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“Consistent with our prior comments and expectations, the North American service provider market remains volatile, impacting our quarter-to-quarter visibility,” commented Dhrupad Trivedi, A10 Network’s President and Chief Executive Officer. “While elongated sales cycles have slowed service provider revenue, we continue to believe that we have not lost those customer opportunities to competitors or cancellations, and demand for our security-led solutions remains robust. The Enterprise segment continues to grow in line with our stated strategy. During the second quarter, Enterprise revenue increased 25% and year-to-date, Enterprise revenue was up 7%. We continue to increase our research and development investments, focused on enterprise-targeted solutions and capitalizing on AI-driven market potential, to better position A10 to capture growth opportunities in the future.”

A live audio webcast of the conference call will be accessible from the “Investor Relations” section of A10 Network’s 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 conclusion of the live call and will run for seven days and may be accessed by dialing (866) 813-9403 (toll-free) or (929) 458-6194 and entering the passcode 793093.

This press release contains “forward-looking statements,” including statements regarding our quarterly dividend payments and stock repurchase program, strategy, growth, customer opportunities, demand, positioning, profitability, revenue and expectations for 2024, market trends, investments and return of capital. 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 any unforeseen need for capital which may require us to divert funds we may have otherwise used for the dividend program or stock repurchase program, which may in turn negatively impact our ability to administer the quarterly dividends or the repurchase of our common stock; a significant decline in global macroeconomic or political conditions that have an adverse impact on our business and financial results; 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 February 29, 2024. 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.

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP net income per basic and diluted share (or non-GAAP EPS), non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP operating expenses, Adjusted EBITDA and Adjusted EBITDA margin. 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.

We define non-GAAP net income as our GAAP net income excluding: (i) stock-based compensation and related payroll tax, (ii) restructuring expense, (iii) cyber incident remediation expense, (iv) one-time tax planning expense, (v) one-time legal expense and (vi) income tax effect of non-GAAP items (i) to (v) listed above. 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, (ii) restructuring expense and (iii) cyber incident remediation expense. We define non-GAAP gross margin as our non-GAAP gross profit 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) restructuring expense, (iii) cyber incident remediation expense, (iv) one-time tax planning expense and (v) one-time legal expense. We define non-GAAP operating income as our GAAP income from operations excluding (i) stock-based compensation and related payroll tax, (ii) restructuring expense, (iii) cyber incident remediation expense, (iv) one-time tax planning expense and (v) one-time legal expense. We define non-GAAP operating margin as our non-GAAP operating income divided by our GAAP revenue. We define Adjusted EBITDA as our GAAP net income excluding (i) interest and other (income) expense, net, (ii) depreciation and amortization expense, (iii) provision for income taxes, (iv) stock-based compensation and related payroll tax, (v) restructuring expense, (vi) cyber incident remediation expense, (vii) one-time tax planning expense and (viii) one-time legal expense. We define Adjusted EBITDA margin as our Adjusted EBITDA divided by our GAAP revenue.

A10 Networks (NYSE: ATEN) provides security and infrastructure solutions for on-premises, hybrid cloud, and edge-cloud environments. Our 7000+ customers span global large enterprises and communications, cloud and web service providers who must ensure business-critical applications and networks are secure, available, and efficient. Founded in 2004, A10 Networks is based in San Jose, Calif. and serves customers globally. For more information, visit A10networks.com and follow us at A10Networks.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue:
Products	$	29,533	$	39,090	$	59,602	$	70,272
Services	30,563		26,727		61,169		53,236
Total net revenue	60,096		65,817		120,771		123,508
Cost of net revenue:
Products	6,813		9,436		13,612		15,519
Services	5,225		4,027		9,870		8,160
Total cost of net revenue	12,038		13,463		23,482		23,679
Gross profit	48,058		52,354		97,289		99,829
Operating expenses:
Sales and marketing	19,453		20,868		40,667		43,202
Research and development	14,737		13,965		28,800		25,630
General and administrative	5,952		5,255		12,693		12,564
Total operating expenses	40,142		40,088		82,160		81,396
Income from operations	7,916		12,266		15,129		18,433
Non-operating income, net:
Interest income	1,761		662		3,442		1,635
Other income (expense), net	1,306		1,884		3,632		(334)
Non-operating income, net	3,067		2,546		7,074		1,301
Income before provision for income taxes	10,983		14,812		22,203		19,734
Provision for income taxes	1,507		3,186		3,001		4,150
Net income	$	9,476	$	11,626	$	19,202	$	15,584
Net income per share:
Basic	$	0.13	$	0.16	$	0.26	$	0.21
Diluted	$	0.13	$	0.15	$	0.25	$	0.21
Weighted-average shares used in computing net income per share:
Basic	74,366		74,017		74,401		74,009
Diluted	75,497		75,428		75,432		75,512


