Form 8-K A10 Networks, Inc. For: Oct 27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________
FORM 8-K
____________________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 27, 2016
____________________________________________________________________________
A10 NETWORKS, INC.
(Exact name of registrant as specified in its charter)
____________________________________________________________________________
Delaware | 001-36343 | 20-1446869 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||
3 West Plumeria Drive
San Jose, CA 95134
(Address of principal executive offices, including zip code)
(408) 325-8668
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 27, 2016, A10 Networks, Inc. (the “Company”) issued a press release regarding financial results for the third quarter ended September 30, 2016. The Company also posted on its website (www.a10networks.com) slides with accompanying prepared remarks regarding such financial results. Copies of the press release and slides with accompanying prepared remarks by the Company are attached as Exhibits 99.1 and 99.2, respectively, and the information in Exhibits 99.1 and 99.2 are incorporated herein by reference.
The information in Item 2.02 and Item 9.01 in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit | Description |
99.1 | |
99.2 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 27, 2016
By: /s/ Greg Straughn | |
Greg Straughn | |
Chief Financial Officer (Principal Accounting and Financial Officer) | |
EXHIBIT 99.1
A10 Networks, Inc. Reports Third Quarter 2016 Results; Board of Directors Authorizes Share Repurchase
SAN JOSE, Calif., October 27, 2016 -- A10 Networks, Inc. (NYSE: ATEN), a leader in application networking and security, today announced financial results for its third quarter ended September 30, 2016.
Total revenue for the third quarter grew to $55.1 million, up 8 percent when compared with $50.8 million in the third quarter of 2015. On a GAAP basis, A10 Networks reported a net loss for the third quarter 2016 of $4.7 million, or $0.07 per share, compared with a net loss of $9.0 million, or $0.14 per share, in the third quarter of 2015. Non-GAAP net income for the third quarter of 2016 was $0.2 million, or $0.00 per share, compared with a non-GAAP net loss of $4.4 million, or $0.07 per share, in the third quarter of 2015. A reconciliation between GAAP and non-GAAP information is contained in the financial statements below.
“We reported third quarter revenue of $55.1 million, which was below our guidance and reflects a shortfall in North America where we received a couple orders too late in the quarter to ship and some deals slipped into future quarters,” said Lee Chen, president and chief executive officer of A10 Networks. “While we are disappointed with our topline performance, we continued to drive leverage in our operating model, significantly improve our bottom-line results and invest in key areas of our business to foster long-term growth. The share repurchase authorization announced today reflects our confidence in our market opportunities and ability to meet our financial objectives.”
Board of Directors Authorizes Share Repurchase
A10 Networks also announced that its Board of Directors authorized a share repurchase program for up to $20 million of common stock over the next 12 months. Under the repurchase authorization, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. The repurchase authorization may be commenced, suspended or discontinued at any time at the company’s discretion.
Prepared Materials and Conference Call Information
A10 Networks has made available a presentation with management’s prepared remarks on its third 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 third quarter 2016 results and outlook for its fourth 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 10092140. 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, 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 success of any future acquisitions or investments in complementary companies, products, services or technologies and the ability to successfully integrate acquisitions such as Appcito, 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.
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 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 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: 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 property of their respective owners.
Investor Contact:
Maria Riley
The Blueshirt Group
415-217-7722
or
Media Contact:
Ben Stricker
A10 Networks
+1-916-842-9813
Source: A10 Networks, Inc.
