,872
Research and development 15,997 15,968 49,529 45,231
General and administrative 6,878 6,305 21,028 20,196
Litigation expense -   66   -   2,059  
Total operating expenses 49,805   46,670   149,311   145,358  
Loss from operations (2,145 ) (4,550 ) (14,513 ) (19,740 )
Non-operating income (expense):
Interest expense (20 ) (145 ) (128 ) (397 )
Interest and other income (expense), net (37 ) 309   779   1,544  
Total non-operating income (expense), net (57 ) 164   651   1,147  
Loss before income taxes (2,202 ) (4,386 ) (13,862 ) (18,593 )
Provision for income taxes 454   298   963   561  
Net loss $ (2,656 ) $ (4,684 ) $ (14,825 ) $ (19,154 )
Net loss per share:
Basic and diluted $ (0.04 ) $ (0.07 ) $ (0.21 ) $ (0.29 )
Weighted-average shares used in computing net loss per share:
Basic and diluted 70,705   66,260   69,688   65,146  

 
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(unaudited, in thousands, except per share amounts)
 
  Three Months Ended   Nine Months Ended
September 30, September 30,
2017   2016 2017   2016
GAAP net loss $ (2,656 ) $ (4,684 ) $ (14,825 ) $ (19,154 )
Stock-based compensation 4,545 4,588 13,824 13,069
Amortization expense related to acquisition 253 253 758 253
Litigation and settlement expense -   -   -   836  
Non-GAAP net income (loss) $ 2,142   $ 157   $ (243 ) $ (4,996 )
Non-GAAP net income (loss) per share:
Basic and diluted $ 0.03   $ 0.00   $ 0.00   $ (0.08 )
Weighted average shares used in computing non-GAAP net income (loss) per share:
Basic 70,705   66,260   69,688   65,146  
Diluted 73,572   72,763   69,688   65,146  
 
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
  September 30,   December 31,
2017 2016
ASSETS
Current Assets:
Cash and cash equivalents $ 39,919 $ 28,975
Marketable securities 83,973 85,372
Accounts receivable, net of allowances 49,856 66,755
Inventory 15,944 15,070
Prepaid expenses and other current assets 7,045   5,137  
Total current assets 196,737 201,309
Property and equipment, net 9,531 8,219
Goodwill and intangible assets 6,858 7,940
Other non-current assets 4,837   3,870  
Total Assets $ 217,963   $ 221,338  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,509 $ 9,851
Accrued liabilities 27,604 31,525
Deferred revenue 59,294   61,334  
Total current liabilities 95,407 102,710
Deferred revenue, non-current 31,710 31,574
Other non-current liabilities 1,073   988  
Total Liabilities 128,190   135,272  
Stockholders' Equity:
Common stock and additional paid-in-capital 347,574 328,870
Accumulated other comprehensive loss (17 ) (45 )
Accumulated deficit (257,784 ) (242,759 )
Total Stockholders' Equity 89,773   86,066  
Total Liabilities and Stockholders' Equity $ 217,963   $ 221,338  
 
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
  Nine Months Ended
September 30,
2017   2016
Cash flows from operating activities:
Net loss $ (14,825 ) $ (19,154 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 6,222 5,919
Stock-based compensation 13,824 13,069
Other non-cash items 930 1,798
Changes in operating assets and liabilities:

 

Accounts receivable, net 16,049 7,311
Inventory (3,242 ) 2,303
Prepaid expenses and other assets (2,870 ) 349
Accounts payable (1,243 ) (878 )
Accrued liabilities (3,023 ) 906
Deferred revenue (1,904 ) 10,440
Other 102   (224 )
Net cash provided by operating activities 10,020   21,839  
Cash flows from investing activities:
Purchases of marketable securities (69,580 ) (109,268 )
Proceeds from sales and maturities of marketable securities 70,866 23,787
Purchases of property and equipment (4,223 ) (4,256 )
Payment for acquisition - (4,380 )
Purchases of intangible asset -   (1,500 )
Net cash used in investing activities (2,937 ) (95,617 )
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans 7,665 7,116
Repurchases and retirement of common stock (3,071 ) -
Payment of contingent consideration (650 ) -
Other (83 ) (75 )
Net cash provided by financing activities 3,861   7,041  
Net increase (decrease) in cash and cash equivalents 10,944 (66,737 )
Cash and cash equivalents - beginning of period 28,975   98,117  
Cash and cash equivalents - end of period $ 39,919   $ 31,380  


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