A10 Networks (ATEN) Q4 2023 earnings summary

Executive summary

• Q4 revenue was $70.4M, down 9.3% YoY and up 21.9% QoQ as delayed Q3 orders arrived; results met guidance.

• FY23 revenue declined 10.2% to $251.7M; enterprise growth partly offset continued service provider spending weakness.

• Profitability improved despite lower revenue; management expects FY24 non-GAAP EPS growth.

Financial highlights

• Q4 revenue was $70.4M vs. $77.6M in Q4'22; FY23 revenue was $251.7M vs. $280.3M in FY22.

• Q4 GAAP net income was $17.9M, or $0.24 diluted EPS; non-GAAP net income was $18.5M, or $0.25 diluted EPS. FY23 GAAP and non-GAAP net income were $40.0M and $54.9M.

• FY23 adjusted EBITDA was $71.2M vs. $75.1M in FY22; Q4 adjusted EBITDA was $23.9M vs. $22.9M in Q4'22. FY23 non-GAAP operating income was $61.8M vs. $67.0M; Q4 was $21.4M vs. $19.8M.

• FY23 operating cash flow was $43.8M vs. $66.1M in FY22; year-end cash and cash equivalents were $97.2M. Cash and marketable securities were $159.3M.

Outlook and guidance

• FY24 non-GAAP EPS is expected to grow versus FY23; FY23 EPS was flat on a constant-currency basis.

• Target gross margin of 80–82% and adjusted EBITDA margin of 26–28% maintained despite FY23 revenue headwinds.