A10 Networks (NYSE: ATEN), a leading provider of intelligent,
automated and secure networking solutions, provided the following
business update amidst the rapidly evolving COVID-19 situation and
reaffirmed its first quarter 2020 business outlook.
Dhrupad Trivedi, President and Chief Executive Officer of A10
Networks, commented, “As an organization, protecting the health and
safety of our employees and our global community is our top
priority, and we are committed to take the necessary actions to do
our part to help slow the spread of COVID-19. Thankfully, to date,
we have not experienced any meaningful negative impact to our
business or our supply chain, and we anticipate our first quarter
financial results to be in line with the guidance provided in our
fourth quarter earnings release. Our team is productively working,
with the vast majority of employees doing so remotely. Amidst the
global quarantine and shelter in place orders, networks across the
globe are being stressed with unprecedented usage and increasing
demand for bandwidth, underscoring the need for the critical
communications infrastructure solutions we provide. We are taking
the necessary steps to mitigate any potential disruption given the
macro uncertainty and unprecedented nature of the current
environment, while remaining focused on the significant opportunity
in front of us.”
“We are reaffirming our first quarter outlook and remaining
focused on internal initiatives to improve operational efficiency
while executing on our key objectives,” Trivedi added. “In the
long-term, the need for critical communications infrastructure
remains significant, and we believe we are well positioned with
service providers, who must invest to keep up with network demand
and increasing data usage. With $130 million in cash and no debt as
of December 31, 2019, we are well positioned to operate from a
position of strength to support our customers in any environment.
We continue to focus on major industry trends like IOT, 5G, Cloud
and others, and are working collaboratively with our customers to
help them deliver business outcomes resulting from their
investments in digital transformation.”
First Quarter 2020 Business Outlook Update¹
Based on its quarterly operating trends and current visibility,
the Company is reaffirming its previously issued outlook for:
- Revenue in the range of $51 million to $53 million
- Non-GAAP gross margin in the range of 76% to 78%
- Non-GAAP operating expenses in the range of $37.5 million to
$38.5 million
- Adjusted EBITDA in the range of $3.7 million to $5 million
- Non-GAAP earnings per share in the range of $0.01 to $0.03
using approximately 81 million diluted shares
¹ 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.
Business Continuity
A10 Networks has taken actions and precautions to keep our
employees and business operations safe during these unprecedented
times.
- On March 3, 2020, we implemented the World Health Organization
(WHO) and Centers for Disease Control and Prevention (CDC) safety
practices for the protection of our workforce. Our employees are
fully equipped to work from home and non-essential employees are
working remotely.
- As an “Essential Business” providing critical infrastructure
support, A10 continues to operate globally following the
guidelines, recommendations and mandates of local authorities in
each of the markets we operate.
- We are providing ongoing service and support to ensure business
continuity for our customers. 24x7 global customer support remains
operational albeit with a select group of essential personnel.
- Our supply chain has not been directly impacted thus far, and
we remain in close contact with suppliers, partners and customers
monitoring for any potential indirect impacts or disruption.
Balance Sheet Update
In the current environment, maintaining a strong balance sheet
remains a priority. As of December 31, 2019, A10 Networks had
$129.9 million in cash and marketable securities, with no debt. The
Company has put in place processes to reduce discretionary spending
and is advancing initiatives as part of its ongoing effort to
improve operational efficiency.
Forward-Looking Statements
This press release contains “forward-looking statements,” within
the meaning of Section 27A of the Securities Act of 1933. These
forward-looking statements may be identified by terms such as
anticipate, believe, foresee, expect, may, will, provide, could and
should and the negative of these terms or other similar
expressions. These forward-looking statements include, but are not
limited to, statements regarding our reaffirmation of previously
issued guidance for the financial results of our first fiscal
quarter, an anticipated increase in the need for the critical
communications infrastructure solutions we provide, the significant
opportunity in front of us, the steps we are taking to mitigate any
potential disruption given the macro uncertainty and unprecedented
nature of the current environment, our continued efforts to improve
operational efficiencies, the need of service providers to invest
to keep up with network demand and increasing data usage and our
ability to operate from a position of strength to support our
customers in any environment. 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 public health requirements in response to
the outbreak of COVID-19 and the impact on our business and
operations, which is evolving and beyond our control, and the
timing of customer orders and product shipments; members of our
management team or a significant number of our global employee base
becoming ill with COVID-19; changes in government regulations and
mandates to address COVID-19 that may adversely impact our ability
to continue to operate without disruption; a significant decline in
global macroeconomic conditions that may have an adverse impact on
our business and financial results; challenges to our
infrastructure because of the number of employees working from
remote locations, a cyberattack or other issues associated with
remote connectivity; 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;
our ability to shorten our sales 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 and other risks discussed in
“Risk Factors” in our filings with the Securities and Exchange
Commission, including our Form 10-K filed with the Securities and
Exchange Committee on March 10, 2020. We expressly disclaim any
obligation 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), this press release contains certain projected non-GAAP
financial measures, including projected non-GAAP net income (loss)
per diluted share, non-GAAP gross 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. 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.
We define non-GAAP net income as our GAAP net income (loss)
excluding: (i) stock-based compensation and related payroll tax,
(ii) amortization expense related to acquisition and (iii)
non-recurring expenses associated with the litigation settlement
expense and internal investigation, (iv) restructuring expense, and
related tax, and (v) non-recurring facilities expense. We define
non-GAAP net income per diluted share as our non-GAAP net income
(loss) divided by our diluted weighted-average shares outstanding.
We define non-GAAP gross profit as our GAAP gross profit excluding
stock-based compensation and related payroll tax. 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 tax, (ii) amortization expense related to acquisition,
(iii) non-recurring expenses associated with the litigation
settlement expense and internal investigation, (iv) restructuring
expense, and related tax, and (v) non-recurring facilities expense.
We define Adjusted EBITDA as our GAAP net income (loss) excluding
(i) interest expense, (ii) interest income and other (income)
expense, net, (iii) depreciation and amortization expense, (iv)
provision for income taxes, (v) stock-based compensation and
related payroll tax, (vi) litigation settlement and internal
investigation expense (vii) restructuring expense, and related tax,
and (viii) non-recurring facilities expense.
About A10 Networks
A10 Networks (NYSE: ATEN) is a leading provider of secure
application services and solutions, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200326005132/en/
Investor Contact: Rob Fink FNK IR (646) 809-4048
Rob@fnkir.com
Tom Constantino Chief Financial Officer
investors@a10networks.com
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