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A10 Networks (ATEN)
NYSE:ATEN

A10 Networks (ATEN) AI Stock Analysis

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A10 Networks

(NYSE:ATEN)

Rating:74Outperform
Price Target:
$19.00
▲(7.47%Upside)
A10 Networks has a strong financial foundation with solid profitability and a positive earnings outlook. While there are concerns about valuation and leverage, the company's strategic initiatives and cash flow management provide a buffer. Technical indicators show moderate bullish momentum, but caution is advised due to neutral RSI and stochastic signals.
Positive Factors
Customer Base Expansion
A10 Networks was successful in gaining more enterprise customers, continuing the trend in diversifying its revenue base away from service.
Financial Performance
A10 Networks reported better than expected first quarter results as both products and services revenue rose from the year ago period.
Revenue Growth
The return to revenue growth has helped give A10 Networks' stock a lift in recent months.
Negative Factors
Cost Management
Management expects opex as a percent of revenue to increase slightly in 2025, implying a slight downtick in EBITDA margins this year.
Operational Challenges
Management appeared cautiously optimistic on the potential for a sustained turnaround in service provider spending trends and the opportunity to further expand its security portfolio.

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

A10 Networks Business Overview & Revenue Model

Company DescriptionA10 Networks (ATEN) is a technology company that specializes in the development of advanced application networking solutions. The company provides a range of products and services designed to optimize the performance, availability, and security of data centers and cloud environments. A10 Networks' core offerings include application delivery controllers (ADCs), threat protection solutions, and secure application services that enable businesses to ensure reliable and secure application delivery across multi-cloud networks.
How the Company Makes MoneyA10 Networks generates revenue primarily through the sale of its software and hardware products, including application delivery controllers and security solutions. The company operates a revenue model based on direct sales, as well as channel partners and distributors who help extend its market reach. Additionally, A10 Networks offers maintenance and support services, which provide a recurring revenue stream. Strategic partnerships with cloud service providers and enterprises further bolster its revenue by integrating A10's solutions into broader digital transformation initiatives.

A10 Networks Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 7.80%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive outlook with strong revenue growth and strategic acquisitions, particularly in the enterprise segment. However, there were noted challenges in the service provider segment and uncertainties related to tariffs and regional market dynamics.
Q1-2025 Updates
Positive Updates
Overall Revenue Growth
A10 Networks reported a 9% increase in revenue year-over-year, with significant contributions from both enterprise and service provider segments.
Enterprise Revenue Surge
Enterprise revenue grew by 18% year-over-year and 12% on a trailing 12-month basis, indicating a strong foundation for future growth.
Strong Cash Position
The company ended the quarter with $355.8 million in cash, cash equivalents, and marketable securities, significantly up from $195.6 million at the end of 2024.
Acquisition of ThreatXProtect
A10 Networks acquired ThreatXProtect, enhancing its cybersecurity portfolio with web application and API protection, a strategic move to expand its enterprise market relevance.
Stable Gross Margin
Gross margin was maintained at 80.9%, aligning with the company's target range of 80% to 82%.
Negative Updates
Service Provider Revenue Volatility
Service provider revenue showed only a modest 3% increase year-over-year, with ongoing quarter-to-quarter volatility.
Impact of Tariff Uncertainty
Customer caution and spending delays were noted due to uncertainties surrounding tariffs and macroeconomic conditions.
Asia Pacific Revenue Decline
Revenue in the Asia Pacific was impacted by strong Q1 performance last year in Japan, indicating a year-over-year decline in this region.
Company Guidance
During the A10 Networks First Quarter 2025 Financial Results call, various metrics were highlighted, showcasing the company's performance and strategic initiatives. A10 Networks reported a 9% year-over-year revenue growth, with enterprise revenue increasing by 18% and service provider revenue by 3%. On a trailing 12-month basis, enterprise revenue grew 12%, indicating a stable foundation for future growth. The company's adjusted EBITDA was $19.5 million, representing 29.5% of revenue, while non-GAAP net income was $15 million, or $0.20 per diluted share. A10 Networks generated $15.2 million in cash from operations and had $355.8 million in cash, cash equivalents, and marketable securities by the end of the quarter. Additionally, the company issued $200 million in convertible senior notes, increasing its long-term debt to $217.7 million. The board approved a quarterly cash dividend of $0.06 per share and initiated a new $75 million share repurchase program. A10 Networks targets gross margins of 80% to 82% and adjusted EBITDA margins of 26% to 28% for the full year.

