A10 Networks, Inc. Q1 FY2026 earnings call

• ATEN continued to deliver on strategic plan centered around AI-driven demand cycle. • Delivered 13.4% revenue growth in Q1, third quarter in last four with double-digit growth. • Trailing 12-month revenue growth 12.1% and TTM-adjusted EBITDA margins 29.7%. • Service provider revenue grew 11% and enterprise revenue 13% in trailing 12 months. • Core platform relevant to AI infrastructure build-out, traffic management returning to forefront. • AI evolving rapidly creating new threats, ATEN's security portfolio aligned. • Selected as technology partner for a significant AI infrastructure build-out, customer's expansion reflects focus on next-gen networking. • AI transforming distinction between large enterprises and service providers building networks, ATEN's platform built for this world with one architecture, model, security framework. • Disciplined operating model balances investment with margin expansion. • Non-GAAP gross margin 80.6%, operating expenses $41.5 million, operating margin 25.2%, net income $17.7 million, 25 cents per basic and 24 cents per diluted share. • Cash and marketable securities $369.7 million as of March 31st, deferred revenue $147.2 million. • Paid $4.3 million in cash dividends and repurchased $2.5 million worth of shares in quarter. • Board approved quarterly cash dividend of $0.06 per share.

Product revenue was $44 million, 59% of total revenue, growing 22.3% year-over-year. Service revenue was the remainder. Security-led revenue was a strong driver of product revenue growth. Enterprise customers represented 56% of Q1 revenues, with Americas outpacing enterprise revenue growth. Service provider revenue was 44% of total revenue. Americas region represented 67% of global revenue. EMEA had headwinds related to regional conflicts. APJ spending was conservative as customers navigated uncertain capital environment.

• Re-trading 2026 outlook with 2026 revenue growth within guided range of 10% to 12%, adjusted EBITDA margins between 28% to 30%, and EPS growth of 12 to 14%.

• Forward-looking statements involve risks and uncertainties beyond control that could cause actual results to differ materially. • Delivery and cost challenges related to pricing of certain components. • EMEA headwinds related to regional conflicts. • APJ spending conservative due to uncertain capital environment.

Q: Gray Powell with BT IG asked about investment cycle around AI and details of large customer win.

A: Drupal Trivedi and Michelle Karan responded discussing investment cycle, how large customer win fits in enterprise and service provider segments, and that business fundamentals remain strong with no meaningful uptick in aged receivables.

Q: Hamid Corson with BWS Financial asked about accounts receivable related to large project and reason for not keeping guidance unchanged.

A: Michelle Karan responded that it's a calendar event not a credit event, business fundamentals strong, no meaningful uptick in aged receivables.

Q: Michael Romanello with Mizuho asked about business activity across install base excluding large project and demand across geos.

A: Drupal Trivedi responded that existing customers are allocating more spending to AI, and discussed demand across different geos like Japan, AMIA, Americas.

Q: Anya Soderstrom with Sudoti asked about lag in services growth related to product growth and competitive dynamics.

A: Drupal Trivedi responded that service revenue lags product revenue due to product growth leading to service renewal in four quarters later, and that no significant changes in competitive dynamics recently.

Q: Ben Textall with Craig Hallam asked about 2026 guidance reiteration and path to exceed 12% growth.

A: Drupal Trivedi responded that 2026 guidance reiteration was not indicative of guiding every quarter, and factors like mix shift, AI spending, and SP spending resumption could help exceed 12% growth.

Q: Victor in for Simon Leopold with Raymond James asked about supply chain, memory shortages, pricing impact, and timing of large orders.

A: Drupal Trivedi responded that there are supply chain impacts like memory shortages, adjusted pricing to some degree, and that large orders are due to customers building out AI infrastructure fast not double booking