Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>ATEN reported first quarter results exhibiting much of the issues that plagued the business in the past couple of years have not fully departed from the industry.</li>
<li>ATEN reported revenue slightly higher than we were projecting resulting in year over year growth.</li>
<li>ATEN’s stock has not reached previous highs with investors most likely waiting for a signal that revenue would surpass 2022 level. This is more likely a 2025 event</li>
</ul>


ATEN reported first quarter results exhibiting much of the issues that plagued the business in the past couple of years have not fully departed from the industry.
ATEN reported revenue slightly higher than we were projecting resulting in year over year growth.
ATEN’s stock has not reached previous highs with investors most likely waiting for a signal that revenue would surpass 2022 level. This is more likely a 2025 event


<ul>
<li>The sales emphasis A10 Networks (ATEN) started to put on winning enterprise customers proved as the enabler for the Company posting sequential growth in the fourth quarter of 2023</li>
<li>ATEN reported results missing our expectations with North American service providers continuing to delay their spending plans.</li>
<li>The customer mix has changed in recent quarters. ATEN is no longer generating two-thirds of its revenue from service providers. In the fourth quarter the figure was 58.4 percent</li>
</ul>


The sales emphasis A10 Networks (ATEN) started to put on winning enterprise customers proved as the enabler for the Company posting sequential growth in the fourth quarter of 2023
ATEN reported results missing our expectations with North American service providers continuing to delay their spending plans.
The customer mix has changed in recent quarters. ATEN is no longer generating two-thirds of its revenue from service providers. In the fourth quarter the figure was 58.4 percent


<ul>
<li>A10 Networks (ATEN) not warning about missing consensus estimates is a positive, but not enough for a victory lap after a volatile 2023</li>
<li>The fourth quarter was of particular importance since the Company had reported third quarter revenue materially below estimates</li>
<li>Service providers represented 50 percent of ATEN’s third quarter revenue compared to 67 percent in prior years. Throughout 2023 this customer base was not consistent with their purchasing</li>
</ul>


A10 Networks (ATEN) not warning about missing consensus estimates is a positive, but not enough for a victory lap after a volatile 2023
The fourth quarter was of particular importance since the Company had reported third quarter revenue materially below estimates
Service providers represented 50 percent of ATEN’s third quarter revenue compared to 67 percent in prior years. Throughout 2023 this customer base was not consistent with their purchasing


<ul>
<li>ATEN reported third quarter results after having already warned there were order push outs towards the end of the period.</li>
<li>ATEN has been trying to diversify the revenue stream to reduce the volatility order flow disruptions could have on the business</li>
<li>ATEN managed to maintain gross margin above 80 percent, a feat that does not get much recognition from investors. ATEN should continue to achieve gross margin above 80 percent</li>
</ul>


ATEN reported third quarter results after having already warned there were order push outs towards the end of the period.
ATEN has been trying to diversify the revenue stream to reduce the volatility order flow disruptions could have on the business
ATEN managed to maintain gross margin above 80 percent, a feat that does not get much recognition from investors. ATEN should continue to achieve gross margin above 80 percent


<ul>
<li>ATEN continues to experience challenges with order timing from some of its largest customers. ATEN lowered Q3 revenue forecast after North American service providers delayed their purchases in the quarter</li>
<li>ATEN has spent the entire year trying to add more enterprise customers to offset this volatility and, while successful, it was not enough in the third quarter.</li>
<li>ATEN is projecting third quarter revenue between $56.5 million and $58.5 million compared to our estimate of $75.3 million.</li>
</ul>


ATEN continues to experience challenges with order timing from some of its largest customers. ATEN lowered Q3 revenue forecast after North American service providers delayed their purchases in the quarter
ATEN has spent the entire year trying to add more enterprise customers to offset this volatility and, while successful, it was not enough in the third quarter.
ATEN is projecting third quarter revenue between $56.5 million and $58.5 million compared to our estimate of $75.3 million.


United States

A10 Networks Inc. provides computer networking products and security solutions. The Company offers application networking platforms and security products to streamline technology operations, including cloud and service providers and application delivery solutions. A10 serves customers in various industries worldwide.

A10 Networks (ATEN US)

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