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue: | |||||||||||||||
Products | $ | 35,275 | $ | 34,990 | $ | 110,446 | $ | 98,837 | |||||||
Services | 19,793 | 15,788 | 55,556 | 43,494 | |||||||||||
Total revenue | 55,068 | 50,778 | 166,002 | 142,331 | |||||||||||
Cost of revenue: | |||||||||||||||
Products | 8,795 | 8,529 | 27,297 | 23,501 | |||||||||||
Services | 4,153 | 4,186 | 13,087 | 11,601 | |||||||||||
Total cost of revenue | 12,948 | 12,715 | 40,384 | 35,102 | |||||||||||
Gross profit | 42,120 | 38,063 | 125,618 | 107,229 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 24,331 | 25,774 | 77,872 | 75,258 | |||||||||||
Research and development | 15,968 | 13,562 | 45,231 | 41,542 | |||||||||||
General and administrative | 6,305 | 6,892 | 20,196 | 20,122 | |||||||||||
Litigation and settlement expense | 66 | 469 | 2,059 | 1,939 | |||||||||||
Total operating expenses | 46,670 | 46,697 | 145,358 | 138,861 | |||||||||||
Loss from operations | (4,550 | ) | (8,634 | ) | (19,740 | ) | (31,632 | ) | |||||||
Other income (expense), net: | |||||||||||||||
Interest expense | (145 | ) | (151 | ) | (397 | ) | (382 | ) | |||||||
Interest income and other income (expense), net | 309 | 22 | 1,544 | (167 | ) | ||||||||||
Total other income (expense), net | 164 | (129 | ) | 1,147 | (549 | ) | |||||||||
Loss before income taxes | (4,386 | ) | (8,763 | ) | (18,593 | ) | (32,181 | ) | |||||||
Provision for income taxes | 298 | 204 | 561 | 497 | |||||||||||
Net loss | $ | (4,684 | ) | $ | (8,967 | ) | $ | (19,154 | ) | $ | (32,678 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.07 | ) | $ | (0.14 | ) | $ | (0.29 | ) | $ | (0.53 | ) | |||
Weighted-average shares used in computing net loss per share: | |||||||||||||||
Basic and diluted | 66,260 | 62,753 | 65,146 | 62,009 | |||||||||||
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(unaudited, in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP net loss | $ | (4,684 | ) | $ | (8,967 | ) | $ | (19,154 | ) | $ | (32,678 | ) | |||
Stock-based compensation | 4,588 | 4,608 | 13,069 | 13,246 | |||||||||||
Amortization expense related to acquisition | 253 | — | 253 | — | |||||||||||
Litigation and settlement expense | — | — | 836 | 686 | |||||||||||
Non-GAAP net income (loss) | $ | 157 | $ | (4,359 | ) | $ | (4,996 | ) | $ | (18,746 | ) | ||||
Non-GAAP net income (loss) per share: | |||||||||||||||
Basic and diluted | $ | 0.00 | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.30 | ) | ||||
Weighted average shares used in computing non-GAAP net income (loss) per share: | |||||||||||||||
Basic | 66,260 | 62,753 | 65,146 | 62,009 | |||||||||||
Diluted | 72,763 | 62,753 | 65,146 | 62,009 | |||||||||||
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
September 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 31,380 | $ | 98,117 | |||
Marketable securities | 85,385 | — | |||||
Accounts receivable, net of allowances | 48,903 | 57,778 | |||||
Inventory | 14,537 | 18,291 | |||||
Prepaid expenses and other current assets | 4,652 | 5,064 | |||||
Total current assets | 184,857 | 179,250 | |||||
Property and equipment, net | 8,851 | 8,903 | |||||
Goodwill and intangible assets | 8,300 | 867 | |||||
Other non-current assets | 3,752 | 3,531 | |||||
Total Assets | $ | 205,760 | $ | 192,551 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 9,419 | $ | 10,508 | |||
Accrued liabilities | 29,427 | 27,757 | |||||
Deferred revenue, current | 53,484 | 49,572 | |||||
Total current liabilities | 92,330 | 87,837 | |||||
Deferred revenue, non-current | 29,759 | 23,232 | |||||
Other non-current liabilities | 1,052 | 1,414 | |||||
Total Liabilities | 123,141 | 112,483 | |||||
Stockholders’ Equity: | |||||||
Common stock and additional paid-in capital | 323,556 | 301,887 | |||||
Accumulated other comprehensive income | 36 | — | |||||
Accumulated deficit | (240,973 | ) | (221,819 | ) | |||
Total Stockholders' Equity | 82,619 | 80,068 | |||||
Total Liabilities And Stockholders' Equity | $ | 205,760 | $ | 192,551 | |||
A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (19,154 | ) | $ | (32,678 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 5,919 | 6,784 | |||||
Stock-based compensation | 13,069 | 13,246 | |||||
Other non-cash items | 1,798 | 1,589 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 7,311 | 11,223 | |||||
Inventory | 2,303 | 922 | |||||
Prepaid expenses and other assets | 349 | (97 | ) | ||||
Accounts payable | (878 | ) | (1,086 | ) | |||
Accrued liabilities | 906 | (1,492 | ) | ||||
Deferred revenue | 10,440 | 9,118 | |||||
Other | (224 | ) | 104 | ||||
Net cash provided by operating activities | 21,839 | 7,633 | |||||
Cash flows from investing activities: | |||||||
Purchases of marketable securities | (109,268 | ) | — | ||||
Proceeds from sales and maturities of marketable securities | 23,787 | — | |||||
Payment for acquisition | (4,380 | ) | — | ||||
Purchases of property and equipment | (4,256 | ) | (2,558 | ) | |||
Purchase of intangible asset | (1,500 | ) | — | ||||
