A10 Networks, Inc. Net Income jumped on 200% and EBITDA Margin surged on 17.4 pp from -1.7% to 15.8%
02/09/2021 • About A10 Networks, Inc. (
$ATEN) • By InTwits
A10 Networks, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- A10 Networks, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 0.0% while average EBITDA Margin was -0.2% for the sames years
- A10 Networks, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $8m in 2020, $10m in 2019, $16m in 2018, $17m in 2017, $26m in 2016
- The company has highly profitable business model: ROIC is 13.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 6.1%. Revenue growth showed slowdown in 20Q4 - it was 3.9% YoY. During 2016-2020 Revenue growth bottomed in 2019 at -8.4%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.7 pp from 13.4% to 6.7% in FY2020.
Gross Margin increased slightly on 0.75 pp from 77.0% to 77.8% in 2020. SG&A as a % of Revenue dropped on 10.6 pp from 54.8% to 44.2% in 2020.
Net Income margin surged on 16.3 pp from -8.4% to 7.9% in 2020.
Investments (CAPEX, working capital and M&A)
A10 Networks, Inc.'s CAPEX/Revenue was 1.6% in 2020. CAPEX/Revenue decreased slightly on 0.86 pp from 2.4% in 2017 to 1.6% in 2020. It's average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at good ROIC (13.0%) and ROE (15.9%). ROIC surged on 26.1 pp from -13.0% to 13.0% in 2020. ROE surged on 32.6 pp from -16.8% to 15.9% in 2020.
Leverage (Debt)
Debt level is -1.5x Net Debt / EBITDA and 0.8x Debt / EBITDA. Debt dropped on 13.3% while cash jumped on 82.1%.
A10 Networks, Inc. has no short term refinancing risk: cash is higher than short term debt (1,583.3%).
Valuation and dividends
The company's trades at EV/EBITDA 18.2x and P/E 39.4x.
Management team
A10 Networks, Inc.'s CEO Dhrupad Trivedi has spent 1 year with the company.
Financial and operational results
FY ended 12/31/2020
A10 Networks, Inc. ($ATEN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 227.3 | 235.4 | 232.2 | 212.6 | 225.5 | 6.1% |
| Gross Profit | 172.9 | 182.1 | 180.3 | 163.7 | 175.4 | 7.1% |
| SG&A | 130.7 | 129.5 | 142.8 | 116.5 | 99.6 | -14.5% |
| EBITDA | -12.3 | -1.9 | -19.8 | -3.5 | 35.6 | |
| Net Income | -22.4 | -10.8 | -27.6 | -17.8 | 17.8 | |
Balance Sheet
|
|---|
| Cash | 29.0 | 46.6 | 40.6 | 45.7 | 83.3 | 82.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 5.1 | 5.3 | 3.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 28.0 | 23.5 | -16.2% |
Cash flow
|
|---|
| Capex | 4.9 | 5.7 | 2.8 | 4.3 | 3.6 | -17.9% |
Ratios
|
|---|
| Revenue growth | 14.2% | 3.6% | -1.4% | -8.4% | 6.1% | |
| EBITDA growth | -58.6% | -84.9% | 963.9% | -82.3% | -1,114.1% | |
|
|---|
| Gross Margin | 76.1% | 77.4% | 77.7% | 77.0% | 77.8% | 0.8% |
| EBITDA Margin | -5.4% | -0.8% | -8.5% | -1.7% | 15.8% | 17.4% |
| SG&A, % of revenue | 57.5% | 55.0% | 61.5% | 54.8% | 44.2% | -10.6% |
| Net Income Margin | -9.9% | -4.6% | -11.9% | -8.4% | 7.9% | 16.3% |
| CAPEX, % of revenue | 2.1% | 2.4% | 1.2% | 2.0% | 1.6% | -0.5% |
|
|---|
| ROIC | -24.4% | -11.3% | -27.2% | -13.0% | 13.0% | 26.1% |
| ROE | -27.5% | -11.9% | -27.3% | -16.8% | 15.9% | 32.6% |
| Net Debt/EBITDA | | | | | -1.5x |
A10 Networks, Inc. ($ATEN) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 54 | 53 | 57 | 63 | | 6.9% | 6.7% | 7.1% | 3.9% |
| EBITDA | 5 | 10 | 12 | 10 | | - | - | 250.1% | 181.6% |
| Net Income | -0 | 4 | 6 | 8 | | - | - | 3,636.4% | 15,274.5% |
Balance Sheet
|
|---|
| Cash | 66 | 66 | 83 | 83 | | 93.2% | 78.8% | 130.3% | 82.1% |
| Short Term Debt | 5 | 5 | 5 | 5 | | 34.5% | 66.2% | 116.7% | 3.0% |
