A10 Networks, Inc. (ATEN)

CIK: 0001580808. SIC: 3576 Computer Communications Equipment. Latest 10-K as of: 2026-02-25.

SIC breadcrumb: Manufacturing > Industrial And Commercial Machinery And Computer Equipment > SIC 3576 Computer Communications Equipment

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1580808. Latest filing source: 0001580808-26-000014.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001580808.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001580808.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001580808-26-000032.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-07. Report date: 2026-03-31.

ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Note Regarding Forward-Looking Statements” and other risk factors contained in Part I, Item 1A “Risk Factors” in the 2025 Annual Report.

Overview

We are a global provider of secure application and network solutions that protect, optimize, and scale business-critical systems across on-premises, hybrid cloud, and edge environments. Our network infrastructure and security products are designed to enable large enterprises, service providers, and cloud platforms worldwide to deliver performance, reliability, and protection against cyber threats, while preparing their networks for the demands of AI and next-generation applications.

We sell our solutions globally to service providers and enterprises who are looking to modernize and secure their digital infrastructure. Our service provider customers rely on scalable, efficient, and secure networks to deliver connectivity, cloud and other services that may generate revenue to their customers. Our enterprise customers require secure application delivery, AI-ready infrastructure, and are increasingly concerned about the landscape of cybersecurity threats across their complex networks. Our end-customers operate in a variety of industries, including telecommunications, technology, industrial, retail, financial, gaming, education and government. Since inception, our customer base has grown significantly.

In February 2025, we acquired the assets and key personnel of ThreatX Protect, which expanded our cybersecurity portfolio with WAAP protection (web application and application programming interfaces). We offer protection under A10 Defend ThreatX Protect. In March 2025, the Company issued the 2030 Notes and received net proceeds from the offering of approximately $217.7 million.

A10’s portfolio brings together secure application delivery, DDoS and API protection, and unified management into a cohesive platform that integrates with existing network architectures and leading public cloud environments. We deliver these capabilities through flexible deployment models, including software, cloud-native, and hardware form factors that are tailored to the scale and requirements of our customers. We generate revenue primarily from the sale of our secure networking and cybersecurity solutions and related support services. These offerings are delivered through a combination of direct and channel-based sales, with most customers purchasing maintenance and support alongside their initial deployment and renewing that support as contracts expire.

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software licenses and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and SaaS offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and over time once the subscription term has commenced. For our SaaS offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products.

We operate worldwide across the Americas, EMEA, and Asia Pacific, supported by a hybrid go-to-market model that combines a direct, high-touch sales organization with a broad ecosystem of distributors, resellers, and system integrators. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations.

25

During the three months ended March 31, 2026, (i) 67% of our total revenue was generated from the Americas region, of which 62% was generated from the United States and 5% was generated from the Americas-other, (ii) 19% of our total revenue was generated from the APJ region and (iii) 14% of our total revenue was generated from the EMEA region. During the three months ended March 31, 2025, (i) 51% of our total revenue was generated from the Americas region, of which 46% was generated from the United States and 5% was generated from the Americas-other, (ii) 28% of our total revenue was generated from the APJ region and (iii) 21% of our total revenue was generated from the EMEA region. One of our priorities is to strengthen our sales efforts in North America. During the three months ended March 31, 2026 and 2025, our enterprise customers accounted for 56% and 41% of our total revenue, respectively, and our service provider customers accounted for 44% and 59% of our total revenue, respectively.

As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of large customers, including service providers and enterprise customers, in any period. Purchases by our ten largest end-customers accounted for 55% and 44% of our total revenue for the three months ended March 31, 2026 and 2025, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles. The timing of these purchases and the delivery of the purchased products are difficult to predict. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest customers could materially impact our revenue and operating results in any quarterly period. This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict.

As of March 31, 2026, we had $57.9 million of cash and cash equivalents and $311.9 million of marketable securities. Cash provided by operating activities was $2.2 million during the three months ended March 31, 2026, compared to $17.2 million in the same period of 2025.

We continue to invest in innovation that strengthens our leadership in secure infrastructure, expands our cybersecurity capabilities, and positions A10 at the intersection of network performance, protection, and AI-driven workloads. Our strategy is grounded in disciplined capital allocation and a commitment to deliver durable revenue growth, expanding recurring revenue, and strong cash flow generation.

