Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - A10 Networks, Inc. | exhibit991pressreleaseq317.htm |
| 8-K - 8-K - A10 Networks, Inc. | a8-kpressreleaseq317.htm |
1.
Your Secure Application Services Company
Third Quarter 2017
Financial Results &
Commentary
October 26, 2017
2.
Agenda
Introduction
• Maria Ri ley , Investor Relat ions
Results Overview
• Lee Chen, CEO, Pres ident and Founder
Q3 2017 Financial Results & Q4 2017 Business Outlook
• Tom Constant ino , CFO
Q&A
• Lee Chen, CEO, Pres ident and Founder
• Tom Constant ino , CFO
3.
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 statements regarding our projections for our fourth quarter
2017 operating results, our expectations for future revenue growth and market opportunities, the performance of our products, profitability,
operating margin and operating expenses, our ability to penetrate certain markets, anticipated customer needs, expected product launches and
the general growth of our business.
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
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.
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.
4.
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.
5.
CEO, President and Founder
Lee Chen
6.
Third Quarter 2017 Summary
Third quarter revenue increased 12% y/y to reach $61.4 Million
• Driven by:
• Solid demand and the team’s improved execution
• Strength with our marquee service provider customers
• Product revenue grew 12% y/y to $39.4 M, or 64% of total revenue
• Achieved strong product bookings for Thunder ADC and record product bookings for our
Thunder SSLi and Thunder CFW solutions
• Strong performance in U.S. & Japan
Continued bottom-line improvement
• Reported GAAP net loss of $2.7 M, or $0.04 per basic share
• Achieved non-GAAP net income of $2.1 M or $0.03 on a per share basis, compared with break-
even on a per share basis in last year’s third quarter
7.
Recent Customer Engagements
• Won a large deal with a mobi le provider in the U.S. , where we continued to expand our
footprint and replaced the incumbent ADC vendor with our ThunderADC and ThunderSSLi
solut ions; customer contr ibuted 14% of Q3 revenue
• Closed a seven-f igure deal with leading mobi le provider in Mexico for our CGN and ADC
solut ions
• New project wins with four of the top telecommunicat ion providers in Japan
• An organizat ion of the executive branch of Japan’s government looking for a highly -
re l iable and scalable solut ion to handle their encrypted traff ic chose A10's Thunder CFW
and SSLi solut ions
• Federal enforcement agency in the U.S. , chose A10's Thunder SSLi to cope with the
growing amount of encrypted traff ic on their network
• Major retai l group in Japan chose A10's Thunder CFW and Thunder SSLi as the Cloud
proxy for i ts new Off ice 365 deployment
8.
Security Solutions
O N
P R E M I S E
C L O U D
Harmony Controller
Management
Analytics, Configuration
aGalaxy
Centralized Management
Reporting, Control
SSLi CFW TPS
SECURITY
• DDoS Mitigation
• Detection, traffic
baselining, auto-
learning
• SSL visibility
• Policy Enforcement
• Dynamic web category
classification
• Firewall platform
• DC Firewall / Gi Firewall
• Secure Web Gateway
• Site to Site IPSec VPN
9.
Harmony Controller
ANY USER. ANY APP. ANY WHERE.
PRIVATE
CLOUD
DATA
CENTER HACKER
DDOS ATTACK
HOME
OFFICE
REMOTE
USER
PUBLIC
CLOUD
SAAS
CLOUD
AVAILABILITY
SECURITY VISIBILITY
10.
CFO
Tom Constantino
11.
Revenue Trend
QUARTERLY
$M
$179
$199
$230
2014 2015 2016
ANNUAL
$M
Annual
$51
$57
$54
$57
$55
$64
$60
$54
$61
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2015 2016 2017
12.
Revenue Mix
$ MILLIONS / % REVENUE
Product Geography Verticals
Numbers may not total to 100% due to rounding.
13.
Non-GAAP Gross Profit
*Non-GAAP rounded financial measures. For reconciliation see Appendix.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$-
$10
$20
$30
$40
$50
$60
$70
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17
$
M
ill
io
ns
Product GP $ Service GP $ Total GM %
14.
Summary Financial Results
NON-GAAP* FINANCIAL MEASURES ($M) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17
Sales & Marketing $24.7 $25.0 $22.6 $25.1 $24.7 $23.7 $25.2
Research & Development $13.3 $13.4 $14.0 $13.7 $15.1 $14.4 $14.2
General, Administrative & Litigation $6.9 $6.6 $5.6 $6.1 $6.3 $6.1 $6.0
Income (Loss) from Operations $(4.0) $(1.9) $0.3 $4.7 $0.2 $(2.8) $2.7
Net income (loss) Per share $(0.06) $(0.02) $0.00 $0.03 $0.01 $(0.04) $0.03
*Non-GAAP rounded financial measures. For reconciliation see Appendix.
15.
Balance Sheet & Cash Flow
SELECTED GAAP FINANCIAL
MEASURES ($M) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17
Cash and Marketable Securities $107.5 $113.7 $116.8 $114.3 $116.2 $132.2 $123.9
Accounts Receivable $41.9 $39.3 $48.9 $66.8 $61.8 $41.4 $49.9
Deferred Revenue (total) $74.8 $75.8 $83.2 $92.9 $93.1 $92.5 $91.0
Cash Flow Provided by (Used
in) Ops $10.4 $8.8 $2.0 $(2.5) $0.5 $13.2 $(3.8)
16.
