UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________

FORM 8-K
____________________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934

July 28, 2020
Date of Report (Date of earliest event reported)
____________________________________________________________________________

A10 NETWORKS, INC.
(Exact name of the registrant as specified in its charter)
____________________________________________________________________________

Delaware001-3634320-1446869
(State or Other Jurisdiction of Incorporation or Organization)(Commission File Number)(I.R.S. Employer Identification Number)

2300 Orchard Parkway
San Jose, CA 95131
(Address of principal executive offices, including zip code)

(408) 325-8668
(Name and telephone number, including area code, of the person to contact in connection with this report)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
____________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.00001 par value per shareATENNew York Stock Exchange





Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Item 2.02 Results of Operations and Financial Condition

On July 9, 2020, A10 Networks, Inc. (the “Company”) issued a press release regarding financial results for the quarter ended June 30, 2020. The Company also posted on its website (www.a10networks.com) slides regarding such financial results. Copies of the press release and slides are attached as Exhibits 99.1 and 99.2, respectively, and the information in Exhibits 99.1 and 99.2 are incorporated herein by reference.

The information in Item 2.02 and Item 9.01 in this Current Report on Form 8-K and the exhibit attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

ExhibitDescription
99.1
99.2


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 28, 2020

A10 NETWORKS, INC.
By: /s/ Tom Constantino
Tom Constantino
Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)


Document

EXHIBIT 99.1


A10 Networks Reports Second Quarter 2020 Financial Results
Second Quarter Revenue of $52.5 Million; GAAP Net Income of $3.8 Million, GAAP EPS of $0.05, non-GAAP Net Income of $7.1 Million, non-GAAP EPS of $0.09 and Cash Flow from Operations of $10.5 Million

SAN JOSE, Calif., July 28, 2020 -- A10 Networks (NYSE: ATEN), a leading provider of secure application services and solutions, today announced financial results for its second quarter ended June 30, 2020.

Second Quarter 2020 Financial Summary
1.Revenue of $52.5 million, up 7% year-over-year.
2.GAAP gross margin of 78.2%; non-GAAP gross margin of 78.8%.
3.GAAP operating expenses of $37.2 million, declined sequentially from $41.8 million in the first quarter of 2020; non-GAAP operating expenses of $34.1 million.
4.GAAP net income of $3.8 million, or $0.05 per share, compared with GAAP net loss of $(5.8) million, or $(0.08) per share in the second quarter of 2019; non-GAAP net income of $7.1 million, or $0.09 per basic and diluted share.
5.Adjusted EBITDA of $9.8 million, an improvement of more than $8.4 million compared with $1.3 million in Adjusted EBITDA in the second quarter last year.
6.Ended the quarter with $143.4 million in cash, cash equivalents and marketable securities, compared to $129.9 million dollars as of December 31, 2019.

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

“A10 continues to make progress on our business model transformation, resulting in improved earnings power, amidst an uncertain environment,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “To date, we have successfully navigated the challenges related to the pandemic and associated economic disruptions. Demand remains strong, though sales cycles, particularly in Asia, have been elongated. Increasingly, our global footprint and customer mix serve as important and durable competitive advantages. We were able to offset revenue declines from Japan and Asia Pacific regions




with improvements from North America and EMEA. We maintain a strong market position with service providers and their investment cycles which can last multiple years and result in variable demand levels within a 90-day period.”

“We continue to focus on execution and efficiency to maximize profitability while investing in innovation for our customers,” continued Mr. Trivedi. “On a non-GAAP basis, during the quarter we achieved an $8.2 million improvement in operating income, a $7.4 million improvement in net income, and an $8.4 million improvement in Adjusted EBITDA, on a $3.3 million improvement in revenue compared with the same period last year. We have already achieved our stated goal of eliminating $10 million in operating expenses, with a reduction of over $11 million in the first six months of 2020 compared with the same period in 2019, and we now expect to reduce opex by at least $14 million for the full year. This enhanced operating leverage and global customer mix coupled with our strong balance sheet, with $143.4 million in cash and marketable securities and no debt, positions us well to weather these storms while investing in innovation for our customers. I am truly excited about our growth opportunities with a refreshed portfolio and go-to-market model, including the recently announced partnership with Dell.”

