A10 Networks (ATEN) AI Stock Analysis

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A10 Networks

(NYSE:ATEN)

77Outperform

A10 Networks scores a robust 77, driven by strong financial performance and a positive earnings call outlook, highlighting growth in the security segment and a solid cash position. The technical analysis is mixed, with some bearish indicators, but valuation appears reasonable with a fair P/E ratio and a modest dividend yield.

Positive Factors

Cash Flow

The company has a growing cash balance of $182.1 million and positive free cash flow, enhancing financial stability.

Earnings

A10 Networks reported better than expected fourth quarter 2024 results, boosting investor confidence.

Revenue Growth

A10 Networks reported fourth quarter revenue of $74.2 million compared to the estimate of $70.7 million, driven by higher product revenue.

Negative Factors

Operating Expenses

Management expects operating expenses as a percent of revenue to increase slightly, implying a slight downtick in EBITDA margins.

Revenue Variability

The variability of orders from certain service providers has resulted in A10 Networks reporting minimal revenue growth.

A10 Networks (ATEN) vs. S&P 500 (SPY)

Market Cap

$1.21B

Dividend Yield1.5%

Average Volume (3M)1.56M

Price to Earnings (P/E)24.5

Beta (1Y)1.06

Revenue Growth3.97%

EPS Growth25.83%

CountryUS

Employees481

SectorTechnology

Sector Strength45

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.67

Shares Outstanding73,952,600

10 Day Avg. Volume970,512

30 Day Avg. Volume1,559,712

Financial Highlights & Ratios

PEG Ratio0.95

Price to Book (P/B)N/A

Price to Sales (P/S)4.89

Price to Cash Flow (P/CF)12.50

P/FCF Ratio12.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$22.33

Price Target Upside36.74% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

A10 Networks Business Overview & Revenue Model

Company DescriptionA10 Networks, Inc. (ATEN) is a leading provider of secure application services and solutions. The company operates within the technology sector, focusing on delivering high-performance application networking, cybersecurity, and cloud solutions. A10 Networks' core products and services include application delivery controllers (ADCs), distributed denial-of-service (DDoS) protection, and network visibility and analytics solutions. These offerings are designed to optimize the security, efficiency, and performance of data centers and cloud infrastructures for enterprises, service providers, and government organizations.

How the Company Makes MoneyA10 Networks generates revenue primarily through the sale of its hardware and software solutions, which include both perpetual licenses and subscription-based models. The company earns money by offering a combination of product sales, including ADCs and DDoS protection appliances, and associated software licenses. Additionally, A10 Networks provides maintenance and support services, which contribute to a recurring revenue stream. Key factors contributing to its earnings include strategic partnerships with global technology distributors and resellers, as well as its ability to innovate and adapt its offerings to meet the evolving needs of the cybersecurity and cloud markets.

A10 Networks Financial Statement Overview

Summary

A10 Networks exhibits strong financial health, characterized by consistent revenue growth, solid profitability, and robust cash flow generation. The balance sheet is particularly strong due to zero debt and high equity levels, minimizing financial risk.

Income Statement

Very Positive

A10 Networks has demonstrated solid profitability with consistent growth in revenue and net income. The gross profit margin and net profit margin are strong, reflecting effective cost management. Revenue growth has been positive over recent years, although there was a dip in 2022. Overall, the EBIT and EBITDA margins indicate robust operational efficiency.

Balance Sheet

Very Positive

The company's balance sheet is healthy, with a strong equity base and zero debt as of the latest period. The equity ratio is favorable, showing a stable financial structure. The return on equity is impressive, reflecting efficient use of equity to generate profits. The absence of debt reduces financial risk.

Cash Flow

Very Positive

A10 Networks has shown strong cash flow generation, with a healthy operating cash flow to net income ratio. Free cash flow has grown significantly, indicating effective capital management. The free cash flow to net income ratio is robust, showcasing the company's ability to convert earnings into cash.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
261.70M	251.70M	280.34M	250.04M	225.53M
	Gross Profit
210.28M	203.74M	223.51M	196.54M	175.38M
	EBIT
43.97M	38.65M	53.08M	33.39M	17.73M
	EBITDA
43.97M	47.99M	60.46M	35.14M	24.74M
	Net Income Common Stockholders
50.14M	39.97M	46.91M	94.89M	17.82M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
195.56M	159.30M	150.99M	185.04M	158.13M
	Total Assets
432.81M	389.81M	369.11M	393.08M	290.81M
	Total Debt
11.94M	16.82M	16.85M	19.32M	23.50M
	Net Debt
-83.19M	-80.42M	-51.13M	-59.61M	-59.78M
	Total Liabilities
200.99M	181.93M	188.09M	184.20M	174.84M
	Stockholders Equity
231.83M	207.88M	181.01M	208.89M	115.97M
Cash Flow		Free Cash Flow
78.22M	33.62M	55.30M	44.93M	51.72M
	Operating Cash Flow
90.49M	44.51M	66.10M	50.10M	55.29M
	Investing Cash Flow
-48.35M	13.61M	11.09M	-38.07M	5.20M
	Financing Cash Flow
-44.26M	-28.85M	-88.14M	-16.38M	-22.95M