A10 Networks Financial Statement Overview

Summary
A10 Networks shows strong financial health with robust profitability and efficient cash flow management. The company maintains solid margins and shareholder returns, but high leverage and slowing revenue growth pose potential risks.
Income Statement
75
Positive
A10 Networks demonstrates strong profitability with a healthy gross profit margin of 80.0% and a net profit margin of 18.7% for TTM (Trailing-Twelve-Months). Revenue growth is moderate, showing a 2.1% increase from the previous year. The EBIT margin of 17.0% and EBITDA margin of 19.2% indicate operational efficiency. However, the revenue growth rate has slowed compared to previous years, which could be a concern for future expansion.
Balance Sheet
72
Positive
The company's balance sheet shows a robust equity position with an equity ratio of 32.3%, which represents financial stability. The debt-to-equity ratio is relatively high at 1.11, indicating significant leverage that could pose risks if not managed properly. ROE stands at 25.5%, reflecting strong returns for shareholders. Overall, while leverage is notable, the equity base and asset management are solid.
Cash Flow
78
Positive
A10 Networks displays healthy cash flow management with a free cash flow growth rate of -21.5% from the previous year, reflecting challenges in maintaining cash flow levels despite a high operating cash flow to net income ratio of 1.51. The free cash flow to net income ratio of 1.23 suggests the company generates ample cash relative to its earnings, which is a positive indicator of liquidity.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
267.16M261.70M251.70M280.34M250.04M225.53M
Gross Profit
213.74M210.28M203.74M223.51M196.54M175.38M
EBIT
45.53M43.97M38.65M53.08M33.39M17.73M
EBITDA
54.13M55.26M47.99M61.76M42.70M24.74M
Net Income Common Stockholders
49.96M50.14M39.97M46.91M94.89M17.82M
Balance SheetCash, Cash Equivalents and Short-Term Investments
355.84M195.56M159.30M150.99M185.04M158.13M
Total Assets
606.22M432.81M389.81M369.11M393.08M290.81M
Total Debt
228.41M11.94M16.82M16.85M19.32M23.50M
Net Debt
-15.44M-83.19M-80.42M-51.13M-59.61M-59.78M
Total Liabilities
410.34M200.99M181.93M188.09M184.20M174.84M
Stockholders Equity
195.88M231.83M207.88M181.01M208.89M115.97M
Cash FlowFree Cash Flow
61.41M78.22M33.62M55.30M44.93M51.72M
Operating Cash Flow
75.25M90.49M44.51M66.10M50.10M55.29M
Investing Cash Flow
-83.74M-48.35M13.61M11.09M-38.07M5.20M
Financing Cash Flow
129.42M-44.26M-28.85M-88.14M-16.38M-22.95M

A10 Networks Technical Analysis

Technical Analysis Sentiment
Positive
Last Price17.68
Price Trends
50DMA
16.78
Positive
100DMA
17.99
Negative
200DMA
16.90
Positive
Market Momentum
MACD
0.26
Negative
RSI
53.17
Neutral
STOCH
46.89
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 17.68 is above the 20-day moving average (MA) of 17.59, above the 50-day MA of 16.78, and above the 200-day MA of 16.90, indicating a bullish trend. The MACD of 0.26 indicates Negative momentum. The RSI at 53.17 is Neutral, neither overbought nor oversold. The STOCH value of 46.89 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
83
Outperform
$16.46B27.2219.89%5.61%26.65%
74
Outperform
$1.27B26.5524.36%1.36%4.90%9.91%
73
Outperform
$1.03B22.115.32%-2.09%76.96%
72
Outperform
$1.14B100.343.78%9.54%
64
Neutral
$5.49B-22.21%13.34%13.71%
62
Neutral
$11.80B10.08-7.46%2.99%7.37%-8.21%
61
Neutral
$1.66B-21.26%-0.82%-146.80%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ATEN
A10 Networks
17.68
4.36
32.73%
FFIV
F5 Networks
286.61
118.92
70.92%
NTCT
Netscout Systems
23.25
5.36
29.96%
RDWR
Radware
26.60
9.28
53.58%
VRNT
Verint Systems
17.17
-17.84
-50.96%
VRNS
Varonis Systems
49.02
5.32
12.17%

A10 Networks Corporate Events

Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
A10 Networks Reports Q1 2025 Financial Results
Positive
May 1, 2025

On May 1, 2025, A10 Networks announced its financial results for the first quarter of 2025, reporting a revenue increase of 9% year-over-year to $66.1 million. The company also declared a quarterly dividend of $0.06 per share and introduced a $75 million share repurchase program, reflecting its strategic focus on capital allocation and shareholder returns. Despite macroeconomic volatility, A10 Networks remains well-positioned to outperform the industry, driven by its diversification efforts and recent acquisition of ThreatX Protect, which enhances its capabilities in protecting web applications and APIs.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.