A10 Networks, Inc. · NYSE:ATEN
A10 Networks — Q4 2019 Earnings Presentation
23 slides from A10 Networks's earnings presentation, Feb 11, 2020
Slide 1: Investor Presentation
Always Available, Always Secure INVESTOR PRESENTATION Reliable Security Always™ FEBRUARY 11, 2020
Slide 2: Cautionary Statements & Disclosures
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 projections for our future operating results, our focus on driving organic
Slide 3: Secure Application Delivery Is in A10 Networks DNA
SECURE APPLICATION DELIVERY IS IN A10 NETWORKS DNA Hardware & Software based Revenue model We enable secure and Over 800 employees optimized network 7,000+ customers in application delivery 117 countries Founded in 2004 IPO in 2014 (NYSE: ATEN) 3
Slide 4: Trends & Opportunities for A10
TRENDS & OPPORTUNITIES FOR A10 IoT Shift to 4G to 5G Proliferation Cloud Security Operational Threats Complexity 4
Slide 5: Solutions for a Transforming Industry
SOLUTIONS FOR A TRANSFORMING INDUSTRY Management Plane: Configuration, Analytics, Automation Secure Application Secure Access DDoS Attack Carrier Grade Solutions Delivery Controller Edge Controller Protection Firewall and NAT Advanced Core Operating System: Shared Memory Architecture Customers Enter
Slide 6: Recognized as Performance Leader at Scale
RECOGNIZED AS PERFORMANCE LEADER AT SCALE 9 of Top 10 8 of Top 10 (1) Telecom Operators Cloud Providers 58% 42% Service Provider Enterprise 21 of Top 50 15 of Top 25 Fortune Global 500 Video Gaming Companies 5 of Top 10 Media Companies (1) Customer vertical revenue mix for FY 2019 6
Slide 7: All at Hyperscale: Growth Drivers
GROWTH DRIVERS Our solutions help our Enterprise and Service Provider customers: Provide reliable Support seamless Help service providers Protect networks Address operational application delivery migration to the securing from cybersecurity complexities with and security on-prem cloud with hybrid 5G
Slide 8: Increased Execution Focus in 2020
INCREASED EXECUTION FOCUS IN 2020 OPERATING LEVERAGE to drive Expand IMPROVED PROFITABILITY Improve PRODUCTIVITY PREDICTABILITY IN Drive FINANCIAL PERFORMANCE 8
Slide 9: A10 Customers Increasingly Select Security-Driven Solutions
A10 CUSTOMERS INCREASINGLY SELECT SECURITY-DRIVEN SOLUTIONS 2017 2018 2019 27% 38% 44% 62% 56% 73% Security Legacy Security Legacy Security Legacy The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard Represents Security Product Re
Slide 10: Growing Recurring Revenue Business Model
GROWING RECURRING REVENUE BUSINESS MODEL As % of total Revenue $95M $91M $83M 45% 39% 35% 2017 2018 2019 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard Represents Security Product Revenue as a % of Product Revenue, excluding
Slide 11: Financial Profile
FINANCIAL PROFILE Reliable Security Always™
Slide 12: Revenue & Non-GAAP Operating Income (Loss)
REVENUE & NON-GAAP OPERATING INCOME (LOSS) Revenue, $ Millions Q4’19 Revenue: $235 $60.3M $232 $227 14% Q/Q $213 $196 2015 2016 2017 2018 2019 Non-GAAP Operating Income (Loss), $ Millions $7.8 Q4’19 Non-GAAP $2.6 Operating Income: $0.9 $7.7M $(2.8) $(22.8) 2015 2016 2017 2018 2019 The company adopte