Conference Call Information
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 second quarter 2020 financial results and outlook for its third quarter 2020. 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 at least 90 days. 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 10145938. The 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 an increasingly efficient organization, an increase in demand for our products, the impact of Covid-19 on our business and near-term visibility, our position to weather the current environment, our continued efforts to improve our profitability, growth opportunities, customer trends, and our ability to achieve our stated goal of eliminating $14 million in operating expenses on an annual basis. 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 public health requirements in response to the outbreak of Covid-19 and the impact on our business and operations, which is evolving and beyond our control, and the timing of customer orders and product shipments; members of our management team or a significant number of our global employee base becoming ill with Covid-19; changes in government regulations and mandates to address Covid-19 that may adversely impact our ability to continue to operate without




disruption; a significant decline in global macroeconomic conditions that have an adverse impact on our business and financial results; challenges to our infrastructure because of the number of employees working from remote locations; business interruptions related to our supply chain; our ability to manage our business and expenses if customers cancel or delay orders; 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; our ability to timely file periodic reports required to be filed under the Securities Exchange Act of 1934; and other risks that are described in “Risk Factors” in our periodic filings with the Securities and Exchange Commission, including our Form 10-K filed with the Securities and Exchange Commission on March 10, 2020. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

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 tables contain certain non-GAAP financial measures, including non-GAAP net income (loss), non-GAAP net income (loss) per basic and diluted share, non-GAAP gross profit and gross margin, non-GAAP operating income (loss) and operating margin, non-GAAP operating expenses, and Adjusted 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.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.





We define non-GAAP net income 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, (iv) restructuring expense, and related tax, and (v) non-recurring facilities expense. We define non-GAAP net income per basic and diluted share as our non-GAAP net income (loss) divided by our basic and diluted weighted-average shares outstanding.  We define non-GAAP gross profit as our GAAP gross profit excluding stock-based compensation and related payroll tax. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. 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, (iv) restructuring expense, and related tax, and (v) non-recurring facilities expense. We define non-GAAP operating margin as our non-GAAP operating income (loss) divided by our GAAP revenue. We define non-GAAP operating expenses as our GAAP operating expenses excluding (i) stock-based compensation, and related tax, (ii) amortization expense related to acquisition, (iii) non-recurring expenses associated with the litigation settlement expense and internal investigation, (iv) restructuring expense, and related tax, and (v) non-recurring facilities expense. We define Adjusted EBITDA as our GAAP net income (loss) excluding (i) interest expense, (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense, (iv) provision for income taxes, (v) stock-based compensation and related payroll tax, (vi) litigation settlement and internal investigation expense (vii) restructuring expense, and related tax, and (viii) non-recurring facilities expense.

We have included our non-GAAP net income (loss), non-GAAP gross profit and gross margin, non-GAAP operating income (loss) and operating margin, non-GAAP operating expenses and Adjusted EBITDA in this press release. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results.

About A10 Networks
A10 Networks (NYSE: ATEN) provides secure application services and solutions for on-premises, multi-cloud and edge-cloud environments at hyperscale. Our mission is to enable service providers and enterprises to deliver business-critical applications that are secure, available and efficient for multi-cloud transformation and 5G readiness. We deliver better business outcomes that support investment protection, new business models and help future-proof infrastructures, empowering our customers to provide the most secure and available digital experience. Founded in 2004, A10 Networks is based in San Jose, Calif. and serves customers globally. For more information, visit www.a10networks.com and follow us @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.






