Greetings. Welcome to A10 Networks Fourth Quarter and Full Year 2025 Financial Results Conference Call. A question and answer session will follow the formal presentation. I will now turn the conference over to your host, Tom Baumann. Sir, you may begin.

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 ninety days via the A10 Networks website at a10networks.com. Hosting the call today are Dhrupad Trivedi, A10 Networks' President and CEO, and CFO, Michelle Caron.

Before we begin, I would like to remind you that shortly after the market closed today, A10 Networks issued a press release announcing its fourth quarter 2025 financial results. Additionally, A10 published a presentation and supplemental trended financial statements. You may access the press release, presentation, and trended financial statements on the Investor Relations section of the company's website. During the course of today's call, management will make forward-looking statements, including statements regarding projections for future operating results, demand, industry and customer trends, macroeconomic factors, strategy, potential new products and solutions, our capital allocation strategy, profitability, expenses and investments, positioning, and our dividend program. These statements are based on current expectations and beliefs as of today, February 4, 2026. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, that could cause actual results to differ materially, and you should not rely on them as predictions of future events. A10 does not intend to update information contained in forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. For a more detailed description of these risks and uncertainties, please refer to the most recent 10-Ks and quarterly report on Form 10-Q. Please note that with the exception of revenue, financial measures discussed today are on a non-GAAP basis, unless otherwise noted, and have been adjusted to exclude certain charges. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for prepared remarks in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. A reconciliation between GAAP and non-GAAP measures can be found in the press release issued today and on the trended quarterly financial statements posted on the company's website at www.a10networks.com. Now I would like to turn the call over to Dhrupad Trivedi, President and CEO of A10 Networks.

Thank you, Tom. And thank you all for joining us. Today, A10 Networks reported record quarterly and full-year revenue results. These results reinforce A10's strategic position. A key contributor continues to be the sustained investment in environments supporting AI-driven workloads. As customers scale high-performance computing, inference platforms, and data-intensive applications, they are increasingly focused on traffic management, availability, and security at massive scale. These requirements play directly to A10's strength. For the full year, revenue grew 11% year over year, outpacing growth rates across much of our competitive landscape, and underscoring the increasing relevance of our portfolio with customers. We enter 2026 with momentum supported by macro trends as a result of our agile strategy, strong execution, and excellent industry reputation. Increasingly, we are considered a foundational piece in the development of AI and other infrastructure, in addition to being a critical component for customers operating their current environments. As our customers grow, we grow. In the fourth quarter, we delivered $80.4 million in revenue, our largest single quarter ever. Revenue expanded 8.3% year over year in spite of an unusually strong seasonal fourth quarter last year. Our investments in targeting North America customers have resulted in this portion of our business growing faster than our overall revenue, and we continue to be well-positioned with these customers while maintaining our geographic and customer diversity. Our global diversification continues to enable consistent performance despite macro variability. For the full year 2025, we delivered revenue of $290.6 million, up 11% year over year, and adjusted EBITDA of $86 million, which represents 29.6% of revenue. These are all company records and continue to demonstrate the inherent strength of our strategy, operating model, and disciplined execution. Security-led solutions are now sustainably at our long-term goal of 65% of total revenue. This shift reflects not…

Thank you, Dhrupad. As a reminder, with the exception of revenue, all of the metrics discussed on this call are on a non-GAAP basis unless otherwise stated. A full reconciliation of GAAP to non-GAAP results is provided in our press release and on our website. So now let me turn to the results. As Dhrupad noted, we delivered a strong Q4 and entered 2026 with encouraging momentum. Fourth-quarter revenue grew 8.3% to $80.4 million. This was a record revenue level for A10 Networks. From a mix perspective, product revenue accounted for 61% of total revenue, and service revenue represented 39%. Product revenue of $48.8 million grew percent year over year and typically is representative of future revenue trends. Within our product revenue category, the fourth quarter achieved our long-term target of generating more than 65% of our total revenue from security-led solutions. This demonstrates our ability to deliver differentiated solutions leveraging our strengths in performance, scale, and reliability. Looking at our major verticals, enterprise customers represented 42% of Q4 revenues. The Americas continued to outpace overall enterprise revenue growth for the company in line with our stated strategy. Total revenue, service provider revenue, which was 58%, was weighted towards cloud providers, further indication of our success in strategically aligning our offerings with AI infrastructure build-out. In fact, non-cloud service provider revenue was flat year over year, reflecting an ongoing mix shift as customers prioritize security and next-generation networking initiatives over legacy infrastructure. A10 Networks has evolved its solutions to be well-positioned to capture legacy refresh demand as this market transition progresses, and customers resume investment while continuing to align with their evolving priorities around performance, scale, and security. From a geographical perspective, our Americas region represented 64% of global revenue, reflecting the benefits of A10 Networks' investments in our enterprise…