Enhanced U.S. tariffs, import/export restrictions and countermeasures taken by affected countries are contributing to macroeconomic volatility which in turn is impacting demand and our cost inputs. Spending patterns remain uneven due to the unpredictable impact of trade policies, and we may need to implement tariff-related input cost increases.

26

Results of Operations

A summary of our condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 is as follows (dollars in thousands):

Three Months Ended March 31,

2026

2025

Increase (Decrease)

Amount

Percent of Total Revenue

Amount

Percent of Total Revenue

Amount

Percent

Net revenue:

Products

$

43,986 

58.6 

%

$

35,979 

54.4 

%

$

8,007 

22.3 

%

Services

31,014 

41.4 

30,158 

45.6 

856 

2.8 

Total net revenue

75,000 

100.0 

66,137 

100.0 

8,863 

13.4 

Cost of net revenue:

Products

8,930 

11.9 

7,263 

11.0 

1,667 

23.0 

Services

6,346 

8.5 

6,179 

9.3 

167 

2.7 

Total cost of net revenue

15,276 

20.4 

13,442 

20.3 

1,834 

13.6 

Gross profit

59,724 

79.6 

52,695 

79.7 

7,029 

13.3 

Operating expenses:

Sales and marketing

20,014 

26.7 

19,545 

29.6 

469 

2.4 

Research and development

19,018 

25.4 

15,900 

24.0 

3,118 

19.6 

General and administrative

7,693 

10.3 

8,472 

12.8 

(779)

(9.2)

Total operating expenses

46,725 

62.3 

43,917 

66.4 

2,808 

6.4 

Income from operations

12,999 

17.3 

8,778 

13.3 

4,221 

48.1 

Non-operating income (expense):

Interest income

3,383 

4.5 

1,790 

2.7 

1,593 

89.0 

Interest and other income (expense), net

(2,158)

(2.9)

(90)

(0.1)

(2,068)

2,297.8 

Non-operating income, net

1,225 

1.6 

1,700 

2.6 

(475)

(27.9)

Income before provision for income taxes

14,224 

19.0 

10,478 

15.8 

3,746 

35.8 

Provision for income taxes

2,192 

2.9 

935 

1.4 

1,257 

134.4 

Net income

$

12,032 

16.0 

%

$

9,543 

14.4 

%

$

2,489 

26.1 

%

Net Revenue

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and SaaS offerings.

Our products revenue primarily consists of revenue from sales of our hardware appliances upon which our software is installed. Such software includes our ACOS software platform plus one or more of our ADC, CGN, TPS, SSLi or CFW solutions. Purchase of a hardware appliance includes a perpetual license to the included software. Additionally, a small portion of our products revenue comes from subscription revenue. We offer several products by subscription, primarily through either term-based license agreements or as a service through our cloud-based platform. With respect to sales of our hardware appliances, we recognize products revenue upon transfer of control, generally at the time of shipment, provided that all other revenue recognition criteria have been met. Revenue for term-based license agreements is recognized at a point in time when we deliver the software license to the customer and the subscription term has commenced. For our SaaS offerings, our customers do not take possession of our software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized ratably as the services are provided. As a percentage of revenue, our products revenue may vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates and the impact of significant transactions with unique terms and conditions.

27

We generate services revenue from sales of PCS, which is bundled with sales of products and technical services. We offer tiered PCS services under renewable, fee-based PCS contracts, primarily including technical support, hardware repair and replacement parts, and software upgrades on a when-and-if-available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years.

A summary of our total revenue is as follows (dollars in thousands):

Three Months Ended March 31,

2026

2025

Increase (Decrease)

Amount

Percent of Total Revenue

Amount

Percent of Total

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-25. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include, but are not limited to, those matters discussed under the heading “Forward-looking Statements.” Our actual results could differ materially from those anticipated by these forward‑looking statements due to various factors, including, but not limited to, those set forth under Item 1A. Risk Factors of this Annual Report on Form 10-K and elsewhere in this document.

This section of this Annual Report on Form 10-K generally discusses fiscal 2025 and 2024 items and year-to-year comparisons between fiscal 2025 and 2024. Discussions of fiscal 2024 items and year-to-year comparisons between fiscal 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 25, 2025.

