A10 networks reports 13% organic growth for q4 2021, driving double-digit annual growth
San jose, calif.--(business wire)--a10 networks (nyse: aten), a leading provider of cybersecurity and infrastructure solutions, today announced financial results for its fourth quarter ended december 31, 2021. management will discuss these results and its longer-term strategy at an investor day scheduled for february 2, 2022. to register, learn more about the event, and review attendance options, please visit the a10 investor day page at www.a10networks.com/analyst-day. fourth quarter 2021 financial summary record revenue of $70.7 million, up 12.8% year-over-year. sales of security products grew 22.2% year-over-year. improving commercial execution combined with favorable market conditions drove 26.3% growth in the americas year-over-year. deferred revenue of a record $121.6 million, up 11.9% year-over-year. gaap gross margin of 79.9%; non-gaap gross margin of 80.7% as the company successfully navigated short-term input cost pressures. gaap net income of $10.7 million (15.2% of revenue), or $0.13 per diluted share, compared with net income of $7.8 million, or $0.10 per diluted share in the fourth quarter of 2020. non-gaap net income of $16.4 million (23.3% of revenue), or $0.20 per diluted share, compared with non-gaap net income of $13.9 million, or $0.18 per diluted share in the fourth quarter of 2020. adjusted ebitda of $19.4 million, representing 27.5% of revenues, compared to $16.1 million in the fourth quarter of 2020. full-year 2021 financial summary record revenue of $250.0 million, up 10.9% year-over-year. gaap gross margin of 78.6%; non-gaap gross margin of 79.6%. gaap net income of $94.9 million (37.9% of revenue) inclusive of a $65.4 million non-recurring tax benefit recorded in the third quarter, or $1.19 per diluted share, compared with net income of $17.8 million, or $0.22 per diluted share last year. non-gaap net income of $50.1 million, or $0.63 per diluted share, compared with non-gaap net income of $35.4 million, or $0.44 per diluted share, last year. adjusted ebitda of $62.4 million, representing 25.0% of revenues, compared to $45.6 million last year. cash and cash equivalents and marketable securities as of december 31, 2021 was $185.0 million, up $26.9 million from $158.1 million at december 31, 2020. subsequent to the end of the quarter, the board of directors declared a quarterly dividend of $0.05 per share, payable on march 1, 2022, to stockholders of record on february 15, 2022. for the full-year, the company repurchased 1.7 million shares at an average price of $10.64 per share. a reconciliation between gaap and non-gaap information is contained in the financial statements below. “we are capturing market share and delivering growth that outpaces the overall market due to rapidly accelerating demand for our security-led solutions, as cyber threats continue to increase across the globe,” said dhrupad trivedi, president and chief executive officer of a10 networks. “as a result, we delivered record product sales and accelerating recurring revenue. long-term deferred revenue increased 13.6% in the quarter, outpacing total revenue growth, and our security solutions grew more than 22%, demonstrating our strong position in the cybersecurity ecosystem. increasingly, we are converting this growth into improving market position while returning capital to shareholders through a stock buyback and a cash dividend. with durable tailwinds driving industry leading growth and a proven business model, we have significant momentum and look forward to elaborating on this position in our investor day presentation tomorrow.” first quarter and full-year 2022 outlook based on current visibility, management expects revenue to grow approximately 10-12% year-over-year, both in the first quarter of 2022 and for the full-year. the company expects to maintain its current business model. investor day in lieu of a conference call, management will host an investor day at 11 a.m. et (8 a.m. pt) on wednesday, february 2, 2022. this event will be hosted live at a10’s executive briefing center in san jose and will be available simultaneously via webcast. during this presentation, management will discuss its longer-term financial model. to register, learn more about the event (including a detailed agenda), and review the in-person and virtual attendance options, please visit the a10 investor day page at www.a10networks.com/analyst-day. forward-looking statements this press release contains “forward-looking statements,” including statements regarding our anticipated future financial results, capturing market share, growth accelerating demand, increasing cyber threats, return of capital to shareholders and our positioning. 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 effects of the covid-19 global pandemic on the company and its business, and on the business of its business partners and customers; unanticipated changes in the markets in which the company operates; the effects of the current macroeconomic climate (especially in light of the ongoing adverse effects of the covid-19 global pandemic); 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, and 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, 2021. 