A10 Networks
Future Ready Security Solutions
Lee Chen, Founder & CEOA10’s cutting-edge security portfolio is geared to address more such threats in the wake of the digital technology boom driven by cloud, IoT, smart cities, and mobile networks. Constantly updating its solution suite, the company empowers clients to be one step ahead of the cyberattackers. To elaborate, the recently introduced A10 DDoS Protection Cloud solution offers full-spectrum cloud scrubbing that improves the detection of malicious network traffic in the enterprise cloud network. Another recent addition to A10’s solution suite is the One-DDoS Protection which efficiently handles threats with firewall and takes advantage of machine learning and AI to fight against new hacking methods that exploit bots. “Making sure we utilize cyber threat intelligence to tackle cyberattackers allows us to update our solutions faster,” says Chen.
Making sure we utilize cyber threat intelligence to tackle cyberattackers allows us to update our solutions faster
A10 has a spectrum of solutions in its portfolio—all designed for every aspect of a business. Available in a wide range of form factors, A10’s products can be hosted both on-premise and on the cloud for the most challenging network environments. The products can automatically defend applications and services in real time, even before advanced cyberattacks exploit them. In particular, the A10 Thunder product series has the ability to protect against sophisticated DDoS attacks and SSL visibility and decryption. It also offers secure application delivery and secures companies through converged, carrier-grade, security best practices. In addition, A10 also provides Harmony Controller for improved data analytics and management, making it easy for clients to protect their digital infrastructure by providing a single view of the entire network. Analytics solutions such as the per-app analytics available in A10 Harmony Controller empower companies to quickly and accurately detect security anomalies. The whole suite of A10’s solutions is GDPR compliant.
Alongside, A10 also has provision for companies to implement stronger identity hygiene practices like multi-factor authentication to prevent attackers from breaking into the networks and stealing data. From firewalls to cloud scrubbing to A10 Harmony Controller, A10’s solutions are designed to improve efficiency within the organization and allow IT professionals to focus on improving security and, in turn, business performance. For instance, SEGA Corporation, a video game giant, wanted to enhance its mobile game presence. They, however, required a robust and cost-efficient server to host the online abilities of their titles that could handle the high volume of traffic that SEGA was expecting. Implementing A10 ADC, SEGA gained high performance and usability through relevant traffic reporting options made available via local language GUI.
With the recent introduction of improved ways to battle sophisticated cyberthreats, the first half of 2018 has been quite eventful for A10 Networks. The company believes that technologies like cryptocurrencies and 5G will gain tremendous traction, but there will be a simultaneous presence of threats. “We are working toward ensuring that our software is prepared for the large-scale attacks that might occur in future,” concludes Chen.
A10 Networks News
A10 Networks Reports Record Revenue, Full-Year Revenue of $280.3 Million, Fourth Quarter Revenue of $77.6 Million
The Role of AI in Modern Cybersecurity: Beyond the Buzz
A10 Networks
In the world, and in particular, the cybersecurity landscape, the buzzword is undoubtedly “AI.” We’re constantly discussing it because of its incredible ability to think, create, and adapt in real time.
Artificial intelligence is going to be a key component of any modern security system as the volume and complexity of attacks continue to increase. In 2019, A10 introduced zero-day automated protection (ZAPR), which properly harnessed the power of AI and machine learning technologies. This application of AI has consistently proven to be effective in blocking attacks that were previously not known. AI continues to dominate the industry with its potential to adapt and counter continually evolving modern attack methods. At this time, AI’s capacity to classify and collect attack data has made its implementation within the threat intelligence subsector of cybersecurity a focal point.
In the context of cybersecurity, adaptability as a trait is invaluable. However, it is imperative not to underestimate the value of preparation (e.g., threat intelligence) or even the more advanced methods of gathering proper intelligence beforehand (e.g., AI-enhanced threat intelligence). To illustrate this phenomenon in simple terms, I will draw a parallel between this concept and an American basketball player in the NBA facing the Golden State Warriors. Before jumping in, it is important to note that threat intelligence can integrate artificial intelligence, but more on that later.
