Business Wire | Feb 9, 2021 04:05PM EST

A10 Networks Reports Record GAAP Net Income of $7.8 Million for Fourth Quarter of 2020

Feb. 09, 2021

SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 09, 2021--A10 Networks (NYSE: ATEN), a leading provider of secure application services and solutions, today announced financial results for its fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Summary

* Revenue of $62.7 million, up 4% year-over-year. * GAAP gross margin of 78.5%; non-GAAP gross margin of 79.6%. * GAAP operating expenses of $41.4 million, non-GAAP operating expenses of $36.0 million. * Record GAAP net income of $7.8 million, or $0.10 per share, compared with $51,000, or $0.00 per share in the fourth quarter of 2019. * Record non-GAAP net income of $13.9 million, or $0.18 per share compared with non-GAAP net income of $7.8 million, or $0.10 per share in the fourth quarter of 2019. * Record Adjusted EBITDA of $16.1 million, an improvement of $6.1 million compared with $10.0 million in the fourth quarter of 2019.

Year 2020 Financial Summary

* Revenue of $225.5 million, compared with $212.6 million in 2019. * GAAP gross margin of 77.8%; non-GAAP gross margin of 78.6%. * GAAP operating margin of 7.9%; non-GAAP operating margin of 15.6%. * GAAP net income of $17.8 million, or $0.22 per share, compared with a GAAP net loss of $17.8 million, or $0.23 per share in 2019, non-GAAP net income of $35.3 million, or $0.44 per share. * Adjusted EBITDA of $45.6 million, an improvement of $33.9 million compared with $11.6 million in 2019. * Ended the year with $158.1 million in cash and cash equivalents, after $32.5 million of total stock repurchase activity, including $19.2 million as part of the Company's $50 million share repurchase plan, compared to $129.9 million dollars as of December 31, 2019.

A reconciliation between GAAP and non-GAAP information is contained in the financial statements below.

"This was a dynamic year for A10, as we increased full-year earnings by $36 million compared to last year's $18 million loss while successfully navigating a challenging economy," said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. "Our solutions-based sales focus and market strategy also enabled us to deliver 6% year-over-year growth, versus negative organic growth last year, and our focus on execution and cost discipline drove $55.3 million in cash from operations, funding a sizable stock buyback while preserving the strong balance sheet position to navigate uncertain markets. Our strategic focus is to drive our portfolio and continue to invest in faster growth opportunities like cybersecurity, 5G and cloud - leveraging our historic leadership position in those markets."

"The operational and commercial foundation provide us with the ability to further build our recurring revenue in line with our customers' preference and their business priorities," continued Trivedi. "We expect this portion to grow faster than our overall revenue growth. We enjoy broad and sustainable industry tailwinds, particularly in the areas of 5G, multi-cloud and cybersecurity, bolstered by our industry leading solutions for these growing areas of focus. A10 enters 2021 in a strong position, with leading products, a proven team, and a solid balance sheet. We plan to leverage this strong position to increase our focus on portfolio management, with the goal of increasing our recurring revenue."

Conference Call Information

A10 Networks will host a conference call today at 4:30 p.m. Eastern time / 1:30 p.m. Pacific time for analysts and investors to discuss its fourth quarter and full year 2020 financial results. Open to the public, interested parties may access the conference call by dialing 1-844-792-3728 or 1-412-317-5105. A live audio webcast of the conference call will be accessible from the "Investor Relations" section of A10 Networks' 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 call and will run for seven business days and may be accessed by dialing 1-877-344-7529 or 1-412-317-0088 and entering the passcode 10151378. A presentation with management's prepared remarks and supplemental financial information will be posted to the website following the issuance of the company's fourth quarter and full year 2020 results press release after U.S. markets close on Tuesday, February 9, 2021. These materials will be accessible from the "Investor Relations" section of A10 Network's website at investors.a10networks.com.

