ATEN

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How ATEN rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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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.
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.
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 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.
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.
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.
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.
We generate services revenue from sales of PCS, which is bundled with sales of products and technical services.
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.
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.

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Gone since FY2024

This section of the Form 10-K generally discusses fiscal 2024 and 2023 items and year-to-year comparisons between fiscal 2024 and 2023.
Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and 2022 that are not included in this 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, 2023 filed with the SEC on February 29, 2024.
Overview We are a leading provider of secure application solutions and services that enable a new generation of intelligently connected companies with the ability to continuously improve cyber protection and digital responsiveness across dynamic Information Technology (“IT”) and network infrastructures.
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 post contract support (“PCS”), professional services, training and software-as-a-service offerings.
Our customers predominantly purchase PCS services in conjunction with purchases of our products other than our software-as-a-service offerings.
We report two customer verticals: service providers, which accounted for 57% and 58% of our total revenue during 2024 and 2023, respectively, and enterprise, which accounted for 43% and 42% of our total revenue during 2024 and 2023, 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 end-customers and service providers.
Purchases from our ten largest end-customers accounted for 38%, 33% and 41% of our total revenue for 2024, 2023 and 2022, respectively.
We intend to continue to invest for long-term growth.
We have invested and expect to continue to invest in our product development efforts to deliver new products and additional features in our current products to address customer needs.
In addition, we may expand our global sales and marketing organizations, expand our distribution channel programs and increase awareness of our solutions on a global basis.
Our investments in growth in these areas may affect our short-term profitability.
Results of Operations A summary of our consolidated statements of operations for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands): Years Ended December 31, 2024 2023 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Revenue: Products $ 139,799 53.4 % $ 141,082 56.1 % $ (1,283) (0.9) % Services 121,897 46.6 110,618 43.9 11,279 10.2 % Total revenue 261,696 100.0 251,700 100.0 9,996 4.0 % Cost of revenue: Products 31,218 11.9 31,468 12.5 (250) (0.8) % Services 20,201 7.7 16,494 6.6 3,707 22.5 % Total cost of revenue 51,419 19.6 47,962 19.1 3,457 7.2 % Gross profit 210,277 80.4 203,738 80.9 6,539 3.2 % Operating expenses: Sales and marketing 83,300 31.8 85,976 34.2 (2,676) (3.1) % Research and development 57,726 22.1 55,229 21.9 2,497 4.5 % General and administrative 25,283 9.7 23,885 9.5 1,398 5.9 % Total operating expenses 166,309 63.6 165,090 65.6 1,219 0.7 % Income from operations 43,968 16.8 38,648 15.4 5,320 13.8 % Non-operating income (expense): Interest income 6,747 2.6 5,078 2.0 1,669 32.9 % Interest and other income (expense), net 7,384 2.8 69 — 7,315 10,601.4 % Total non-operating income (expense), net 14,131 5.4 5,147 2.0 8,984 174.5 % Income before income taxes 58,099 22.2 43,795 17.4 14,304 32.7 % Provision for income taxes 7,959 3.0 3,825 1.5 4,134 108.1 % Net income $ 50,140 19.2 % $ 39,970 15.9 % $ 10,170 25.4 % 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 post contract support (“PCS”), professional services, training and software-as-a-service offerings.
We generate services revenue from sales of post contract support (“PCS”), which is bundled with sales of products and technical services.
A summary of our total revenue is as follows (dollars in thousands): Years Ended December 31, 2024 2023 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Revenue: Products $ 139,799 53 % $ 141,082 56 % $ (1,283) (1) % Services 121,897 47 % 110,618 44 % 11,279 10 % Total revenue $ 261,696 100 % $ 251,700 100 % $ 9,996 4 % Revenue by geographic region: Americas $ 134,356 51 % $ 132,745 53 % $ 1,611 1 % United States 117,707 45 % 113,766 45 % 3,941 3 % Americas-other 16,649 6 % 18,979 8 % (2,330) (12) % APJ 87,175 33 % 77,606 31 % 9,569 12 % EMEA 40,165 16 % 41,349 16 % (1,184) (3) % Total revenue $ 261,696 100 % $ 251,700 100 % $ 9,996 4 % Total revenue increased by $10.0 million, or 4%, in 2024 compared to 2023.
