A10 Networks, Inc. · NYSE:ATEN
A10 Networks — Q2 2019 Earnings Presentation
27 slides from A10 Networks's earnings presentation, Jul 30, 2019
Slide 1: Q2 2019 Financial Results & Commentary
Reliable Security Always Q2 2019 FINANCIAL RESULTS & COMMENTARY July 30, 2019 1 1. CONFIDENTIAL | DO NOT DISTRIBUTE ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 1 | Page
Slide 2: Agenda
Agenda • Introduction • Maria Riley, Investor Relations • Results Overview • Lee Chen, CEO, President and Founder • Market Overview • Chris White, EVP WW Sales • Q2 2019 Financial Results & Business Outlook • Tom Constantino, CFO • Q&A: Lee Chen, Tom Constantino, and Chris White 2 2. CONFIDENTIAL |
Slide 3: 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 ability to transform our
Slide 4: 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 ability to transform our
Slide 5: Lee Chen
Lee Chen CEO, President and Founder 5 5. CONFIDENTIAL | DO NOT DISTRIBUTE ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 5 | Page
Slide 6: A10: Well-Positioned in 5G
A10: Well-Positioned in 5G • A10’s proven strength in hyper-scalability, low latency, security and CGN consolidation, and AI-driven automation • Strong anti-DDoS attack solutions and integrated security and CGN analytics platform • High-end hardware and SDN/NFV/container solutions • Strong presence
Slide 7: Company Update
Company Update • Lee Chen, CEO President and Founder announces planned retirement • Chen will resign from role as CEO once a newly appointed CEO begins • Search Committee has been formed for a new CEO • Eric Singer, Managing Partner of Viex Capital Advisors, joins A10 Board of Directors • Strategy C
Slide 8: Zero-Day Automated Protection (ZAP) for DDoS
ZERO-DAY AUTOMATED PROTECTION (ZAP) FOR DDOS Zero-Day Attack Pattern Recognition (ZAPR) technology Packet Filtering Spoofed Request Distinct Content Reflector Pattern 010001011001111 Machine Learning Distinct Content Content Pattern Detection DDoS Bot Pattern Legitimate Normal Content User Protected
Slide 9: Thunder Containers
THUNDER CONTAINERS Visibility, Analytics and Management Platform ADC CGNAT/IPv6 DC Firewall Gi, GTP Firewall Ultra-High Performance – Up to 200Gbps Throughput per Thunder Container Application Delivery, Carrier Grade NAT, Data Center Firewall Elastic, Portable & Scalable for 5G & Multi Cloud 9 Durin
Slide 10: Strategic Partnership Expansion
STRATEGIC PARTNERSHIP EXPANSION • A10 vThunder ADC and Harmony Controller • Executed a global reseller agreement to become available in the Oracle Cloud Marketplace an Extended Global Technology Partner • First virtual ADC available in OCI • Dell EMC to resell full product line of A10 multi- cloud a
Slide 11: Chris White
Chris White EVP, WW Sales 11 11. CONFIDENTIAL | DO NOT DISTRIBUTE ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 11 | Page
Slide 12: Market Summary
Market Summary • North America • Large deals among Service Provider and Web Giant Customers were delayed or downsized • Win rate remains high & majority of deals remain in pipeline • International • Double-digit year-over-year product revenue growth in Japan, EMEA and Latin America • Triple-digit ye
Slide 13: Strategic Partnership Expansion
STRATEGIC PARTNERSHIP EXPANSION • A10 vThunder ADC and Harmony Controller • Executed a global reseller agreement to become available in the Oracle Cloud Marketplace an Extended Global Technology Partner • First virtual ADC available in OCI • Dell EMC to resell full product line of A10 multi- cloud a
Slide 14: Customer Success
CUSTOMER SUCCESS 14 14. CONFIDENTIAL | DO NOT DISTRIBUTE During the quarter, we added 215 new customers, which is our highest level in fourteen quarters. In addition to the number of new logos, we were also pleased with the expansions we generated with our existing customers. I will highlight a few