If you are about to take on the Golden State Warriors and you enter the game without doing any research, relying solely on your ability to adapt, I wish you the best of luck trying to stop Steph Curry. It is going to be a long night. If your ability to adapt on the fly is beyond exceptional, you might just survive. That said, the real game-changer is when you combine your natural adaptability with high-quality intel. Examples such as knowing Curry’s shooting habits, his favorite spots, the Warriors’ plays, and more can significantly boost your chances. This is why teams watch film of their opponent before a game.
In cybersecurity, AI-enhanced technologies play a similar role. They empower security devices to combat zero-day threats effectively. But, equipping technologies with a wealth of high-quality intelligence will give you a truly advanced security solution that can be specific, accurate, and perhaps even proactive. This is how you would prepare for advanced modern threats.
When you hear the term “threat intelligence” today, it is far from a small sector or just a feature bundled with security devices. Threat intelligence solutions are on the rise, with a predicted growth rate of over 135 percent through the end of the decade. This growth trend is, in part, related to AI. It is difficult to integrate AI technology in a way that actually works. However, experts are aligned in the belief that the level of AI technology today can be integrated into threat intelligence and augment the way threat intelligence works. With threat intelligence, AI is more than just fluff. It’s a genuine advancement of technology. Pay attention to this trend, because a more advanced threat intelligence platform could soon be on the horizon — one that is in-depth, precise, and proactive.
In both the NBA and cybersecurity, the ability to adapt is vital. However, combining that adaptability with thorough preparation and the right intel can make the difference between success and failure. Whether you’re guarding the three-point line or safeguarding your digital assets, the winning strategy lies in embracing both adaptability and intelligence.
In the world, and in particular, the cybersecurity landscape, the buzzword is undoubtedly “AI.” We’re constantly discussing it because of its incredible ability to think, create, and adapt in real time.
Artificial intelligence is going to be a key component of any modern security system as the volume and complexity of attacks continue to increase. In 2019, A10 introduced zero-day automated protection (ZAPR), which properly harnessed the power of AI and machine learning technologies. This application of AI has consistently proven to be effective in blocking attacks that were previously not known. AI continues to dominate the industry with its potential to adapt and counter continually evolving modern attack methods. At this time, AI’s capacity to classify and collect attack data has made its implementation within the threat intelligence subsector of cybersecurity a focal point.
In the context of cybersecurity, adaptability as a trait is invaluable. However, it is imperative not to underestimate the value of preparation (e.g., threat intelligence) or even the more advanced methods of gathering proper intelligence beforehand (e.g., AI-enhanced threat intelligence). To illustrate this phenomenon in simple terms, I will draw a parallel between this concept and an American basketball player in the NBA facing the Golden State Warriors. Before jumping in, it is important to note that threat intelligence can integrate artificial intelligence, but more on that later.
If you are about to take on the Golden State Warriors and you enter the game without doing any research, relying solely on your ability to adapt, I wish you the best of luck trying to stop Steph Curry. It is going to be a long night. If your ability to adapt on the fly is beyond exceptional, you might just survive. That said, the real game-changer is when you combine your natural adaptability with high-quality intel. Examples such as knowing Curry’s shooting habits, his favorite spots, the Warriors’ plays, and more can significantly boost your chances. This is why teams watch film of their opponent before a game.
In cybersecurity, AI-enhanced technologies play a similar role. They empower security devices to combat zero-day threats effectively. But, equipping technologies with a wealth of high-quality intelligence will give you a truly advanced security solution that can be specific, accurate, and perhaps even proactive. This is how you would prepare for advanced modern threats.