Net cash used in investing activities | (95,617 | ) | (2,558 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock under employee equity incentive plans, net of repurchases | 7,116 | 3,238 | |||||
Other | (75 | ) | 306 | ||||
Net cash provided by financing activities | 7,041 | 3,544 | |||||
Net increase (decrease) in cash and cash equivalents | (66,737 | ) | 8,619 | ||||
Cash and cash equivalents—beginning of period | 98,117 | 91,905 | |||||
Cash and cash equivalents—end of period | $ | 31,380 | $ | 100,524 | |||
YOUR SECURE
APPLICATION
SERVICES COMPANY
Third Quarter 2016
Financial Results &
Commentary
October 27, 2016
1
Agenda
Introduction
• Maria Riley, Investor Relations
Results Overview
• Lee Chen, CEO, President and Founder
Q3 2016 Financial Results & Q4 2016 Business Outlook
• Greg Straughn, CFO
Q & A
• Lee Chen, CEO, President and Founder
• Greg Straughn, CFO
• Ray Smets, VP – Worldwide Sales
2
Cautionary Statements and Disclosures
This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on our management’s beliefs and assumptions
and on information currently available to management, including A10’s continued acceptance of A10’s products in the marketplace, growing demand for ADC
security features, meeting our financial goals, the anticipated results of any past or future acquisitions, expanding our total addressable market, financial
results, plans, assumptions, strategy, international growth, business outlook and revenue.
We operate in very competitive and rapidly changing environments, and new risks may emerge from time to time. It is not possible for our management to
predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements we may make. Forward-looking statements are subject to known and unknown
risks, uncertainties, assumptions and other factors including, but not limited to, those related to our ability to maintain an adequate rate of revenue growth, our
business plan and our ability to effectively manage our growth, costs associated with defending intellectual property infringement and other claims, risks and
costs related to litigation, our ability to attract and retain end-customers, our ability to further penetrate our existing customer base, our ability to displace
existing products in established markets, our ability to timely and effectively scale and adapt our existing technology, our ability to innovate new products and
bring them to market in a timely manner, our ability to expand internationally, the effects of increased competition in our market and our ability to compete
effectively, the effects of seasonal trends on our results of operations, our expectations concerning relationships with third parties, the attraction and retention
of qualified employees and key personnel, our ability to maintain, protect, and enhance our brand and intellectual property, and future acquisitions of or
investments in complementary companies, products, services or technologies and our ability to successfully integrate such acquisitions.
These factors, together with those described in our quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings made with the Securities and
Exchange Commission (“SEC”), may cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied
by our forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although our management believes that the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described
in the forward-looking statements will be achieved or occur. Moreover, neither we, nor any other person, assume responsibility for the accuracy and
completeness of the forward-looking statements. We disclaim any obligation to update information contained in these forward-looking statements whether as
a result of new information, future events, or otherwise.
3
Cautionary Statements and Disclosures
In addition to the U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. The non-GAAP measures have limitations as analytical
tools and you should not consider them in isolation or as a substitute for an analysis of our results under U.S. GAAP. There are a number of limitations related to
the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures
differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for
comparison.
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.
With the exception of revenue, all financial measures discussed today are on a non-GAAP basis and have been adjusted to exclude certain charges. The use of
non-GAAP measures is further discussed in the accompanying quarterly financial results press release, which has been furnished to the SEC on Form 8-K and
posted on A10 Networks’ website. The press release also defines our non-GAAP financial measures.
A reconciliation between GAAP and non-GAAP measures for historical periods can also be found in the appendix to this document, in the accompanying press
release and on the trended quarterly financial statements posted on the company’s website. 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.