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

GAAP net income	$	9,476	$	11,626	$	19,202	$	15,584
Non-GAAP items:
Stock-based compensation and related payroll tax	4,309		3,527		8,298		7,497
Restructuring expense	—		—		—		1,861
Cyber incident remediation expense (recovery)	—		(621)		—		732
One-time tax planning expense	400		—		400		—
One-time legal expense	71		—		71		—
Income tax-effect of non-GAAP items	(1,046)		(3)		(2,017)		(1,218)
Total non-GAAP items	3,734		2,903		6,752		8,872
Non-GAAP net income	$	13,210	$	14,529	$	25,954	$	24,456

GAAP net income per share:
Basic	$	0.13	$	0.16	$	0.26	$	0.21
Diluted	$	0.13	$	0.15	$	0.25	$	0.21
Non-GAAP items:
Stock-based compensation and related payroll tax	0.05		0.05		0.11		0.10
Restructuring expense	—		0.01		—		0.02
Cyber incident remediation expense (recovery)	—		(0.01)		—		0.01
One-time tax planning expense	0.01		—		0.01		—
One-time legal expense	—		—		—		—
Income tax-effect of non-GAAP items	(0.01)		—		(0.03)		(0.02)
Total non-GAAP items	0.05		0.04		0.09		0.12

Non-GAAP net income per share:
Basic	$	0.18	$	0.20	$	0.35	$	0.33
Diluted	$	0.18	$	0.19	$	0.34	$	0.32
Weighted average shares used in computing net income per share:
Basic	74,366		74,017		74,401		74,009
Diluted	75,497		75,428		75,432		75,512

Net income and earnings per share excluding adjustments are non-GAAP financial measures presented as supplemental financial measures to enable a user of the financial information to understand the impact of these adjustments on reported results. These financial measures should not be considered an alternative to net income, operating income, cash flows provided by operating activities, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our adjusted net income and earnings per share may not be comparable to similarly titled measures of another company because companies may not all calculate adjusted net income and earnings per share in the same manner.


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	77,457	$	97,244
Marketable securities	99,682		62,056
Accounts receivable, net of allowances of $676 and $405, respectively	57,395		74,307
Inventory	25,212		23,522
Prepaid expenses and other current assets	15,301		14,695
Total current assets	275,047		271,824
Property and equipment, net	34,012		29,876
Goodwill	1,307		1,307
Deferred tax assets, net	62,327		62,725
Other non-current assets	24,477		24,077
Total assets	$	397,170	$	389,809
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,642	$	7,024
Accrued liabilities	27,398		21,388
Deferred revenue	81,993		82,657
Total current liabilities	115,033		111,069
Deferred revenue, non-current	57,963		58,677
Other non-current liabilities	9,817		12,187
Total liabilities	182,813		181,933

Stockholders' equity:
Common stock, $0.00001 par value: 500,000 shares authorized; 89,580 and 89,003 shares issued and 73,860 and 74,359 shares outstanding, respectively	1		1
Treasury stock, at cost: 15,720 and 14,644 shares, respectively	(165,785)		(150,909)
Additional paid-in-capital	497,520		486,958
Dividends paid	(46,562)		(37,619)
Accumulated other comprehensive income (loss)	465		(71)
Accumulated deficit	(71,282)		(90,484)
Total stockholders' equity	214,357		207,876
Total liabilities and stockholders' equity	$	397,170	$	389,809


