Executive Summary

Q1 2025 delivered broad-based growth: revenue rose 9% year over year to $66.1M, with non-GAAP EPS at $0.20; GAAP EPS held at $0.13. Enterprise +18% YoY; service provider +3% YoY .
Results beat S&P Global consensus on revenue and EPS (Revenue: $66.14M vs $63.70M; EPS non-GAAP: $0.20 vs $0.18). EBITDA trailed consensus due to mix and acquisition-related hosting/support costs in the quarter; management affirmed full-year profitability targets. Values retrieved from S&P Global*. Commentary on margin and acquisition impact from management .
Capital allocation remained shareholder-friendly: $47.0M repurchases (2.4M shares at $19.58) and a $0.06 quarterly dividend; Board authorized a new $75M repurchase program .
Strategic updates: ThreatX Protect acquisition expands WAAP/API security; convertible notes issuance significantly strengthened liquidity (cash & securities $355.8M) while adding $217.7M long-term debt; positions A10 for M&A and investment in AI/security .
Stock reaction catalyst: clear beat on revenue/EPS, enterprise momentum, and capital return acceleration; watch near-term tariff/macro uncertainty and EBITDA normalization vs consensus .

What Went Well and What Went Wrong

What Went Well

Enterprise execution: enterprise revenue +18% YoY; management emphasized durable TTM growth (+12%) and momentum from product/capability investments .
Strategic portfolio expansion: acquisition of ThreatX Protect strengthens WAAP/API security as AI-related threats rise; seen as accretive and aligned with enterprise focus .
Capital allocation and balance sheet: $51.4M returned in Q1 (buybacks + dividend); new $75M buyback; cash & securities increased to $355.8M after convertible notes, providing optionality for M&A and growth .

“Overall, A10 is well-positioned strategically… security-related revenue continues to grow faster than overall revenue” — Dhrupad Trivedi, CEO .

What Went Wrong

EBITDA vs consensus: EBITDA came in below S&P Global consensus as quarter reflected mix and short-term hosting/support costs from the acquisition; management reaffirmed full-year margin targets . Values retrieved from S&P Global*.
Services revenue dynamic: shift toward longer 5-year service agreements reduces near-term service revenue recognition (vs prior 3-year terms), despite rising deferred revenue and visibility .
Macro/tariffs caution: uneven service provider spending and tariff uncertainty could impact input costs and customer timing; management pointed to careful monitoring and shared mitigation with customers .

Financial Results

Headline Metrics vs Prior Periods

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$66.7	$74.2	$66.1
GAAP EPS ($)	$0.17	$0.24	$0.13
Non-GAAP EPS ($)	$0.21	$0.31	$0.20
GAAP Gross Margin (%)	80.5%	79.9%	79.7%
Non-GAAP Gross Margin (%)	81.3%	80.7%	80.9%
GAAP Operating Margin (%)	15.7%	24.8%	13.3%
Non-GAAP Operating Margin (%)	22.6%	32.7%	24.4%
Adjusted EBITDA ($USD Millions)	$17.8	$27.3	$19.5
Adjusted EBITDA Margin (%)	26.7%	36.8%	29.5%
Cash from Operations ($USD Millions)	$21.0	$25.7	$17.2
Total Deferred Revenue ($USD Millions)	$144.2 (Current $89.5 + Non-current $54.7)	$148.3 (Current $78.3 + Non-current $69.9)	$152.7
Cash & Securities ($USD Millions)	$182.1	$195.6	$355.8
Long-term Debt ($USD Millions)	$0	$0	$217.7

Segment and Mix

Revenue Mix	Q3 2024	Q4 2024	Q1 2025
Product ($USD Millions)	$36.9	$43.3	$36.0
Services ($USD Millions)	$29.9	$30.9	$30.2

Customer Verticals	Q1 2024	Q1 2025
Service Provider Revenue ($USD Millions)	$37.3	$39.0
Enterprise Revenue ($USD Millions)	$23.0	$27.1

Geography (Revenue %)	Q1 2025
Americas	51%
APJ	28%
EMEA	21%

S&P Global Consensus vs Actuals (Q1 2025)

Metric	Consensus	Actual
Revenue ($USD)	$63,702,600*	$66,137,000
Primary EPS (non-GAAP) ($)	$0.1792*	$0.20
EBITDA ($USD)	$17,254,000*	$12,174,000

Values retrieved from S&P Global*.

Note: EPS actual reflects non-GAAP EPS reported. EBITDA “actual” reflects GAAP EBITDA per reconciliation; consensus methodologies may differ (GAAP vs non-GAAP), contributing to variance .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA Margin	FY 2025	26%–28% (target)	26%–28% (target reaffirmed)	Maintained
Gross Margin (Non-GAAP)	FY 2025	80%–82% (target)	80%–82% (target reaffirmed)	Maintained
Revenue Growth	FY 2025	None explicitly provided	“Comfortable” with high single-digit YoY growth (qualitative)	Introduced
OpEx	FY 2025	Expect modest pickup to support AI/security investments	Continue investing within margin envelope	Maintained
Dividend	Quarterly	$0.06 per share	$0.06 per share (June 2, 2025)	Maintained
Share Repurchase Authorization	Ongoing	~$50M (nearly exhausted)	New $75M authorization	Raised
Capital Structure	Q1 2025	No long-term debt	$217.7M LT debt; $225M convertible notes issued at 2.75% due 2030	Added debt / Liquidity up