4
Lee Chen
CEO, President and Founder
5
Third Quarter Summary
Revenue of $55.1 M, up 8% y/y
• Japan revenue of $16.0 M, up 83% y/y
• Some deals in North America pushed into future quarters, impacted product bookings
• Record services revenue of $19.8 M, deferred revenue grew 25% y/y
Significant Bottom-Line Improvement
• Achieved non-GAAP net income of $0.2 M or break even on a per share basis,
compared with a loss of $0.07 per share in last year’s third quarter
Cash Generation & Share Repurchase Authorization
• Year to date, generated $21.8 M in cash flow from operations
• Board of directors authorized share repurchase program for up to $20 million of common
stock. The authorization has been approved for a term of 12 months
6
Third Quarter Accomplishments
Service Provider Expansion
• Large mobile carrier selected our Thunder TPS solution. Two of the top three mobile
operators in Japan are now using our TPS solution
• Secured a NEW U.S. Tier-1 service provider with our Thunder ADC. A10 now serves the top
four Tier-1 mobile operators in the U.S.
• Added a NEW communications provider via our ability to deliver ADC and Carrier-Grade
NAT on a single appliance
Public Sector
• Significant win with executive branch of U.S. Government that selected our Thunder ADC,
Thunder SSLi and Thunder Baremetal solutions
Cloud Provider
• Leading public cloud provider in the U.S. deploying our new Thunder 14045 TPS
with 300g throughput
7
8
Enabling Application Agility
ACOS ACOS
Application Delivery & Security
Appliance & SDN
Virtualization / NFV
Lightweight ADC
Secure Application Services
Containers & Microservices
On Premise Cloud
S TA B I L I T Y & P E R F O R M A N C E A G I L I T Y & F LU I D I T Y
ANALYTICS
API CONFIGS
APPLICATIONS APPLICATIONS
Controller
Greg Straughn
CFO
9
Revenue Trend
QUARTERLY
$M
$142
$179
$199
2013 2014 2015
ANNUAL
$M
Annual
$43
$45 $44
$48
$51
$57
$54
$57
$55
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2015 2014 2016
10
Revenue Mix
$ MILLIONS / % REVENUE
Product Geography Verticals
Numbers may not total to 100% due to rounding.
11
Non-GAAP Gross Profit
*Non-GAAP rounded financial measures. For reconciliation see Appendix.
12
Summary Financial Results
*Non-GAAP rounded financial measures. For reconciliation see Appendix.
13
NON-GAAP* FINANCIAL MEASURES ($M) Q1’2015 Q2’2015 Q3’2015 Q4’2015 Q1’2016 Q2’2016 Q3’2016
Sales & Marketing $22.5 $23.1 $23.7 $27.6 $24.7 $25.0 $22.6
Research & Development $12.7 $12.4 $12.1 $12.2 $13.3 $13.4 $14.0
General, Administrative & Litigation $7.5 $5.5 $6.8 $6.7 $6.9 $6.6 $5.6
Operating Income (Loss) $(8.9) $(4.7) $(4.0) $(3.2) $(4.0) $(1.9) $0.3
Net income (loss) Per share $(0.15) $(0.09) $(0.07) $(0.06) $(0.06) $(0.02) $0.00
Balance Sheet & Cash Flow
14
NON-GAAP* FINANCIAL MEASURES ($M) Q1’2015 Q2’2015 Q3’2015 Q4’2015 Q1’2016 Q2’2016 Q3’2016
Sales & Marketing $22.5 $23.1 $23.7 $27.6 $24.7 $25.0 $22.6
Research & Development $12.7 $12.4 $12.1 $12.2 $13.3 $13.4 $14.0
General, Administrative & Litigation $7.5 $5.5 $6.8 $6.7 $6.9 $6.6 $5.6
Operating Income (Loss) $(8.9) $(4.7) $(4.0) $(3.2) $(4.0) $(1.9) $0.3
Net income (loss) Per share $(0.15) $(0.09) $(0.07) $(0.06) $(0.06) $(0.02) $0.00
Q4 2016 Business Outlook
Management will host a conference call to discuss A10’s financial results for its third quarter 2016 and the current outlook for
the fourth quarter of 2016 on October 27, 2016 at 4:30 p.m. Eastern time / 1:30 p.m. Pacific time.
Open to the public, investors may access the call by dialing 1-844-792-3728 or 1-412-317-5105. A live audio webcast of the
conference call will be accessible from the “Investors” section of A10 Networks website at investors.a10networks.com. The
webcast will be archived for a period of one year. A telephonic replay of the conference call will be available one hour after
the call and will run for five business days and may be accessed by dialing 1-412-317-0088 or 1-877-344-7529 and entering
the passcode 10092140.
Please refer to page #3 for information regarding forward looking statements.
