Sign in

You're signed outSign in or to get full access.

AN

A10 Networks, Inc. (ATEN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue grew 11.9% year-over-year to $74.7M, with product revenue up 17% and services up 6%; non-GAAP gross margin was 80.7%, non-GAAP operating margin 24.7%, and adjusted EBITDA $21.9M .
  • Results exceeded Wall Street consensus: non-GAAP EPS $0.23 vs $0.21* and revenue $74.68M vs $70.70M*; 6 EPS and 7 revenue estimates contributed to the consensus* (beat on both). Values retrieved from S&P Global.
  • Americas strength (65% of revenue) and security-led mix above the 65% long-term target drove performance; EMEA benefited from one large project, not a new run-rate .
  • Board approved a $0.06 quarterly dividend payable Dec 1, 2025; $60.1M remains on the $75M buyback authorization .

What Went Well and What Went Wrong

What Went Well

  • Security-led revenue mix exceeded the 65% target, reflecting alignment with AI infrastructure buildouts and customer needs in North America (service providers and enterprises) .
  • Profitability leverage: non-GAAP operating margin expanded to 24.7% (+215 bps YoY), adjusted EBITDA margin reached 29.3%; CFO emphasized operating discipline and cash generation .
  • Strong regional execution: Americas at 65% of revenue; enterprise pipeline expanding; service provider revenue weighted to cloud providers aligned with AI buildouts .
    • CEO: “A10 is well-aligned with this trend, and our offerings are seen as increasingly relevant…” .

What Went Wrong

  • GAAP net income margin declined YoY (16.3% vs 18.9%) amid higher R&D and other operating expenses, despite revenue growth .
  • Macro and tariff uncertainty persisted; management noted uneven telco CapEx and jitter in Americas linearity, plus Japan’s continued softness .
  • EMEA strength in Q3 was driven by a single large project, not a sustained step-up; services revenue growth remains timing-dependent on renewals .

Financial Results

Summary Financials versus prior periods

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$66.7 $66.1 $69.4 $74.7
GAAP Diluted EPS ($)$0.17 $0.13 $0.14 $0.17
Non-GAAP Diluted EPS ($)$0.21 $0.20 $0.21 $0.23
GAAP Gross Margin (%)80.5% 79.7% 78.9% 80.1%
Non-GAAP Gross Margin (%)81.3% 80.9% 80.0% 80.7%
GAAP Operating Margin (%)15.7% 13.3% 14.9% 17.4%
Non-GAAP Operating Margin (%)22.6% 24.4% 23.6% 24.7%
Adjusted EBITDA ($USD Millions)$17.8 $19.5 $19.7 $21.9

Segment breakdown

Segment MetricQ3 2024Q1 2025Q2 2025Q3 2025
Product Revenue ($USD Millions)$36.9 $36.0 $39.2 $43.1
Services Revenue ($USD Millions)$29.9 $30.2 $30.2 $31.6

Customer vertical and geography mix (Q3 2025)

KPIQ3 2025
Enterprise share of revenue (%)36%
Service Provider share of revenue (%)64%
Americas (%)65%
APJ (%)22%
EMEA (%)12%
Security-led revenue mix>65% (above target)

KPIs

KPIQ3 2024Q2 2025Q3 2025
Deferred Revenue ($USD Millions)N/A$144.4 (73.3 current + 71.0 non-current) $143.5
Cash & Investments ($USD Millions)$195.6 $367.4 $371.0
Share Repurchase Authorization Remaining ($USD Millions)N/A$71.1 $60.1

Versus Estimates (Q3 2025)

