A10 Networks, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 30, 2018

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EXHIBIT 99.1


a10logoa01a17.jpg
A10 Networks Reports Preliminary Second Quarter and First Half 2018 Financial Results

SAN JOSE, Calif., Aug. 30, 2018 -- A10 Networks (NYSE: ATEN), a provider of intelligent and automated cybersecurity solutions, today announced preliminary financial results for the quarter and six months ended June 30, 2018.

Second Quarter 2018 Financial Summary
•
Revenue of $60.7 million grew 12% year-over-year
•
GAAP net loss of $4.5 million, or $0.06 per share
•
Non-GAAP net income of $1.6 million, or $0.02 per share

First Half 2018 Financial Summary
•
Revenue of $109.9 million, compared with $117.9 million in the first half of 2017
•
GAAP net loss of $24.2 million, or $0.33 per share
•
Non-GAAP net loss of $5.5 million, or $0.07 per share

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

“We have made steady progress across our key initiatives including strengthening our team, increasing our pace of innovation, and targeting our R&D investments in cloud, security and 5G. While our first quarter was impacted by our sales transformation, we were pleased to see improved momentum in the second quarter,” said Lee Chen, president and chief executive officer of A10 Networks. “There are a number of trends in the market that play to A10's strengths that we believe present many opportunities for growth over the long-term. We are focused as a management team and believe we are on the right path to continue to improve our execution and drive growth.”
 
Prepared Materials and Conference Call Information
A10 Networks has made available a presentation with management’s prepared remarks on its preliminary second quarter and first half 2018 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 second quarter and first half 2018 results and outlook for its third quarter of 2018. 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 10123380. 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 ability to improve our execution, take advantage of trends in the market, 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, 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) legal expenses associated with the litigation and internal investigation.

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 provider of intelligent and automated cybersecurity solutions, providing a portfolio of high-performance secure application solutions that enable intelligent automation with machine learning to ensure business-critical applications are secure and always available. Founded in 2004, A10 Networks is based in San Jose, Calif., and serves customers in more than 80 countries with offices worldwide. For more information, visit: www.a10networks.com and @A10Networks.

The A10 logo, A10 Networks, A10 Thunder and A10 5G-GiLAN 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.




Investor Contact:
Maria Riley & Chelsea Lish
The Blueshirt Group
415-217-7722
investors@a10networks.com


Source: A10 Networks, Inc.







A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Products
$
39,224

 
$
32,828

 
$
67,373

 
$
76,526

Services
21,489

 
21,145

 
42,523

 
41,381

Total revenue
60,713

 
53,973

 
109,896

 
117,907

Cost of revenue:
 

 
 

 
 

 
 

Products
9,080

 
8,265

 
16,189

 
18,767

Services
4,107

 
4,535

 
8,882

 
8,776

Total cost of revenue
13,187

 
12,800

 
25,071

 
27,543

Gross profit
47,526

 
41,173

 
84,825

 
90,364

Operating expenses:
 

 
 

 
 

 
 

Sales and marketing
25,788

 
25,561

 
52,692

 
51,824

Research and development
15,572

 
16,490

 
34,369

 
33,532

General and administrative
9,858

 
6,852

 
21,452

 
14,499

Total operating expenses
51,218

 
48,903

 
108,513

 
99,855

Loss from operations
(3,692
)
 
(7,730
)
 
(23,688
)
 
(9,491
)
Non-operating income (expense):
 

 
 

 
 

 
 

Interest expense
(32
)
 
(64
)
 
(65
)
 
(108
)
Interest and other income (expense), net
(429
)
 
(26
)
 
137

 
816

Total non-operating income (expense), net
(461
)
 
(90
)
 
72

 
708

Loss before income taxes
(4,153
)
 
(7,820
)
 
(23,616
)
 
(8,783
)
Provision for income taxes
379

 
135

 
586

 
509

Net loss
$
(4,532
)
 
$
(7,955
)
 
$
(24,202
)
 
$
(9,292
)
Net loss per share:
 

 
 

 
 

 
 

Basic and diluted
$
(0.06
)
 
$
(0.11
)
 
$
(0.33
)
 
$
(0.13
)
Weighted-average shares used in computing net loss per share:
 

 
 