Investor Contact:
Rob Fink
FNK IR
646.809.4048
aten@fnkir.com

Tom Constantino
Chief Financial Officer
investors@a10networks.com
Source: A10 Networks, Inc.





A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts, on a GAAP Basis)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Revenue:
Products$29,214 $26,785 $59,950 $55,015 
Services23,286 22,404 46,314 44,464 
Total revenue52,500 49,189 106,264 99,479 
Cost of revenue:
Products6,544 6,891 13,485 14,407 
Services4,878 4,380 10,079 9,114 
Total cost of revenue11,422 11,271 23,564 23,521 
Gross profit41,078 37,918 82,700 75,958 
Operating expenses:
Sales and marketing18,476 23,626 39,097 48,109 
Research and development13,450 14,617 28,765 30,783 
General and administrative5,237 6,099 11,132 14,457 
Total operating expenses37,163 44,342 78,994 93,349 
Income (loss) from operations3,915 (6,424)3,706 (17,391)
Non-operating income (expense):
Interest expense(1)(37)(1)(192)
Interest and other income, net228 776 459 143 
Total non-operating income (expense), net227 739 458 (49)
Income (loss) before provision for income taxes4,142 (5,685)4,164 (17,440)
Provision for income taxes334 86 653 603 
Net income (loss)$3,808 $(5,771)$3,511 $(18,043)
Net income (loss) per share:
Basic$0.05 $(0.08)$0.04 $(0.24)
Diluted$0.05 $(0.08)$0.04 $(0.24)
Weighted-average shares used in computing net income (loss) per share:
Basic78,178 75,712 78,119 75,263 
Diluted79,982 75,712 79,930 75,263 













A10 NETWORKS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(unaudited, in thousands, except per share amounts)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
GAAP net income (loss)$3,808$(5,771)$3,511$(18,043)
Non-GAAP adjustments:
Stock-based compensation and related payroll tax3,0755,0496,3168,945
Amortization expense related to acquisition253253506506
Litigation and investigation expense173301,049
Non-recurring facilities expense795
Non-GAAP net income (loss)$7,136$(296)$11,158$(7,543)
GAAP net income (loss) per share:
Basic$0.05 $(0.08)$0.04$(0.24)
Diluted$0.05 $(0.08)$0.04$(0.24)
Non-GAAP adjustments:
Stock-based compensation and related payroll tax0.040.070.080.12
Amortization expense related to acquisition0.000.010.010.01
Litigation and investigation expense0.000.000.01
Non-recurring facilities expense0.01
Non-GAAP net income (loss) per share:
Basic$0.09$(0.00)$0.14$(0.10)
Diluted$0.09$(0.00)$0.14$(0.10)
Weighted-average shares used in computing non-GAAP net income (loss) per share:
Basic$78,178$75,712$78,119$75,263
Diluted$79,982$75,712$79,930$75,263
















A10 NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, on a GAAP Basis)
June 30, 2020December 31, 2019
ASSETS
Current assets:  
Cash and cash equivalents$65,846 $45,742 
Marketable securities77,544 84,180 
Accounts receivable, net of allowances of $818 and $52, respectively45,895 53,566 
Inventory22,159 22,384 
Prepaid expenses and other current assets11,342 15,067 
Total current assets222,786 220,939 
Property and equipment, net7,033 7,656 
Goodwill1,307 1,307 
Intangible assets, net1,584 2,305 
Other non-current assets39,898 41,846 
Total assets$272,608 $274,053 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Accounts payable$6,850 $7,592 
Accrued liabilities23,493 27,756 
Deferred revenue65,915 62,233 
Total current liabilities96,258 97,581 
Deferred revenue, non-current39,083 38,931 
Other non-current liabilities26,407 28,754 
Total liabilities161,748 165,266 
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value: 500,000 shares authorized; 77,519 and 77,580 shares issued and outstanding, respectively
Treasury stock, at cost(18,226)(4,890)
Additional paid-in-capital415,166 403,490 
Accumulated other comprehensive income (loss)473 251 
Accumulated deficit(286,554)(290,065)
Total stockholders' equity110,860 108,787 
Total liabilities and stockholders' equity$272,608 $274,053 