Forward-Looking Statements

This press release contains "forward-looking statements," including statements regarding our strategic focus, portfolio management, investment in growth opportunities, revenue growth, including recurring revenue, industry tailwinds 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 impact of the COVID-19 pandemic, including public health requirements in response thereto, on our business and operations, which is evolving and beyond our control, and its impact on the timing of customer orders and product shipments; members of our management team or a significant number of our global employee base becoming ill with COVID-19; changes in government regulations and mandates to address COVID-19 that may adversely impact our ability to continue to operate without disruption; a significant decline in global macroeconomic conditions that have an adverse impact on our business and financial results; challenges to our infrastructure because of the number of employees working from remote locations; 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 10, 2020. 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 (loss), non-GAAP net income (loss) per basic and diluted share, non-GAAP gross profit and gross margin, non-GAAP operating income (loss) 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 (loss) 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 (recovery), (iv) restructuring expense and related tax, and (v) non-recurring facilities expense. We define non-GAAP net income per basic and diluted share as our non-GAAP net income (loss) 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 portfolio rationalization expense. We define non-GAAP gross margin as our non-GAAP gross profit divided by our GAAP revenue. We define non-GAAP operating income (loss) as our GAAP income (loss) 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 (recovery), (iv) restructuring expense, (v) global portfolio rationalization expense, and (vi) non-recurring facilities expense. We define non-GAAP operating margin as our non-GAAP operating income (loss) 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 (recovery), (iv) restructuring expense, (v) global portfolio rationalization expense, and (vi) non-recurring facilities expense. We define Adjusted EBITDA as our GAAP net income (loss) excluding (i) interest expense, (ii) interest income and other (income) expense, net, (iii) depreciation and amortization expense, (iv) provision for income taxes, (v) stock-based compensation and related payroll tax, (vi) litigation settlement and internal investigation expense (recovery), (vii) restructuring expense, (viii) global portfolio rationalization expense, and (ix) non-recurring facilities expense.

We have included our non-GAAP net income (loss), non-GAAP gross profit and gross margin, non-GAAP operating income (loss) and operating margin, non-GAAP operating expenses and Adjusted EBITDA 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 Year Ended December 31, December 31,

2020 2019 2020 2019

Revenue:

Products $ 37,738 $ 36,853 $ 129,876 $ 121,920

Services 24,917 23,463 95,651 90,708

Total revenue 62,655 60,316 225,527 212,628

Cost of revenue:

Products 8,014 8,301 29,109 29,816

Services 5,447 5,139 21,039 19,065

Total cost of revenue 13,461 13,440 50,148 48,881

Gross profit 49,194 46,876 175,379 163,747

Operating expenses:

Sales and marketing 20,079 22,618 77,732 92,783

Research and development 15,604 15,257 58,063 61,824

General and administrative 5,725 6,393 21,851 23,704

Restructuring expense - 2,530 - 2,530

Total operating expenses 41,408 46,798 157,646 180,841

Income (loss) from 7,786 78 17,733 (17,094 )operations

Non-operating income (expense):

Interest expense - (15 ) (1 ) (237 )

Interest and other income, 469 522 1,407 919 net

Total non-operating income, 469 507 1,406 682 net

Income (loss) before 8,255 585 19,139 (16,412 )provision for income taxes

Provision for income taxes 414 534 1,323 1,407

Net income (loss) $ 7,841 $ 51 $ 17,816 $ (17,819 )

Net income (loss) per share:

Basic $ 0.10 $ - $ 0.23 $ (0.23 )

Diluted $ 0.10 $ - $ 0.22 $ (0.23 )

Weighted-average sharesused in computing net income (loss) per share:

Basic 76,638 77,147 77,776 76,080

Diluted 78,775 79,248 80,019 76,080

A10 NETWORKS, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

GAAP net income (loss)

$

7,841

$

51

$

17,816

$

(17,819

)

Non-GAAP adjustments:

Stock-based compensation and related payroll tax

2,947

4,332

12,817

16,790

Amortization expense related to acquisition

252

253

1,011

1,012

Litigation and investigation expense (recovery)

-

43

30

(1,066

)

Non-recurring facilities expense

-

425

795

425

Global portfolio rationalization expense

2,884

-

2,884

-

Restructuring expense and related taxes

-

2,676

-

2,676

Non-GAAP net income

$

13,924

$

7,780

$

35,353

$

2,018

GAAP net income per share:

Basic

$

0.10

$

-

$

0.23

$

(0.23

)

Diluted

$

0.10

$

-

$

0.22

$

(0.23

)

Non-GAAP adjustments:

Stock-based compensation and related payroll tax

0.04

0.05

0.16

0.21

Amortization expense related to acquisition

-

-

0.01

0.01

Litigation and investigation expense (recovery)

-

-

-

(0.01

)

Non-recurring facilities expense

-

0.01

0.01

0.01

Global portfolio rationalization expense

0.04

-

0.04

-

Restructuring expense and related taxes

-

0.03

-

0.03

Non-GAAP net income (loss) per share:

Basic

$

0.18

$

0.10

$

0.45

$

0.03

Diluted

$

0.18

$

0.10

$

0.44

$

0.03

Weighted-average shares used in computing non-GAAP net income per share:

Basic

76,638

77,147

77,776

76,080

Diluted

78,775

79,248

80,019

78,487

A10 NETWORKS, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

GAAP net income (loss) $ 7,841 $ 51 $ 17,816 $ (17,819 )

Non-GAAP adjustments:

Stock-based compensation 2,947 4,332 12,817 16,790 and related payroll tax

Amortization expense 252 253 1,011 1,012 related to acquisition

Litigation andinvestigation expense - 43 30 (1,066 ) (recovery)

Non-recurring facilities - 425 795 425 expense

Global portfolio 2,884 - 2,884 - rationalization expense

Restructuring expense and - 2,676 - 2,676 related taxes

Non-GAAP net income $ 13,924 $ 7,780 $ 35,353 $ 2,018





GAAP net income per share:

Basic $ 0.10 $ - $ 0.23 $ (0.23 )

Diluted $ 0.10 $ - $ 0.22 $ (0.23 )

Non-GAAP adjustments:

Stock-based compensation 0.04 0.05 0.16 0.21 and related payroll tax

Amortization expense - - 0.01 0.01 related to acquisition

Litigation andinvestigation expense - - - (0.01 ) (recovery)

Non-recurring facilities - 0.01 0.01 0.01 expense

Global portfolio 0.04 - 0.04 - rationalization expense

Restructuring expense and - 0.03 - 0.03 related taxes

Non-GAAP net income (loss) per share:

Basic $ 0.18 $ 0.10 $ 0.45 $ 0.03

Diluted $ 0.18 $ 0.10 $ 0.44 $ 0.03

Weighted-average sharesused in computing non-GAAP net income pershare:

Basic 76,638 77,147 77,776 76,080

Diluted 78,775 79,248 80,019 78,487

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except par value, on a GAAP Basis)

December 31, 2020

December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents

$

83,281

$

45,742

Marketable securities

74,851

84,180

Accounts receivable, net of allowances of $41 and $52, respectively

51,051

53,566

Inventory

20,730

22,384

Prepaid expenses and other current assets

12,390

15,067

Total current assets

242,303

220,939

Property and equipment, net

7,888

7,656

Goodwill

1,307

1,307

Intangible assets, net

862

2,305

Other non-current assets

38,451

41,846

Total assets

$

290,811

$

274,053

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

4,851

$

7,592

Accrued liabilities

36,930

27,756

Deferred revenue

65,999

62,233

Total current liabilities

107,780

97,581

Deferred revenue, non-current

42,700

38,931

Other non-current liabilities

24,357

28,754

Total liabilities

174,837

165,266

Commitments and contingencies

Stockholders' equity:

Common stock, $0.00001 par value: 500,000 shares authorized; 76,346 and 77,580 shares issued and outstanding, respectively

1

1

Treasury stock

(32,540

)

-

Additional paid-in-capital

420,664

398,600

Accumulated other comprehensive income

98

251

Accumulated deficit

(272,249

)

(290,065

)

Total stockholders' equity

115,974

108,787

Total liabilities and stockholders' equity

$

290,811

$

274,053

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except par value, on a GAAP Basis)

December December 31, 31, 2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 83,281 $ 45,742

Marketable securities 74,851 84,180

Accounts receivable, net of allowances of $41 and 51,051 53,566 $52, respectively

Inventory 20,730 22,384

Prepaid expenses and other current assets 12,390 15,067

Total current assets 242,303 220,939

Property and equipment, net 7,888 7,656

Goodwill 1,307 1,307

Intangible assets, net 862 2,305

Other non-current assets 38,451 41,846

Total assets $ 290,811 $ 274,053

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 4,851 $ 7,592

Accrued liabilities 36,930 27,756

Deferred revenue 65,999 62,233

Total current liabilities 107,780 97,581

Deferred revenue, non-current 42,700 38,931

Other non-current liabilities 24,357 28,754

Total liabilities 174,837 165,266

Commitments and contingencies

Stockholders' equity:

Common stock, $0.00001 par value: 500,000 sharesauthorized; 76,346 and 77,580 shares issued and 1 1 outstanding, respectively

Treasury stock (32,540 ) -

Additional paid-in-capital 420,664 398,600

Accumulated other comprehensive income 98 251

Accumulated deficit (272,249 ) (290,065 )

Total stockholders' equity 115,974 108,787

Total liabilities and stockholders' equity $ 290,811 $ 274,053

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands, on a GAAP Basis)

Year Ended

December 31,

2020

2019

Cash flows from operating activities:

Net income (loss)