Overview

We are a global provider of secure application and network solutions that protect, optimize, and scale business-critical systems across on-premises, hybrid cloud, and edge environments. Our network infrastructure and security products are designed to enable large enterprises, service providers, and cloud platforms worldwide to deliver performance, reliability, and protection against cyber threats, while preparing their networks for the demands of artificial intelligence (“AI”) and next-generation applications.

We sell our solutions globally to service providers and enterprises who are looking to modernize and secure their digital infrastructure and application. Our service provider customers rely on scalable, efficient, and secure networks to deliver connectivity, cloud and other services that may generate revenue to their customers. Our enterprise customers require secure application delivery, AI-ready infrastructure, and are increasingly concerned about the landscape of cybersecurity threats across their complex networks and emerging AI workloads. Our end-customers operate in a variety of industries, including telecommunications, technology, industrial, retail, financial, gaming, education and government. Since inception, our customer base has grown significantly.

A10’s portfolio brings together secure application delivery, DDoS and API protection, and unified management into a cohesive platform that integrates with existing network architectures and leading public cloud environments. We deliver these capabilities through flexible deployment models, including software, cloud-native, and hardware form factors that are tailored to the scale and requirements of our customers. We generate revenue primarily from the sale of our secure networking and cybersecurity solutions and related support services. These offerings are delivered through a combination of direct and channel-based sales, with most customers purchasing maintenance and support alongside their initial deployment and renewing that support as contracts expire.

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software licenses and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes post contract support (“PCS”), professional services, training and software-as-a-service (”SaaS”) offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and over time once the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products.

We operate worldwide across the Americas, EMEA, and Asia Pacific, supported by a hybrid go-to-market model that combines a direct, high-touch sales organization with a broad ecosystem of distributors, resellers, and system integrators. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations.

49

We sell our products globally to service providers and enterprises that depend on data center applications and networks to generate revenue and manage operations efficiently. We report two customer verticals: service providers, which accounted for 60%, 57% and 58% of our total revenue during 2025, 2024 and 2023, respectively, and enterprise, which accounted for 40%, 43% and 42% of our total revenue during 2025, 2024 and 2023, respectively. While we expect total demand to remain strong as the need for cybersecurity solutions continues to increase, we expect the demand shift trend from service provider to enterprise to continue in the near term. We report customer revenues in three broad geographic regions: the Americas, APJ and EMEA regions. The Americas region comprises the U.S. and all other countries in the Americas (excluding the U.S.). The APJ region comprises Asia Pacific region including Japan. The EMEA region comprises Europe, Middle East and Africa. We believe this vertical and geographic view aligns with how we manage the business and maps our product portfolio to customer verticals.

Our end-customers operate in a variety of industries, including telecommunications, technology, industrial, retail, financial, gaming, education and government. Since inception, our customer base has grown rapidly.

We sell substantially all of our solutions through our high-touch sales organization as well as distribution channels, including distributors, value-added resellers and system integrators, and fulfill nearly all orders globally through such resellers. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations.

As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of large end-customers, including service providers and enterprise customers, in any period. Purchases from our ten largest end-customers accounted for 40%, 38% and 33% of our total revenue for 2025, 2024 and 2023, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles. The timing of these purchases and the delivery of the purchased products are difficult to predict and rely upon customer growth and network enhancements. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest end-customers could materially impact our revenue and operating results in any quarterly period. This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict.

In February 2025, we acquired the assets and key personnel of ThreatX Protect, which expanded our cybersecurity portfolio with WAAP protection (web application and application programming interfaces). We offer protection under A10 Defend ThreatX Protect.

In March 2025, we issued $225.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2030 (the “2030 Notes”). The Company received net proceeds from the offering of approximately $217.7 million. The 2030 Notes will mature on April 1, 2030, unless earlier converted, redeemed or repurchased.

We continue to invest in innovation that strengthens our leadership in secure infrastructure, expands our cybersecurity capabilities, and positions A10 at the intersection of network performance, protection, and AI-driven workloads. Our strategy is grounded in disciplined capital allocation and a commitment to deliver durable revenue growth, expanding recurring revenue, and strong cash flow generation.