A10 NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands, on a GAAP Basis)
Six Months Ended June 30,
 20202019
Cash flows from operating activities:
Net income (loss)$3,511 $(18,043)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization6,096 4,982 
Stock-based compensation6,009 8,824 
Other non-cash items(432)(310)
Changes in operating assets and liabilities:
Accounts receivable8,442 8,802 
Inventory(92)(5,045)
Prepaid expenses and other assets2,662 63 
Accounts payable(776)(434)
Accrued and other liabilities(6,610)(9,372)
Deferred revenue3,834 (175)
Other123 
Net cash provided by (used in) operating activities22,653 (10,585)
Cash flows from investing activities:
Proceeds from sales of marketable securities3,160 16,134 
Proceeds from maturities of marketable securities16,549 19,250 
Purchases of marketable securities(12,982)(29,557)
Purchases of property and equipment(1,549)(2,303)
Net cash provided by investing activities5,178 3,524 
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans5,609 3,260 
Repurchase of common stock(13,336)— 
Other— (2)
Net cash provided by (used in) financing activities(7,727)3,258 
Net increase (decrease) in cash and cash equivalents20,104 (3,803)
Cash and cash equivalents—beginning of period$45,742 $40,621 
Cash and cash equivalents—end of period$65,846 $36,818 












A10 NETWORKS, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
(unaudited, in thousands, except percentages)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
GAAP gross profit$41,078$37,918$82,700$75,958
GAAP gross margin78.2%77.1%77.8%76.4%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax298468799792
Non-GAAP gross profit$41,376$38,386$83,499$76,750
Non-GAAP gross margin78.8%78.0%78.6%77.2%

RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES TO
TO NON-GAAP TOTAL OPERATING EXPENSES
(unaudited, in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
GAAP total operating expenses$37,163$44,342$78,994$93,349
Non-GAAP adjustments:
Stock-based compensation and related payroll tax2,7774,5815,5178,153
Amortization expense related to acquisition253253506506
Litigation and investigation expense173301,049
Non-recurring facilities expense795
Non-GAAP total operating expenses$34,133$39,335$72,146$83,641



















RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS
TO NON-GAAP OPERATING INCOME (LOSS)
(unaudited, in thousands, except percentages)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
GAAP income (loss) from operations$3,915$(6,424)$3,706$(17,391)
GAAP operating margin7.5%(13.1)%3.5%(17.5)%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax3,0755,0496,3168,945
Amortization expense related to acquisition253253506506
Litigation and investigation expense173301,049
Non-recurring facilities expense795
Non-GAAP operating income (loss)$7,243$(949)$11,353$(6,891)
Non-GAAP operating margin13.8%(1.9)%10.7%(6.9)%


RECONCILIATION OF GAAP NET INCOME (LOSS) TO
EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(unaudited, in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
GAAP net income (loss)$3,808$(5,771)$3,511$(18,043)
Exclude: Interest expense1371192
Exclude: Interest and other (income) expense, net(228)(776)(459)(143)
Exclude: Depreciation and amortization expense2,7852,5356,0964,982
Exclude: Provision for income taxes33486653603
EBITDA6,700(3,889)9,802(12,409)
Exclude: Stock-based compensation and related payroll tax3,0755,0496,3168,945
Exclude: Litigation and investigation expense173301,049
Exclude: Non-recurring facilities expense795
Adjusted EBITDA$9,775$1,333$16,943$(1,909)


a10exhibit992
Q2 2020 Financial Results & Commentary July 28, 2020 Always Secure. Always Available.