$

17,816

$

(17,819

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

11,303

10,028

Stock-based compensation

12,310

16,529

Other non-cash items

1,066

(343

)

Changes in operating assets and liabilities:

Accounts receivable

2,346

599

Inventory

543

(5,648

)

Prepaid expenses and other assets

1,141

(452

)

Accounts payable

(2,683

)

(621

)

Accrued and other liabilities

3,909

(5,897

)

Deferred revenue

7,535

3,198

Net cash provided by (used in) operating activities

55,286

(426

)

Cash flows from investing activities:

Proceeds from sales of marketable securities

9,051

32,200

Proceeds from maturities of marketable securities

57,707

43,525

Purchases of marketable securities

(57,992

)

(71,636

)

Purchases of property and equipment

(3,564

)

(4,340

)

Net cash provided by (used in) investing activities

5,202

(251

)

Cash flows from financing activities:

Proceeds from issuance of common stock under employee equity incentive plans

9,591

5,798

Repurchase of common stock

(32,540

)

-

Net cash provided by (used in) financing activities

(22,949

)

5,798

Net increase in cash and cash equivalents

37,539

5,121

Cash and cash equivalents-beginning of period

$

45,742

$

40,621

Cash and cash equivalents-end of period

$

83,281

$

45,742

A10 NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands, on a GAAP Basis)

Year Ended December 31,

2020 2019

Cash flows from operating activities:

Net income (loss) $ 17,816 $ (17,819 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 11,303 10,028

Stock-based compensation 12,310 16,529

Other non-cash items 1,066 (343 )

Changes in operating assets and liabilities:

Accounts receivable 2,346 599

Inventory 543 (5,648 )

Prepaid expenses and other assets 1,141 (452 )

Accounts payable (2,683 ) (621 )

Accrued and other liabilities 3,909 (5,897 )

Deferred revenue 7,535 3,198

Net cash provided by (used in) operating activities 55,286 (426 )

Cash flows from investing activities:

Proceeds from sales of marketable securities 9,051 32,200

Proceeds from maturities of marketable securities 57,707 43,525

Purchases of marketable securities (57,992 ) (71,636 )

Purchases of property and equipment (3,564 ) (4,340 )

Net cash provided by (used in) investing activities 5,202 (251 )

Cash flows from financing activities:

Proceeds from issuance of common stock under employee 9,591 5,798 equity incentive plans

Repurchase of common stock (32,540 ) -

Net cash provided by (used in) financing activities (22,949 ) 5,798

Net increase in cash and cash equivalents 37,539 5,121

Cash and cash equivalents-beginning of period $ 45,742 $ 40,621

Cash and cash equivalents-end of period $ 83,281 $ 45,742



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,

2020

2019

2020

2019

GAAP gross profit

$

49,194

$

46,876

$

175,379

$

163,747

GAAP gross margin

78.5

%

77.7

%

77.8

%

77.0

%

Non-GAAP adjustments:

Stock-based compensation and related payroll tax

385

466

1,641

1,592

Global portfolio rationalization expense

307

-

307

-

Non-GAAP gross profit

$

49,886

$

47,342

$

177,327

$

165,339

Non-GAAP gross margin

79.6

%

78.5

%

78.6

%

77.8

%

A10 NETWORKS, INC.

RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT

(unaudited, in thousands, except percentages)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

GAAP gross profit $ 49,194 $ 46,876 $ 175,379 $ 163,747

GAAP gross margin 78.5 % 77.7 % 77.8 % 77.0 %

Non-GAAP adjustments:

Stock-based compensation 385 466 1,641 1,592 and related payroll tax

Global portfolio 307 - 307 - rationalization expense

Non-GAAP gross profit $ 49,886 $ 47,342 $ 177,327 $ 165,339

Non-GAAP gross margin 79.6 % 78.5 % 78.6 % 77.8 %



A10 NETWORKS, INC.

RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES TO

TO NON-GAAP TOTAL OPERATING EXPENSES

(unaudited, in thousands)

Three Months Ended

December 31,

Year Ended

December 31,

2020

2019

2020

2019

GAAP total operating expenses

$

41,408

$

46,798

$

157,646

$

180,841

Non-GAAP adjustments:

Stock-based compensation and related payroll tax

(2,562

)

(3,866

)

(11,176

)

(15,197

)

Amortization expense related to acquisition

(252

)

(253

)

(1,011

)

(1,012

)

Litigation and investigation (expense) recovery

-

(43

)

(30

)

1,066

Non-recurring facilities expense

-

(425

)

(795

)

(425

)

Global portfolio rationalization expense

(2,577

)

-

(2,577

)

-

Restructuring expense

-

(2,530

)

-

(2,530

)

Non-GAAP total operating expenses

$

36,017

$

39,681

$

142,057

$

162,743

A10 NETWORKS, INC.