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, non-gaap net income per basic and diluted share, non-gaap gross profit and gross margin, non-gaap operating income and operating margin, non-gaap operating expenses, adjusted ebitda and free cash flow. 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) amortization expense related to acquisition, (iii) non-recurring expenses associated with the litigation settlement and internal investigation expense, (iv) global distribution center transition expense, (v) non-recurring facilities expense, and (vi) 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 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, (iii) non-recurring expenses associated with the litigation settlement and internal investigation expense, (iv) global distribution center transition expense, and (v) non-recurring facilities 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, (iii) non-recurring expenses associated with the litigation settlement and internal investigation expense, (iv) global distribution center transition expense, and (v) non-recurring facilities expense. we define adjusted ebitda as our gaap net income excluding (i) interest expense (if any), (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense, (iv) benefit from (provision for) income taxes, (v) stock-based compensation and related payroll tax, (vi) litigation settlement and internal investigation expense, (vii) global distribution center transition expense, and (viii) non-recurring facilities expense. we define free cash flow as net cash provided by operations less capital expenditures. we have included certain of these non-gaap measures 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 https://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. a10 networks, inc. condensed consolidated statements of operations (unaudited, in thousands, except per share amounts, on a gaap basis) three months ended december 31, year ended december 31, 2021 2020 2021 2020 revenue: products $ 43,680 $ 37,738 $ 148,398 $ 129,876 services 26,991 24,917 101,644 95,651 total revenue 70,671 62,655 250,042 225,527 cost of revenue: products 9,460 8,014 32,620 29,109 services 4,722 5,447 20,885 21,039 total cost of revenue 14,182 13,461 53,505 50,148 gross profit 56,489 49,194 196,537 175,379 operating expenses: sales and marketing 25,456 20,079 85,651 77,732 research and development 13,027 15,604 54,077 58,063 general and administrative 6,161 5,725 23,421 21,851 total operating expenses 44,644 41,408 163,149 157,646 income from operations 11,845 7,786 33,388 17,733 non-operating income (expense): interest and other income (expense), net (253 ) 469 (1,746 ) 1,406 total non-operating income (expense), net (253 ) 469 (1,746 ) 1,406 income before income taxes 11,592 8,255 31,642 19,139 benefit from (provision for) income taxes (864 ) (414 ) 63,245 (1,323 ) net income $ 10,728 $ 7,841 $ 94,887 $ 17,816 net income per share: basic $ 0.14 $ 0.10 $ 1.23 $ 0.23 diluted $ 0.13 $ 0.10 $ 1.19 $ 0.22 weighted-average shares used in computing net income per share: basic 77,548 76,638 77,046 77,776 diluted 80,316 78,775 80,037 80,019 a10 networks, inc. reconciliation of gaap net income to non-gaap net income (unaudited, in thousands, except per share amounts) three months ended december 31, year ended december 31, 2021 2020 2021 2020 gaap net income $ 10,728 $ 7,841 $ 94,887 $ 17,816 non-gaap adjustments: stock-based compensation and related payroll tax 3,598 2,947 15,031 12,817 amortization expense related to acquisition — 252 505 1,011 litigation and investigation expense — — — 30 non-recurring facilities expense — — — 795 global distribution center transition expense 2,117 2,884 5,063 2,884 release of deferred tax asset valuation allowance — — (65,417 ) — non-gaap net income $ 16,443 $ 13,924 $ 50,069 $ 35,353 gaap net income per share: basic $ 0.14 $ 0.10 $ 1.23 $ 0.23 diluted $ 0.13 $ 0.10 $ 1.19 $ 0.22 non-gaap adjustments: stock-based compensation and related payroll tax 0.04 0.04 0.19 0.16 amortization expense related to acquisition — — 0.01 0.01 non-recurring facilities expense — — — 0.01 global distribution center transition expense 0.03 0.04 0.06 0.04 release of deferred tax asset valuation allowance — — (0.82 ) — non-gaap net income per share: basic $ 0.21 $ 0.18 $ 0.65 $ 0.45 diluted $ 0.20 $ 0.18 $ 0.63 $ 0.44 weighted-average shares used in computing non-gaap net income per share: basic 77,548 76,638 77,046 77,776 diluted 80,316 78,775 80,037 80,019 a10 networks, inc. condensed consolidated balance sheets (unaudited, in thousands except par value, on a gaap basis) december 31, 2021 december 31, 2020 assets current assets: cash and cash equivalents $ 78,925 $ 83,281 marketable securities 106,117 74,851 accounts receivable, net of allowances of $543 and $41, respectively 61,795 51,051 inventory 22,462 20,730 prepaid expenses and other current assets 14,720 12,390 total current assets 284,019 242,303 property and equipment, net 10,692 7,888 goodwill 1,307 1,307 intangible assets, net — 862 other non-current assets 97,067 38,451 