15
Question & Answer Session
LEE CHEN
CEO, President
and Founder
GREG STRAUGHN
CFO
RAY SMETS
VP Worldwide Sales
16
Non-GAAP Reconciliation – Gross Profit
* SBC = stock-based compensation
17
QUARTERLY Q1'15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16
Gross Profit Margin (GAAP) 75% 75% 75% 76% 75% 75% 76%
SBC included in COGS 2% 1% 1% —% 1% 1% 1%
Gross Profit Margin (Non-GAAP) 77% 76% 76% 76% 76% 76% 77%
QUARTERLY ($M) Q1'15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16
Gross Profit (GAAP) $33.2 $35.9 $38.1 $43.0 $40.6 $42.9 $42.1
SBC included in COGS $0.5 $0.3 $0.4 $0.3 $0.3 $0.2 $0.3
Gross Profit (Non-GAAP) $33.7 $36.3 $38.5 $43.3 $40.9 $43.1 $42.4
Non-GAAP Reconciliation – Expense Items
* SBC stands for stock-based compensation.
18
$ Millions Q1'15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16
Sales & Marketing (GAAP) $24.5 $25.0 $25.8 $29.3 $26.8 $26.8 $24.3
SBC included in Sales & Marketing (2.1) (1.9) (2.1) (1.7) (2.1) (1.7) (1.7)
Sales & Marketing (Non-GAAP) $22.5 $23.1 $23.7 $27.6 $24.7 $25.0 $22.6
R&D (GAAP) $14.3 $13.7 $13.6 $13.3 $14.8 $14.5 $16.0
SBC included in R&D (1.6) (1.3) (1.5) (1.1) (1.4) (1.1) (1.7)
Amortization expense related to acquisition — — — — — — (0.3)
R&D (Non-GAAP) $12.7 $12.4 $12.1 $12.2 $13.3 $13.4 $14.0
G&A (GAAP) $7.5 $5.7 $6.9 $6.9 $6.7 $7.2 $6.3
SBC included in G&A (0.5) (0.5) (0.6) (0.5) (0.7) (0.8) (0.8)
G&A (Non-GAAP) $7.0 $5.2 $6.3 $6.4 $5.9 $6.4 $5.5
Litigation (GAAP) $0.4 $1.0 $0.5 $0.3 $1.8 $0.2 $0.1
Litigation and Settlement — (0.7) — — (0.8) — —
Litigation (Non-GAAP) $0.4 $0.3 $0.5 $0.3 $1.0 $0.2 $0.1
Total Op Exp (GAAP) $46.8 $45.4 $46.7 $49.8 $50.0 $48.7 $46.7
SBC included in Total Op Exp (4.2) (3.7) (4.2) (3.3) (4.3) (3.6) (4.3)
Amortization expense related to acquisition — — — — — — (0.3)
Litigation Settlement — (0.7) — — (0.8) — —
Total Op Exp (Non-GAAP) $42.6 $41.0 $42.5 $46.4 $44.9 $45.0 $42.1
Non-GAAP Reconciliation – Income (Loss) Items
19
$ Millions Q1'15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16
Loss from Operations (GAAP) $(13.6) $(9.4) $(8.6) $(6.8) $(9.4) $(5.8) $(4.6)
Stock-Based Compensation 4.6 4.0 4.6 3.6 4.6 3.9 4.6
Amortization Expense Related to Acquisition — — — — — — 0.3
Litigation and Settlement — 0.7 — — 0.8 — —
Income (Loss) from Operations (Non-GAAP) $(8.9) $(4.7) $(4.0) $(3.2) $(4.0) $(1.9) $0.3
Net loss (GAAP) $(13.7) $(10.0) $(9.0) $(7.4) $(9.5) $(4.9) $(4.7)
Stock-Based Compensation 4.6 4.0 4.6 3.6 4.6 3.9 4.6
Amortization Expense Related to Acquisition — — — — — — 0.3
Litigation and Settlement — 0.7 — — 0.8 — —
Net Income (Loss) (Non-GAAP) $(9.1) $(5.3) $(4.4) $(3.7) $(4.1) $(1.1) $0.2
Weighted Average Shares used in per share calculations
for non-GAAP net income (loss) per share:
Basic 61.5 61.9 62.8 63.7 64.3 64.9 66.3
Diluted 61.5 61.9 62.8 63.7 64.3 64.9 72.8
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