Enhanced U.S. tariffs, import/export restrictions and countermeasures taken by affected countries are contributing to macroeconomic volatility which in turn is impacting demand and our cost inputs. Spending patterns remain uneven due to the unpredictable impact of trade policies, and we may need to implement tariff-related input cost increases.

50

Results of Operations

A summary of our consolidated statements of operations for the years ended December 31, 2025 and 2024 are as follows (dollars in thousands):

Years Ended December 31,

2025

2024

Increase (Decrease)

Amount

Percent of Total Revenue

Amount

Percent of Total Revenue

Amount

Percent

Revenue:

Products

$

167,086 

57.5 

%

$

139,799 

53.4 

%

$

27,287 

19.5 

%

Services

123,471 

42.5 

121,897 

46.6 

1,574 

1.3 

%

Total revenue

290,557 

100.0 

261,696 

100.0 

28,861 

11.0 

%

Cost of revenue:

Products

33,403 

11.5 

31,218 

11.9 

2,185 

7.0 

%

Services

26,639 

9.2 

20,201 

7.7 

6,438 

31.9 

%

Total cost of revenue

60,042 

20.7 

51,419 

19.6 

8,623 

16.8 

%

Gross profit

230,515 

79.3 

210,277 

80.4 

20,238 

9.6 

%

Operating expenses:

Sales and marketing

84,467 

29.1 

83,300 

31.8 

1,167 

1.4 

%

Research and development

69,104 

23.8 

57,726 

22.1 

11,378 

19.7 

%

General and administrative

29,802 

10.3 

25,283 

9.7 

4,519 

17.9 

%

Total operating expenses

183,373 

63.1 

166,309 

63.6 

17,064 

10.3 

%

Income from operations

47,142 

16.2 

43,968 

16.8 

3,174 

7.2 

%

Non-operating income (expense):

Interest income

11,628 

4.0 

6,747 

2.6 

4,881 

72.3 

%

Interest and other income (expense), net

(6,348)

(2.2)

7,384 

2.8 

(13,732)

(186.0)

%

Total non-operating income (expense), net

5,280 

1.8 

14,131 

5.4 

(8,851)

(62.6)

%

Income before income taxes

52,422 

18.0 

58,099 

22.2 

(5,677)

(9.8)

%

Provision for income taxes

10,285 

3.5 

7,959 

3.0 

2,326 

29.2 

%

Net income

$

42,137 

14.5 

%

$

50,140 

19.2 

%

$

(8,003)

(16.0)

%

Revenue

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and software-as-a-service offerings.

Our products revenue primarily consists of revenue from sales of our hardware appliances upon which our software is installed. Such software includes our ACOS software platform plus one or more of our ADC, CGN, TPS, SSLi or CFW solutions. Purchase of a hardware appliance includes a perpetual license to the included software. Additionally, a small portion of our products revenue comes from subscription revenue. We offer several products by subscription, primarily through either term-based license agreements or as a service through our cloud-based platform. With respect to sales of our hardware appliances, we recognize products revenue upon transfer of control, generally at the time of shipment, provided that all other revenue recognition criteria have been met. Revenue for term-based license agreements is recognized at a point in time when we deliver the software license to the customer and the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of our software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized ratably as the services are provided. As a percentage of revenue, our

51

products revenue may vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates and the impact of significant transactions with unique terms and conditions.

We generate services revenue from sales of PCS, which is bundled with sales of products and technical services. We offer tiered PCS services under renewable, fee-based PCS contracts, primarily including technical support, hardware repair and replacement parts, and software upgrades on a when-and-if-available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years.