| Long Term Debt | 27 | 26 | 25 | 23 | | 929.9% | 1,009.4% | 1,141.7% | -16.2% |
Ratios
|
|---|
| Gross Margin | 77.4% | 78.2% | 76.8% | 78.5% | | 1.8% | 1.2% | -0.6% | 0.8% |
| EBITDA Margin | 9.1% | 19.2% | 21.6% | 16.5% | | 24.2% | 25.3% | 15.0% | 10.4% |
| Net Income Margin | -0.6% | 7.3% | 11.4% | 12.5% | | 23.9% | 19.0% | 11.1% | 12.4% |
Peers in Systems Software
Below you can find A10 Networks, Inc. benchmarking vs. other companies in Systems Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | - | 56.5% | 51.3% | 59.2% | 42.4% |
| ServiceNow, Inc. ($NOW) | - | 38.0% | 36.0% | 32.6% | 30.6% |
| SailPoint Technologies Holdings, Inc. ($SAIL) | - | 40.5% | 33.8% | 15.9% | 26.6% |
| Rapid7, Inc. ($RPD) | - | 27.6% | 21.5% | 33.9% | 25.9% |
| Tenable Holdings, Inc. ($TENB) | - | 50.9% | 42.4% | 32.6% | 24.2% |
| |
|---|
| Median (23 companies) | 12.9% | 16.6% | 20.4% | 19.4% | 15.1% |
|---|
| A10 Networks, Inc. ($ATEN) | - | 3.6% | -1.4% | -8.4% | 6.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 88.5% | 88.6% | 89.6% | 89.5% | 89.4% |
| Progress Software Corporation ($PRGS) | 83.8% | 82.6% | 83.1% | 81.8% | 86.0% |
| Varonis Systems, Inc. ($VRNS) | 90.5% | 90.4% | 89.8% | 86.2% | 84.9% |
| Vmware, Inc. ($VMW) | 85.2% | - | 85.5% | 83.9% | 83.4% |
| Tenable Holdings, Inc. ($TENB) | 88.6% | 86.4% | 83.9% | 82.8% | 82.4% |
| |
|---|
| Median (23 companies) | 73.1% | 73.9% | 73.5% | 75.4% | 76.5% |
|---|
| A10 Networks, Inc. ($ATEN) | 76.1% | 77.4% | 77.7% | 77.0% | 77.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 49.8% | 50.7% | 48.8% | 46.0% | 45.1% |
| Qualys, Inc. ($QLYS) | 23.8% | 25.1% | 28.4% | 36.5% | 40.3% |
| SolarWinds Corporation ($SWI) | -8.0% | 44.0% | 44.8% | 44.7% | 39.8% |
| Progress Software Corporation ($PRGS) | 2.4% | 28.6% | 32.9% | 23.4% | 34.4% |
| Fortinet, Inc. ($FTNT) | 7.2% | 11.1% | 15.9% | 19.8% | 23.9% |
| |
|---|
| Median (23 companies) | -9.8% | -5.4% | -3.9% | 0.2% | -1.1% |
|---|
| A10 Networks, Inc. ($ATEN) | -5.4% | -0.8% | -8.5% | -1.7% | 15.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | 7.8% | 6.5% | 8.0% | 9.5% | 12.0% |
| ServiceNow, Inc. ($NOW) | 7.6% | 7.8% | 8.6% | 7.7% | 9.3% |
| Qualys, Inc. ($QLYS) | 11.7% | 16.4% | 8.2% | 8.6% | 8.3% |
| Zuora, Inc. ($ZUO) | 3.4% | 3.3% | 2.8% | 5.7% | 7.8% |
| Proofpoint, Inc. ($PFPT) | 9.2% | 9.0% | 4.1% | 4.0% | 6.9% |
| |
|---|
| Median (23 companies) | 2.0% | 2.2% | 2.6% | 3.8% | 3.4% |
|---|
| A10 Networks, Inc. ($ATEN) | 2.1% | 2.4% | 1.2% | 2.0% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fortinet, Inc. ($FTNT) | 5.3% | 15.0% | 28.0% | 29.0% | 46.3% |
| Check Point Software Technologies Ltd. ($CHKP) | 24.7% | 26.8% | 25.5% | 24.2% | 25.6% |
| Qualys, Inc. ($QLYS) | 13.7% | 12.3% | 14.3% | 18.7% | 22.0% |
| Vmware, Inc. ($VMW) | 15.9% | - | - | 18.1% | 19.6% |
| Progress Software Corporation ($PRGS) | -4.9% | 13.5% | 18.5% | 7.6% | 16.0% |
| |
|---|
| Median (23 companies) | 0.0% | -2.7% | -0.9% | -6.3% | -6.4% |
|---|
| A10 Networks, Inc. ($ATEN) | -24.4% | -11.3% | -27.2% | -13.0% | 13.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SolarWinds Corporation ($SWI) | - | 6.2x | 4.1x | 4.4x | 4.1x |
| Proofpoint, Inc. ($PFPT) | - | - | - | -27.4x | 2.5x |
| Progress Software Corporation ($PRGS) | -7.5x | -0.1x | 0.1x | 1.5x | 2.1x |
| Vmware, Inc. ($VMW) | -0.7x | - | -0.8x | 0.3x | 1.5x |
| CyberArk Software Ltd. ($CYBR) | -4.1x | -5.7x | -4.5x | -3.6x | 0.9x |
| |
|---|
| Median (11 companies) | -1.2x | -0.6x | -0.4x | -0.3x | 0.9x |
|---|
| A10 Networks, Inc. ($ATEN) | - | - | - | - | -1.5x |