 
 
 
 
Basic and diluted
72,707

 
69,770

 
73,486

 
69,173







A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(unaudited, in thousands, except per share amounts)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
GAAP net loss
$
(4,532
)
 
$
(7,955
)
 
$
(24,202
)
 
$
(9,292
)
Stock-based compensation
2,571

 
4,963

 
10,722

 
9,279

Amortization expense related to acquisition
253

 
253

 
505

 
505

Litigation and investigation expense
3,282

 
—

 
7,500

 
—

Non-GAAP net income (loss)
$
1,574

 
$
(2,739
)
 
$
(5,475
)
 
$
492

Non-GAAP net income (loss) per share:
 
 
 
 
 
 
 
Basic and diluted
$
0.02

 
$
(0.04
)
 
$
(0.07
)
 
$
0.01

Weighted average shares used in computing non-GAAP net income (loss) per share:
 
 
 
 
 
 
 
Basic
72,707

 
69,770

 
73,486

 
69,173

Diluted
74,634

 
69,770

 
73,486

 
74,177







A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
June 30,
2018
 
December 31,
2017
ASSETS
Current Assets:
 
 
 
Cash and cash equivalents
$
40,567

 
$
46,567

Marketable securities
86,820

 
84,567

Accounts receivable, net of allowances
50,370

 
48,266

Inventory
14,965

 
17,577

Prepaid expenses and other current assets
13,977

 
6,825

Total current assets
206,699

 
203,802

Property and equipment, net
8,676

 
9,913

Goodwill
1,307

 
1,307

Intangible assets
4,469

 
5,190

Other non-current assets
7,555

 
4,646

Total Assets
$
228,706

 
$
224,858

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
 
 
 
Accounts payable
$
6,234

 
$
9,033

Accrued liabilities
25,154

 
21,835

Deferred revenue
64,907

 
61,858

Total current liabilities
96,295

 
92,726

Deferred revenue, non-current
33,176

 
32,779

Other non-current liabilities
760

 
967

Total Liabilities
130,231

 
126,472

Stockholders’ Equity:
 
 
 
Common stock and additional paid-in-capital
367,526

 
355,534

Accumulated other comprehensive loss
(221
)
 
(123
)
Accumulated deficit (1)
(268,830
)
 
(257,025
)
Total Stockholders' Equity
98,475

 
98,386

Total Liabilities and Stockholders' Equity
$
228,706

 
$
224,858

(1)
The adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) in the first quarter of 2018 resulted in a reduction to the accumulated deficit balance of $12.4 million as of January 1, 2018.






A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
Six Months Ended
June 30,
 
2018
 
2017
Cash flows from operating activities:
 

 
 

Net loss
$
(24,202
)
 
$
(9,292
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 

Depreciation and amortization
4,103

 
4,332

Stock-based compensation
10,722

 
9,279

Other non-cash items
63

 
386

Changes in operating assets and liabilities:
 

 
 
Accounts receivable, net
(2,243
)
 
20,984

Inventory
1,993

 
(1,593
)
Prepaid expenses and other assets
(1,700
)
 
(3,112
)
Accounts payable
(3,035
)
 
(1,810
)
Accrued liabilities
3,163

 
(5,544
)
Deferred revenue
7,447

 
108

Other
117

 
33

Net cash provided by (used in) operating activities
(3,572
)
 
13,771

Cash flows from investing activities:
 

 
 

Proceeds from sales of marketable securities
13,863

 
14,228

Maturities of marketable securities
30,669

 
32,314

Purchases of marketable securities
(46,890
)
 
(47,074
)
Purchases of property and equipment
(1,289
)
 
(1,513
)
Net cash used in investing activities
(3,647
)

(2,045
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of common stock under employee equity incentive plans
1,269

 
7,207

Repurchases and retirement of common stock
—

 
(816
)
Payment of contingent consideration
—

 
(650
)
Other
(50
)
 
(57
)
Net cash provided by financing activities
1,219

 
5,684

Net increase (decrease) in cash and cash equivalents
(6,000
)
 
17,410

Cash and cash equivalents - beginning of period
46,567

 
28,975

Cash and cash equivalents - end of period
$
40,567

 
$
46,385




A10 Networks, Inc. Reports