Slide 15: Tom Constantino
Tom Constantino CFO 15 15. CONFIDENTIAL | DO NOT DISTRIBUTE ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 15 | Page
Slide 16: Revenue
REVENUE $Millions Q2’19 Revenue: $49M 19% y/y $227 $235 $232 $196 $180 2014 2015 2016 2017 2018 16 16. CONFIDENTIAL The company | 606 adopted ASC DO accounting NOT DISTRIBUTE standard effective January 1, 2018, all prior periods are based on ASC 605 standard. Tom Constantino, CFO Thank you, Chris. S
Slide 17: Product and Service Revenue
PRODUCT AND SERVICE REVENUE $Millions $235 $232 $227 $196 2Q 2019 $180 $49 million 33% 36% 38% 31% 25% 46% 67% 64% 62% 75% 69% 54% 2014 2015 2016 2017 2018 Product Service 17 17. CONFIDENTIAL The company | 606 adopted ASC DO accounting NOT DISTRIBUTE standard effective January 1, 2018, all prior per
Slide 18: Revenue by Geography
REVENUE BY GEOGRAPHY $Millions $235 $232 $227 3% 4% 2Q 2019 2% $196 10% 12% 12% $49 million $180 3% 14% 13% 14% 16% 4% 11% 7% 12% 11% 23% 22% 13% 31% 24% 18% 25% $56 19% 53% 51% 49% 45% 48% 30% 2014 2015 2016 2017 2018 United States Japan APAC ex Japan EMEA Other 18 18. The company adopted ASC CONFI
Slide 19: Revenue by Customer Vertical
REVENUE BY CUSTOMER VERTICAL $Millions $227 $235 $232 $196 11% 14% 18% 2Q 2019 $180 $49 million 10% 8% 41% 39% 39% 16% 45% 43% 39% 48% 47% 43% 45% 50% 46% 2014 2015 2016 2017 2018 SP Enterprise Web Giant 19 19. The company adopted ASC CONFIDENTIAL | 606 DO accounting standard effective January 1, 20
Slide 20: Financial Performance Highlights
FINANCIAL PERFORMANCE HIGHLIGHTS $ Millions (except EPS) Income Statement Summary: Q2’19 Q2’18 Revenue $49.2 $60.7 Gross Margin % 78.0% 78.6% Operating Margin % (1.9)% 4.0% EPS ($0.00) $0.02 Balance Sheet & Cash Flow Summary: Q2’19 Q2’18 Cash & Marketable Security $119.3 $127.4 Accounts Receivable $
Slide 21: Business Outlook
Business Outlook • Q3 2019 • Revenue in the range of $50.0 million to $54.0 million • Non-GAAP gross margin in the range of 76.0 percent to 78.0 percent • Non-GAAP operating expenses in the range of $40.0 million to $41.0 million • Non-GAAP earnings per share to be between a loss of $0.04 and income
Slide 22: Question & Answer Session
QUESTION & ANSWER SESSION Lee Chen Tom Constantino Chris White Founder & CEO CFO EVP, WW Sales 22 22. CONFIDENTIAL | DO NOT DISTRIBUTE Operator, you can now open the call up for questions. ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 22 | Page
Slide 23: Appendix
APPENDIX 23 23. CONFIDENTIAL | DO NOT DISTRIBUTE ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 23 | Page
Slide 24: GAAP to Non-GAAP
GAAP to NON-GAAP % of Revenue except EPS Q1'19 Q2'19 Q2'19 YTD Q1'18 Q2'18 Q2'18 YTD Gross Margin % - GAAP 75.6 % 77.1 % 76.4 % 75.8 % 78.3 % 77.2 % Stock-based Compensation 0.6 % 0.9 % 0.8 % 1.9 % 0.3 % 1.0 % Gross Margin % - Non-GAAP 76.3 % 78.0 % 77.2 % 77.7 % 78.6 % 78.2 % EPS $ - GAAP $ (0.16)
Slide 25: GAAP to Non-GAAP
GAAP to NON-GAAP $ Millions Q1'19 Q2'19 Q2'19 YTD Q1'18 Q2'18 Q2'18 YTD Total operating expenses $ - GAAP $ 49.0 $ 44.3 $ 93.3 $ 57.3 $ 51.2 $ 108.5 Stock-based compensation (3.6) (4.6) (8.2) (7.3) (2.4) (9.6) Litigation and investigation expense (benefit) (0.9) (0.2) (1.0) (4.2) (3.3) (7.5) Amortiz
Slide 26: GAAP to Non-GAAP
GAAP to NON-GAAP $ Millions Q1'19 Q2'19 Q2'19 YTD Q1'18 Q2'18 Q2'18 YTD Loss from operations $ - GAAP $ (11.0) $ (6.4) $ (17.4) $ (20.0) $ (3.7) $ (23.7) Stock-based compensation 3.9 5.0 8.9 8.2 2.6 10.7 Litigation and investigation expense (benefit) 0.9 0.2 1.0 4.2 3.3 7.5 Amortization expense rela
Slide 27: Thank You
THANK YOU 27 27. CONFIDENTIAL | DO NOT DISTRIBUTE ATEN – Q2 2019 Financial Results Conference Call – Tuesday, July 30, 2019 27 | Page