• Fourth Quarter Revenue: $74.2 million, an increase of 5.4% year-over-year.
• Enterprise Revenue Growth: 8% for the quarter.
• Service Provider Revenue Growth: 4% for the quarter.
• Product Revenue: $43.3 million, representing 58% of total revenue.
• Services Revenue: $30.9 million, or 42% of total revenue.
• Deferred Revenue: Increased 5% to $148.3 million.
• Gross Margin: 80.7% for the fourth quarter.
• Adjusted EBITDA: $27.4 million, reflecting 36.8% of revenue.
• Non-GAAP Net Income: $23 million or $0.31 per diluted share for the quarter.
• GAAP Net Income: $18.3 million or $0.24 per diluted share for the quarter.
• Full Year Revenue: $261.7 million, up 4% year-over-year.
• Year-to-Date Non-GAAP Gross Margin: 81.2%.
• Full Year Adjusted EBITDA: $74.5 million, reflecting 28.5% of revenue.
• Full Year Non-GAAP Net Income: $64.8 million or $0.86 per diluted share.
• Full Year GAAP Net Income: $50.1 million or $0.67 per diluted share.
• Cash from Operations: $90.5 million for the year.
• Total Cash, Cash Equivalents, and Marketable Securities: $195.6 million as of December 31, 2024.
• Cash Dividends Paid: $4.4 million during the quarter.
• Share Repurchase: $5.8 million worth of shares repurchased during the quarter.
• Quarterly Cash Dividend: $0.06 per share approved for March 3, 2025.

• Warning! GuruFocus has detected 7 Warning Sign with ATEN.

Release Date: February 04, 2025

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 5% growth for the fourth quarter and 4% growth for the full year 2024, indicating a positive trend in revenue.
• The company experienced a turnaround in service provider revenue, which was up 2.5% for the year, showing recovery from earlier declines.
• Enterprise customer revenue grew faster than consolidated revenue at 6% for the year, highlighting successful strategic investments in this segment.
• Security-led revenue increased by 6% for the quarter and 9% for the year, aligning with the company's focus on cybersecurity solutions.
• A10 Networks Inc (NYSE:ATEN) ended the year with nearly $200 million in cash and marketable securities, demonstrating strong cash generation and financial stability.

Negative Points

• Quarter-to-quarter volatility in spending patterns, particularly in the North American service provider sector, persists, posing challenges to consistent revenue growth.
• The company did not experience as much of a year-end budget flush as in previous years, indicating tighter spending scrutiny from customers.
• Product gross margins were softer due to geographic and product mix, which could impact overall profitability.
• The impact of tariffs and potential cost pressures from procurement could affect future financial performance.
• A10 Networks Inc (NYSE:ATEN) faces uncertainties related to macroeconomic factors such as interest rates and tariffs, which are beyond its control and could influence future growth.

Q & A Highlights

Q: How did seasonality in Q4 compare to the last couple of years? Did you see a normal budget flush? A: The seasonality in Q4 was consistent with previous years, but there was less of a budget flush phenomenon. This was due to increased scrutiny around spending throughout the year, affecting both CapEx and OpEx.

Q: Can you provide details on the new products coming up this year, particularly those related to AI and security? A: We are expanding our security products, including DDoS detection and bot management, which will enhance our security platform over the next 6-12 months. For AI-oriented products, we expect positive impacts in 2025, particularly in the second half, as AI data centers prioritize throughput and latency.

Q: Could you break out your AI revenue, both from customers building AI data centers and selling AI-enabled products? A: Our current products are used in AI applications, but it's early in the cycle for AI-specific products. We plan to provide more details on customer numbers and funnel growth in future quarters, as these won't convert to revenue immediately.

Q: With service providers normalizing and enterprise traction, could growth in 2025 exceed the 10-12% long-term target? A: We are on a positive trajectory compared to last year, but we are still assessing macroeconomic factors like interest rates and tariffs. We expect to have a clearer view mid-year if growth can exceed expectations.

Q: How should we think about OpEx run rate heading into 2025, given the fluctuations in 2024? A: OpEx will increase slightly to reflect investments in cybersecurity and AI products. However, our long-term goals of 80-82% gross margin and 26-28% EBITDA margin remain unchanged.

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