Growth driven by cybersecurity and portfolio
transformation; Management expects double digit growth in 2022
Company to discuss trends, differentiators and long-term outlook at
Investor Day on February 2
A10 Networks (NYSE: ATEN), a leading provider of cybersecurity
and infrastructure solutions, today announced financial results for
its fourth quarter ended December 31, 2021. Management will discuss
these results and its longer-term strategy at an investor day
scheduled for February 2, 2022. To register, learn more about the
event, and review attendance options, please visit the A10 Investor
Day page at www.a10networks.com/analyst-day.
Fourth Quarter 2021 Financial
Summary
- Record Revenue of $70.7 million, up 12.8% year-over-year.
- Sales of security products grew 22.2% year-over-year.
- Improving commercial execution combined with favorable market
conditions drove 26.3% growth in the Americas year-over-year.
- Deferred revenue of a record $121.6 million, up 11.9%
year-over-year.
- GAAP gross margin of 79.9%; non-GAAP gross margin of 80.7% as
the company successfully navigated short-term input cost
pressures.
- GAAP net income of $10.7 million (15.2% of revenue), or $0.13
per diluted share, compared with net income of $7.8 million, or
$0.10 per diluted share in the fourth quarter of 2020.
- Non-GAAP net income of $16.4 million (23.3% of revenue), or
$0.20 per diluted share, compared with non-GAAP net income of $13.9
million, or $0.18 per diluted share in the fourth quarter of
2020.
- Adjusted EBITDA of $19.4 million, representing 27.5% of
revenues, compared to $16.1 million in the fourth quarter of
2020.
Full-Year 2021 Financial
Summary
- Record Revenue of $250.0 million, up 10.9% year-over-year.
- GAAP gross margin of 78.6%; non-GAAP gross margin of
79.6%.
- GAAP net income of $94.9 million (37.9% of revenue) inclusive
of a $65.4 million non-recurring tax benefit recorded in the third
quarter, or $1.19 per diluted share, compared with net income of
$17.8 million, or $0.22 per diluted share last year.
- Non-GAAP net income of $50.1 million, or $0.63 per diluted
share, compared with non-GAAP net income of $35.4 million, or $0.44
per diluted share, last year.
- Adjusted EBITDA of $62.4 million, representing 25.0% of
revenues, compared to $45.6 million last year.
- Cash and cash equivalents and marketable securities as of
December 31, 2021 was $185.0 million, up $26.9 million from $158.1
million at December 31, 2020.
- Subsequent to the end of the quarter, the Board of Directors
declared a quarterly dividend of $0.05 per share, payable on March
1, 2022, to stockholders of record on February 15, 2022.
- For the full-year, the Company repurchased 1.7 million shares
at an average price of $10.64 per share.
A reconciliation between GAAP and non-GAAP information is
contained in the financial statements below.
“We are capturing market share and delivering growth that
outpaces the overall market due to rapidly accelerating demand for
our security-led solutions, as cyber threats continue to increase
across the globe,” said Dhrupad Trivedi, President and Chief
Executive Officer of A10 Networks. “As a result, we delivered
record product sales and accelerating recurring revenue. Long-term
deferred revenue increased 13.6% in the quarter, outpacing total
revenue growth, and our security solutions grew more than 22%,
demonstrating our strong position in the cybersecurity ecosystem.
Increasingly, we are converting this growth into improving market
position while returning capital to shareholders through a stock
buyback and a cash dividend. With durable tailwinds driving
industry leading growth and a proven business model, we have
significant momentum and look forward to elaborating on this
position in our investor day presentation tomorrow.”
First Quarter and Full-Year 2022
Outlook
Based on current visibility, management expects revenue to grow
approximately 10-12% year-over-year, both in the first quarter of
2022 and for the full-year. The Company expects to maintain its
current business model.
Investor Day
In lieu of a conference call, management will host an investor
day at 11 a.m. ET (8 a.m. PT) on Wednesday, February 2, 2022. This
event will be hosted live at A10’s Executive Briefing Center in San
Jose and will be available simultaneously via webcast. During this
presentation, management will discuss its longer-term financial
model. To register, learn more about the event (including a
detailed agenda), and review the in-person and virtual attendance
options, please visit the A10 Investor Day page at
www.a10networks.com/analyst-day.