A10 Networks Technical Analysis

Technical Analysis Sentiment

Positive

Last Price16.33

Price Trends

50DMA

18.02

Negative

100DMA

18.39

Negative

200DMA

16.23

Positive

Market Momentum

MACD

-0.53

Negative

RSI

48.48

Neutral

STOCH

72.48

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ATEN, the sentiment is Positive. The current price of 16.33 is above the 20-day moving average (MA) of 15.92, below the 50-day MA of 18.02, and above the 200-day MA of 16.23, indicating a neutral trend. The MACD of -0.53 indicates Negative momentum. The RSI at 48.48 is Neutral, neither overbought nor oversold. The STOCH value of 72.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ATEN.

A10 Networks Risk Analysis

A10 Networks disclosed 55 risk factors in its most recent earnings report. A10 Networks reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

A10 Networks Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATEN	77 Outperform	$1.21B	24.52	22.81%	1.50%	3.97%	25.83%
FFIV	77 Outperform	$15.46B	26.68	19.51%	―	3.02%	31.36%
VRNT	67 Neutral	$1.12B	18.42	6.35%	―	-0.13%	263.78%
RDWR	64 Neutral	$899.83M	161.75	2.01%	―	5.20%	―
Sector *	59 Neutral	$10.59B	10.09	-6.37%	3.05%	7.44%	-10.67%
VRNS	56 Neutral	$4.54B	―	-20.26%	―	10.38%	6.88%
NTCT	55 Neutral	$1.44B	―	-24.41%	―	-1.55%	-250.10%

* Technology Sector Average

Performance Comparison

ATEN

A10 Networks

16.50

3.16

23.69%

FFIV

F5 Networks

268.16

86.22

47.39%

NTCT

Netscout Systems

21.04

1.14

5.73%

RDWR

Radware

23.07

6.04

35.47%

VRNT

Verint Systems

17.96

-12.97

-41.93%

VRNS

Varonis Systems

42.28

-3.05

-6.73%

A10 Networks Earnings Call Summary

Earnings Call Date: Feb 4, 2025 | % Change Since: -19.24% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Positive

The earnings call conveyed a generally positive outlook with solid revenue growth, particularly in the security segment, and a strong cash position. Despite some challenges such as spending volatility and gross margin variability, A10 Networks showed resilience and strategic alignment with market trends, including AI and cybersecurity.

Highlights

Revenue Growth

A10 Networks achieved a 5% growth for the quarter and 4% growth for the year. Enterprise customer growth was 6% for the year.

Security-Led Revenue Increase

Security-led revenue increased by 6% for the quarter and 9% for the year, with security representing 63% of total revenue.

Strong Cash and Marketable Securities Position

Ended the year with nearly $200 million in cash and marketable securities, even after significant capital returns to shareholders.

Service Provider Revenue Recovery

Service provider revenue was up 2.5% for the year after being down nearly 8% in the first half, indicating a recovery.

Geographic Growth

Delivered growth in all key regions including North America, Asia Pacific, Japan, and EMEA.

Lowlights

Quarter-to-Quarter Volatility

Quarter-to-quarter volatility in North America service provider sector persists.

Gross Margin Variability

Product gross margin was affected by geographic and product mix, indicating some variability.

Lower Budget Flush in Q4

Observed less of a budget flush phenomenon in Q4 due to increased scrutiny around spending.

Company Guidance

In the A10 Networks Fourth Quarter and Full Year 2024 Financial Results Call, the company provided several key metrics and guidance for the future. A10 reported a 5% growth for the fourth quarter and a 4% growth for the full year 2024. For the fourth quarter, revenue was $74.2 million, with product revenue making up 58% of this at $43.3 million and services revenue comprising 42% at $30.9 million. The non-GAAP gross margin was 80.7%, and adjusted EBITDA was $27.4 million. Non-GAAP net income for Q4 was $23 million, or $0.31 per diluted share. For the full year 2024, A10 reported revenue of $261.7 million, with a non-GAAP gross margin of 81.2% and adjusted EBITDA of $74.5 million. The company highlighted its strong cash position, ending the year with nearly $200 million in cash and marketable securities and continued its commitment to returning capital to shareholders, including a dividend payout and share repurchase program. Looking ahead to 2025, A10 expects continued growth from enterprise customers and an improving competitive position, driven by security and AI-related investments. Security-led revenue increased 6% for Q4 and 9% for the year, with security solutions representing 63% of total revenue for 2024.

A10 Networks Corporate Events

Business Operations and StrategyFinancial Disclosures

A10 Networks Reports Revenue Growth and Strategic Focus

Positive

Feb 4, 2025

On February 4, 2025, A10 Networks announced its fourth-quarter and full-year 2024 financial results, highlighting a 5% revenue growth in Q4 to $74.2 million and a 4% increase for the year to $261.7 million. The company experienced improved demand from service providers, with a notable 8% growth in enterprise revenue, and emphasized its continued focus on operational excellence and investment in enhancing security offerings, positioning itself for sustained growth in 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.