 
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 market trends, the impact of COVID-19 on our business, including demand for our products, pipeline and near-term disruption in our supply chain, our positioning and recurring revenues, our strategy and objectives, our expectations as to future operating results, including as to non-GAAP profitability and operating expenses, our plans with respect to issuing guidance. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results to differ materially from those anticipated or implied by our forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 on our business, on the business of our customers and suppliers, and on the global economy in general, execution risks related to closing key deals and improving our execution, successfully executing our strategies, market adoption of our products, successfully anticipating market needs and opportunities, timely development of new products and features, achieving or maintaining profitability, loss or delay of expected purchases, our ability to maintain or improve our competitive position; competitive and execution risks related to cloud-based computing trends, attracting and retaining new end-customers, maintaining and enhancing our brand and reputation, changes demanded by our customers in the deployment and payment model for our products, growth in markets relating to network security, the success of any future acquisitions or investments, the success of our partnerships with technology providers, the ability of our sales team to execute well, our ability to shorten our close cycle, the ability of our channel partners to sell our products, variations in product mix or geographic locations of our sales, our presence in international markets, and other factors described in our quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings made with the Securities and Exchange Commission, to which your attention is directed. The forward-looking statements included in this presentation are based on current expectations and beliefs as of July 28, 2020 only. We do not intend to update this information contained in the forward-looking statements, except as required by law. This presentation and the accompanying oral presentation also include certain non-GAAP financial measures. Non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under U.S. GAAP. We consider 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. Definitions of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP financial measures can be found in the appendix to this document and in the accompanying financial results press 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. 2


 
Agenda • Introduction • 2Q Overview • 2Q Financial Performance 3


 
A10 Core Purpose, Mission and Vision CORE PURPOSE VISION MISSION Enabling a secure To empower our We enable service and available digital customers to providers and world provide the most enterprises to secure and deliver business- available digital critical applications experience that are secure, available and efficient for multi-cloud transformation and 5G readiness 4


 
Large Installed Base Trusts Us With Their Critical Applications and transition to Cloud Provide always Protect investments Support seamless Secure multi- Protect networks Simplify IT ops with available application for enterprises and migration to the generational from cyberattacks connected intel, delivery and security service providers cloud and cloud- networks through that threaten automation, ML on-prem and in the native with hybrid the transition to 5G network availability and DevOps/ cloud solutions and cloud SecOps tools ALL AT HYPERSCALE 9 of Top 10 8 of Top 10 21 of Top 50 15 of Top 25 5 of Top 10 Telecom Operators Cloud Providers Fortune Global 500 Video Gaming Companies Media Companies 5


 
Market Trends driving our Solutions IoT Shift to 5G/4G+ Operational Security Proliferation Cloud Deployment Complexity Threats 6


 
A10 Advantage – Performance, Flexibility, Security Security Flexible Automation & Performance Technical Stack Form Factor & Analytics @ Scale Support Consolidation Pricing Multi-cloud Lower Capex Future Better Business Trusted Efficiency & Opex Proof Outcomes Advice Simplification without Compromise @ Hyperscale 7


 
Q2’20: Delivering Results • Delivered strong operating results in Q2 while diligently navigating a rapidly changing economic environment • Year-over-Year growth for: • Revenue • Net Income • Adjusted EBITDA • Diluted EPS • Significantly improved earnings power • Reduced operating expenses • Objectives • Remain laser focused on improving our execution, our efficiency and long-term objectives • Clear goal of maximizing profitability and building shareholder value 8


 
Near-term Expectations • Continue to expect to see some near-term delays related to COVID-19 • Well-equipped to mitigate any related disruption • Strong pipeline and win rate with lower visibility of order patterns in the next 90-day period related to changing global business environment • Guidance • Continuing to suspend practice of providing quarterly guidance • Expect to maintain profitability in Q3 • Now expect to reduce annual Operating Expenses by $14 million o Up from original expectation of $10 million reduction 9