Forward-Looking
Statements
This press release contains “forward-looking statements,”
including statements regarding our anticipated future financial
results, capturing market share, growth accelerating demand,
increasing cyber threats, return of capital to shareholders and our
positioning. 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 effects of the COVID-19 global pandemic on
the Company and its business, and on the business of its business
partners and customers; unanticipated changes in the markets in
which the Company operates; the effects of the current
macroeconomic climate (especially in light of the ongoing adverse
effects of the COVID-19 global pandemic); 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; and other
risks that are described in “Risk Factors” in our periodic filings
with the Securities and Exchange Commission, including our Form
10-K filed with the Securities and Exchange Commission on March 8,
2021. We do not intend 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 and the accompanying tables contain
certain non-GAAP financial measures, including non-GAAP net income,
non-GAAP net income per basic and diluted share, non-GAAP gross
profit and gross margin, non-GAAP operating income and operating
margin, non-GAAP operating expenses, Adjusted EBITDA and free cash
flow. 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.
We define non-GAAP net income as our GAAP net income excluding:
(i) stock-based compensation and related payroll tax, (ii)
amortization expense related to acquisition, (iii) non-recurring
expenses associated with the litigation settlement and internal
investigation expense, (iv) global distribution center transition
expense, (v) non-recurring facilities expense, and (vi) release of
deferred tax asset valuation allowance. We define non-GAAP net
income per basic and diluted share as our non-GAAP net income
divided by our basic and diluted weighted-average shares
outstanding. We define non-GAAP gross profit as our GAAP gross
profit excluding (i) stock-based compensation and related payroll
tax, and (ii) global distribution center transition expense. We
define non-GAAP gross margin as our non-GAAP gross profit divided
by our GAAP revenue. We define non-GAAP operating income as our
GAAP income from operations excluding (i) stock-based compensation
and related payroll tax, (ii) amortization expense related to
acquisition, (iii) non-recurring expenses associated with the
litigation settlement and internal investigation expense, (iv)
global distribution center transition expense, and (v)
non-recurring facilities expense. We define non-GAAP operating
margin as our non-GAAP operating income divided by our GAAP
revenue. We define non-GAAP operating expenses as our GAAP
operating expenses excluding (i) stock-based compensation and
related payroll tax, (ii) amortization expense related to
acquisition, (iii) non-recurring expenses associated with the
litigation settlement and internal investigation expense, (iv)
global distribution center transition expense, and (v)
non-recurring facilities expense. We define Adjusted EBITDA as our
GAAP net income excluding (i) interest expense (if any), (ii)
interest income and other (income) expense, net, (iii) depreciation
and amortization expense, (iv) benefit from (provision for) income
taxes, (v) stock-based compensation and related payroll tax, (vi)
litigation settlement and internal investigation expense, (vii)
global distribution center transition expense, and (viii)
non-recurring facilities expense. We define free cash flow as net
cash provided by operations less capital expenditures.
We have included certain of these non-GAAP measures 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
A10 Networks (NYSE: ATEN) provides secure application services
and solutions for on-premises, multi-cloud and edge-cloud
environments at hyperscale. Our mission is to enable service
providers and enterprises to deliver business-critical applications
that are secure, available and efficient for multi-cloud
transformation and 5G readiness. We deliver better business
outcomes that support investment protection, new business models
and help future-proof infrastructures, empowering our customers to
provide the most secure and available digital experience. Founded