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	19,202	$	15,584
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,507		4,307
Stock-based compensation	8,105		7,214
Other non-cash items	(403)		(270)
Changes in operating assets and liabilities:
Accounts receivable	16,695		3,698
Inventory	(3,318)		(1,705)
Prepaid expenses and other assets	(541)		3,827
Accounts payable	(2,859)		(1,460)
Accrued liabilities	3,640		(17,094)
Deferred revenue	(1,378)		4,621

Net cash provided by operating activities	44,650		18,722
Cash flows from investing activities:
Proceeds from sales of marketable securities	22,536		42,252
Proceeds from maturities of marketable securities	47,699		44,532
Purchases of marketable securities	(106,293)		(44,680)
Capital expenditures	(6,414)		(5,065)
Net cash provided by (used in) investing activities	(42,472)		37,039
Cash flows from financing activities:
Proceeds from issuance of common stock under employee equity incentive plans	1,854		2,559

Repurchase of common stock	(14,876)		(6,230)
Payments for dividends	(8,943)		(8,880)
Net cash used in financing activities	(21,965)		(12,551)
Net increase (decrease) in cash and cash equivalents	(19,787)		43,210
Cash and cash equivalents—beginning of period	97,244		67,971
Cash and cash equivalents—end of period	$	77,457	$	111,181

Non-cash investing and financing activities:
Transfers between inventory and property and equipment	$	1,628	$	959
Purchases of property and equipment included in accounts payable	$	1,477	$	1,134


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023

GAAP gross profit	$	48,058		$	52,354		$	97,289		$	99,829
GAAP gross margin	80.0		%	79.5		%	80.6		%	80.8		%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax	563			417			1,034			861
Restructuring expense	—			—			—			42
Cyber incident remediation expense	—			—			—			3
Non-GAAP gross profit	$	48,621		$	52,771		$	98,323		$	100,735
Non-GAAP gross margin	80.9		%	80.2		%	81.4		%	81.6		%


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

GAAP total operating expenses	$	40,142	$	40,088	$	82,160	$	81,396

Non-GAAP adjustments:
Stock-based compensation and related payroll tax	(3,746)		(3,110)		(7,264)		(6,636)
Restructuring expense	—		—		—		(1,819)
Cyber incident remediation recovery (expense)	—		621		—		(729)
One-time tax planning expense	(400)		—		(400)		—
One-time legal expense	(71)		—		(71)		—
Non-GAAP total operating expenses	$	35,925	$	37,599	$	74,425	$	72,212


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023

GAAP income from operations	$	7,916		$	12,266		$	15,129		$	18,433
GAAP operating margin	13.2		%	18.6		%	12.5		%	14.9		%
Non-GAAP adjustments:
Stock-based compensation and related payroll tax	4,309			3,527			8,298			7,497
Restructuring expense	—			—			—			1,861
Cyber incident remediation expense (recovery)	—			(621)			—			732
One-time tax planning expense	400			—			400			—
One-time legal expense	71			—			71			—
Non-GAAP operating income	$	12,696		$	15,172		$	23,898		$	28,523
Non-GAAP operating margin	21.1		%	23.1		%	19.8		%	23.1		%


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023

GAAP net income	$	9,476		$	11,626		$	19,202		$	15,584
GAAP net income margin	15.8		%	17.7		%	15.9		%	12.6		%

Exclude: Interest and other (income) expense, net	(3,067)			(2,546)			(7,074)			(1,301)
Exclude: Depreciation and amortization	2,815			2,202			5,507			4,308
Exclude: Provision for income taxes	1,507			3,186			3,001			4,150
EBITDA	10,731			14,468			20,636			22,741
Exclude: Stock-based compensation and related payroll tax	4,309			3,527			8,298			7,497
Exclude: Restructuring expense	—			—			—			1,861
Exclude: Cyber incident remediation expense (recovery)	—			(621)			—			732
Exclude: One-time tax planning expense	400			—			400			—
Exclude: One-time legal expense	71			—			71			—
Adjusted EBITDA	$	15,511		$	17,374		$	29,405		$	32,831
Adjusted EBITDA margin	25.8		%	26.4		%	24.3		%	26.6		%