Attached files
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| EX-99.1 - EX-99.1 - A10 Networks, Inc. | atenq12021earningsreleasee.htm |
| 8-K - 8-K - A10 Networks, Inc. | aten-20210427.htm |
Always Secure. Always Available. Q1 2021 Financial Results & Commentary April 27, 2021
2 Cautionary Statements & Disclosures This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on our management’s beliefs and assumptions, including statements regarding our positioning, global business environment, strategy, including portfolio management, recurring revenue, growth and profitability. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results to differ materially from those anticipated or implied by our forward-looking statements. These factors include, but are not limited to, the impact of the COVID-19 pandemic on our business, on the business of our customers and suppliers, and on the global economy in general, execution risks related to closing key deals and improving our execution, successfully executing our strategies, market adoption of our products, successfully anticipating market needs and opportunities, timely development of new products and features, achieving or maintaining profitability, loss or delay of expected purchases, our ability to maintain or improve our competitive position; competitive and execution risks related to cloud-based computing trends, attracting and retaining new end-customers, maintaining and enhancing our brand and reputation, changes demanded by our customers in the deployment and payment model for our products, growth in markets relating to network security, the success of any future acquisitions or investments, the success of our partnerships with technology providers, the ability of our sales team to execute well, our ability to shorten our close cycle, the ability of our channel partners to sell our products, variations in product mix or geographic locations of our sales, our presence in international markets, and other factors 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, to which your attention is directed. The forward-looking statements included in this presentation are based on current expectations and beliefs as of April 27, 2021 only. We do not intend to update this information contained in the forward-looking statements, except as required by law. This presentation and the accompanying oral presentation also include certain non-GAAP financial measures including Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, Adjusted EBITDA and Non-GAAP EPS. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titles 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 (loss) 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 facility expense. We define non-GAAP net income per basic and diluted share as our non-GAAP net income (loss) 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 (loss) as our GAAP income (loss) 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 portfolio rationalization expense, and (v) non-recurring facilities expense. We define non-GAAP operating margin as our non-GAAP operating income (loss) 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 (loss) excluding (i) interest expense (if any), (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense, (iv) 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 facility expense. A reconciliation between GAAP and non-GAAP financial measures can be found in the appendix to this document and in the accompany financial results press release.
3 Agenda • Introduction • Q1 Overview • Q1 Financial Performance
4 A10 at a Glance Enabling a Secure and Available Digital World IoT Proliferation Shift to Cloud 5G Deployment Operational Complexity Security Threats Protect investments for enterprises and service providers Support seamless migration to the cloud and cloud- native with hybrid solutions Secure multi- generational networks through the transition to 5G and cloud Protect networks from cyberattacks that threaten network availability Simplify IT ops with connected intel, automation, ML and DevOps/ SecOps tools Provide always available application delivery and security on-prem and in the cloud $225M 2020 ANNUAL REVENUE 78.8% Q1’21 NON-GAAP GROSS MARGIN $161M CASH & MARKETABLE SECURITIES AS OF 3/31/21 $113M DEFERRED REV AS OF 3/31/21 7,800+ CUSTOMERS $0 DEBT