Thank you, Michelle. The results for the fourth quarter and full year validate the strategic investments we have made over the past half-decade to reposition A10 Networks as a valuable partner for addressing the new and emerging challenges related to the evolving technology environment. The demands AI brings to a data center or a CSP are challenges that A10 Networks has a proven track record of addressing. We facilitate East-West traffic, efficiently managing workloads, and dynamically prioritize traffic, emphasizing high throughput and low latency, all with integrated security. As a result, A10 Networks is positioned squarely in front of multiple durable secular catalysts. We are investing to enhance our position across our portfolio. Our business model dynamically allocates resources to address changing market conditions while preserving profitability and shareholder return. In the press release we issued today, we laid out our initial 2026 outlook. On a full-year basis for 2026, we expect to deliver both top and bottom-line growth, including revenue growth of 10% to 12% over 2025 levels. We also expect non-GAAP gross margin in line with historical trends and within our stated business model goals of 82% while navigating input cost pressures. We expect to expand our net and EBITDA margins from current levels, and we expect EPS growth to exceed our revenue growth rate. We will provide additional strategic and solution context around our growth drivers and market positioning at an upcoming Investor Day, including a deeper discussion of the factors that drive these expectations. Operator, you can now open the call up for questions.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. One moment, please. Or a comment. The first question comes from Gray Powell with BTIG. Please proceed.

Hey, great. Thanks for taking the questions and congratulations on the good results.

Thanks, Gray.

Absolutely. So maybe a couple of questions on my side. Just to start off, it was really good to see the improvement in service provider growth in 2025. Just as we think about 2026, how sustainable is the trend there? And then I know you hit on this in the prepared remarks. Just, like, how should we think about the different growth drivers within service providers, you know, like a recovery in traditional communication companies versus continued growth from the cloud providers deploying AI infrastructure? Thank you.

Yeah. Great. No. Thank you. Good question. So yeah, so I think as we went through the period this year, I think you can see in the results we saw certainly relative to 2024, an improvement in the service provider segment overall. I would say the two things to note. First is the majority of that growth did come from cloud-oriented companies, whether it's in the US or elsewhere, building out infrastructure towards AI or towards more cloud services. However, I would say as we went through the year into Q3, Q4 period, we saw not return to original levels, but certainly improvement in spending patterns with also the traditional telcos. And the nature of their investment, I would say, is twofold. One was relative to improving their security position and posture for the networks, or the enterprise services that they provide. And second, I would say that because of the nature of our portfolio, the other part of that growth was them simply needing to add capacity to manage more data and more users and more traffic on the network. Right? So without them needing to build a kind of a greenfield new network, both those drivers were relevant to us. One was making their networks more secure. And second is continuing to modernize the network as well as adding capacity while they do that.

Got it. Okay. And then just a quick follow-up if it's okay. Yeah.

Yep.

I know it's probably really hard to quantify, and maybe it's, like, too early. But are you seeing it's part of this, like, are you seeing AI drive higher traffic volumes? Like, higher levels of DDoS attacks or something else? And that's driving part of the refresh cycle, or am I getting ahead of myself there?

Yeah. No. That's a good question, Gray. I think, you know, we certainly monitor that, and I think your question, it may be a little early. I don't think we are past that point where we could quantify or talk about it. But absolutely, there are two sides of the coin, right, is where AI also facilitates kind of ease of deploying more complex, more sophisticated attacks, and therefore also drives volume. And some of it is related to also the nature of traffic that did not exist on the network before AI. Right? So that certainly is a factor. Little early to quantify. I don't think that, you know, service providers are investing yet on that, but they are certainly viewing that as something to worry about. But they do expect and anticipate increasing volume just from the nature of the volume increase when people constantly feed prompts and get feedback as opposed to not having that topic before. Right? So that certainly also feeds the growth. And the security is something that is on, I would say, everybody's radar, but hard to quantify that yet.

Understood. Alright. Thank you very much.

Yep. Thanks.

Our next question comes from Anja Soderstrom with Sidoti. Please proceed.

Hey, thank you for taking my question and congrats on the quarter and the outlook for 2026. Thank you. You have quite an outperformance in the fourth quarter. What was the main surprise here? What changed during the quarter? And sort of how did the quarter trend for you?

