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A10 Networks(ATEN) - 2022 Q1 - Earnings Call Transcript
ATENA10 Networks(ATEN)2022-05-04 02:42
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Financial Data and Key Metrics Changes - Revenue in Q1 2022 was 62.7million,up14.362.7 million, up 14.3% year-over-year [15] - Product revenue was 37 million, representing 59.1% of total revenue, up 21.3% year-over-year [15] - Gross margin in Q1 was 80.2%, with non-GAAP operating income of 11.7millioncomparedto11.7 million compared to 10.8 million in the previous year [17] - Non-GAAP income for the quarter was 10millionor10 million or 0.13 per share, compared to 6.3millionor6.3 million or 0.08 per share on a GAAP basis [18][19] Business Line Data and Key Metrics Changes - Security-led product revenue increased 20.1% year-over-year, with North America being the leading driver [11] - Services revenue, including maintenance and support, was 25.6million,or40.925.6 million, or 40.9% of total revenue [15] - Recurring revenue grew 8.9% year-over-year to 27.9 million, within the target range of 45% to 50% of total revenue [16] Market Data and Key Metrics Changes - Revenue from the Americas grew 25.5% year-over-year to 33million[11]−EMEArevenueincreasedfrom33 million [11] - EMEA revenue increased from 8.6 million to 11.9millionyear−over−year[11]−RevenuefromAsia,includingJapan,declinedfrom11.9 million year-over-year [11] - Revenue from Asia, including Japan, declined from 20 million to 17.8million,impactedbyeconomicconditionsandCOVID−19[11][15]CompanyStrategyandDevelopmentDirection−ThecompanyaimstoachievetheRuleof40,targetingacombinedrevenuegrowthandEBITDAmarginof4017.8 million, impacted by economic conditions and COVID-19 [11][15] Company Strategy and Development Direction - The company aims to achieve the Rule of 40, targeting a combined revenue growth and EBITDA margin of 40% or greater [8] - Focus on integrating security into all networking solutions to differentiate technology offerings [10] - Continued investment in growth opportunities while balancing profitability [12] Management's Comments on Operating Environment and Future Outlook - Management noted that cybersecurity remains a primary growth catalyst, with increasing focus from CIOs and IT leaders on security [9][13] - The company is well-positioned to achieve high-end revenue growth targets of 10% to 12% for the full year [19] - Management expressed confidence in navigating supply chain issues and maintaining operational performance [13] Other Important Information - The company repurchased 28.3 million in stock and returned 3.9milliontoshareholdersindividendsduringthequarter[8][19]−Deferredrevenuewas3.9 million to shareholders in dividends during the quarter [8][19] - Deferred revenue was 121.3 million, up 7.2% year-over-year, consistent with typical seasonality [16] Q&A Session Summary Question: Supply chain challenges and performance consistency - Management highlighted long-term planning and regionalizing supply chains as key strategies to mitigate supply chain issues [23][24] Question: Competitive landscape in the current security environment - Management noted competition primarily from established players in the DDoS marketplace and emphasized the importance of high reliability and expertise over price [25][26] Question: Product gross margin contraction - Management indicated that variations in product mix and input cost inflation were factors affecting gross margin [30][31] Question: Impact of geopolitical events on EMEA - Management observed increased importance of cybersecurity in EMEA, with expectations of budget prioritization despite economic uncertainty [36][38] Question: Order visibility and pipeline conviction - Management discussed refining sales processes and maintaining visibility on project budgets and approvals, indicating improved visibility compared to previous years [50][52]