A10 Networks (ATEN 8.24) makes a living providing hardware and software solutions designed to enable its customers to secure and optimize the performance of their data center and cloud applications and secure their users, applications and infrastructure from internet, web and network threats at scale. A10, though, didn't get to help as many customers in the second quarter as it thought it might. Consequently, the company has cut its second quarter outlook.
A10 shared its revised guidance after Thursday's close and the response from investors was not favorable. Shares of ATEN dropped 17% in after-hours action and they have remained pinned at those lower levels before the start of today's trading.
The company's revised outlook calls for total revenue in the second quarter to be between $52.5 million and $53.5 million and its net loss to be between $0.05 and $0.06 on a non-GAAP basis, using approximately 69.8 million basic shares. Previously, A10 expected total revenue to be between $62.0 million and $64.0 million and to report net income between $0.01 and $0.03 per share, using approximately 76.6 million diluted shares.
The new guidance ranges are well below analysts' average expectations, which helps explain the stark response to the company's warning.
A10 attributed the disappointing revenue guidance to a number of opportunities in its pipeline that did not close, primarily in North America and to a lesser degree Japan.
A10 has over 5,400 customers across 82 countries, including the top four wireless carriers in the U.S., seven of the top 10 U.S. cable providers, and the top three service providers in Japan. In fiscal 2016, it derived 52% of its revenue from the U.S., 23% from Japan, and 25% from other geographic regions.
The company's competitors include the likes of F5 Networks (FFIV 128.29), Citrix Systems (CTXS 80.37), Cisco (CSCO 31.27), Juniper Networks (JNPR 29.09), Radware (RDWR 18.00), and Symantec (SYMC 30.36).
A10 said it still has key deals in its pipeline and that it is working diligently to improve its execution while remaining confident that it can penetrate faster-growing segments of its market due to the investments it has made in security and cloud. Based on the initial response to the company's second quarter warning, many investors don't appear to share that confidence.
The company will have an opportunity to allay their concerns when it reports its complete financial results for the second quarter after the close on Thursday, July 27, and presumably offers third quarter guidance.