A summary of our total revenue is as follows (dollars in thousands):

Years Ended December 31,

2025

2024

Increase (Decrease)

Amount

Percent of Total Revenue

Amount

Percent of Total Revenue

Amount

Percent

Revenue:

Products

$

167,086 

58 

%

$

139,799 

53 

%

$

27,287 

20 

%

Services

123,471 

42 

%

121,897 

47 

%

1,574 

1 

%

Total revenue

$

290,557 

100 

%

$

261,696 

100 

%

$

28,861 

11 

%

Revenue by geographic region:

Americas

$

175,181 

60 

%

$

134,356 

51 

%

$

40,825 

30 

%

United States

160,528 

55 

%

117,707 

45 

%

42,821 

36 

%

Americas-other

14,653 

5 

%

16,649 

6 

%

(1,996)

(12)

%

APJ

70,524 

24 

%

87,175 

33 

%

(16,651)

(19)

%

EMEA

44,852 

16 

%

40,165 

15 

%

4,687 

12 

%

Total revenue

$

290,557 

100 

%

$

261,696 

99 

%

$

28,861 

11 

%

Total revenue increased by $28.9 million, or 11%, in 2025 compared to 2024 as a result of an increase of $27.3 million in products revenue and an increase of $1.6 million in services revenue.

Products revenue increased $27.3 million, or 20%, in 2025 compared to 2024. The increase was primarily a result of an increase in demand from our service provider and enterprise customers in the Americas region and an increase in demand from our service provider customers in the EMEA region, partially offset by decreases in demand from service provider and enterprise customers in the APJ region and enterprise customers in the EMEA region.

Services revenue increased $1.6 million, or 1%, in 2025 compared to 2024. The increase was primarily attributable to the increase in PCS sales in connection with our increased installed customer base in the Americas region.

During 2025, $175.2 million, or 60% of total revenue, was generated from the Americas region, which represents a 30% increase compared to 2024. The increase was primarily a result of higher products and services revenue driven by an increase in demand from both service provider and enterprise customers.

During 2025, $70.5 million, or 24% of total revenue, was generated from APJ, which represents a 19% decrease compared to 2024. The decrease was primarily a result of lower products and services revenue driven by a decrease in demand from our service provider and enterprise customers.

During 2025, $44.9 million, or 16% of total revenue, was generated from EMEA, which represented a 12% increase compared to 2024. The increase was primarily a result of higher products revenue driven by an increase in demand from our service provider customers.

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Cost of Revenue, Gross Profit and Gross Margin

Cost of Revenue

Cost of products revenue is primarily comprised of cost of third-party manufacturing services and cost of inventory for the hardware component of our products. Our component suppliers change their selling prices frequently in response to market trends, including industry-wide increases in demand. Cost of products revenue also includes warehouse personnel costs, shipping costs, inventory write-downs, certain allocated facilities and information technology infrastructure costs, and expenses associated with logistics and quality control.

Cost of services revenue is primarily comprised of personnel costs for our technical support, training and professional service teams. Cost of services revenue also includes the costs of inventory used to provide hardware replacements to end- customers under PCS contracts and certain allocated facilities and information technology infrastructure costs. Additionally, cost of services revenue includes a one-time asset impairment cost of $951 thousand for the year ended December 31, 2025.

A summary of our cost of revenue is as follows (dollars in thousands):

Years Ended December 31,

Increase (Decrease)

2025

2024

Amount

Percent

Cost of revenue:

Products

$

33,403 

$

31,218 

$

2,185 

7 

%

Services

26,639 

20,201 

6,438 

32 

%

Total cost of revenue

$

60,042 

$

51,419 

$

8,623 

17 

%

Gross Margin

Gross margin may vary and be unpredictable from period to period due to a variety of factors. These may include the mix of revenue from each of our regions, the mix of our products sold within a period, discounts provided to customers, cost of inventory for the hardware component of our products, inventory write-downs and foreign currency exchange rates.

Our sales are generally denominated in U.S. dollars, however, in Japan they are denominated in Japanese yen.

Any of the factors noted above can generate either a favorable or unfavorable impact on gross margin.

A summary of our gross profit and gross margin is as follows (dollars in thousands):

Years Ended December 31,

2025

2024

Increase (Decrease)

Amount

Gross Margin

Amount

Gross Margin

Amount

Gross Margin

Gross profit:

Products

$

133,683 

80.0 

%

$

108,581 

77.7 

%

$

25,102 

2.3 

%

Services

96,832 

78.4 

%

101,696 

83.4 

%

(4,864)

(5.0)

%

Total gross profit

$

230,515 

79.3 

%

$

210,277 

80.4 

%

$

20,238 

(1.1)

%

Products gross margin percentage increased to 80.0% in 2025 compared to 77.7% in 2024, primarily due to product and regional mix.

