A10 Networks (ATEN) Q4 2020 earnings summary

Executive summary

• FY20 revenue grew 6% YoY to $225.5M, reversing the 8% decline in FY19; net income was $17.8M after losses in the prior two years.

• Focus areas for 2021 include security-led portfolio development, 5G readiness, hybrid cloud adoption, recurring revenue growth, and continued productivity gains.

• Operations adapted to pandemic-related remote work while prioritizing employee safety, profitability, and operational execution.

Financial highlights

• Revenue was $225.5M, up 6% YoY; products revenue rose 7% to $129.9M and services revenue rose 5% to $95.7M.

• Gross profit increased 7% to $175.4M; gross margin was 77.8%, up from 77.0% in 2019.

• Operating income was $17.7M versus an operating loss of $17.1M in 2019; net income was $17.8M versus a net loss of $17.8M.

• Diluted EPS was $0.22 versus a loss of $0.23 per share in 2019; income tax provision was $1.3M.

• Operating cash flow was $55.3M versus $0.4M used in 2019; cash and cash equivalents plus marketable securities totaled $158.1M at year-end.

Outlook and guidance

• 2021 priorities: optimize the portfolio for security, 5G/5G readiness and hybrid cloud, and increase recurring revenue.

• Sales and marketing, R&D, and G&A expenses were each expected to remain at 2020 levels as cost control continued.

• Long-term investment in product development, global sales and marketing, channel programs, and awareness may affect short-term profitability.

• Quarterly quantitative revenue and earnings guidance was temporarily suspended amid COVID-19 uncertainty.

• Management expected available cash and marketable securities to cover anticipated needs for at least 12 months.