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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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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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APPLICATION DELIVERY Advanced Core Operating System (ACOS) Secure Application Services Platform SECURITY
Thunder TPS
DDoS Protection
Thunder SSLi
SSL Visibility
Thunder CFW
Converged Firewall
Thunder ADC
App Delivery Controller
Thunder CGN
IPv4 Preservation
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Latency in 5G is critical for new use cases3
Downlink cell site video1
More devices connected per km2
Source: Network World, Ericsson, GSMA
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IoT devices could be weaponized by 2030
Growth in size of average DDoS attack over 2 years
Of Internet traffic from botnets
Source: SecurityIntelligence.com, IHS Markit, SC Magazine
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cloud apps on average per enterprise2
Office 365 users worldwide3
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Evolved Packet core Gi-LAN (IP Services) MEC (Edge Cloud)
CGN
Visibility
Customers
Internet
L4/L7 Firewall Roaming Firewall GTP Director CGN Gi/SGi Firewall CGN
Visibility
TPS
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Scale, performance, low latency, security, extreme reliability and automation
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$- $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:
CAGR for SAM:
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Carrier Class Firewall URL Filtering SSL Decryption/Encryption Multi-Vector DDoS Protection Traffic Steering)
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.
8% 92%
Security ADC, CGN 26% 74%
Security ADC, CGN
+30%
Security ADC, CGN
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135,000,000 USERS 6,000,000 ORGANIZATIONS 48,000,000 USERS
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40 DATA CENTERS 36 GLOBAL REGIONS
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BARE METAL VIRTUAL CONTAINER APPLIANCE
PERPETUAL FLEXPOOL SUBSCRIPTION
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Descriptive Analytics
PERFORMANCE MONITORING
Diagnostic Analytics
FASTER TROUBLESHOOTING
ADC SSLi DC Firewall Carrier Firewall, CGN O365...
INTEGRATED
Prescriptive Analytics
ACTIONALBE INSIGHTS
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Enterprise, Cloud
Telecom Operators
Video Gaming Companies
Media Companies
Cloud Providers
Fortune Global 500
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
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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$ 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
$ (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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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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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
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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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
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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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
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
0.01 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)
(0.3) (0.3) (0.8) (0.8) Total operating expenses $ – Non-GAAP $ 45.1 $ 45.5 $ 136.0 $ 136.2 $ 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.
Total operating expenses %– GAAP 81% 80% 92% 83% Stock-based compensation (4) (7) (7) (7) Litigation and investigation expense (benefit) (3)
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
0.3 0.3 0.8 0.8 Income (loss) from operations $ – Non-GAAP $ 2.5 $ 3.1 $ (2.4) $ 3.4
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
4% 5% (1)% 2%
$ Millions % of Revenue
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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
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.