total assets $ 393,085 $ 290,811 liabilities and stockholders’ equity current liabilities: accounts payable $ 6,852 $ 4,851 accrued liabilities 36,101 36,930 deferred revenue 73,132 65,999 total current liabilities 116,085 107,780 deferred revenue, non-current 48,499 42,700 other non-current liabilities 19,613 24,357 total liabilities 184,197 174,837 commitments and contingencies stockholders' equity: common stock, $0.00001 par value: 500,000 shares authorized; 77,423 and 76,346 shares issued and outstanding, respectively 1 1 treasury stock, at cost: 7,294 and 5,578 shares, respectively (55,677 ) (37,410 ) additional paid-in-capital 446,035 425,534 dividends paid (3,880 ) — accumulated other comprehensive income (229 ) 98 accumulated deficit (177,362 ) (272,249 ) total stockholders' equity 208,888 115,974 total liabilities and stockholders' equity $ 393,085 $ 290,811 a10 networks, inc. condensed consolidated statements of cash flows (unaudited, in thousands, on a gaap basis) year ended december 31, 2021 2020 cash flows from operating activities: net income $ 94,887 $ 17,816 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 8,907 11,303 stock-based compensation 14,422 12,310 other non-cash items (63,719 ) 1,066 changes in operating assets and liabilities: accounts receivable (11,025 ) 2,346 inventory (1,826 ) 543 prepaid expenses and other assets (903 ) 1,141 accounts payable 1,995 (2,683 ) accrued and other liabilities (5,573 ) 3,909 deferred revenue 12,932 7,535 net cash provided by operating activities 50,097 55,286 cash flows from investing activities: proceeds from sales of marketable securities 6,865 9,051 proceeds from maturities of marketable securities 88,790 57,707 purchases of marketable securities (128,554 ) (57,992 ) purchases of property and equipment (5,171 ) (3,564 ) net cash provided by (used in) investing activities (38,070 ) 5,202 cash flows from financing activities: proceeds from issuance of common stock under employee equity incentive plans 5,764 9,591 repurchase of common stock (18,267 ) (32,540 ) payments for dividends (3,880 ) — net cash used in financing activities (16,383 ) (22,949 ) net increase (decrease) in cash and cash equivalents (4,356 ) 37,539 cash and cash equivalents—beginning of period $ 83,281 $ 45,742 cash and cash equivalents—end of period $ 78,925 $ 83,281 a10 networks, inc. reconciliation of gaap gross profit to non-gaap gross profit (unaudited, in thousands, except percentages) three months ended december 31, year ended december 31, 2021 2020 2021 2020 gaap gross profit $ 56,489 $ 49,194 $ 196,537 $ 175,379 gaap gross margin 79.9 % 78.5 % 78.6 % 77.8 % non-gaap adjustments: stock-based compensation and related payroll tax 398 385 1,733 1,641 global distribution center transition expense 117 307 655 307 non-gaap gross profit $ 57,004 $ 49,886 $ 198,925 $ 177,327 non-gaap gross margin 80.7 % 79.6 % 79.6 % 78.6 % a10 networks, inc. reconciliation of gaap total operating expenses to non-gaap total operating expenses (unaudited, in thousands) three months ended december 31, year ended december 31, 2021 2020 2021 2020 gaap total operating expenses $ 44,644 $ 41,408 $ 163,149 $ 157,646 non-gaap adjustments: stock-based compensation and related payroll tax (3,200 ) (2,562 ) (13,298 ) (11,176 ) amortization expense related to acquisition — (252 ) (505 ) (1,011 ) litigation and investigation expense — — — (30 ) non-recurring facilities expense — — — (795 ) global distribution center transition expense (2,000 ) (2,577 ) (4,408 ) (2,577 ) non-gaap total operating expenses $ 39,444 $ 36,017 $ 144,938 $ 142,057 a10 networks, inc. reconciliation of gaap income from operations to non-gaap operating income (unaudited, in thousands, except percentages) three months ended december 31, year ended december 31, 2021 2020 2021 2020 gaap income from operations $ 11,845 $ 7,786 $ 33,388 $ 17,733 gaap operating margin 16.8 % 12.4 % 13.4 % 7.9 % non-gaap adjustments: stock-based compensation and related payroll tax 3,598 2,947 15,031 12,817 amortization expense related to acquisition — 252 505 1,011 litigation and investigation expense — — — 30 non-recurring facilities expense — — — 795 global distribution center transition expense 2,117 2,884 5,063 2,884 non-gaap operating income $ 17,560 $ 13,869 $ 53,987 $ 35,270 non-gaap operating margin 24.8 % 22.1 % 21.6 % 15.6 % a10 networks, inc. reconciliation of gaap net income to ebitda and adjusted ebitda (non-gaap) (unaudited, in thousands) three months ended december 31, year ended december 31, 2021 2020 2021 2020 gaap net income $ 10,728 $ 7,841 $ 94,887 $ 17,816 exclude: interest and other (income) expense, net 253 (469 ) 1,746 (1,406 ) exclude: depreciation and amortization expense 1,863 2,531 8,907 11,303 exclude: provision for (benefit from) income taxes 864 414 (63,245 ) 1,323 ebitda 13,708 10,317 42,295 29,036 exclude: stock-based compensation and related payroll tax 3,598 2,947 15,031 12,817 exclude: litigation and investigation expense — — — 30 exclude: non-recurring facilities expense — — — 795 exclude: global distribution center transition expense 2,117 2,884 5,063 2,884 adjusted ebitda $ 19,423 $ 16,148 $ 62,389 $ 45,562
