A10 Networks (NYSE: ATEN), a leading provider of intelligent and automated cybersecurity solutions, today announced financial results for its third quarter ended September 30, 2019.

Third Quarter 2019 Financial Summary

• Revenue of $52.8 million, up 7 percent compared with $49.2 million in second quarter 2019
• GAAP gross margin of 77.4 percent, non-GAAP gross margin of 78.1 percent
• GAAP operating expenses of $40.7 million, non-GAAP operating expenses of $39.4 million
• GAAP net income of $0.2 million, or $0.00 per basic and diluted share, non-GAAP net income of $1.8 million, or $0.02 per basic and diluted share
• Adjusted EBITDA of $4.0 million, compared with $1.3 million in second quarter 2019

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

“We delivered results in the third quarter that were in-line to above our most recent guidance. Our revenue increased 7% sequentially, and we were pleased with improving demand from our service provider vertical, which grew 36% versus the prior quarter. We also saw continued strength in 5G security in South Korea, Japan, and the Middle East,” said Lee Chen, president and chief executive officer of A10 Networks. “We are optimistic as we look to the fourth quarter and beyond, due to improving demand signals from several key North America accounts, expanded 5G security infrastructure deployments on the part of service providers across the globe, an ongoing positive mix shift toward more recurring maintenance and subscription revenue, and the fact that the company is laser-focused on making progress to accelerate operating income.”

Fourth Quarter 2019 Business Outlook (+)

For the fourth quarter of 2019, the company currently expects:

• Revenue in the range of $55 million to $59 million, representing 8 percent sequential growth at the midpoint
• Non-GAAP gross margin in the range of 76 percent to 78 percent
• Non-GAAP operating expenses in the range of $39 million to $40 million, excluding anticipated charges for severance and restructuring of approximately $2 million
• Adjusted EBITDA in the range of $5.4 million to $8.2 million
• Non-GAAP earnings per share in the range of $0.04 to $0.08 using approximately 80 million basic and diluted shares

(+) Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non-GAAP financial measures.

Company Update

Review of strategic alternatives by Strategy Committee of the Board

The Strategy Committee continues to evaluate opportunities to maximize shareholder value.

Search Committee of the Board directed at supporting CEO succession

The Search Committee continues to evaluate CEO candidates. The Company continues to have the full commitment of current president and chief executive officer Lee Chen until the CEO role is transitioned to his successor.

Prepared Materials and Conference Call Information

A10 Networks has made available a presentation with management’s prepared remarks on its third quarter 2019 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 third quarter 2019 financial results and outlook for its fourth quarter 2019. 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 101358845. 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 pipeline; projections for our future operating results, optimism for the fourth quarter and beyond; improving demand signals in North America; accelerating operating income; an ongoing positive mix shift toward more recurring maintenance and subscription revenue; our plans to evaluate strategic alternatives; the timing of completing a search for a CEO successor and the commitment from Mr. Chen that he will remain fully committed until a successor is appointed; and our planned implementation of a reduction in force. 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 maintain or improve our competitive position, competitive and execution risks related to cloud-based computing trends, our ability to attract and retain new end-customers and our largest end-consumers, our ability to maintain and enhance our brand and reputation, changes demanded by our customers in the deployment and payment model for our products, 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, risks associated with our presence in international markets, weaknesses or deficiencies in our internal control over financial reporting, and our ability to timely file periodic reports required to be filed under the Securities Exchange Act of 1934.

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 gross profit, non-GAAP operating income (loss) and EBITDA. 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 GAAP net income (loss) excluding: (i) stock-based compensation and related payroll tax, (ii) amortization expense related to acquisition and (iii) non-recurring expenses associated with the litigation settlement expense and internal investigation. We define non-GAAP gross profit as our GAAP gross profit excluding stock-based compensation and related payroll tax. We define non-GAAP operating income (loss) as our GAAP income (loss) from operations excluding (i) stock-based compensation, and related tax, (ii) amortization expense related to acquisition and (iii) non-recurring expenses associated with the litigation settlement expense and internal investigation. We define EBITDA as our GAAP net income (loss) excluding (i) interest expense, (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense and (iv) provision for income taxes.

We have included our non-GAAP net income (loss), non-GAAP gross profit, non-GAAP operating income (loss) and EBITDA 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. 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.

About A10 Networks

A10 Networks (NYSE: ATEN) provides Reliable Security Always™, with 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 the property of their respective owners.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191029006069/en/