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” 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. 2. CONFIDENTIAL | DO NOT DISTRIBUTE 2
THE A10 VISION Enabling intelligent RELIABLE automation to ensure SECURITY business critical applications ALWAYS are reliable, secure and available always 3. CONFIDENTIAL | DO NOT DISTRIBUTE 3 3
THE MARKET IS TRANSFORMING 4. CONFIDENTIAL | DO NOT DISTRIBUTE 4
HYPERSCALE FLEXIBLE SOLUTIONS Secure Thunder Thunder ADC Thunder TPS Thunder CFW Thunder CGN Application SSLi App Delivery DDoS Protection Converged Firewall IPv4 Preservation Services Controller SSL Visibility SECURITY APPLICATION DELIVERY Platform Advanced Core Operating System (ACOS) SECURITY CLOUD 5G 5. CONFIDENTIAL | DO NOT DISTRIBUTE 5
<1ms 20Gbps 100X Latency in 5G Downlink cell site video 1 More devices connected per km 2 is critical for new use cases 3 Source: Network World, Ericsson, GSMA 5G: A MAJOR TRANSFORMATION 6. CONFIDENTIAL | DO NOT DISTRIBUTE 6
4X 125B 29% Growth in size of average IoT devices could be Of Internet traffic from DDoS attack over 2 years weaponized by 2030 botnets Source: SecurityIntelligence.com, IHS Markit, SC Magazine ESCALATING SECURITY THREATS 7. CONFIDENTIAL | DO NOT DISTRIBUTE 7
5 Clouds 928 135M on average per enterprise 1 cloud apps on average per Office 365 users enterprise 2 worldwide 3 1. Rightscale ; 2. Symantec ; 3. Reuters MULTICLOUD MIGRATION 8. CONFIDENTIAL | DO NOT DISTRIBUTE 8
A10’s Offerings for 4G and 5G 250 SP Customers CGN Evolved Gi-LAN MEC Internet Packet core (IP Services) (Edge Cloud) L4/L7 Visibility Roaming GTP CGN Gi/SGi CGN Visibility TPS Firewall Firewall Director Firewall 9. CONFIDENTIAL | DO NOT DISTRIBUTE 9
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 10. CONFIDENTIAL | DO NOT DISTRIBUTE 10
5G IS TRANSFORMATIVE: A Large and Growing Market $2,500.00 CAGR for TAM: ~13% $2,000.00 $1,500.00 D O L L A R S ( M ) CAGR for SAM: ~50% $1,000.00 $500.00 $- 2018 2019 2020 2021 2022 2023 Aggregate TAM Aggregate SAM 11. CONFIDENTIAL | DO NOT DISTRIBUTE 11
High-performance Security Solutions Ease-of-use CFW Application Traffic Carrier Class Secure Web URL Integrated Firewall Steering) Firewall Gateway Filtering Security SSLi Third-party Security Solutions SSL Integration Decryption/Encryption TPS Multi-Vector DDoS Protection 12. CONFIDENTIAL | DO NOT DISTRIBUTE 12
SECURITY TRANSFORMATION IS UNDERWAY 2014 2017 2018 Goal 8% 26% + 30% 92% 74% Security ADC, CGN Security ADC, CGN Security ADC, CGN The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard 13. CONFIDENTIAL | DO NOT DISTRIBUTE 13 Represents Security Product Revenue as a % of total Product Revenue.
RELIABLE SECURITY AT SCALE 135,000,000 USERS 6,000,000 ORGANIZATIONS 48,000,000 USERS 40 DATA CENTERS 36 GLOBAL REGIONS 14. CONFIDENTIAL | DO NOT DISTRIBUTE 14 14
MULTI-CLOUD DC: Performance, Agile, Flexible & Automation SSL O365 SECURITY ADC CLOUD/HC ANY PLATFORM ANYWAY SUBSCRIPTION APPLIANCE VIRTUAL On-premises, PERPETUAL Cloud BARE METAL CONTAINER FLEXPOOL 15. CONFIDENTIAL | DO NOT DISTRIBUTE 15
HARMONY CONTROLLER: Multi-cloud orchestrator MODERN REAL-TIME INTEGRATED ACTIONABLE Simple Integrated Intelligent Automation On-premises, Cloud 16. CONFIDENTIAL | DO NOT DISTRIBUTE 16
HARMONY CONTROLLER: Unprecedented Control & Visibility ACTIONALBE INTEGRATED INSIGHTS ADC Prescriptive Analytics SSLi • Policy updates DC Firewall • Behavior Analysis Carrier Firewall, CGN • Correlation O365... PERFORMANCE FASTER MONITORING TROUBLESHOOTING Descriptive Analytics Diagnostic Analytics • Health Status • Per-App metrics • Logs & Events • Trend Analysis 17. CONFIDENTIAL | DO NOT DISTRIBUTE 17
PROTECTING MAJOR BUSINESSES GLOBALLY 41% 59% 10 of Top 10 2 of Top 3 Service Provider Enterprise, Cloud Telecom Operators Cloud Providers 20 of Top 50 8 of Top 12 Fortune Global 500 Video Gaming Companies 5 of Top 10 Media Companies >6,500 customers as of 3Q18 18. CONFIDENTIAL | DO NOT DISTRIBUTE 18 Enterprise/Service Provider revenue mix is as of 3Q18.
A10’s EVOLUTION: BEYOND TECH LEADERSHIP Technology Operational New Team Vision Excellence Tom Constantino, CFO Standalone products to KPI focus Western Digital, HP, Operational solutions focused Go-to-market excellence excellence focused Profitable growth Controller architecture with Disciplined investing Chris White, EVP Sales machine learning Proofpoint, 10 years security Built in security with analytics Gunter Reiss, VP, WW Marketing and enhanced automation Ericsson Resellers Partners 19. CONFIDENTIAL | DO NOT DISTRIBUTE 19
FINANCIAL PROFILE 20. CONFIDENTIAL | DO NOT DISTRIBUTE 20
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 Q318 Q317 Q318 YTD Q317 YTD Balance Sheet & Cash Flow Summary: 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 t he 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. 21. CONFIDENTIAL | DO NOT DISTRIBUTE 21 The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard.
RETURN TO REVENUE GROWTH $Millions $235 $227 $196 $180 $180 $170 $142 2013 2014 2015 2016 2017 YTD 2017 YTD 2018 22. CONFIDENTIAL | DO NOT DISTRIBUTE The company adopted ASC 606 accounting standard effective January 1, 2018, all prior periods are based on ASC 605 standard. 22
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