Q4 2017 Business Outlook
Management will host a conference call to discuss A10’s financial results for its third quarter of 2017 and the current outlook
for the fourth quarter of 2017 on October 26, 2017 at 4:30 p.m. Eastern time / 1:30 p.m. Pacific time.
Open to the public, investors may access the call by dialing 1-844-792-3728 or 1-412-317-5105. A live audio webcast of the
conference call will be accessible from the “Investors” section of A10 Networks website at investors.a10networks.com. The
webcast will be archived for a period of one year. A telephonic replay of the conference call will be available one hour after
the call and will run for five business days and may be accessed by dialing 1-412-317-0088 or 1-877-344-7529 and entering
the passcode 10112610.
Please refer to page #3 for information regarding forward looking statements.
17.
Questions & Answer Session
LEE CHEN
CEO, President
and Founder
TOM CONSTANTINO
CFO
18.
Non-GAAP Reconciliation – Gross Profit
QUARTERLY Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17
Gross Profit Margin (GAAP) 75% 75% 76% 77% 77% 76% 78%
SBC* included in COGS 1% 1% 1% —% —% 1% 1%
Gross Profit Margin (Non-GAAP) 76% 76% 77% 78% 77% 77% 78%
* SBC stands for stock-based compensation.
QUARTERLY ($M) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17
Gross Profit (GAAP) $40.6 $42.9 $42.1 $49.5 $46.1 $41.0 $47.7
SBC* included in COGS $0.3 $0.2 $0.3 $0.2 $0.3 $0.4 $0.4
Gross Profit (Non-GAAP) $40.9 $43.1 $42.4 $49.7 $46.4 $41.4 $48.1
19.
Non-GAAP Reconciliation – Expense Items
$ Millions Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17
Sales & Marketing (GAAP) $26.8 $26.8 $24.3 $26.5 $26.3 $25.6 $26.9
SBC included in Sales & Marketing (2.1) (1.7) (1.7) (1.4) (1.5) (1.9) (1.7)
Sales & Marketing (Non-GAAP) $24.7 $25.0 $22.6 $25.1 $24.7 $23.7 $25.2
R&D (GAAP) $14.8 $14.5 $16.0 $15.5 $17.0 $16.5 $16.0
SBC included in R&D (1.4) (1.1) (1.7) (1.5) (1.7) (1.8) (1.5)
Amortization expense related to acquisition — — (0.3) (0.3) (0.3) (0.3) (0.3)
R&D (Non-GAAP) $13.3 $13.4 $14.0 $13.7 $15.1 $14.4 $14.2
G&A (GAAP) $6.7 $7.2 $6.3 $6.9 $7.2 $7.0 $6.9
SBC included in G&A (0.7) (0.8) (0.8) (0.8) (0.8) (0.9) (0.9)
G&A (Non-GAAP) $5.9 $6.4 $5.5 $6.1 $6.3 $6.1 $6.0
Litigation (GAAP) $1.8 $0.2 $0.1 $— $— $— $—
Litigation and Settlement (0.8) — — — — — —
Litigation (Non-GAAP) $1.0 $0.2 $0.1 $— $— $— $—
Total Op Exp (GAAP) $50.0 $48.7 $46.7 $48.9 $50.5 $49.0 $49.8
SBC included in Total Op Exp (4.3) (3.6) (4.3) (3.7) (4.0) (4.6) (4.1)
Amortization expense related to acquisition — — (0.3) (0.3) (0.3) (0.3) (0.3)
Litigation Settlement (0.8) — — — — — —
Total Op Exp (Non-GAAP) $44.9 $45.0 $42.2 $44.9 $46.2 $44.2 $45.4
20.
Non-GAAP Reconciliation – Income (Loss) Items
$ Millions Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17
Income (Loss) from Operations (GAAP) $(9.4) $(5.8) $(4.6) $0.6 $(4.3) $(8.0) $(2.1)
Stock-Based Compensation 4.6 3.9 4.6 3.8 4.3 5.0 4.5
Amortization Expense Related to Acquisition — — 0.3 0.3 0.3 0.3 0.3
Litigation and Settlement 0.8 — — — — — —
Income (Loss) from Operations (Non-GAAP) $(4.0) $(1.9) $0.3 $4.7 $0.2 $(2.8) $2.7
Net Loss (GAAP) $(9.5) $(4.9) $(4.7) $(1.8) $(3.9) $(8.3) $(2.7)
Stock-Based Compensation 4.6 3.9 4.6 3.8 4.3 5.0 4.5
Amortization Expense Related to Acquisition — — 0.3 0.3 0.3 0.3 0.3
Litigation and Settlement 0.8 — — — — — —
Net Income (Loss) (Non-GAAP) $(4.1) $(1.1) $0.2 $2.3 $0.7 $(3.1) $2.1
Weighted Average Shares used in per share
calculations for non-GAAP net income (loss) per
share:
Basic 64.3 64.9 66.3 67.5 68.6 69.8 70.7
Diluted 64.3 64.9 72.8 73.1 74.3 69.8 73.6
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