Yes. I think for us, you know, as we had talked about, right, Anja, is that our focus is obviously, we have a strong position with the service provider segment globally. And, as that, you know, improves, maybe not fully recover, we'll continue to see, you know, some benefit from those deep relationships that we continue to build upon. So that, obviously, you can see in the numbers helped a little bit. Second is, right, we continue to focus on growing our footprint around larger customers, including in the enterprise segment, and we highlighted a couple of new customers. So our ability to land new large customers, obviously, is also helpful to that growth while we benefit overall. Right? And third, as we said in our comments that to the degree, you know, where some maybe a lot, some maybe not so much, people are investing in AI infrastructure. Our portfolio is well-positioned, so we see that. So I would say, you know, SP becoming slightly better was, I would say, better than we expected. Not all the way back, but certainly, you know, something that helped us in the quarter. Our growth on the enterprise side, as well as on AI-led infrastructure, was what we were expecting.

Okay. Thank you. And you mentioned some new customers. Were they, did you displace someone with them?

Yeah. I think, so, typically, in most of those cases, we would be displacing them. I think the only exception to that is when we work with customers on some of our security solutions, they may not be using anything today. Right? And they are implementing new security protocols or standards. So in that case, it's not replacing somebody. But outside of that, it would be, certainly in a competitive situation.

Okay. And is it like, one specific competitor you're replacing, or is it more broadly? And has it changed at all recently? Competitive landscape?

No. So I would say no real change in the landscape, right, as we have talked about in the past, right, on the enterprise side and security side. It's the same competitive landscape. I think we just continue to work at improving our solutions and be more in tune with customer needs. So I think as that is better aligned, we are seeing better opportunities as well.

Okay. And just one more from me. If I heard you right, there was an uptick in the CapEx spend. What's driving that, and how should we think about that for 2026?

Sure. Yeah. So I think, you know, if you kind of look at our trend, there was a little bit of an uptick in CapEx in Q4. There's two real drivers to it. I think one of it is related to our need to invest in some of the back-end infrastructure. So when we, you know, acquire a company like FedEx and we are offering some more services, what that translates to is not necessarily cost from a traditional sense, but on the hosting services, data centers, SOC, and doing our security, right, to strengthen our own security operations and so forth. So some of that investment is really around enabling the solutions that are helping our solutions be more relevant to customers in terms of either hosted solution or back-end infrastructure. So a lot of that is in IT. And then some part of it is as we are, you know, in the early stage with customers doing demos and POCs on AI infrastructure. Obviously, we are investing a little bit of that CapEx in new kinds of processors and chips and GPUs and things like that.

Okay. Thank you. That was all for me.

Thank you, Anja. The next question comes from Hamed Khorsand with BWS Financial. Please proceed.

Hi. Could you just walk through your guidance a bit here? And this is the first time you've been willing to provide any kind of guidance with this specific in, two, three years. How are you seeing that visibility? Is enterprise, the service provider, and how certain are you that this is going to actually be there compared to two, three years ago when you stopped giving guidance?

Yeah. No. I think that's a good question. I think kind of the environment has evolved and our products and business have evolved over the last two, three years. Certainly, right, we were much more exposed to just the SP or the traditional SP spending cycle, which is CapEx cyclic and CapEx intensive and so harder to predict over long periods of time. What we did guide even the last three years as, you know, Hamed was, delivering on the gross margin and EBITDA percent. Not as much on the top line because of the level of variability with everything going on, right, with the macro as well as micro. So as we see the last few quarters, I think we have continued to make the base of our revenue more durable. And as we are getting more of that from enterprise or large enterprise, as well as SP as well as AI spending. I think in an aggregate, we think we can sustain kind of the momentum where we are, where, you know, we just finished the year at 11% year-over-year growth. So we feel that based on the visibility we have with the six to nine-month cycle, and more diversified exposure across these markets, that's all it is. Right? But our fundamental outlook of saying, you know, EBITDA 26 to 28%, gross margin 80 to 82%, and EPS growing year over year, has not changed. I've given that guidance every year. Right?

Okay. Great. And my other question was related to your APJ performance. Was that country-specific, or was that multiple countries?

Yeah. No. I would say that the majority of it was related to Japan. And I think it's heavily related to the environment there with the low GDP concern over what, you know, the tariff environment could mean. And therefore, SPs as well as enterprise holding off on investment. So I think we certainly are not seeing us losing share, but we are certainly seeing depressed spending. In line with, you know, all the macro news you would see out of Japan. Outside of Japan, I think we were fine. It was not that negative. Probably close to company average.

Okay. Thank you.

No problem. Thank you, Hamed.

Again, if you have a question or a comment, please press 1 on your telephone keypad. The next question comes from Michael Romanelli with Mizuho. Please proceed.

