A10 Networks, Inc. · NYSE:ATEN
A10 Networks — Q3 2019 Earnings Presentation
24 slides from A10 Networks's earnings presentation, Oct 29, 2019
Slide 1: Q3 2019 Financial Results & Commentary
Reliable Security Always Q3 2019 FINANCIAL RESULTS & COMMENTARY October 29, 2019 Reliable Security Always™
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, including our belief that we
Slide 3: Agenda
AGENDA • Introduction ◦ Chris Mammone, Investor Relations • Results Overview ◦ Lee Chen, CEO, President and Founder • 3Q 2019 Financial Results & Business Outlook ◦ Tom Constantino, CFO • Market Overview ◦ Chris White, EVP WW Sales • Q&A: Lee Chen, Tom Constantino, and Chris White 3
Slide 4: The A10 Vision
THE A10 VISION Enabling intelligent automation to ensure business critical RELIABLE applications are responsive, SECURITY secure and always available ALWAYS 4
Slide 5: Lee Chen, CEO, President and Founder
Lee Chen CEO, President and Founder Reliable Security Always™
Slide 6: Q3'19 Delivering Results
Q3’19 COMPANY UPDATE • Delivering Results ◦ 3Q results: Above the midpoint of guidance on revenue, top-line grew 7% sequentially, improved profitability (adjusted EBITDA of $4.0M) on lower levels of OpEx ◦ Strong engagement with customers who are adopting our secure application services for multi-cl
Slide 7: Reasons for Optimism into 2020
REASONS FOR OPTIMISM INTO 2020 • Greater confidence in ability to navigate effectively through dynamic business environment • Client expansions in 5G infrastructure deployments ◦ Notable wins in South Korea, Japan, and Middle East • Mix shift with respect to high margin recurring revenue ◦ Targeting
Slide 8: Tom Constantino, CFO
Tom Constantino CFO Reliable Security Always™
Slide 9: Financial Profile
FINANCIAL PROFILE Reliable Security Always™
Slide 10: Revenue
REVENUE $Millions Q3’19 Revenue: $52.8M 7% Q/Q $227 $235 $232 $196 $180 2014 2015 2016 2017 2018 10 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.
Slide 11: Revenue by Product and Service
REVENUE BY PRODUCT AND SERVICE $Millions $235 $232 $227 $196 3Q 2019 $52.8 million $180 33% 36% 38% 31% 25% 43% 67% 64% 75% 69% 62% 57% 2014 2015 2016 2017 2018 Product Service 11 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standa
Slide 12: Revenue by Geography
REVENUE BY GEOGRAPHY $Millions $235 $232 $227 3Q 2019 2% 3% 4% $196 10% 12% 12% $52.8 million $180 3% 13% 14% 4% 14% 16% 11% 6% 12% 11% 23% 22% 12% 24% 18% 37% 25% 16% $56 53% 51% 49% 45% 48% 29% 2014 2015 2016 2017 2018 United States Japan APAC ex Japan EMEA Other 12 The company adopted ASC 606 acc
Slide 13: Revenue by Customer Vertical
REVENUE BY CUSTOMER VERTICAL $Millions $227 $235 $232 14% $196 11% 18% 3Q 2019 $180 $52.8 million 10% 8% 41% 39% 39% 12% 45% 43% 50% 38% 48% 47% 50% 46% 43% 2014 2015 2016 2017 2018 SP Enterprise Web Giant 13 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior period
Slide 14: Financial Performance Highlights
FINANCIAL PERFORMANCE HIGHLIGHTS $ Millions (except EPS) Income Statement Summary: Q3’19 Q3’18 Revenue $52.8 $ 60.5 Gross Margin % 78.1% 78.8% Operating Margin % 3.5% 4.2% Adjusted EBITDA $4.0 $4.2 EPS $0.02 $ 0.03 Balance Sheet & Cash Flow Summary: Q3’19 Q3’18 Cash & Marketable Security $122.6 $ 12
Slide 15: Business Outlook for Q4'19
BUSINESS OUTLOOK FOR Q4’19 • Revenue in the range of $55M to $59M, sequential growth of 8% at midpoint • Non-GAAP gross margin in the range of 76% to 78% • Non-GAAP operating expenses in the range of $39M to $40M, excluding severance and restructuring charges • Adjusted EBITDA in the range of $5.4M
Slide 16: Chris White, EVP WW Sales
Chris White EVP, WW Sales Reliable Security Always™
Slide 17: Market Summary
MARKET SUMMARY • North America ◦ NA revenue grew 28% QoQ and was the biggest driver of 7% overall sequential growth ◦ Large deals within Enterprise and Web Giant verticals continue to be delayed ◦ We are seeing increased traction from smaller-sized deals within our strategic NA accounts, positioning
Slide 18: Highlighted Customer Engagements
HIGHLIGHTED CUSTOMER ENGAGEMENTS • Multi-million dollar competitive • New multi-million dollar • Follow-on 5G orders with leading win with North America engagement with large EMEA mobile providers in South Korea Broadband giant mobile provider to support upcoming 5G rollout 18
Slide 19: Question & Answer Session
QUESTION & ANSWER SESSION Lee Chen Tom Constantino Chris White Founder & CEO CFO EVP, WW Sales 19
Slide 20: Appendix
APPENDIX Reliable Security Always™
Slide 21: GAAP to Non-GAAP
GAAP TO NON-GAAP % of Revenue except EPS Q3'19 Q3'19 YTD Q3'18 Q3'18 YTD Gross Margin % - GAAP 77.4 % 76.7 % 78.5 % 77.6 % Stock-based Compensation 0.6 % 0.7 % 0.3 % 0.7 % Gross Margin % - Non-GAAP 78.1 % 77.5 % 78.8 % 78.4 % EPS $ - GAAP $ 0.00 $ (0.24) $ (0.02) $ (0.36) Stock-based compensation $
Slide 22: GAAP to Non-GAAP
GAAP TO NON-GAAP $ Millions Q3'19 Q3'19 YTD Q3'18 Q3'18 YTD Total operating expenses $ - GAAP $ 40.7 $ 134.0 $ 49.1 $ 157.6 Stock-based compensation (3.2) (11.3) (2.1) (11.8) Litigation and investigation (expense) benefit 2.2 $ 1.1 (1.5) (9.0) Amortization expense related to acquisition (0.3) $ (0.8
Slide 23: GAAP to Non-GAAP
GAAP TO NON-GAAP $ Millions Q3'19 Q3'19 YTD Q3'18 Q3'18 YTD Income (loss) from operations $ - GAAP $ 0.2 $ (17.2) $ (1.6) $ (25.3) Stock-based compensation 3.5 12.5 2.3 13.1 Litigation and investigation (expense) benefit (2.2) (1.1) 1.5 9.0 Amortization expense related to acquisition 0.3 0.8 0.3 0.8
Slide 24: Thank You
THANK YOU RELIABLE SECURITY ALWAYS INVESTORS@A10NETWORKS.COM