Reliable Security Always NEEDHAM GROWTH CONFERENCE JANUARY 2019 1. - - PowerPoint PPT Presentation

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Reliable Security Always NEEDHAM GROWTH CONFERENCE JANUARY 2019 1. - - PowerPoint PPT Presentation

Reliable Security Always NEEDHAM GROWTH CONFERENCE JANUARY 2019 1. CONFIDENTIAL | DO NOT DISTRIBUTE 1 CAUTIONARY STATEMENTS & DISCLOSURES This presentation and the accompanying oral presentation contain forward - looking


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NEEDHAM GROWTH CONFERENCE

JANUARY 2019

Reliable Security Always

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CAUTIONARY STATEMENTS & DISCLOSURES

This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on our management’s beliefs and assumptions, including statements regarding our projections for our future operating results, our expectations for future revenue growth, profitability and market opportunities, the performance of our products, our future strategies, our ability to penetrate certain markets, expected product launches and the general growth of our business. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results to differ materially from those anticipated or implied by our forward-looking statements. These factors include, but are not limited to, successfully executing our strategies, market adoption of our products, successfully anticipating market needs and opportunities, timely development of new products and features, achieving or maintaining profitability, loss or delay of expected purchases, attracting and retaining new end-customers, maintaining and enhancing our brand and reputation, growth in markets relating to network security, the success of any future acquisitions or investments, our ability to shorten our close cycle, the ability of our channel partners to sell our products, our presence in international markets, and other factors described in our quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings made with the Securities and Exchange Commission, to which your attention is directed. We assume no responsibility for the accuracy and completeness of the forward-looking statements and disclaim any obligation to update information contained in these forward-looking statements. This presentation and the accompanying oral presentation also include certain non-GAAP financial measures. Non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under U.S. GAAP. Definitions of our non- GAAP financial measures and a reconciliation between GAAP and non-GAAP financial measures can be found in the appendix to this document. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures on a forward-looking basis is not available due to high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures.

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RELIABLE SECURITY ALWAYS

THE A10 VISION

Enabling intelligent automation to ensure business critical applications are reliable, secure and available always

3

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THE MARKET IS TRANSFORMING

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APPLICATION DELIVERY Advanced Core Operating System (ACOS) Secure Application Services Platform SECURITY

SECURITY 5G CLOUD

Thunder TPS

DDoS Protection

HYPERSCALE FLEXIBLE SOLUTIONS

Thunder SSLi

SSL Visibility

Thunder CFW

Converged Firewall

Thunder ADC

App Delivery Controller

Thunder CGN

IPv4 Preservation

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<1ms

Latency in 5G is critical for new use cases3

20Gbps

Downlink cell site video1

100X

More devices connected per km2

Source: Network World, Ericsson, GSMA

5G: A MAJOR TRANSFORMATION

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125B

IoT devices could be weaponized by 2030

ESCALATING SECURITY THREATS

4X

Growth in size of average DDoS attack over 2 years

29%

Of Internet traffic from botnets

Source: SecurityIntelligence.com, IHS Markit, SC Magazine

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928

cloud apps on average per enterprise2

5 Clouds

  • n average per enterprise1

135M

Office 365 users worldwide3

MULTICLOUD MIGRATION

  • 1. Rightscale ; 2. Symantec ; 3. Reuters
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A10’s Offerings for 4G and 5G

Evolved Packet core Gi-LAN (IP Services) MEC (Edge Cloud)

CGN

Visibility

250 SP

Customers

Internet

L4/L7 Firewall Roaming Firewall GTP Director CGN Gi/SGi Firewall CGN

Visibility

TPS

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A10: Well-Positioned in 5G

  • A10’s proven strength in hyper-scalability, low latency, security and CGN

consolidation, and AI-driven automation

  • Strong anti-DDoS attack solutions and integrated security and CGN analytic

platform

  • High-end hardware and SDN/NFV/container solutions
  • Strong presence with global service providers
  • Partners are important. Ericsson & NEC are strong partners

Scale, performance, low latency, security, extreme reliability and automation

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5G IS TRANSFORMATIVE: A Large and Growing Market

$- $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00

2018 2019 2020 2021 2022 2023

D O L L A R S ( M ) Aggregate TAM Aggregate SAM

CAGR for TAM:

~13%

CAGR for SAM:

~50%

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CFW SSLi TPS

Carrier Class Firewall URL Filtering SSL Decryption/Encryption Multi-Vector DDoS Protection Traffic Steering)

High-performance Security Solutions Ease-of-use

Application Firewall Secure Web Gateway Integrated Security Third-party Security Solutions Integration

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The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard Represents Security Product Revenue as a % of total Product Revenue.

