A10 Networks Earnings Call: Record Growth, Security Focus

A10 Networks ((ATEN)) has held its Q4 earnings call. Read on for the main highlights of the call.

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A10 Networks Caps Record Year With Strong Growth and Security Pivot

A10 Networks’ latest earnings call struck a clearly upbeat tone, with management emphasizing record revenue and profitability, expanding security-led business, and robust cash generation. While executives acknowledged regional softness in Japan, flat trends in some legacy segments, and emerging uncertainties around supply-chain costs and AI-driven cyber threats, they underscored that disciplined execution and a focused strategy are driving momentum into 2026.

Record Revenue Across Quarter and Full Year

A10 posted its largest quarter ever, with fourth-quarter revenue of $80.4 million, up 8.3% year over year, and full-year 2025 revenue reaching $290.6 million, an 11% increase. This marks a solid step-up in scale for a company still relatively small versus larger networking and security peers. The double-digit full-year growth shows A10 is finding demand in core markets despite macro and regional headwinds, a key point for investors watching whether mid-cap tech names can sustain growth amid uneven IT spending.

Profitability Surges With Record Adjusted EBITDA and High Margins

Profitability was another standout. Full-year adjusted EBITDA hit a record $86.0 million, or 29.6% of revenue, with Q4 adjusted EBITDA at $24.9 million, representing 31% of revenue. Non-GAAP gross margins remained in the company’s target band, at 80.8% in Q4 and 80.6% for the year. These levels are high even by software and security standards and signal tight cost control and a favorable product mix. For shareholders, the combination of double-digit revenue growth and near-30% EBITDA margins suggests A10 is operating in a rarefied part of the IT infrastructure landscape where incremental revenue translates efficiently into profit.

Security-Led Revenue Strategy Hits Key Milestone

Management highlighted a strategic milestone in the company’s pivot to security-led solutions. Security offerings reached the long-term goal of roughly 65% of total revenue on a sustainable basis in Q4, and for the full year they accounted for 72%. This shift toward higher-value security use cases is important because security budgets tend to be more resilient and often carry better margins than legacy networking. It also positions A10 more squarely in front of spending trends tied to rising cyber risk, helping support both growth and profitability targets.

Americas and Cloud Service Providers Drive Top-Line Strength

Geographically and by customer type, the Americas and cloud service providers were the main growth engines. The Americas region made up 64% of global revenue and grew 30% year over year in 2025, offsetting weakness elsewhere. Service providers represented 58% of total revenue, with performance skewed toward cloud providers, reflecting demand tied to AI infrastructure and modern data center build-outs. For investors, this mix indicates A10 is aligned with high-growth infrastructure projects where traffic volumes, performance needs, and security requirements are rising simultaneously.

Balanced Product-Service Mix and Recovering Enterprise Demand

A10’s fourth-quarter revenue mix remained well balanced: products contributed $48.8 million, or 61% of total, while services made up 39%. Notably, enterprise customers—which represented 42% of Q4 revenue—returned to growth, with enterprise revenue rising 8% after prior quarters of decline. This improvement suggests that demand is broadening beyond telecom and cloud providers, giving A10 more diversified end-market exposure. A healthier enterprise trajectory can reduce reliance on a few large verticals and help cushion cyclical swings in carrier spending.

Strong Cash Generation and Active Capital Returns

Cash metrics underscored the strength of the business model. In Q4, operating cash flow reached $22.7 million and free cash flow was $16.0 million after $6.7 million in capital expenditures. A10 ended the year with $378 million in cash and marketable securities, a sizeable cushion relative to annual revenue. The company is returning a meaningful portion of that to shareholders, distributing $17.4 million in dividends and repurching $68.9 million of stock during 2025. Roughly $53.4 million remains on the existing $75 million buyback program, and the board approved a quarterly dividend of $0.06 per share. This capital return profile, combined with strong cash generation, will likely appeal to investors seeking both growth and income from the tech sector.

Strategic Customer Wins Validate Competitive Position

Management pointed to several marquee customer wins in the quarter as evidence that A10’s product roadmap is resonating. Notable deals included a large global data and analytics software provider and a major global airline. These customers chose A10 for high-performance traffic management, hardware acceleration, security capabilities, automation, centralized management, and cost-efficiency at scale. Such wins not only bring near-term revenue but also serve as reference points that can help A10 penetrate similar large enterprises and service providers, reinforcing its competitive positioning in a crowded market.

2026 Outlook: Growth, Margin Expansion, and EPS Leverage

For 2026, A10 guided to revenue growth of 10%–12% over 2025’s $290.6 million, implying a range of roughly $319.7 million to $325.5 million. Non-GAAP gross margins are expected to remain around the company’s ~82% target, broadly in line with recent levels. Management also aims to expand net and EBITDA margins beyond current marks—already nearly 30% on an adjusted basis—and expects EPS growth to outpace revenue growth, signaling further operating leverage. The company acknowledged ongoing input and supply cost pressures but expressed confidence in managing them within its long-term operating model, with more detail to come at a future investor event.

APJ Weakness and Legacy Service Providers Drag on Results

Not everything in the quarter was positive. The APJ region, particularly Japan, weighed on performance, with revenue declining for the year amid weak GDP growth, inflation concerns, and tariff-related uncertainty. This regional softness partially offset strong results in the Americas and EMEA. At the same time, non-cloud service provider revenue was flat year over year, reflecting a shift in spending away from older infrastructure refresh cycles and toward security and next-generation networking. While these pressures are manageable, they highlight the importance of A10’s continued push into cloud, security, and AI-related projects to fuel growth.

Monitoring Supply-Chain Costs and AI-Driven Threat Dynamics

Management flagged potential risks related to supply-chain and input costs, especially in the memory component space. While no near-term delivery disruptions are expected, the company acknowledged that component cost pressures could emerge and said it is proactively planning its supply needs. On the technology front, A10 sees early signs that AI could change network traffic patterns and cyberthreat dynamics, with the potential for more sophisticated or higher-volume attacks. However, executives stressed that it is still too early to quantify how these AI-driven shifts will translate into incremental security spending or product demand.

Higher CapEx Signals Investment in Infrastructure and AI Capabilities

Capital expenditures ticked up in Q4 to $6.7 million, driven by investment in backend infrastructure, hosted and managed service enablement, and early-stage AI demonstration environments using GPUs and specialized processors. Management framed these as strategic investments aimed at supporting future growth and enhancing the company’s ability to serve customers in AI-heavy and service-centric environments. While an extended period of elevated CapEx could modestly pressure free cash flow, the company’s strong cash position and high margins provide ample room to fund these initiatives without straining the balance sheet.

A10 Networks’ earnings call painted a picture of a company executing well on a clear strategy: deepen its security posture, align with cloud and AI infrastructure demand, and convert growth into high-margin profits and cash returns. Despite regional and segment headwinds and new uncertainties around supply costs and AI-driven cyber risks, A10 is entering 2026 with record financials, a strong balance sheet, and a guidance framework that targets continued growth, expanding margins, and rising earnings per share—an attractive mix for investors monitoring the name.