A10 Networks (NYSE: ATEN), a leading provider of intelligent and
automated cybersecurity solutions, today announced financial
results for its first quarter ended March 31, 2019.
First Quarter 2019 Financial
Summary
- Revenue increased to $50.3 million,
compared with $49.2 million in first quarter 2018
- GAAP gross margin of 75.6 percent,
non-GAAP gross margin of 76.3 percent
- GAAP operating margin of (21.8)
percent, non-GAAP operating margin of (11.4) percent
- GAAP net loss of $12.3 million, or
$0.16 per basic and diluted share, non-GAAP net loss of $7.2
million, or $0.09 per diluted share
A reconciliation between GAAP and non-GAAP information is
contained in the financial statements below.
“During the quarter, we continued to make progress on our
priorities for 2019, which include driving growth and innovation in
security, 5G and multi-cloud. Security product revenue grew 22
percent year-over-year to 34 percent of product revenue and we
secured another 5G design win with a top mobile provider in Korea
and forged ahead in our efforts to drive further product innovation
that supports the commercial roll-out of 5G networks,” said Lee
Chen, president and chief executive officer of A10 Networks. “We
have a strong product portfolio, our win rate remains high and our
team is energized by our opportunities in the market.”
Second Quarter 2019 Business Outlook
(+)
For the second quarter of 2019, the company currently
expects:
- Revenue in the range of $51.0 million
to $56.0 million
- Non-GAAP gross margin in the range of
76.0 percent to 78.0 percent
- Non-GAAP operating expenses in the
range of $43.0 million to $44.0 million
- Non-GAAP earnings per share to be
between a loss of $0.08 and breakeven using approximately 76.0
million fully diluted shares
(+) Please refer to the note below on forward-looking statements
and the risks involved with such statements as well as the note on
non-GAAP financial measures.
Prepared Materials and Conference Call Information
A10 Networks has made available a presentation with management’s
prepared remarks on its first quarter 2019 financial results. These
materials are accessible from the “Investor Relations” section of
the 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 first quarter 2019 financial results and outlook for
its second quarter 2019. 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 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 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 10130391. The press
release and 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
This press release contains “forward-looking statements,”
including statements regarding our projections for our future
operating results, the pace of growth in the market for our
solutions, our pace of innovation, the drivers of growth and
innovation for our solutions, our belief that we are on the right
path, and our ability to maximize our opportunities.
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 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, and our ability to timely file periodic reports required
to be filed under the Securities Exchange Act of 1934.
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 gross profit and non-GAAP operating 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 GAAP net
income (loss) excluding: (i) stock-based compensation, (ii)
amortization expense related to acquisition and (iii) non-recurring
expenses associated with the litigation settlement expense and
internal investigation. We define non-GAAP gross profit as our GAAP
gross profit excluding stock-based compensation. We define non-GAAP
operating income (loss) as our GAAP income (loss) from operations
excluding (i) stock-based compensation, (ii) amortization expense
related to acquisition and (iii) non-recurring expenses associated
with the litigation settlement expense and internal
investigation.
We have included our non-GAAP net income (loss), non-GAAP gross
profit and non-GAAP operating 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. A reconciliation
of non-GAAP guidance measures to corresponding GAAP measures on a
forward-looking basis is not available due to high variability and
low visibility with respect to the charges which are excluded from
these non-GAAP measures.
