A10 Networks, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 26, 2017

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EXHIBIT 99.1
a10logoa01a13.jpg

A10 Networks Reports Third Quarter 2017 Financial Results; Board of Directors Authorizes New Share Repurchase Program

SAN JOSE, Calif., Oct. 26, 2017 -- A10 Networks, Inc. (NYSE: ATEN), a Secure Application Services™ company, today announced financial results for its third quarter ended Sept. 30, 2017.

Third Quarter 2017 Financial Summary
•
Revenue of $61.4 million, compared with $55.1 million in third quarter 2016
•
GAAP net loss of $2.7 million, or $0.04 per basic share
•
Non-GAAP net income of $2.1 million, or $0.03 per diluted share

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

“We delivered a strong third quarter and are pleased with the team’s execution. Revenue exceeded our initial and revised guidance and increased 12% year-over-year to reach $61.4 million. Our top-line performance was driven by solid demand and the team’s improved execution as we began to see the initial progress from some of the recent changes we implemented in the quarter,” said Lee Chen, president and chief executive officer of A10 Networks. “We are making solid progress, but still have a lot of work ahead of us in order to continue to capitalize on the fast-growing areas of our market. The share repurchase authorization announced today reflects our confidence in our market opportunities and our commitment to enhancing shareholder value.”

Prepared Materials and Conference Call Information
A10 Networks has made available a presentation with management’s prepared remarks on its third quarter 2017 financial results and supplemental financial information. These materials are accessible from the “Investor Relations” 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 2017 results and outlook for its fourth quarter of 2017. 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 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 10112610. The press release and supplemental financials will be accessible from 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 continue to improve our execution, increase the effectiveness of our go-to-market activities, support growth for our expanding product portfolio, penetrate and expand into the cloud and security markets, 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, management and analysis, 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) amounts paid in settlement of litigation, and other legal expenses associated with these settlements.

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 Secure Application Services™ company, 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, A10 Networks, A10 Harmony, Thunder and A10 Lightning and Secure Application Services 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.

Source: A10 Networks, Inc.





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

or

Media Contact:
Ben Stricker
A10 Networks
+1-408-325-8616
bstricker@a10networks.com







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,
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
Products
$
39,389

 
$
35,275

 
$
111,195

 
$
110,446

Services
22,030

 
19,793

 
64,199

 
55,556

Total revenue
61,419

 
55,068

 
175,394

 
166,002

Cost of revenue:
 

 
 

 
 

 
 

Products
9,119

 
8,795

 
26,973

 
27,297

Services
4,640

 
4,153

 
13,623

 
13,087

Total cost of revenue
13,759

 
12,948

 
40,596

 
40,384

Gross profit
47,660

 
42,120

 
134,798

 
125,618

Operating expenses:
 

 
 

 
 

 
 

Sales and marketing
26,930

 
24,331

 
78,754

 
77,872

Research and development
15,997

 
15,968

 
49,529

 
45,231

General and administrative
6,878

 
6,305

 
21,028

 
20,196

Litigation expense
—

 
66

 
—

 
2,059

Total operating expenses
49,805

 
46,670

 
149,311

 
145,358

Loss from operations
(2,145
)
 
(4,550
)
 
(14,513
)
 
(19,740
)
Non-operating income (expense):
 

 
 

 
 

 
 

Interest expense
(20
)
 
(145
)
 
(128
)
 
(397
)
Interest and other income (expense), net
(37
)
 
309

 
779

 
1,544

Total non-operating income (expense), net
(57
)
 
164

 
651

 
1,147

Loss before income taxes
(2,202
)
 
(4,386
)
 
(13,862
)
 
(18,593
)
Provision for income taxes
454

 
298

 
963

 
561

Net loss
$
(2,656
)
 
$
(4,684
)
 
$
(14,825
)
 
$
(19,154
)
Net loss per share:
 

 
 

 
 

 
 

Basic and diluted
$
(0.04
)
 
$
(0.07
)
 
$
(0.21
)
 
$
(0.29
)
Weighted-average shares used in computing net loss per share:
 

 
 