5 Q1’21: Building on our Successes • Accelerating recurring revenue • Recurring revenue increased 8% year-over-year • Deferred revenue reaches a record $113.2 million, up approximately 12% year-over-year • Record profitability • Quarterly operating expenses reduced by approximately $5.6 million, or approximately 15% year-over-year • Q1 operating income improved by $6.7 million, or approximately 163% year-over-year • Adjusted EBITDA improved by $5.8 million, or 81% year-over-year • Continued execution in a challenging economic environment • Year-over-year growth for: • Revenue • Net Income • Adjusted EBITDA • Diluted EPS
6 Near-term Expectations • Increasing focus on higher growth portfolio • Deliver integrated solutions that drive established strengths in cybersecurity, 5G, network availability • Grow recurring revenue faster than overall revenue growth • Guidance • Targeting sustainable growth of 6-8% annually with expectation to maintain GAAP profitability going forward • Management expects sequential growth in each remaining quarter of 2021
7 Quarterly Recurring Revenue $20.3 $20.9 $21.8 $21.7 $21.1 $21.2 $21.7 $22.4 $22.2 $22.5 $23.6 $24.1 $23.4 $31.0 $1.1 $1.2 $1.2 $2.7 $1.8 $2.2 $1.7 $2.4 $1.5 $3.0 $4.6 $4.3 $2.2 $21.4 $22.1 $23.0 $24.4 $22.9 $23.4 $23.4 $24.8 $23.7 $25.5 $28.2 $28.4 $25.6 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Exiting 2021 Support Subscription $120.0 $ Millions
8 Quarterly Revenue & Non-GAAP Operating Income Operating Profit is a Non-GAAP Financial Measure. See Appendix for reconciliation to most comparable GAAP financial measures. $53.8 $52.5 $56.6 $62.7 $54.8 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Revenue, $ Millions $4.1 $7.2 $10.0 $13.9 $10.8 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Non-GAAP Operating Income, $ Millions $53.8 $54.8 Q1'20 Q1'21 Revenue, $ Millions $4.1 $10.8 Q1'20 Q1'21 Non-GAAP Operating Income, $ Millions
9 62% 38% Q1’21 $54.8 million Quarterly Revenue by Customer Vertical 65.1% 57.9% 59.5% 60.0% 62.0% 34.9% 42.1% 40.5% 40.0% 38.0% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Enterprise Service Provider
10 Quarterly Revenue by Geography 47% 46% 39% 43% 48% 33% 24% 32% 30% 25% 9% 15% 15% 13% 12% 11% 15% 14% 15% 16% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 $ Millions Americas Japan APAC ex Japan EMEA 48% 25% 12% 16% Q1’21 $54.8 million
11 Quarterly Revenue & Non-GAAP Operating Income Operating Profit is a Non-GAAP Financial Measure. See Appendix for reconciliation to most comparable GAAP financial measures. $53.8 $54.8 Q1'20 Q1'21 Revenue, $ Millions $4.1 $10.8 Q1'20 Q1'21 Non-GAAP Operating Income, $ Millions
12 Financial Performance Trends Numbers may not sum due to rounding. Please refer to the supplemental financials posted in the “Investor Relations” section of the A10 Networks website at investors.a10networks.com Gross Margin %, Operating Margin %, Adjusted EBITDA and EPS are Non-GAAP Financial Measures. See Appendix for reconciliation to most comparable GAAP financial measures. $ Millions (except EPS) Q1'19 Q2'19 Q3’19 Q4'19 FY 2019 Q1’20 Q2’20 Q3’20 Q4’20 FY2020 Q1’21 Revenue $50.3 $49.2 $52.8 $60.3 $212.6 $53.8 $52.5 $56.6 $62.7 $225.5 $54.8 Non-GAAP Gross Margin % 76.3% 78.0% 78.1% 78.5% 77.8% 78.3% 78.8% 77.6% 79.6% 78.6% 78.9% Non-GAAP Operating Margin % (11.8%) (1.9%) 3.5% 12.7% 1.2% 7.7% 13.8% 17.8% 22.1% 15.6% 19.7% Adjusted EBITDA (non-GAAP) ($3.7) $1.3 $4.0 $10.0 $11.6 $7.2 $9.8 $12.5 $16.1 $45.6 $13.0 Non-GAAP EPS ($0.10) $0.00 $0.02 $0.10 $0.03 $0.05 $0.09 $0.13 $0.18 $0.44 $0.12 Ending Cash & Marketable Securities $122.8 $119.3 $122.6 $129.9 $129.9 $142.9 $143.4 $159.1 $158.1 $158.1 $161.0
13 Appendix