Services gross margin percentage decreased to 78.4% in 2025 compared to 83.4% in 2024 primarily due to an increase in personnel-related support costs and the mix of services delivered, which include technical support, training and service costs. Additionally, in 2025 services gross margin percentage was negatively impacted by a one-time asset impairment charge totaling $951 thousand.

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Operating Expenses

Our operating expenses consist of sales and marketing, research and development, general and administrative, and restructuring expenses. The largest component of our operating expenses is personnel costs which consist of wages, benefits, bonuses, and, with respect to sales and marketing expenses, sales commissions. Personnel costs also include stock-based compensation.

A summary of our operating expenses is as follows (dollars in thousands):

Years Ended December 31,

Increase (Decrease)

2025

2024

Amount

Percent

Operating expenses:

Sales and marketing

$

84,467 

$

83,300 

$

1,167 

1 

%

Research and development

69,104 

57,726 

11,378 

20 

%

General and administrative

29,802 

25,283 

4,519 

18 

%

Total operating expenses

$

183,373 

$

166,309 

$

17,064 

10 

%

Sales and Marketing

Sales and marketing expenses are our largest functional category of operating expenses and primarily consist of personnel costs. Sales and marketing expenses also include the cost of marketing programs, trade shows, consulting services, promotional materials, demonstration equipment, depreciation and certain allocated facilities and information technology infrastructure costs.

The $1.2 million increase in sales and marketing expenses in 2025 compared to 2024 was primarily due to increases of $1.8 million in personnel costs as a result of an increase in headcount, $0.3 million in equipment expense and $0.3 million of amortization and depreciation expense, partially offset by a decrease in bad debt expense of $1.2 million.

For 2026, we expect sales and marketing expenses to increase modestly from 2025 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

Research and Development

Research and development efforts are focused on new product development and on developing additional functionality for our existing products. These expenses primarily consist of personnel costs, and, to a lesser extent, prototype materials, depreciation and certain allocated facilities and information technology infrastructure costs. We expense research and development costs as incurred.

The $11.4 million increase in research and development expenses in 2025 compared to 2024 was primarily due to an increase of $12.0 million in personnel costs and a $1.5 million increase in equipment and software expense, partially offset by a decrease of $2.3 million in consultants and professional services.

For 2026, we expect research and development expenses to increase from 2025 levels reflecting strategic investments in our growth priorities, including cybersecurity technology and AI technologies.

General and Administrative

General and administrative expenses primarily consist of personnel costs, professional services and office expenses. General and administrative personnel costs include executive, finance, human resources, information technology, facility and legal related expenses. Professional services primarily consist of fees for outside accounting, tax, legal, recruiting and other administrative services.

The $4.5 million increase in general and administrative expenses in 2025 compared to 2024 was primarily due to an increases of $1.2 million in legal services, $1.0 million in personnel costs primarily as a result of an increase in variable compensation, $1.0 million in amortization and depreciation, $0.5 million in business insurance and $0.4 million in equipment expense.

For 2026, we expect general and administrative expenses to increase modestly from 2025 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

54

Non-Operating Income (Expense) - Interest Income

Interest income consists primarily of interest income earned on our invested cash, cash equivalents and marketable securities.

Interest income was $11.6 million and $6.7 million in the years ended December 31, 2025 and 2024, respectively.

Non-Operating Income (Expense) - Interest and Other Income (Expense), Net

In the year ended December 31, 2025, interest and other income (expense), net consisted primarily of interest expense for the 2030 Notes and foreign currency exchange gains and losses. In the year ended December 31, 2024, interest and other income (expense), net consisted primarily of gains on equity investments and foreign currency exchange gains and losses. The Company recorded $6.1 million of interest expense for the 2030 Notes in the year ended December 31, 2025, while no interest expense was recorded during the year ended December 31, 2024. The Company recorded $5.3 million of investment gains in the year ended December 31, 2024, while no investment gains or losses were recorded in the year ended December 31, 2025. Foreign currency exchange gains and losses, net had an unfavorable change of $0.3 million in the year ended December 31, 2025 compared to a favorable change of $2.1 million in the year ended December 31, 2024.