When you hear the term “threat intelligence” today, it is far from a small sector or just a feature bundled with security devices. Threat intelligence solutions are on the rise, with a predicted growth rate of over 135 percent through the end of the decade. This growth trend is, in part, related to AI. It is difficult to integrate AI technology in a way that actually works. However, experts are aligned in the belief that the level of AI technology today can be integrated into threat intelligence and augment the way threat intelligence works. With threat intelligence, AI is more than just fluff. It’s a genuine advancement of technology. Pay attention to this trend, because a more advanced threat intelligence platform could soon be on the horizon — one that is in-depth, precise, and proactive.
In both the NBA and cybersecurity, the ability to adapt is vital. However, combining that adaptability with thorough preparation and the right intel can make the difference between success and failure. Whether you’re guarding the three-point line or safeguarding your digital assets, the winning strategy lies in embracing both adaptability and intelligence.
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“Strong demand for our proprietary security-led solutions drove record revenues for the quarter and the full-year, with continued broad-based growth across both enterprises and service providers and in each key geographic region, on a constant-currency basis”
Fourth Quarter 2022 Financial Summary
• Record revenue of $77.6 million, up 9.9% year-over-year.
• Revenue growth was broad-based, with increases in North America and APAC, as well as Japan on a constant currency basis.
• GAAP gross margin of 79.7%; non-GAAP gross margin of 80.3% as a result of better product mix and continued successful navigation of short-term input cost pressures.
• GAAP net income of $18.0 million, or $0.24 per diluted share, compared with GAAP net income of $10.7 million, or $0.13 per diluted share in the fourth quarter of 2021.
• Non-GAAP net income of $18.4 million, or $0.24 per diluted share (non-GAAP EPS), compared with non-GAAP net income of $16.4 million, or $0.20 per diluted share in the fourth quarter of 2021.
• Adjusted EBITDA of $22.3 million, representing 28.7% of revenue, in line with stated business model goals, and representing more Adjusted EBITDA than A10 generated in all of 2018 and 2019 combined.
• The Board of Directors approved a quarterly cash dividend of $0.06 per share, payable on March 1, 2023 to stockholders of record at the close of business on February 17, 2023.
Full-Year 2022 Financial Summary
• Record revenue of $280.3 million, up 12.1% year-over-year.
• Revenue growth was broad-based, with increases in all major geographies and customer verticals on a constant currency basis.
• GAAP gross margin of 79.7%; non-GAAP gross margin of 80.3%.
• GAAP net income of $46.9 million, or $0.60 per diluted share, compared with GAAP net income (inclusive of a non-recurring $65.4 million income tax benefit related to sustained profitability) of $94.9 million, or $1.19 per diluted share in 2021.
• Non-GAAP net income of $57.7 million, or $0.74 per diluted share, compared with non-GAAP net income of $50.1 million, or $0.63 per diluted share in 2021.
• Q3 and Q4 2022 GAAP EPS of $0.16 and $0.24 per diluted share, respectively, compared to Q3 and Q4 2021 GAAP EPS of $0.94 and $0.13 per diluted share, respectively. Full-year 2022 GAAP EPS was $0.60 vs. $1.19 last year.
• With Q3 and Q4 2022 non-GAAP EPS of $0.20 and $0.24 per diluted share, respectively, and Q3 and Q4 2021 non-GAAP EPS of $0.17 and $0.20 per diluted share, respectively, A10’s profit accelerated in the second-half of 2022 compared to the second-half of 2021. Full-year 2022 non-GAAP EPS was $0.74 vs. $0.63 last year.
• Adjusted EBITDA of $75.1 million, representing 26.8% of revenue, in line with stated goals for profitability.
• Full-year cash flow from operations increased 31.9% to $66.1 million, compared to $50.1 million in 2021.
• A10 returned more than $95 million to shareholders during 2022, repurchasing approximately 6.1 million shares at an average price of $13.01 per share for a total of $79.3 million and issuing $15.9 million in cash dividends.