14 GAAP to Non-GAAP - Gross Margin and EPS Numbers may not sum due to rounding. EPS data is presented on a basic and diluted basis. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. % of Revenue except EPS Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 Q3'20 Q4'20 FY 2020 Q1'21 Gross Margin % - GAAP 75.6% 77.1% 77.4% 77.7% 77.0% 77.4% 78.2% 76.8% 78.5% 77.8% 77.2% Stock-based compensation 0.6% 1.0% 0.6% 0.8% 0.7% 0.9% 0.6% 0.8% 0.6% 0.7% 1.2% Global distribution center transition expense 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 0.1% 0.5% Non-reccuring facilities expense 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Gross Margin % - Non-GAAP 76.3% 78.0% 78.1% 78.5% 77.8% 78.3% 78.8% 77.6% 79.6% 78.6% 78.9% EPS $ - GAAP (0.16)$ (0.08)$ 0.00$ 0.00$ (0.23)$ (0.00)$ 0.05$ 0.08$ 0.10$ 0.22$ 0.03$ Stock-based compensation 0.05 0.07 0.04 0.05 0.21 0.04 0.04 0.05 0.04 0.16 0.06 Litigation and Investigation expense (recovery) 0.01 0.00 (0.03) 0.00 (0.01) 0.00 - - - 0.00 - Amortization expense related to acquisition 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.01 0.00 Global distribution center transition expense - - - - - - - - 0.04 0.04 0.03 Restructuring expense, and related tax - - - 0.03 0.03 - - - - - - Non-recurring facilities expense - - - 0.01 0.01 0.01 - - - 0.01 - EPS $ - Non-GAAP (0.10)$ 0.00$ 0.02$ 0.10$ 0.03$ 0.05$ 0.09$ 0.13$ 0.18$ 0.44$ 0.12$
15 GAAP to Non-GAAP - Operating Income (Loss) Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. $ Millions Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 Q3'20 Q4'20 FY 2020 Q1'21 Income (loss) from operations $ - GAAP (11.0)$ (6.4)$ 0.2$ 0.1$ (17.1)$ (0.2)$ 3.9$ 6.2$ 7.8$ 17.7$ 4.0$ Stock-based compensation 3.9 5.0 3.5 4.3 16.8 3.2 3.1 3.6 2.9 12.8 4.6 Litigation and Investigation expense (recovery) 0.9 0.2 (2.2) 0.0 (1.1) 0.0 - - - 0.0 - Amortization expense related to acquisition 0.3 0.3 0.3 0.3 1.0 0.3 0.3 0.3 0.3 1.0 0.3 Global distribution center transition expense - - - - - - - - 2.9 2.9 1.9 Restructuring expense - - - 2.5 2.5 - - - - - - Non-recurring facilities expense - - - 0.4 0.4 0.8 - - - 0.8 - Income (loss) from operations $ - Non-GAAP (5.9)$ (0.9)$ 1.8$ 7.7$ 2.6$ 4.1$ 7.2$ 10.0$ 13.9$ 35.3$ 10.8$ % of Revenue Income (loss) from operations % - GAAP (21.8)% (13.1)% 0.4 % 0.1 % (8.0)% (0.4)% 7.5 % 11.0 % 12.4 % 7.9 % 7.3 % Stock-based compensation 7.7 % 10.3 % 6.6 % 7.2 % 7.9 % 6.0 % 5.9 % 6.3 % 4.7 % 5.7 % 8.4 % Litigation and Investigation expense (recovery) 1.7 % 0.4 % (4.1)% 0.1 % (0.5)% 0.1 % —% —% —% 0.0 % —% Amortization expense related to acquisition 0.5 % 0.5 % 0.5 % 0.4 % 0.5 % 0.5 % 0.5 % 0.4 % 0.4 % 0.4 % 0.5 % Global distribution center transition expense —% —% —% —% —% —% —% —% 4.6 % 1.3 % 3.5 % Restructuring expense —% —% —% 4.2 % 1.2 % —% —% —% —% —% —% Non-recurring facilities expense —% —% —% 0.7 % 0.2 % 1.5 % —% —% —% 0.4 % —% Income (loss) from operations % - Non-GAAP (11.8)% (1.9)% 3.5 % 12.7 % 1.2 % 7.7 % 13.8 % 17.8 % 22.1 % 15.6 % 19.7 %
16 GAAP to Non-GAAP - Adjusted EBITDA Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. $ Millions Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 Q3'20 Q4'20 FY 2020 Q1'21 GAAP net income (loss) (12.3)$ (5.8)$ 0.2$ 0.1$ (17.8)$ (0.3)$ 3.8$ 6.5$ 7.8$ 17.8$ 2.7$ Exclude: Interest expense 0.2 0.0 0.0 0.0 0.2 - 0.0 - - 0.0 - Exclude: Interest income and other (income) expense, net 0.6 (0.8) (0.3) (0.5) (0.9) (0.2) (0.2) (0.5) (0.5) (1.4) 1.2 Exclude: Depreciation & amortization expense 2.4 2.5 2.5 2.6 10.0 3.3 2.8 2.7 2.5 11.3 2.4 Exclude: Provision for income taxes 0.5 0.1 0.3 0.5 1.4 0.3 0.3 0.3 0.4 1.3 0.2 EBITDA (8.5) (3.9) 2.7 2.7 (7.1) 3.1 6.7 8.9 10.3 29.0 6.4 Exclude: Stock-based compensation 3.9 5.0 3.5 4.3 16.8 3.2 3.1 3.6 2.9 12.8 4.6 Exclude: Litigation settlement and investigation expense 0.9 0.2 (2.2) 0.0 (1.1) 0.0 - - - 0.0 - Exclude: Global distribution center transition expense - - - - - - - - 2.9 2.9 1.9 Exclude: Restructuring expense - - - 2.5 2.5 - - - - - - Exclude: Non-recurring facilities expense - - - 0.4 0.4 0.8 - - - 0.8 - Adjusted EBITDA - Non-GAAP (3.7)$ 1.3$ 4.0$ 10.0$ 11.6$ 7.2$ 9.8$ 12.5$ 16.1$ 45.6$ 13.0$
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