Q2 2026 A10 Networks Inc Earnings Call Transcript
Key Points
- A10 Networks Inc (ATEN) delivered strong financial results with 15.5% year-over-year revenue growth in Q2 2026 and 14.5% growth year-to-date, marking the fourth quarter of double-digit growth in the last five.
- The company raised its full-year 2026 outlook, now expecting revenue growth of 12% to 14% and EPS growth of 14% to 16%, up from previous guidance of 10% to 12% and 12% to 14%, respectively.
- A10 Networks Inc (ATEN) announced a significant expansion of its relationship with Microsoft, which includes mutual performance commitments and aligns the company with the long-term roadmap of this industry leader.
- The acquisition of TrojAI adds two layers to A10 Networks Inc (ATEN)'s platform: red teaming for AI vulnerability probing at build time and real-time protection at runtime, enhancing its AI security portfolio.
- A10 Networks Inc (ATEN) generated strong free cash flow of $26.9 million in Q2, with year-to-date free cash flow at $26.2 million, and continues to return capital to shareholders through dividends and share repurchases.
- The company's non-GAAP gross margin remained strong at 80.3%, with operating margin at 25.5%, demonstrating solid profitability alongside growth.
- A10 Networks Inc (ATEN) sees improving service provider demand in the Americas and a strong pipeline, with enterprise customers representing 60% of Q2 revenues, reflecting balanced growth across verticals.
- A10 Networks Inc (ATEN) continues to navigate cost and delivery challenges related to the supply chain, particularly around memory prices, which are expected to persist for several quarters.
- Service provider demand in EMEA was impacted by the geopolitical environment, while Japan within the APJ region continues to experience macroeconomic pressures that are affecting spending cycles.
- The company's revenue concentration with Microsoft remains high, with the customer expected to represent a similar percentage of revenue in Q2 as the 37% disclosed in the prior quarter.
- A10 Networks Inc (ATEN) faces competition from both traditional infrastructure companies adding AI capabilities and numerous startups in the evolving AI security market.
- The enterprise sales cycles tend to be long, ranging from six to nine months, which could delay the realization of pipeline opportunities until later this year or early next year.
- Service provider spend excluding Microsoft is expected to be only slightly better than 2025 levels, with Japan equal or slightly worse and Europe neutral, indicating limited growth in this segment.
- The company's operating expenses increased to $43.9 million as it prioritizes investments in AI-facing innovation, next-gen networking, and security, which could pressure near-term margins.
Good afternoon everyone and welcome to the A10 Networks Second Quarter 2026 Financial Results.
At this time, all participants have been placed on a listen-only mode and we will open the floor for questions following the presentation.
It is now my pleasure to turn the floor over to your host, Tom Bauman of FNK Investor Relations. Tom, the floor is yours.
Thank you, and thank you all for joining us today.
This call is being recorded and webcast live and may be accessed for at least 90 days via the ATEN Networks website at ATENnetworks.com.
Hosting the call today are Drupa Trivedi, ATEN's President, CEO, and CFO, Michelle Caron.
Before we begin, I would like to remind you that shortly after the market close today.
A10 Networks issued a press release announcing its second-quarter 2026 financial results.
Additionally, A10 published a presentation of governmental trend and financial statements.
You may access the press release,
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