Provision for Income Taxes

We recorded a provision for income tax of $10.3 million for the year ended December 31, 2025 and $8.0 million for the year ended December 31, 2024. Our deferred tax assets primarily consist of research and development credits, capitalized research and development expenses and accruals and reserves. The Company’s income tax provision for the year ended December 31, 2025 and 2024, primarily consisted of U.S. federal, state and foreign income taxes.

See Note 12 Income Taxes, of the notes to consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further details regarding the Company’s taxes.

Liquidity and Capital Resources

As of December 31, 2025, we had cash and cash equivalents of $71.1 million, including $4.1 million held outside the U.S. in our foreign subsidiaries, and $306.7 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As of December 31, 2025, we had working capital of $342.3 million, retained earnings of $1.8 million and total stockholders’ equity of $211.5 million.

We plan to continue to invest for long-term growth, and our investment may increase. We currently believe that our existing cash and cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months and beyond. Our future capital requirements will depend on many factors, including our growth rate, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced product and service offerings and the continuing market acceptance of our products. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected. We may also elect to raise additional financing to help us pursue our business and strategic objectives. Any additional financing could be dilutive to our existing stockholders.

In March 2025, the Company issued the 2030 Notes and received net proceeds from the offering of approximately $217.7 million.

The Board of Directors, from time to time, has authorized various stock repurchase programs, including most recently, a twelve-month $50 million program approved November 7, 2023 (the “2023 Program”), a $50 million program approved November 7, 2024 (the “2024 Program”) and a $75 million program approved May 1, 2025 (the “2025 Program”). The Board of Directors terminated the 2024 Program on May 1, 2025. Under all programs, repurchased shares are held in treasury at cost. The Company’s stock repurchase programs do not obligate us to acquire any specific number of shares. Shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act of 1934 (the “Exchange Act”). During the year ended December 31, 2025, the Company had repurchased 3.7

55

million shares for a total cost of $68.9 million under the 2025 and 2024 Programs. During the year ended December 31, 2024, the Company repurchased 2.2 million shares for a total cost of $30.1 million under the 2024 and 2023 Programs.

In October 2021, the Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. During the year ended December 31, 2025, the Company paid quarterly cash dividends in the amount of $0.06 per share outstanding, for a total of $17.4 million. The next dividend, in the amount of $0.06 per share, will be paid on March 2, 2026 to stockholders of record on February 16, 2026. We currently anticipate that we will continue to pay comparable quarterly cash dividends in the future. However, the payment, amount and timing of future dividends remain within the discretion of the Board of Directors and will depend upon our results of operations, financial condition, cash requirements, and other factors.

In addition, as described in Note 9 Commitments and Contingencies, in the notes to consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, we may be currently, or may be from time to time, involved in ongoing litigation. Any adverse settlements or judgments in any litigation could have a material adverse impact on our results of operations, cash balances and cash flows in the period in which such events occur.

Statements of Cash Flows

The following table summarizes our cash flow related activities (in thousands):

Years Ended December 31,

2025

2024

Cash provided by (used in):

Operating activities

$

84,894 

$

90,492 

Investing activities

(243,638)

(48,350)

Financing activities

134,754 

(44,257)

Net decrease in cash and cash equivalents

$

(23,990)

$

(2,115)

Cash Flows from Operating Activities

Our cash provided by operating activities is driven primarily by sales of our products and management of working capital investments. Our primary uses of cash from operating activities have been for personnel-related expenditures, manufacturing costs, marketing and promotional expenses and costs related to our facilities. Our cash flows from operating activities will continue to be affected principally by the extent to which we increase spending on our business and our working capital requirements.

During the year ended December 31, 2025, cash provided by operating activities was $84.9 million, consisting of net income of $42.1 million, non-cash benefits totaling $37.8 million and a favorable net change in operating assets and liabilities of $5.0 million. Our non-cash benefits primarily consisted of non-cash charges of $20.0 million for stock-based compensation and $14.9 million of depreciation and amortization expense. The net change in our operating assets and liabilities primarily reflects cash inflows from changes in accounts receivable of $14.6 million, accrued and other liabilities of $4.6 million and inventory of $3.7 million, partially offset by cash outflows from changes in prepaid expenses and other assets of $8.3 million, deferred revenue of $8.0 million, and accounts payable of $1.5 million. The favorable change in accounts receivable was due to the timing of collections from our customers. The favorable change in accrued liabilities was due to increases in accrued income taxes and variable compensation. The unfavorable change in prepaid expenses and other assets was due to an increase in deferred contract acquisition costs. The unfavorable change in deferred revenues was attributable to the timing of service contract bookings. The favorable change in accounts payable is due to the timing of payments to our vendors.