RECONCILIATION OF GAAP TOTAL OPERATING EXPENSES TO

TO NON-GAAP TOTAL OPERATING EXPENSES

(unaudited, in thousands)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

GAAP total $ 41,408 $ 46,798 $ 157,646 $ 180,841 operating expenses



Non-GAAP adjustments:

Stock-basedcompensation and (2,562 ) (3,866 ) (11,176 ) (15,197 ) related payroll tax

Amortizationexpense related to (252 ) (253 ) (1,011 ) (1,012 ) acquisition

Litigation andinvestigation - (43 ) (30 ) 1,066 (expense) recovery

Non-recurring - (425 ) (795 ) (425 ) facilities expense

Global portfoliorationalization (2,577 ) - (2,577 ) - expense

Restructuring - (2,530 ) - (2,530 ) expense

Non-GAAP total $ 36,017 $ 39,681 $ 142,057 $ 162,743 operating expenses



A10 NETWORKS, INC.

RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS

TO NON-GAAP OPERATING INCOME (LOSS)

(unaudited, in thousands, except percentages)

Three Months Ended

December 31,

Year Ended

December 31,

2020

2019

2020

2019

GAAP income (loss) from operations

$

7,786

$

78

$

17,733

$

(17,094)

GAAP operating margin

12.4

%

0.1

%

7.9

%

(8.0

)%

Non-GAAP adjustments:

Stock-based compensation and related payroll tax

2,947

4,332

12,817

16,790

Amortization expense related to acquisition

252

253

1,011

1,012

Litigation and investigation expense (recovery)

-

43

30

(1,066)

Non-recurring facilities expense

-

425

795

425

Global portfolio rationalization expense

2,884

-

2,884

-

Restructuring expense

-

2,530

-

2,530

Non-GAAP operating income

$

13,869

$

7,661

$

35,270

$

2,597

Non-GAAP operating margin

22.1

%

12.7

%

15.6

%

1.2

%

A10 NETWORKS, INC.

RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS

TO NON-GAAP OPERATING INCOME (LOSS)

(unaudited, in thousands, except percentages)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

GAAP income (loss) from $ 7,786 $ 78 $ 17,733 $ (17,094) operations

GAAP operating margin 12.4 % 0.1 % 7.9 % (8.0 ) %

Non-GAAP adjustments:

Stock-based compensation and 2,947 4,332 12,817 16,790 related payroll tax

Amortization expense related 252 253 1,011 1,012 to acquisition

Litigation and investigation - 43 30 (1,066) expense (recovery)

Non-recurring facilities - 425 795 425 expense

Global portfolio 2,884 - 2,884 - rationalization expense

Restructuring expense - 2,530 - 2,530

Non-GAAP operating income $ 13,869 $ 7,661 $ 35,270 $ 2,597

Non-GAAP operating margin 22.1 % 12.7 % 15.6 % 1.2 %

A10 NETWORKS, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO

EBITDA AND ADJUSTED EBITDA (NON-GAAP)

(unaudited, in thousands)

Three Months Ended

December 31,

Year Ended

December 31,

2020

2019

2020

2019

GAAP net income (loss)

$

7,841

$

51

$

17,816

$

(17,819

)

Exclude: Interest expense

-

15

1

237

Exclude: Interest and other income, net

(469

)

(522

)

(1,407

)

(919

)

Exclude: Depreciation and amortization expense

2,531

2,595

11,303

10,028

Exclude: Provision for income taxes

414

534

1,323

1,407

EBITDA

10,317

2,673

29,036

(7,066

)

Exclude: Stock-based compensation and related payroll tax

2,947

4,332

12,817

16,790

Exclude: Litigation and investigation expense (recovery)

-

43

30

(1,066

)

Exclude: Non-recurring facilities expense

-

425

795

425

Exclude: Global portfolio rationalization expense

2,884

-

2,884

-

Exclude: Restructuring expense

-

2,530

-

2,530

Adjusted EBITDA

$

16,148

$

10,003

$

45,562

$

11,613

View source version on businesswire.com: https://www.businesswire.com/news/home/20210209006111/en/

CONTACT: Investor Contact: Rob Fink FNK IR 646.809.4048 aten@fnkir.com

CONTACT: Brian Becker Interim Chief Financial Officer investors@a10networks.com