 
Revenue & Non-GAAP Operating Income (Loss) Revenue, $ Millions Revenue, $ Millions $60.3 $53.8 $49.2 $52.5 $49.2 $52.8 $52.5 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q2'19 Q2'20 Non-GAAP Operating Income (Loss), $ Millions Non-GAAP Operating $7.7 $7.2 Income (Loss), $ Millions $4.1 $7.2 $(0.9) $1.8 ($0.9) Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q2'19 Q2'20 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard. Operating Profit is a Non-GAAP Financial Measure. See Appendix for reconciliation to most comparable GAAP financial measures. 10


 
Revenue by Customer Vertical $Millions 36% 35% 2Q 2020 45% 41% 42% $52.5 million 42% 64% 65% 58% 55% 59% 58% Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Service and Cloud Providers Enterprise The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard. 11


 
Revenue by Geography $Millions 13% 12% 12% 11% 15% 2Q 2020 $52.5 million 9% 15% 19% 16% 15% 33% 29% 27% 24% 15% 30% 15% 46% 46% 47% 46% 24% 38% 43% Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Americas Japan APAC ex Japan EMEA The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard. 12


 
Financial Performance: 8 Quarter Trends $ Millions (except EPS) 2Q'18 Q3’18 4Q'18 FY 2018 1Q'19 2Q'19 Q3’19 4Q'19 FY 2019 1Q’20 2Q’20 Revenue $60.7 $60.5 $61.8 $232.2 $50.3 $49.2 $52.8 $60.3 $212.6 $53.8 $52.5 Non-GAAP Gross Margin % 78.6% 78.8% 78.2% 78.3% 76.3% 78.0% 78.1% 78.5% 77.8% 78.3% 78.8% Non-GAAP Operating Margin % 4.0% 4.2% 5.3% 0.4% (11.8%) (1.9%) 3.5% 12.7% 1.2% 7.7% 13.8% Adjusted EBITDA (non-GAAP) $4.1 $4.2 $4.9 $7.7 ($3.7) $1.3 $4.0 $10.0 $11.6 $7.2 $9.8 Non-GAAP EPS $0.02 $0.03 $0.05 $0.01 ($0.10) $0.00 $0.02 $0.10 $0.03 $0.05 $0.09 Ending Cash & Marketable Securities $127.4 $123.6 $128.4 $128.4 $122.8 $119.3 $122.6 $129.9 $129.9 $142.9 $143.4 Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com Gross Margin %, Operating Margin %, Adjusted EBITDA and EPS are Non-GAAP Financial Measures. See Appendix for reconciliation to most comparable GAAP financial measures. 13


 
Appendix 14


 
GAAP to Non-GAAP - Gross Margin and EPS % of Revenue except EPS Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 Gross Margin % - GAAP 78.3% 78.5% 77.7% 77.7% 75.6% 77.1% 77.4% 77.7% 77.0% 77.4% 78.2% Stock-based compensation 0.3% 0.3% 0.5% 0.7% 0.6% 1.0% 0.6% 0.8% 0.7% 0.9% 0.6% Gross Margin % - Non-GAAP 78.6% 78.8% 78.2% 78.3% 76.3% 78.0% 78.1% 78.5% 77.8% 78.3% 78.8% EPS $ - GAAP $ ( 0.06) $ ( 0.02) $ ( 0.02) $ ( 0.38) $ ( 0.16) $ ( 0.08) $ 0.00 $ 0.00 $ ( 0.23) $ ( 0.00) $ 0.05 Stock-based compensation 0.04 0.03 0.05 0.23 0.05 0.07 0.04 0.05 0.21 0.04 0.04 Litigation and Investigation expense (benefit) 0.05 0.02 0.02 0.14 0.01 0.00 ( 0.03) 0.00 ( 0.01) 0.00 - Amortization expense related to acquisition 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.01 0.00 0.00 Restructuring expense, and related tax - - - - - - - 0.03 0.03 - - Non-recurring facilities expense - - - - - - - 0.01 0.01 0.01 - EPS $ - Non-GAAP $ 0.02 $ 0.03 $ 0.05 $ 0.01 $ ( 0.10) $ 0.00 $ 0.02 $ 0.10 $ 0.03 $ 0.05 $ 0.09 Numbers may not sum due to rounding. EPS data is presented on a basic and diluted basis. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. 15


