A10 Networks Inc (ATEN) Q2 2024 Earnings Call Highlights: Navigating Revenue Challenges with ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $60.1 million, a decrease of 8.7% year-over-year.

  • Product Revenue: $29.5 million, representing 49% of total revenue.

  • Services Revenue: $30.6 million, representing 51% of total revenue.

  • Recurring Revenue: Increased 11% compared to the second quarter last year.

  • Deferred Revenue: $140 million as of June 30, 2024, up 6.3% year-over-year.

  • Gross Margin: 80.9%, in line with the target range of 80% to 82%.

  • Adjusted EBITDA: $15.5 million, reflecting 25.8% of total revenue.

  • Non-GAAP Net Income: $13.2 million or $0.18 per diluted share.

  • GAAP Net Income: $9.5 million or $0.13 per diluted share.

  • Cash from Operations: $11.3 million generated during the quarter.

  • Total Cash and Equivalents: $177 million as of June 30, 2024.

  • Dividends and Share Repurchase: $4.5 million in cash dividends paid and $11.8 million worth of shares repurchased.

  • Debt: No debt reported.

Release Date: July 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • A10 Networks Inc (NYSE:ATEN) reported a 25% increase in Enterprise-related revenue, offsetting a 25% decline in the Service Provider segment.

  • The company secured a significant win by displacing a competitor for a major digital communications technology company's hybrid infrastructure solution.

  • A10 Networks Inc (NYSE:ATEN) achieved non-GAAP EPS targets despite market challenges, demonstrating robust profitability.

  • The company's gross margins were in line with the stated goal of 80% to 82%, and adjusted EBITDA margin was nearly 26%.

  • A10 Networks Inc (NYSE:ATEN) continues to invest in AI-based solutions to enhance security offerings, aligning with long-term growth goals.

Negative Points

  • Second quarter revenue decreased by 8.7% year-over-year, primarily due to volatility in the North American Service Provider sector.

  • Product revenue was down 15% year-to-date, representing a challenge in maintaining growth in this segment.

  • Non-GAAP net income for the quarter decreased to $13.2 million from $14.5 million in the year-ago quarter.

  • The North American Service Provider market remains challenging, with projects being delayed and spending levels managed cautiously.

  • Despite strong cash flow, the company faces ongoing revenue headwinds, particularly in the North American Service Provider market.

Q & A Highlights

Q: Are you still seeing service providers come back in the second half, and how are your conversations with them? A: Yes, our service provider conversation is very much North America specific. Outside North America, we have healthy growth. Within North America, service providers continue to manage spending levels, with projects being scoped differently and moved across periods. Our assumptions are based on factors like cost of capital and market uncertainty. We expect steady progress in the Enterprise segment and execution from service providers outside North America. Our second-half plan is not predicated on a sharp snap back in spending from North American service providers.

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