SECURITY TRANSFORMATION IS UNDERWAY

8% 92%

2014

Security ADC, CGN 26% 74%

2017

Security ADC, CGN

+30%

2018 Goal

Security ADC, CGN

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135,000,000 USERS 6,000,000 ORGANIZATIONS 48,000,000 USERS

RELIABLE SECURITY AT SCALE

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40 DATA CENTERS 36 GLOBAL REGIONS

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MULTI-CLOUD DC: Performance, Agile, Flexible & Automation

SSL SECURITY O365 CLOUD/HC ADC

ANY PLATFORM

BARE METAL VIRTUAL CONTAINER APPLIANCE

PERPETUAL FLEXPOOL SUBSCRIPTION

ANYWAY On-premises, Cloud

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HARMONY CONTROLLER: Multi-cloud orchestrator

Simple Integrated Intelligent Automation

ACTIONABLE INTEGRATED REAL-TIME MODERN

On-premises, Cloud

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HARMONY CONTROLLER: Unprecedented Control & Visibility

Descriptive Analytics

  • Health Status
  • Logs & Events

PERFORMANCE MONITORING

Diagnostic Analytics

  • Per-App metrics
  • Trend Analysis

FASTER TROUBLESHOOTING

ADC SSLi DC Firewall Carrier Firewall, CGN O365...

INTEGRATED

Prescriptive Analytics

  • Policy updates
  • Behavior Analysis
  • Correlation

ACTIONALBE INSIGHTS

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59%

Enterprise, Cloud

10 of Top 10

Telecom Operators

8 of Top 12

Video Gaming Companies

5 of Top 10

Media Companies

2 of Top 3

Cloud Providers

20 of Top 50

Fortune Global 500

PROTECTING MAJOR BUSINESSES GLOBALLY

41%

Service Provider

Enterprise/Service Provider revenue mix is as of 3Q18.

>6,500 customers as of 3Q18

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New Team Operational Excellence

A10’s EVOLUTION: BEYOND TECH LEADERSHIP

KPI focus Go-to-market excellence Profitable growth Disciplined investing Tom Constantino, CFO Western Digital, HP, Operational excellence focused Chris White, EVP Sales Proofpoint, 10 years security Gunter Reiss, VP, WW Marketing Ericsson

Technology Vision

Standalone products to solutions focused Controller architecture with machine learning Built in security with analytics and enhanced automation

Partners Resellers

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FINANCIAL PROFILE

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FINANCIAL PERFORMANCE HIGHLIGHTS

$ Millions (except EPS)

Income Statement Summary: Q318 Q317 Q318 YTD Q317 YTD Revenue $ 60.5 $ 62.0 $ 170.4 $ 179.9 Gross Margin % 78.8% 78.3% 78.4% 77.6% Operating Margin % 4.2% 4.9% (1.4)% 1.9% EPS $ 0.03 $ 0.03 $ (0.04) $ 0.04 Balance Sheet & Cash Flow Summary: Q318 Q317 Q318 YTD Q317 YTD Cash & Marketable Security $ 123.6 $ 123.9 $ 123.6 $ 123.9 Accounts Receivable $ 51.1 $ 49.1 $ 51.1 $ 49.1 Deferred Revenue $ 94.9 $ 90.4 $ 94.9 $ 90.4 Debt

  • Free Cash Flow

$ (3.9) $ (6.5) $ (7.8) $ 5.8

Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com Gross Margin, Operating Margin and EPS are Non-GAAP Financial Measures. See Appendix for reconciliation to most comparable GAAP financial measures. The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

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RETURN TO REVENUE GROWTH

The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

$142 $180 $196 $227 $235 $180 $170 2013 2014 2015 2016 2017 YTD 2017 YTD 2018 $Millions

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PRODUCT AND SERVICE REVENUE

The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

79% 75% 69% 67% 64% 65% 62% 21% 25% 31% 33% 36% 35% 38%

2013 2014 2015 2016 2017 YTD 2017 YTD 2018

$Millions

Product Service

$170 $235 $227 $196 $180 $142 $180

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47% 46% 44% 42% 46% 46% 40% 53% 54% 56% 58% 54% 54% 60%