About A10 Networks
A10 Networks (NYSE: ATEN) provides Reliable Security Always™,
with 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 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)
Three Months Ended March
31,
2019 2018 Revenue: Products $ 28,230 $ 28,149
Services 22,060 21,034 Total revenue 50,290
49,183 Cost of revenue: Products 7,516 7,109 Services 4,734
4,775 Total cost of revenue 12,250 11,884
Gross profit 38,040 37,299 Operating expenses:
Sales and marketing 24,483 26,904 Research and development 16,166
18,797 General and administrative 8,358 11,594 Total
operating expenses 49,007 57,295 Loss from operations
(10,967 ) (19,996 ) Non-operating income (expense): Interest
expense (155 ) (33 ) Interest and other income (expense), net (633
) 566 Total non-operating income (expense), net (788 ) 533
Loss before income taxes (11,755 ) (19,463 ) Provision for
income taxes 517 207 Net loss $ (12,272 ) $ (19,670 )
Net loss per share: Basic and diluted $ (0.16 ) $ (0.27 )
Weighted-average shares used in computing net loss per share: Basic
and diluted 74,809 72,232
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Continued)
(unaudited, in thousands, except per
share amounts)
Three Months Ended March 31, 2019
2018 GAAP net loss $ (12,272 ) $ (19,670 )
Stock-based compensation
3,896
8,151 Amortization expense related to acquisition 253 253
Litigation and investigation expense 876 4,218
Non-GAAP net loss $
(7,247
) $ (7,048 ) Non-GAAP net loss per share: Basic $ (0.10 ) $ (0.10 )
Diluted $ (0.09 ) $
(0.09
) Weighted average shares used in computing non-GAAP net loss per
share: Basic 74,809 72,232 Diluted 77,491
74,579
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited, in thousands)
March 31, 2019 December 31,
2018 ASSETS Current Assets: Cash and cash equivalents
$ 33,967 $ 40,621 Marketable securities 88,784 87,754 Accounts
receivable, net of allowances 44,802 53,972 Inventory 20,952 17,930
Prepaid expenses and other current assets 17,113 14,662
Total current assets 205,618 214,939 Property and equipment,
net 13,126 7,262 Goodwill 1,307 1,307 Intangible assets 3,387 3,748
Other non-current assets 8,539 8,620 Total Assets $
231,977 $ 235,876
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities: Accounts
payable $ 8,136 $ 8,202 Accrued liabilities 25,436 25,291 Deferred
revenue 62,528 63,874 Total current liabilities
96,100 97,367 Deferred revenue, non-current 36,041 34,092 Other
non-current liabilities 3,062 534 Total Liabilities
135,203 131,993 Stockholders’ Equity: Common stock
and additional paid-in-capital 381,196 376,273 Accumulated other
comprehensive income (loss) 96 (144 ) Accumulated deficit (284,518
) (272,246 ) Total Stockholders' Equity 96,774 103,883
Total Liabilities and Stockholders' Equity $ 231,977
$ 235,876
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited, in thousands)
Three Months Ended March 31, 2019
2018 Cash flows from operating activities: Net loss $
(12,272 ) $ (19,670 ) Adjustments to reconcile net loss to net cash
used in operating activities: Depreciation and amortization 2,447
2,134 Stock-based compensation 3,896 8,151 Other non-cash items
(246 ) 389 Changes in operating assets and liabilities: Accounts
receivable 9,285 94 Inventory (3,325 ) 827 Prepaid expenses and
other assets (2,409 ) (1,687 ) Accounts payable (492 ) (1,202 )
Accrued and other liabilities (3,616 ) 3,599 Deferred revenue 603
6,995 Other 71 18
Net cash used in operating activities
(6,058 ) (352 ) Cash flows from investing activities: Proceeds from
sales of marketable securities 8,674 10,709 Proceeds from
maturities of marketable securities 4,500 17,150 Purchases of
marketable securities (13,859 ) (27,220 ) Purchases of property and
equipment (936 ) (1,133 ) Net cash used in investing activities
(1,621 ) (494 ) Cash flows from financing activities: Proceeds from
issuance of common stock under employee equity incentive plans
1,025 1,269 Other — (26 ) Net cash provided by financing
activities 1,025 1,243 Net (decrease) increase in
cash and cash equivalents (6,654 ) 397 Cash and cash equivalents -
beginning of period $ 40,621 $ 46,567 Cash and cash
equivalents - end of period $ 33,967 $ 46,964
A10 NETWORKS, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO
NON-GAAP GROSS PROFIT
(unaudited, in thousands, except
percentages)
Three Months Ended March 31, 2019
2018 GAAP gross profit $ 38,040 $ 37,299 GAAP gross
margin 75.6 % 75.8 % Non-GAAP adjustments: Stock-based compensation
325
893 Non-GAAP gross profit $ 38,365 $ 38,192
Non-GAAP gross margin 76.3 % 77.7 %
RECONCILIATION OF GAAP LOSS FROM
OPERATIONS TO NON-GAAP OPERATING INCOME (LOSS)
(unaudited, in thousands, except
percentages)
Three Months Ended March 31, 2019
2018 GAAP loss from operations $ (10,967 ) $ (19,996
) GAAP operating margin (21.8 )% (40.7 )% Non-GAAP adjustments:
Stock-based compensation 3,896 8,151 Amortization expense related
to acquisition 253 253 Litigation and investigation expense 876
4,218 Non-GAAP operating loss $ (5,942 ) $ (7,374 )
Non-GAAP operating margin (11.8 )% (15.0 )%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190425005971/en/
Investor Contact:Maria Riley & Chelsea LishThe
Blueshirt Group415-217-7722investors@a10networks.com
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