Slide 1: Q3 2019 Financial Results & Commentary
Reliable Security Always Q3 2019 FINANCIAL RESULTS & COMMENTARY October 29, 2019 Reliable Security Always™ ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 1 | Page
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: 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 4: 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 4 Please note that
Slide 5: The A10 Vision
THE A10 VISION Enabling intelligent automation to ensure business critical RELIABLE applications are responsive, SECURITY secure and always available ALWAYS 5 ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 5 | Page
Slide 6: Lee Chen, CEO, President and Founder
Lee Chen CEO, President and Founder Reliable Security Always™ ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 6 | Page
Slide 7: Q3'19 Company Update
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 8: Q3'19 Company Update
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 9: 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 10: Tom Constantino, CFO
Tom Constantino CFO Reliable Security Always™ ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 10 | Page
Slide 11: Financial Profile
FINANCIAL PROFILE Reliable Security Always™ ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 11 | Page
Slide 12: Revenue
REVENUE $Millions Q3’19 Revenue: $52.8M 7% Q/Q $227 $235 $232 $196 $180 2014 2015 2016 2017 2018 12 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard. Tom Constantino, CFO Thank you, Lee. Third quarter revenue was 52.8 million
Slide 13: Revenue by Product and Service
REVENUE BY PRODUCT AND SERVICE $Millions $235 $232 $227 $196 3Q 2019 $180 $52.8 million 33% 36% 38% 31% 25% 43% 67% 64% 62% 57% 75% 69% 2014 2015 2016 2017 2018 Product Service 13 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standa
Slide 14: Revenue by Geography
REVENUE BY GEOGRAPHY $Millions $235 $232 $227 3% 4% 3Q 2019 2% $196 10% 12% 12% $52.8 million $180 3% 14% 13% 14% 16% 4% 11% 6% 12% 11% 23% 22% 12% 24% 37% 18% 25% 16% $56 53% 51% 49% 45% 48% 29% 2014 2015 2016 2017 2018 United States Japan APAC ex Japan EMEA Other 14 The company adopted ASC 606 acc
Slide 15: Revenue by Customer Vertical
REVENUE BY CUSTOMER VERTICAL $Millions $227 $235 $232 $196 11% 14% 18% 3Q 2019 $180 $52.8 million 10% 8% 41% 39% 39% 12% 45% 43% 50% 38% 48% 47% 43% 50% 46% 2014 2015 2016 2017 2018 SP Enterprise Web Giant 15 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior period
Slide 16: 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 17: 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 18: Chris White, EVP WW Sales
Chris White EVP, WW Sales Reliable Security Always™ ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 18 | Page
Slide 19: 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 20: 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 21: 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 21 - One of the largest b
Slide 22: Question & Answer Session
QUESTION & ANSWER SESSION Lee Chen Tom Constantino Chris White Founder & CEO CFO EVP, WW Sales 22 Operator, you can now open the call up for questions. ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 22 | Page
Slide 23: Appendix
APPENDIX Reliable Security Always™ ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 23 | Page
Slide 24: 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 25: 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 26: 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 27: Thank You
THANK YOU RELIABLE SECURITY ALWAYS INVESTORS@A10NETWORKS.COM Lee Chen, Founder & CEO Thank you and all of our shareholders for joining us today and for your support. Thank you and good day. ATEN – Q3 2019 Financial Results Conference Call – Tuesday, October 29, 2019 27 | Page