Slide 13: Revenue by Customer Vertical
REVENUE BY CUSTOMER VERTICAL $Millions $235 $232 $227 $213 4Q 2019 $196 $60.3 million 44% 43% 45% 42% 48% 36% 55% 56% 57% 58% 64% 52% 2015 2016 2017 2018 2019 Service Provider Enterprise 13 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC
Slide 14: Revenue by Geography
REVENUE BY GEOGRAPHY $Millions $235 $232 4Q 2019 $227 10% 12% 12% $213 $60.3 million $196 13% 13% 14% 16% 14% 17% 12% 12% 23% 22% 24% 18% 28% 15% 46% $56 56% 53% 52% 48% 42% 27% 2015 2016 2017 2018 2019 Americas Japan APAC ex Japan EMEA 14 The company adopted ASC 606 accounting standard effective Ja
Slide 15: Financial Performance Highlight Trends
FINANCIAL PERFORMANCE HIGHLIGHT TRENDS $ Millions (except EPS) 1Q'18 2Q'18 Q3’18 4Q'18 FY 2018 1Q'19 2Q'19 Q3’19 4Q'19 FY 2019 Revenue $49.2 $60.7 $60.5 $61.8 $232.2 $50.3 $49.2 $52.8 $60.3 $212.6 Non-GAAP Gross Margin % 77.7% 78.6% 78.8% 78.2% 78.3% 76.3% 78.0% 78.1% 78.5% 77.8% Non-GAAP Operating
Slide 16: Q1 2020 Expected Results
Q1 2020 EXPECTED RESULTS Revenue: $51M - $53M Non-GAAP Gross Margin: 76% - 78% Non-GAAP Operating Expenses: $37.5M - $38.5M Adjusted EBITDA: $3.7M - $5.0M Non-GAAP EPS: $0.01 - $0.03 (assumes approximately 81 million diluted shares) Non-GAAP Gross Margin, Non-GAAP Operating Expenses, Adjusted EBITDA
Slide 17: Appendix
APPENDIX Reliable Security Always™
Slide 18: GAAP to Non-GAAP
GAAP TO NON-GAAP #DIV/0! #DIV/0! #DIV/0! % of Revenue except EPS Q1'18 Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Gross Margin % - GAAP 75.8% 78.3% 78.5% 77.7% 77.7% 75.6% 77.1% 77.4% 77.7% 77.0% Stock-based compensation 1.8% 0.3% 0.3% 0.5% 0.7% 0.6% 1.0% 0.6% 0.8% 0.7% Gross Margin %
Slide 19: GAAP to Non-GAAP
GAAP TO NON-GAAP 69.467 73.933 74.321 $ Millions Q4'18 Q4'18 Q4'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Total operating expenses $ - GAAP $ 57.3 $ 51.2 $ 49.1 $ 50.4 $ 208.0 $ 49.0 $ 44.3 $ 40.7 $ 46.8 $ 180.8 Stock-based compensation (7.3) (2.4) (2.1) (3.7) (15.4) (3.6) (4.6) (3.2) (3.9) (
Slide 20: GAAP to Non-GAAP
GAAP TO NON-GAAP 2.765 0.701 0.619 $ Millions Q1'18 Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Income (loss) from operations $ - GAAP $ (20.0) $ (3.7) $ (1.6) $ (2.4) $ (27.7) $ (11.0) $ (6.4) $ 0.2 $ 0.1 $ (17.1) Stock-based compensation 8.2 2.6 2.3 4.0 17.0 3.9 5.0 3.5 4.3 16.8 Liti
Slide 21: GAAP to Non-GAAP
GAAP TO NON-GAAP $ Millions Q1'18 Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 GAAP net income (loss) $ (19.7) $ (4.5) $ (1.8) $ (1.6) $ (27.6) $ (12.3) $ (5.8) $ 0.2 $ 0.1 $ (17.8) Exclude: Interest expense 0.0 0.0 0.0 0.0 0.1 0.2 0.0 0.0 0.0 0.2 Exclude: Interest income and other (inc
Slide 22: GAAP to Non-GAAP
GAAP TO NON-GAAP Fiscal Years Ended December 31, $ Millions 2015 2016 2017 2018 2019 Operating Income (Loss) $ - GAAP $ (40.3) $ (20.6) $ (10.4) $ (27.7) $ (17.1) Non-GAAP adjustments: Stock-based compensation 16.9 16.9 17.2 17.0 16.8 Litigation and Investigation expense (benefit) 0.7 0.8 - 10.5 (1.
Slide 23: Thank You
THANK YOU RELIABLE SECURITY ALWAYS INVESTORS@A10NETWORKS.COM