in 2004, A10 Networks is based in San Jose, Calif. and serves
customers globally. For more information, visit
https://www.a10networks.com/ and follow us @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, on a GAAP Basis)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
Revenue:
Products
$
43,680
$
37,738
$
148,398
$
129,876
Services
26,991
24,917
101,644
95,651
Total revenue
70,671
62,655
250,042
225,527
Cost of revenue:
Products
9,460
8,014
32,620
29,109
Services
4,722
5,447
20,885
21,039
Total cost of revenue
14,182
13,461
53,505
50,148
Gross profit
56,489
49,194
196,537
175,379
Operating expenses:
Sales and marketing
25,456
20,079
85,651
77,732
Research and development
13,027
15,604
54,077
58,063
General and administrative
6,161
5,725
23,421
21,851
Total operating expenses
44,644
41,408
163,149
157,646
Income from operations
11,845
7,786
33,388
17,733
Non-operating income (expense):
Interest and other income (expense),
net
(253
)
469
(1,746
)
1,406
Total non-operating income (expense),
net
(253
)
469
(1,746
)
1,406
Income before income taxes
11,592
8,255
31,642
19,139
Benefit from (provision for) income
taxes
(864
)
(414
)
63,245
(1,323
)
Net income
$
10,728
$
7,841
$
94,887
$
17,816
Net income per share:
Basic
$
0.14
$
0.10
$
1.23
$
0.23
Diluted
$
0.13
$
0.10
$
1.19
$
0.22
Weighted-average shares used in computing
net income per share:
Basic
77,548
76,638
77,046
77,776
Diluted
80,316
78,775
80,037
80,019
A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(unaudited, in thousands, except per share amounts)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
GAAP net income
$
10,728
$
7,841
$
94,887
$
17,816
Non-GAAP adjustments:
Stock-based compensation and related
payroll tax
3,598
2,947
15,031
12,817
Amortization expense related to
acquisition
—
252
505
1,011
Litigation and investigation expense
—
—
—
30
Non-recurring facilities expense
—
—
—
795
Global distribution center transition
expense
2,117
2,884
5,063
2,884
Release of deferred tax asset valuation
allowance
—
—
(65,417
)
—
Non-GAAP net income
$
16,443
$
13,924
$
50,069
$
35,353
GAAP net income per share:
Basic
$
0.14
$
0.10
$
1.23
$
0.23
Diluted
$
0.13
$
0.10
$
1.19
$
0.22
Non-GAAP adjustments:
Stock-based compensation and related
payroll tax
0.04
0.04
0.19
0.16
Amortization expense related to
acquisition
—
—
0.01
0.01
Non-recurring facilities expense
—
—
—
0.01
Global distribution center transition
expense
0.03
0.04
0.06
0.04
Release of deferred tax asset valuation
allowance
—
—
(0.82
)
—
Non-GAAP net income per share:
Basic
$
0.21
$
0.18
$
0.65
$
0.45
Diluted
$
0.20
$
0.18
$
0.63
$
0.44
Weighted-average shares used in computing
non-GAAP net income per share:
Basic
77,548
76,638
77,046
77,776
Diluted
80,316
78,775
80,037
80,019
A10 NETWORKS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited, in thousands except par
value, on a GAAP Basis)
December 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
78,925
$
83,281
Marketable securities
106,117
74,851
Accounts receivable, net of allowances of
$543 and $41, respectively
61,795
51,051
Inventory
22,462
20,730
Prepaid expenses and other current
assets
14,720
12,390
Total current assets
284,019
242,303
Property and equipment, net
10,692
7,888
Goodwill
1,307
1,307
Intangible assets, net
—
862
Other non-current assets
97,067
38,451
Total assets
$
393,085
$
290,811
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
6,852
$
4,851
Accrued liabilities
36,101
36,930
Deferred revenue
73,132
65,999
Total current liabilities
116,085
107,780
Deferred revenue, non-current
48,499
42,700
Other non-current liabilities
19,613
24,357
Total liabilities
184,197
174,837
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value: 500,000
shares authorized; 77,423 and 76,346 shares issued and outstanding,
respectively
1
1
Treasury stock, at cost: 7,294 and 5,578
shares, respectively
(55,677
)
(37,410
)
Additional paid-in-capital
446,035
425,534
Dividends paid
(3,880
)
—
Accumulated other comprehensive income
(229
)
98
Accumulated deficit
(177,362
)
(272,249
)
Total stockholders' equity
208,888
115,974
Total liabilities and stockholders'
equity
$
393,085
$
290,811
A10 NETWORKS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands, on
a GAAP Basis)
Year Ended December
31,
2021
2020