2013 2014 2015 2016 2017 YTD 2017 YTD 2018

$Millions

SP Enterprise

REVENUE BY CUSTOMER VERTICAL

The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

$170 $235 $227 $196 $180 $142 $180

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REVENUE BY GEOGRAPHY

The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

48% 48% 53% 51% 49% 51% 46% 28% 26% 18% 23% 22% 21% 23% 11% 10% 12% 13% 14% 15% 16% 8% 11% 14% 10% 12% 10% 12% 5% 5% 3% 3% 3% 3% 3%

2013 2014 2015 2016 2017 YTD 2017 YTD 2018

$Millions

United States Japan APAC ex Japan EMEA Other

$170 $235 $227 $196 $180 $142 $180

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Lee Chen

Founder & CEO

THE A10 LEADERSHIP TEAM

Chris White

EVP, WW Sales

Raj Jalan

CTO

Rob Cochran

VP, General Counsel

Tom Constantino

CFO

Gunter Reiss

VP, WW Marketing & BD

Todd Kleppe

VP, Global Operations

Eric Kwok

VP, WW Support

Laurie Buzzell

VP, WW HR

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THANK YOU Reliable Security Always

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APPENDIX

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Q318 Q317 Q318 YTD Q317 YTD

Gross Margin % - GAAP 78.5% 77.6% 77.6% 77.0% Stock-based compensation 0.3 0.6 0.7 0.6 Gross Margin % – Non-GAAP 78.8% 78.3% 78.4% 77.6%

$ Millions

GAAP to NON-GAAP

Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

EPS $ – GAAP $ (0.02) $ (0.03) $ (0.36) $ (0.17) Stock-based compensation 0.03 0.06 0.18 0.19 Litigation and investigation expense (benefit) 0.02

  • 0.12
  • Amortization expense related to acquisition
  • 0.01

0.01 EPS $ – Non-GAAP $ 0.03 $ 0.03 $ (0.04) $ 0.04

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Q318 Q317 Q318 YTD Q317 YTD

Total operating expenses $ – GAAP $ 49.1 $ 49.9 $ 157.6 $ 149.7 Stock-based compensation (2.1) (4.1) (11.8) (12.8) Litigation and investigation expense (benefit) (1.5)

  • (9.0)
  • Amortization expense related to acquisition

(0.3) (0.3) (0.8) (0.8) Total operating expenses $ – Non-GAAP $ 45.1 $ 45.5 $ 136.0 $ 136.2 $ Millions

GAAP to NON-GAAP

Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

Total operating expenses %– GAAP 81% 80% 92% 83% Stock-based compensation (4) (7) (7) (7) Litigation and investigation expense (benefit) (3)

  • (5)
  • Amortization expense related to acquisition
  • Total operating expenses % – Non-GAAP

75% 73% 80% 76% % of Revenue

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Q318 Q317 Q318 YTD Q317 YTD

Loss from operations $ – GAAP $ (1.6) $ (1.7) $ (25.3) $ (11.2) Stock-based compensation 2.3 4.5 13.1 13.8 Litigation and investigation expense (benefit) 1.5

  • 9.0
  • Amortization expense related to acquisition

0.3 0.3 0.8 0.8 Income (loss) from operations $ – Non-GAAP $ 2.5 $ 3.1 $ (2.4) $ 3.4

GAAP to NON-GAAP

Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.

Loss from operations %– GAAP (3)% (3)% (15)% (6)% Stock-based compensation 4 7 8 8 Litigation and investigation expense (benefit) 3

  • 5
  • Amortization expense related to acquisition
  • Income (loss) from operations % – Non-GAAP

4% 5% (1)% 2%

$ Millions % of Revenue

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GAAP to NON-GAAP

2013 2014 2015 2016 2017

Gross Margin % - GAAP 76.4% 76.1% 75.3% 76.1% 77.4% Stock-based compensation 0.2 0.6 0.7 0.5 0.6 Gross Margin % - Non-GAAP 76.6% 76.7% 76.1% 76.5% 77.9% Loss from operations $ - GAAP $ (22.8) $ (30.3) $ (40.3) $ (20.6) $ (10.4) Stock-based compensation 4.3 12.4 16.9 16.9 17.2 Litigation and investigation expense (benefit) 7.3 (7.0) 0.7 0.8

  • Amortization expense related to acquisition
  • 0.5

1.0 Income (loss) from operations $ - Non-GAAP $ (11.2) $ (24.9) $ (22.8) $ (2.3) $ 7.8

$Millions

Numbers may not sum due to rounding. Please refer to the supplemental financials posted the “Investor Relations” section of the A10 Networks website at investors.a10networks.com The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.