MetricConsensusActualBeat/Miss
Revenue ($USD)$70,699,430*$74,682,000 Beat*
Non-GAAP EPS ($)$0.2125*$0.23 Beat*
EPS - # of Estimates6*——
Revenue - # of Estimates7*——
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Dividend ($/share)Q4 2025 payment$0.06 (ongoing) $0.06 payable Dec 1, 2025 Maintained
FY Revenue GrowthFY 2025Not previously quantified in filings“Expect full-year growth rate of 10%” Provided / Affirmed
Non-GAAP Gross Margin TargetOngoing80%–82% target“In line with stated goals of 80%–82%” Affirmed
Capital Return – BuybackOngoing$75M authorization (new in Q1) $60.1M remaining Progressed (utilized)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI infrastructure tailwindsQ1: Highlighted ThreatX Protect acquisition to bolster web/app/API security; macro/tariff volatility noted . Q2: Demand from data center expansions and AI infrastructure; selection by global AI data center leaders .Key growth driver; service provider cloud-weighted revenue; Americas strength; security-led mix >65% .Strengthening alignment with AI buildouts.
Security-led product mixQ1: Security-related revenue growing faster than overall . Q2: Reinforced strategic positioning in cybersecurity .Exceeded 65% target in Q3; management intends to maintain/improve .Mix improving toward security.
Regional trendsQ1: Diversification across geographies; monitoring tariffs . Q2: Improving demand; Americas resilient .Americas 65% of revenue; EMEA boosted by one project; Japan slow .Americas strong; EMEA non-repeatable spike.
Service provider dynamicsQ2: Benefited from AI infrastructure investments .Tier-1 CapEx choppy; clarity better where cloud-exposed; tier-2 traction via CG-NAT/virtualization economics .Mixed; selective clarity and tier-2 momentum.
Tariffs/macroQ1: Adversarial trade dynamics and tariff impacts monitored .Americas linearity jitter around tariffs/interest; Japan macro softness .Continuing headwinds but manageable.
R&D and operating leverageQ2: Operating leverage expected to remain key advantage .Margin expansion YoY with higher R&D; adjusted EBITDA 29.3% .Positive leverage despite investment.
Capital allocationQ1: New $75M buyback; dividend maintained . Q2: Continued buybacks/dividends .$11M buyback and $4.3M dividend in Q3; $60.1M buyback remaining; dividend maintained .Ongoing returns.
Competitive landscape (F5 breach)Not discussed.Increased customer conversations; typical enterprise sales cycle 6–9 months .Potential medium-term opportunity.

Management Commentary

  • CEO strategic alignment: “This dynamic is gaining urgency as AI-driven workloads scale… A10 is well‑aligned with this trend, and our offerings are seen as increasingly relevant…” .
  • CFO on profitability discipline: “Non-GAAP gross margin was 80.7%… Operating margin of 24.7%… Adjusted EBITDA was $21.9 million, 29.3% of revenue…” .
  • CEO on regional mix and EMEA: EMEA step-up due to “one big project… not a new step level” .
  • CEO on 2026 setup: aiming for high-single-digit top-line growth with EBITDA 26%–28% and EPS growing faster than revenue .
  • CFO on capital returns: Paid $4.3M in dividends; repurchased $11M of shares; $0.06 dividend approved for Dec 1, 2025 .

Q&A Highlights

  • Security-led mix above 65% goal; management intends to sustain/improve without sacrificing infrastructure revenue .
  • F5 breach context: no negative impact; increased customer interest; enterprise sales cycle typically 6–9 months before potential incremental bookings .
  • AI demand concentration: current upside driven by a few large U.S. customers; broader enterprise engagement underway .
  • Service provider outlook: Tier-1 telco CapEx visibility uneven; better clarity where cloud-exposed; tier-2 progress driven by economic value (CG-NAT/virtualization) .
  • Services revenue: expected to follow product growth with a lag due to renewal cycles .

Estimates Context

  • Q3 2025 results beat consensus on both revenue and EPS: $74.68M actual vs $70.70M* revenue consensus; $0.23 actual non-GAAP EPS vs $0.2125* EPS consensus; 7 revenue and 6 EPS estimates contributed* . Values retrieved from S&P Global.
  • Implication: Estimate revisions likely to move higher for revenue/EPS and potentially margin expectations given operating leverage; watch for analysts to refine FY25 growth to ~10% and update FY26 to 8–10% based on management commentary .

Key Takeaways for Investors

  • Broad-based beat with strong Americas and AI/security tailwinds; stock reaction likely tied to sustained margin leverage and security-led mix above target .
  • Non-GAAP margin expansion and 29.3% adjusted EBITDA underscore operating discipline; cash & investments reached ~$371M, supporting continued buybacks/dividends .
  • EMEA strength was project-specific; normalize regional expectations—focus on U.S. enterprise and cloud-exposed service providers for near-term momentum .
  • Potential share gains amid competitor issues could materialize over a 6–9 month cycle; monitor pipeline conversion into bookings in H1 2026 .
  • Services revenue should follow product growth with a lag, supporting revenue durability into 2026 .
  • Watch macro/tariffs and Japan softness; management sees FY25 ~10% growth and aims for high-single-digit FY26 with 26–28% EBITDA margin .
  • Stable $0.06 dividend and remaining $60.1M buyback capacity provide support to shareholder returns .