“Strong demand for our proprietary security-led solutions drove record revenues for the quarter and the full-year, with continued broad-based growth across both enterprises and service providers and in each key geographic region, on a constant-currency basis,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “Increasingly, A10 is positioned as a diversified, differentiated security solutions provider, structured to mitigate fluctuations from any single customer or region. While we are not immune from recessionary impacts, our industry leadership makes our offerings a priority over discretionary investments. We remain well-positioned for continued success with both enterprise and service provider customers.”
“In 2022 we successfully navigated supply chain constraints, maintained robust gross margins and effectively managed our operating expenses, which drove profitability and free cash flow,” added Trivedi. “With revenue growth that outpaced operating expenses, we were able to grow our bottom line faster than our top line. For the year, we delivered record non-GAAP operating income and EBITDA margins, enabling us to repurchase more than $79.3 million of our stock and return further capital to shareholders through meaningful cash dividends. Simultaneously, we continued to strategically invest in technology, augmenting our already durable differentiators and making our business increasingly resilient. We remain committed to delivering revenue growth that outpaces our peer set, navigating recessionary headwinds better than our peers and delivering solid bottom-line growth, with expected double-digit growth in 2023 full-year non-GAAP EPS. We continue to carry no debt and hold $151.0 million of cash and cash equivalents.”
Conference Call
Management will host a call at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) today, February 7, 2023, to discuss these results. Interested parties may access the conference call by dialing (844) 200-6205 (toll-free) or (929) 526-1599 and referencing access code: 125471.
A live audio webcast of the conference call will be accessible from the “Investor Relations” section of A10 Network’s 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 conclusion of the live call and will run for seven days and may be accessed by dialing (866) 813-9403 (toll-free) or (929) 458-6194 and entering the passcode 897429.
Forward-Looking Statements
This press release contains “forward-looking statements,” including statements regarding our anticipated future financial results, quarterly dividend payments, drivers of growth, strategy, demand, supply chain challenges, positioning, growth and Adjusted EBITDA and non-GAAP EPS expectations. 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 the impact of the COVID-19 pandemic on our business and the business of our customers; a significant decline in global macroeconomic or political conditions that have an adverse impact on our business and financial results; 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 8, 2022. 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), we refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP net income per basic and diluted share (or non-GAAP EPS), non-GAAP gross profit and gross margin, non-GAAP operating income 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 excluding: (i) stock-based compensation and related payroll tax, (ii) impairment of investment, (iii) amortization expense related to acquisition, (iv) global distribution center transition expense, (v) litigation and investigation expense (recovery, (vi) non-recurring facilities expense, (vii) restructuring expense and related taxes, (viii) tax benefit of amended returns and (ix) release of deferred tax asset valuation allowance. We define non-GAAP net income per basic and diluted share as our non-GAAP net income divided by our basic and diluted weighted-average shares outstanding. We define tax effected non-GAAP net income as non-GAAP net income adjusted for the income tax effect of excluding the non-GAAP items (i) to (ix) listed above. We define non-GAAP gross profit as our GAAP gross profit excluding (i) stock-based compensation and related payroll tax, and (ii) global distribution center transition expense. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. We define non-GAAP operating income as our GAAP income from operations excluding (i) stock-based compensation and related payroll tax, (ii) amortization expense related to acquisition and (iii) global distribution center transition expense. We define non-GAAP operating margin as our non-GAAP operating income divided by our GAAP revenue. We define non-GAAP operating expenses as our GAAP operating expenses excluding (i) stock-based compensation and related payroll tax, (ii) amortization expense related to acquisition and (iii) global distribution center transition expense. We define Adjusted EBITDA as our GAAP net income excluding (i) interest and other (income) expense, net, (ii) depreciation and amortization expense, (iii) provision for (benefit from) income taxes, (iv) stock-based compensation and related payroll tax, (v) litigation and investigation expense (recovery), (vi) non-recurring facilities expense, (vi) impairment of investment, (vii) global distribution center transition expense and (ix) restructuring expense.
Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results.