 
 
 
 
Basic and diluted
70,705

 
66,260

 
69,688

 
65,146







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,
 
2017
 
2016
 
2017
 
2016
GAAP net loss
$
(2,656
)
 
$
(4,684
)
 
$
(14,825
)
 
$
(19,154
)
Stock-based compensation
4,545

 
4,588

 
13,824

 
13,069

Amortization expense related to acquisition
253

 
253

 
758

 
253

Litigation and settlement expense
—

 
—

 
—

 
836

Non-GAAP net income (loss)
$
2,142

 
$
157

 
$
(243
)
 
$
(4,996
)
Non-GAAP net income (loss) per share:
 
 
 
 
 
 
 
Basic and diluted
$
0.03

 
$
0.00

 
$
0.00

 
$
(0.08
)
Weighted average shares used in computing non-GAAP net income (loss) per share:
 
 
 
 
 
 
 
Basic
70,705

 
66,260

 
69,688

 
65,146

Diluted
73,572

 
72,763

 
69,688

 
65,146







A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
September 30,
2017
 
December 31,
2016
ASSETS
Current Assets:
 
 
 
Cash and cash equivalents
$
39,919

 
$
28,975

Marketable securities
83,973

 
85,372

Accounts receivable, net of allowances
49,856

 
66,755

Inventory
15,944

 
15,070

Prepaid expenses and other current assets
7,045

 
5,137

Total current assets
196,737

 
201,309

Property and equipment, net
9,531

 
8,219

Goodwill and intangible assets
6,858

 
7,940

Other non-current assets
4,837

 
3,870

Total Assets
$
217,963

 
$
221,338

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
 
 
 
Accounts payable
$
8,509

 
$
9,851

Accrued liabilities
27,604

 
31,525

Deferred revenue
59,294

 
61,334

Total current liabilities
95,407

 
102,710

Deferred revenue, non-current
31,710

 
31,574

Other non-current liabilities
1,073

 
988

Total Liabilities
128,190

 
135,272

Stockholders’ Equity:
 
 
 
Common stock and additional paid-in-capital
347,574

 
328,870

Accumulated other comprehensive loss
(17
)
 
(45
)
Accumulated deficit
(257,784
)
 
(242,759
)
Total Stockholders' Equity
89,773

 
86,066

Total Liabilities and Stockholders' Equity
$
217,963

 
$
221,338







A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
Nine Months Ended
September 30,
 
2017
 
2016
Cash flows from operating activities:
 

 
 

Net loss
$
(14,825
)
 
$
(19,154
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 

Depreciation and amortization
6,222

 
5,919

Stock-based compensation
13,824

 
13,069

Other non-cash items
930

 
1,798

Changes in operating assets and liabilities:
 

 
 
Accounts receivable, net
16,049

 
7,311

Inventory
(3,242
)
 
2,303

Prepaid expenses and other assets
(2,870
)
 
349

Accounts payable
(1,243
)
 
(878
)
Accrued liabilities
(3,023
)
 
906

Deferred revenue
(1,904
)
 
10,440

Other
102

 
(224
)
Net cash provided by operating activities
10,020

 
21,839

Cash flows from investing activities:
 

 
 

Purchases of marketable securities
(69,580
)
 
(109,268
)
Proceeds from sales and maturities of marketable securities
70,866

 
23,787

Purchases of property and equipment
(4,223
)
 
(4,256
)
Payment for acquisition
—

 
(4,380
)
Purchases of intangible asset
—

 
(1,500
)
Net cash used in investing activities
(2,937
)

(95,617
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of common stock under employee equity incentive plans
7,665

 
7,116

Repurchases and retirement of common stock
(3,071
)
 
—

Payment of contingent consideration
(650
)
 
—

Other
(83
)
 
(75
)
Net cash provided by financing activities
3,861

 
7,041

Net increase (decrease) in cash and cash equivalents
10,944

 
(66,737
)
Cash and cash equivalents - beginning of period
28,975

 
98,117

Cash and cash equivalents - end of period
$
39,919

 
$
31,380




A10 Networks, Inc. Reports