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3/Q4 2024)	Current Period (Q1 2025)	Trend
AI/technology initiatives	Blueprint to integrate AI; security-led revenue 63% in Q3; R&D acceleration and GPU-focused solutions; control platform; AI a spending catalyst	AI driving SP capacity demand; enterprise AI inferencing opportunity over 1–2 years; WAAP/APIs via ThreatX Protect; integration with AI firewall	Strengthening, expanding portfolio; nearer-term SP demand, medium-term enterprise inferencing
Supply chain/manufacturing	No China exposure; regional mix impacts margins; normal refresh cycles; hedging FX exposure in Japan	Considering diversification beyond Taiwan; requalifying lines; monitoring subcomponent tariffs; hedging yen exposure	Building resilience; proactive mitigation
Tariffs/macro	SP normalization into H2 2024; cautious budgets; volatility noted	Tariff uncertainty; customers split between delaying vs pre-buying; net-neutral near term; could pressure input costs	Persistent uncertainty; management monitoring
Product performance/refresh	Normal cycle upgrades; switch in two product lines; shift from service renewals to product	Continued refresh dynamics; mix effects on margins; hosting/support costs from acquisition	Mix effects ongoing; near-term cost impact
Regional trends	North America SP recovering; broad regional growth in Q4	North America relatively strong; APAC impacted by tough comp in Japan	NA improving; APAC lapping strong prior-year
R&D execution	Investments to expand security suite and AI-aligned offerings	Continued investment while maintaining 80–82% GM and 26–28% EBITDA margin targets	Balanced investment with margin discipline
Capital allocation	$0.06 dividend; buybacks; strong cash generation	$0.06 dividend; $75M new buyback; $44.2M repurchases tied to convert proceeds	Accelerated returns; enhanced liquidity

Management Commentary

“A10 continued to deliver solid execution, benefiting from some stabilization in our service provider segment… and steady progress in the enterprise segment.” — Dhrupad Trivedi, CEO .
“Gross margin… in line with our stated goal of 80% to 82%, inclusive of short-term impact from the acquisition… which added hosting and support-related costs.” — Brian Becker, CFO .
“We feel pretty good about being in that range of EBITDA of 26% to 28%… we may face some fluctuation on input costs… with tariffs, and we’ll have to manage OpEx through that.” — Dhrupad Trivedi, CEO .
“We are engaged… to build a more resilient, more flexible footprint globally… it takes time to requalify the line.” — Dhrupad Trivedi on manufacturing diversification .
“Enterprise revenue grew 12% on a trailing 12-month basis… providing an increasingly durable foundation for future growth.” — Dhrupad Trivedi, CEO .

Q&A Highlights

Tariff uncertainty and customer behavior: split between waiting for clarity (e.g., early July) vs pre-buying to hedge; net impact neutral near term; unknowns remain at subcomponent level (chips) .
AI data center visibility: strong first-wave builds across public/private cloud and large enterprises; larger enterprise inferencing opportunity expected over 1–2 years; A10 engaged early .
Revenue trajectory: management “comfortable” with high single-digit growth for FY25, barring macro shifts; continued focus on SP normalization and enterprise growth .
Manufacturing diversification: working with partners to diversify assembly footprint beyond Taiwan; requalification in progress; FX exposure in Japan hedged at contract/receivable level .
Mix and expenses: lower sales & marketing with higher R&D to support AI/security; normal product refresh cycles impacting service vs product mix .

Estimates Context

Q1 2025 beat on revenue and non-GAAP EPS vs S&P Global consensus; EBITDA below consensus, reflecting quarter-specific mix and acquisition cost effects. Values retrieved from S&P Global*.
Street coverage breadth: Revenue estimates count = 5; EPS estimates count = 5 for Q1 2025, indicating moderate analyst coverage*.
Implications: Near-term EPS revisions likely upward given topline and non-GAAP EPS beat; EBITDA models may adjust for acquisition-related costs and mix normalization.
Values retrieved from S&P Global*.

Key Takeaways for Investors

Enterprise momentum and WAAP/API security expansion support sustained mix improvement and higher-quality revenues; medium-term AI inferencing opportunity should drive additional enterprise demand .
Profitability discipline intact: non-GAAP gross margin and EBITDA margin targets reaffirmed; Q1 mix/acquisition costs should normalize, supporting full-year margin framework .
Capital returns accelerating: dividend maintained; buyback capacity increased to $75M; opportunistic repurchases tied to convert offering highlight shareholder-friendly stance .
Balance sheet strength: cash & securities of $355.8M vs $217.7M long-term debt provides ample flexibility for M&A and organic investments in AI/security .
Watch macro/tariffs: input-cost pressures and elongated cycles can create quarterly volatility; management positioned to share/mitigate with customers and diversify manufacturing footprint .
Deferred revenue and longer contract terms enhance visibility: shift to 5-year service agreements drives deferred revenue growth and multi-year revenue durability .
Near-term trading setup: revenue/EPS beat, enterprise momentum, and expanded buyback are positive; monitor EBITDA normalization and tariff headlines for volatility .

A10 Networks, Inc. (ATEN)·Q1 2025 Earnings Summary