Cash flows from operating activities:
Net income
$
94,887
$
17,816
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
8,907
11,303
Stock-based compensation
14,422
12,310
Other non-cash items
(63,719
)
1,066
Changes in operating assets and
liabilities:
Accounts receivable
(11,025
)
2,346
Inventory
(1,826
)
543
Prepaid expenses and other assets
(903
)
1,141
Accounts payable
1,995
(2,683
)
Accrued and other liabilities
(5,573
)
3,909
Deferred revenue
12,932
7,535
Net cash provided by operating
activities
50,097
55,286
Cash flows from investing activities:
Proceeds from sales of marketable
securities
6,865
9,051
Proceeds from maturities of marketable
securities
88,790
57,707
Purchases of marketable securities
(128,554
)
(57,992
)
Purchases of property and equipment
(5,171
)
(3,564
)
Net cash provided by (used in) investing
activities
(38,070
)
5,202
Cash flows from financing activities:
Proceeds from issuance of common stock
under employee equity incentive plans
5,764
9,591
Repurchase of common stock
(18,267
)
(32,540
)
Payments for dividends
(3,880
)
—
Net cash used in financing activities
(16,383
)
(22,949
)
Net increase (decrease) in cash and cash
equivalents
(4,356
)
37,539
Cash and cash equivalents—beginning of
period
$
83,281
$
45,742
Cash and cash equivalents—end of
period
$
78,925
$
83,281
A10 NETWORKS, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
(unaudited, in thousands, except percentages)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
GAAP gross profit
$
56,489
$
49,194
$
196,537
$
175,379
GAAP gross margin
79.9
%
78.5
%
78.6
%
77.8
%
Non-GAAP adjustments:
Stock-based compensation and related
payroll tax
398
385
1,733
1,641
Global distribution center transition
expense
117
307
655
307
Non-GAAP gross profit
$
57,004
$
49,886
$
198,925
$
177,327
Non-GAAP gross margin
80.7
%
79.6
%
79.6
%
78.6
%
A10 NETWORKS, INC.
RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES TO NON-GAAP TOTAL
OPERATING EXPENSES (unaudited, in thousands)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
GAAP total operating expenses
$
44,644
$
41,408
$
163,149
$
157,646
Non-GAAP adjustments:
Stock-based compensation and related
payroll tax
(3,200
)
(2,562
)
(13,298
)
(11,176
)
Amortization expense related to
acquisition
—
(252
)
(505
)
(1,011
)
Litigation and investigation expense
—
—
—
(30
)
Non-recurring facilities expense
—
—
—
(795
)
Global distribution center transition
expense
(2,000
)
(2,577
)
(4,408
)
(2,577
)
Non-GAAP total operating expenses
$
39,444
$
36,017
$
144,938
$
142,057
A10 NETWORKS, INC.
RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO NON-GAAP OPERATING
INCOME (unaudited, in thousands, except percentages)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
GAAP income from operations
$
11,845
$
7,786
$
33,388
$
17,733
GAAP operating margin
16.8
%
12.4
%
13.4
%
7.9
%
Non-GAAP adjustments:
Stock-based compensation and related
payroll tax
3,598
2,947
15,031
12,817
Amortization expense related to
acquisition
—
252
505
1,011
Litigation and investigation expense
—
—
—
30
Non-recurring facilities expense
—
—
—
795
Global distribution center transition
expense
2,117
2,884
5,063
2,884
Non-GAAP operating income
$
17,560
$
13,869
$
53,987
$
35,270
Non-GAAP operating margin
24.8
%
22.1
%
21.6
%
15.6
%
A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(NON-GAAP) (unaudited, in thousands)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
GAAP net income
$
10,728
$
7,841
$
94,887
$
17,816
Exclude: Interest and other (income)
expense, net
253
(469
)
1,746
(1,406
)
Exclude: Depreciation and amortization
expense
1,863
2,531
8,907
11,303
Exclude: Provision for (benefit from)
income taxes
864
414
(63,245
)
1,323
EBITDA
13,708
10,317
42,295
29,036
Exclude: Stock-based compensation and
related payroll tax
3,598
2,947
15,031
12,817
Exclude: Litigation and investigation
expense
—
—
—
30
Exclude: Non-recurring facilities
expense
—
—
—
795
Exclude: Global distribution center
transition expense
2,117
2,884
5,063
2,884
Adjusted EBITDA
$
19,423
$
16,148
$
62,389
$
45,562
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220201006056/en/
Investor Contact: Rob Fink FNK IR 646.809.4048
aten@fnkir.com Brian Becker Chief Financial Officer
investors@a10networks.com
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