During the year ended December 31, 2024, cash provided by operating activities was $90.5 million, consisting of net income of $50.1 million, non-cash benefits totaling $28.0 million and a favorable net change in operating assets and liabilities of $12.4 million. Our non-cash benefits primarily consisted of non-cash charges of $17.0 million for stock-based compensation and $11.3 million of depreciation and amortization expense. The net change in our operating assets and liabilities primarily reflects cash inflows from changes in deferred revenue of $6.9 million, accrued and other liabilities of $6.6 million and accounts payable of $2.2 million, partially offset by cash outflows from changes in accounts receivable of $2.6 million, inventory of $0.8 million and prepaid expenses and other assets of $0.1 million. The favorable change in deferred revenues was attributable to the timing of service contract bookings. The favorable change in accrued liabilities was due to increases in

56

accrued income taxes and variable compensation. The favorable change in accounts payable is due to the timing of payments to our vendors. The unfavorable change in accounts receivable was due to the timing of collections from our customers.

Cash Flows from Investing Activities

During the year ended December 31, 2025, cash used by investing activities was $243.6 million, consisting of purchases of marketable securities of $342.0 million, our acquisition of ThreatX Protect for $19.1 million and capital expenditures of $20.1 million, partially offset by proceeds from maturities of marketable securities of $136.8 million and proceeds from the sales of marketable securities of $0.9 million.

During the year ended December 31, 2024, cash used by investing activities was $48.4 million, consisting of purchases of marketable securities of $142.8 million and capital expenditures of $12.3 million, partially offset by proceeds from maturities of marketable securities of $81.1 million and proceeds from the sales of marketable securities of $25.5 million.

Cash Flows from Financing Activities

During the year ended December 31, 2025, cash provided by financing activities was $134.8 million consisting primarily of $217.7 million of net cash proceeds from the issuance of the 2030 Notes and $3.4 million of cash proceeds from common stock issuances under our equity incentive plans. Partially offsetting these cash inflows was $68.9 million of cash used to repurchase our common stock in the open market, from privately negotiated transactions and from withholding shares in connection with vesting equity awards held by certain employees and $17.4 million of cash used for the payments of cash dividends.

During the year ended December 31, 2024, cash used in financing activities was $44.3 million consisting primarily of $30.1 million of cash used to repurchase our common stock in the open market, from privately negotiated transactions and from withholding shares in connection with vesting equity awards held by certain employees. Additionally, cash used for the payments of cash dividends was $17.8 million. Partially offsetting these cash outflows was $3.6 million of cash proceeds from common stock issuances under our equity incentive plans.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. Note 1 Description of Business and Summary of Significant Accounting Policies, in notes to consolidated financial statements in Item 8 of Part II of this Report, describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Revenue Recognition

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and software-as-a-service offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized ratably as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products.

57

Most of our contracts with customers, other than renewals of PCS, contain multiple performance obligations with a combination of products and PCS. Products and PCS generally qualify as distinct performance obligations. Our hardware includes embedded ACOS software, which together deliver the essential functionality of our products. For contracts which contain multiple performance obligations, we allocate revenue to each distinct performance obligation based on the standalone selling price (“SSP”). Judgment is required to determine the SSP for each distinct performance obligation. We use a range of amounts to estimate SSP for products and PCS sold together in a contract to determine whether there is a discount to be allocated based on the relative SSP of the various products and PCS.

If we do not have an observable SSP, such as when we do not sell a product or service separately, then SSP is estimated using judgment and considering all reasonably available information such as market conditions and information about the size and/or purchase volume of the customer. We generally use a range of amounts to estimate SSP for individual products and services based on multiple factors including, but not limited to the sales channel (reseller, distributor or end-customer), the geographies in which our products and services are sold, and the size of the end-customer.

58