 
GAAP to Non-GAAP - Operating Expenses $ Millions Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 Total operating expenses $ - GAAP $ 51.2 $ 49.1 $ 50.4 $ 208.0 $ 49.0 $ 44.3 $ 40.7 $ 46.8 $ 180.8 $ 41.8 $ 37.2 Stock-based compensation ( 2.4) ( 2.1) ( 3.7) ( 15.4) ( 3.6) ( 4.6) ( 3.2) ( 3.9) ( 15.2) ( 2.7) ( 2.8) Litigation and Investigation expense (benefit) ( 3.3) ( 1.5) ( 1.5) ( 10.5) ( 0.9) ( 0.2) 2.2 ( 0.0) 1.1 ( 0.0) - Amortization expense related to acquisition ( 0.3) ( 0.3) ( 0.3) ( 1.0) ( 0.3) ( 0.3) ( 0.3) ( 0.3) ( 1.0) ( 0.3) ( 0.3) Restructuring expense - - - - - - - ( 2.5) ( 2.5) - - Non-recurring facilities expense - - - - - - - ( 0.4) ( 0.4) ( 0.8) - Total operating expenses $ - Non-GAAP $ 45.3 $ 45.1 $ 45.1 $ 181.1 $ 44.3 $ 39.3 $ 39.4 $ 39.7 $ 162.7 $ 38.0 $ 34.1 0.1217746 0.1228406 % of Revenue Total operating expenses % - GAAP 84.4 % 81.1 % 81.6 % 89.6 % 97.4 % 90.1 % 77.0 % 77.6 % 85.1 % 77.8 % 70.8 % Stock-based compensation (3.9)% (3.5)% (5.9)% (6.6)% (7.1)% (9.3)% (6.0)% (6.4)% (7.1)% (5.1)% (5.3)% Litigation and Investigation expense (benefit) (5.4)% (2.5)% (2.4)% (4.5)% (1.7)% (0.4)% 4.1 % (0.1)% 0.5 % (0.1)% —% Amortization expense related to acquisition (0.4)% (0.4)% (0.4)% (0.4)% (0.5)% (0.5)% (0.5)% (0.4)% (0.5)% (0.5)% (0.5)% Restructuring expense —% —% —% —% —% —% —% (4.2)% (1.2)% —% —% Non-recurring facilities expense —% —% —% —% —% —% —% (0.7)% (0.2)% (1.5)% —% Total operating expenses % - Non-GAAP 74.6 % 74.6 % 72.9 % 78.0 % 88.1 % 80.0 % 74.6 % 65.8 % 76.5 % 70.7 % 65.0 % Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. 16