Yes. Hi. Thanks for taking my question. Enterprise revenue growth was 8% this quarter, obviously much improved from the 10% decline reported last quarter. I guess, did you close any notable deals that perhaps pushed from the 3Q? And I guess going forward and in relation to the 10% to 12% growth outlook for 2026? Or how should we be thinking about enterprise business growth for the full year?

Yeah. So I think good question, Michael. And I think if you remember last call, right, I talked about the fact that because we are early in expanding our footprint into that marketplace, it's going to be a little bit choppy, and therefore, even the last quarter, we were highlighting focusing on the TTM growth versus every quarter. Right? So every quarter could be up or down. But on a trailing twelve-month basis, we are confident that that segment will grow at least at the fleet average of 10 to 12%.

Okay. Got it. That's helpful. And then, you know, as part of your prepared remarks, Dhrupad, you highlighted a few encouraging wins in Q4, which was great to hear. You know, I guess, like, overall, how would you characterize net new enterprise logo activity this quarter? And, you know, as part of the 2026 guide, like, you know, obviously, you have a very large install base, but how should we be thinking about your ability to sign up, you know, many more new enterprise customers? Thanks.

Yeah. No. It's a good question. And I think, you know, what I would highlight again, right, is, as a company based on our technology and value proposition, we are not really focused on an SMB market orientation. So really, we are not looking at how many 100 customers we acquire every quarter and how many churn and everything else. Right? So our goal is really to continue to get new customers typically in large enterprises, who operate complex networks with thousands of users, mission-critical environments. Right? So in that context, obviously, acquiring new customers is very, very important. It's very different than a typical SMB model. And, you know, we don't need to acquire hundreds of customers to get that growth. Right? So, we absolutely have a good pipeline of adding new customers. But even once we have those customers, typically, we continue to expand and sell them more product categories as well over time. So that's an important metric for us, but I would say it's different than maybe an SMB-oriented business.

Got it. Okay. Thank you.

Thanks. Thank you, Michael.

The next question comes from Hendi Susanto with Gabelli Funds. Please proceed.

Good evening, Dhrupad. You highlighted how AI can drive growth in three categories, like modernization, network capacity, and security. How do you rank among those three?

Yes. I think, you know, obviously, the core of our growth comes from capacity, whether it's existing or new or new build-outs are growing. As the network. Security is not decoupled from capacity. Right? So obviously, our goal was to get security-led revenue to be 65% of total, and we are there and, you know, we'll stay there. And we are confident we can continue doing that. Modernization, I think there's two aspects to it. One is when people are modernizing applications and use cases, then, obviously, we are relevant. The second part of it is where modernization means somebody has to build a brand new 5G network. Obviously, that's not a growth we bet upon, and we will benefit when that happens more. When somebody builds, you know, kind of a greenfield network. But in the current economic environment, we don't count upon that as a major driver, and our goal is to find growth independent of that. And if that happens, then that's good. Right? So it's really around working with our customers on their current networks and capacity and security. While enabling them with more and more capabilities. And then obviously benefiting more than that if they build new networks.

Yeah. Thank you, Dhrupad. And then one more question. There's a growing conversation about Agentic AI as a growth opportunity in 2026. Like an early stage of growth of Agentic AI. I would like to check in in case you have seen some use cases emerging for Agentic AI and how we should be thinking about A10 Networks in that context.

Sure. Yeah. So I think, you know, like, like, all of, you know, we hear from a lot of the people in the industry and others as well, right, that it's early in the cycle where we are engaged with customers really is, you know, while we do have AI products per se, where we are much more engaged with customers is how do they plan to use AI for their business goals. And what they do with it. So, you know, some of the examples we have talked about is for over kind of service provider type customers. In the next two to three years, having an ability to do predictive analytics and getting predictive in into their network and performance and capacity planning is, you know, important to them. It's still early because companies are themselves figuring out how to take advantage of AI. Second is, of course, right, as we talked about as companies use more AI, whether it's, you know, on-site model or a global model, they will have new kinds of traffic, new kinds of threat, and new capabilities needed to manage those. And particularly with low latency and more distributed networks. So, in that environment, obviously, we are working with customers also on how to continue to improve their, you know, security posture, with new types of traffic. And also enabling the architecture where they can manage that kind of traffic better on their networks.

Okay. Thank you so much, Dhrupad.

Thank you, Hendi.

We have reached the end of the question and answer session, and I will now turn the call over to Dhrupad Trivedi for closing remarks.

Thank you. And thank you to all of our employees, customers, and shareholders for joining us today and for your continued support. I'm increasingly confident in our strategic orientation with security and AI infrastructure spending patterns. Thank you for your time and attention.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.