 
GAAP to Non-GAAP - Operating Income $ Millions Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 Income (loss) from operations $ - GAAP $ ( 3.7) $ ( 1.6) $ ( 2.4) $ ( 27.7) $ ( 11.0) $ ( 6.4) $ 0.2 $ 0.1 $ ( 17.1) $ ( 0.2) $ 3.9 Stock-based compensation 2.6 2.3 4.0 17.0 3.9 5.0 3.5 4.3 16.8 3.2 3.1 Litigation and Investigation expense (benefit) 3.3 1.5 1.5 10.5 0.9 0.2 ( 2.2) 0.0 ( 1.1) 0.0 - Amortization expense related to acquisition 0.3 0.3 0.3 1.0 0.3 0.3 0.3 0.3 1.0 0.3 0.3 Restructuring expense - - - - - - - 2.5 2.5 - - Non-recurring facilities expense - - - - - - - 0.4 0.4 0.8 - Income (loss) from operations $ - Non-GAAP $ 2.4 $ 2.5 $ 3.3 $ 0.9 $ ( 5.9) $ ( 0.9) $ 1.8 $ 7.7 $ 2.6 $ 4.1 $ 7.2 % of Revenue Income (loss) from operations % - GAAP (6.1)% (2.6)% (3.9)% (11.9)% (21.8)% (13.1)% 0.4 % 0.1 % (8.0)% (0.4)% 7.5 % Stock-based compensation 4.2 % 3.9 % 6.4 % 7.3 % 7.7 % 10.3 % 6.6 % 7.2 % 7.9 % 6.0 % 5.9 % Litigation and Investigation expense (benefit) 5.4 % 2.5 % 2.4 % 4.5 % 1.7 % 0.4 % (4.1)% 0.1 % (0.5)% 0.1 % —% Amortization expense related to acquisition 0.4 % 0.4 % 0.4 % 0.4 % 0.5 % 0.5 % 0.5 % 0.4 % 0.5 % 0.5 % 0.5 % Restructuring expense —% —% —% —% —% —% —% 4.2 % 1.2 % —% —% Non-recurring facilities expense —% —% —% —% —% —% —% 0.7 % 0.2 % 1.5 % —% Income (loss) from operations % - Non-GAAP 4.0 % 4.2 % 5.3 % 0.4 % (11.8)% (1.9)% 3.5 % 12.7 % 1.2 % 7.6 % 13.8 % Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. 17


 
GAAP to Non-GAAP - Adjusted EBITDA $ Millions Q2'18 Q3'18 Q4'18 FY 2018 Q1'19 Q2'19 Q3'19 Q4'19 FY 2019 Q1'20 Q2'20 GAAP net income (loss) $ ( 4.5) $ ( 1.8) $ ( 1.6) $ ( 27.6) $ ( 12.3) $ ( 5.8) $ 0 .2 $ 0 .1 $ ( 17.8) $ ( 0.3) $ 3 .8 Exclude: Interest expense 0 .0 0 .0 0 .0 0 .1 0 .2 0 .0 0 .0 0 .0 0 .2 - 0 .0 Exclude: Interest inc and other (inc) exp, net 0 .4 0 .1 ( 1.3) ( 1.3) 0 .6 ( 0.8) ( 0.3) ( 0.5) ( 0.9) ( 0.2) ( 0.2) Exclude: Depreciation & amortization expense 2 .0 1 .9 1 .9 7 .9 2 .4 2 .5 2 .5 2 .6 1 0.0 3 .3 2 .8 Exclude: Provision for income taxes 0 .4 0 .1 0 .4 1 .1 0 .5 0 .1 0 .3 0 .5 1 .4 0 .3 0 .3 EBITDA ( 1.7) 0 .3 ( 0.6) ( 19.8) ( 8.5) ( 3.9) 2 .7 2 .7 ( 7.1) 3 .1 6 .7 Exclude: Stock-based compensation 2 .6 2 .3 4 .0 1 7.0 3 .9 5 .0 3 .5 4 .3 1 6.8 3 .2 3 .1 Exclude: Litigation settlement and investigation exp 3 .3 1 .5 1 .5 1 0.5 0 .9 0 .2 ( 2.2) 0 .0 ( 1.1) 0 .0 - Exclude: Restructuring expense - - - - - - - 2 .5 2 .5 - - Exclude: Non-recurring facilities costs - - - - - - - 0 .4 0 .4 0 .8 - Adjusted EBITDA - Non-GAAP $ 4.1 $ 4.2 $ 4.9 $ 7.7 $ ( 3.7) $ 1.3 $ 4.0 $ 10.0 $ 11.6 $ 7.2 $ 9.8 Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com. 18


 
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