This increase was due to a $11.3 million increase in services revenue, partially offset by a decrease of $1.3 million in products revenue.
Products revenue decreased $1.3 million, or 1%, in 2024 compared to 2023 primarily driven by lower demand from our service provider and enterprise customers in the Americas, and EMEA regions, partially offset by higher demand from service provider customers in APJ.
Services revenue increased $11.3 million, or 10%, in 2024 compared to 2023.
The increase was primarily attributable to the increase in PCS sales in connection with our increased installed customer base in the APJ region, and to a lesser extent in the Americas and EMEA regions.
During 2024, $134.4 million, or 51% of total revenue, was generated from the Americas region, which represents a 1% increase compared to 2023.
The increase was primarily due to higher services revenue driven by an increase in demand from our enterprise customers.
During 2024, $87.2 million, or 33% of total revenue, was generated from APJ, which represents a 12% increase compared to 2023.
The increase was primarily due to higher products and services revenue driven by an increase in demand from our service provider customers.
During 2024, $40.2 million, or 16% of total revenue, was generated from EMEA, which represented a 3% decrease compared to 2023.
The decrease was primarily due to lower products revenue driven by a decrease in demand from our service provider customers.
A summary of our cost of revenue is as follows (dollars in thousands): Years Ended December 31, Increase (Decrease) 2024 2023 Amount Percent Cost of revenue: Products $ 31,218 $ 31,468 $ (250) (1) % Services 20,201 16,494 3,707 22 % Total cost of revenue $ 51,419 $ 47,962 $ 3,457 7 % Gross Margin Gross margin may vary and be unpredictable from period to period due to a variety of factors.
A summary of our gross profit and gross margin is as follows (dollars in thousands): Years Ended December 31, 2024 2023 Increase (Decrease) Amount Gross Margin Amount Gross Margin Amount Gross Margin Gross profit: Products $ 108,581 77.7 % $ 109,614 77.7 % $ (1,033) — % Services 101,696 83.4 % 94,124 85.1 % 7,572 (1.7) % Total gross profit $ 210,277 80.4 % $ 203,738 80.9 % $ 6,539 (0.5) % Products gross margin percentage remained flat in 2024 compared to 2023.
Services gross margin percentage decreased by 1.7% in 2024 compared to 2023 primarily due to an increase in personnel-related support costs, especially variable compensation.
A summary of our operating expenses is as follows (dollars in thousands): Years Ended December 31, Increase (Decrease) 2024 2023 Amount Percent Operating expenses: Sales and marketing $ 83,300 $ 85,976 $ (2,676) (3) % Research and development 57,726 55,229 2,497 5 % General and administrative 25,283 23,885 1,398 6 % Total operating expenses $ 166,309 $ 165,090 $ 1,219 1 % Sales and Marketing Sales and marketing expenses are our largest functional category of operating expenses and primarily consist of personnel costs.
The $2.7 million decrease in sales and marketing expenses in 2024 compared to 2023 was primarily due to decreases of $3.2 million in personnel costs as a result of a decrease in headcount, partially offset by an increase in marketing events of $0.6 million.
For 2025, we expect sales and marketing expenses to increase modestly from 2024 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.
The $2.5 million increase in research and development expenses in 2024 compared to 2023 was primarily due to an increase of $1.5 million in personnel costs and a $1.3 million increase in equipment and software expense, partially offset by a decrease of $0.6 million in professional services.
For 2025, we expect research and development expenses to increase from 2024 levels reflecting strategic investments in our growth priorities, including cybersecurity technology and AI technologies.
The $1.4 million increase in general and administrative expenses in 2024 compared to 2023 was primarily due to an increase of $1.3 million in personnel costs as a result of an increase in variable compensation.
For 2025, we expect general and administrative expenses to increase modestly from 2024 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.
Interest income was $6.7 million and $5.1 million in the years ended December 31, 2024 and 2023, respectively.
Non-Operating Income (Expense) - Interest and Other Income (Expense), Net In the years ended December 31, 2024 and 2023, interest and other income (expense), net consisted primarily of gains on equity investments and foreign currency exchange gains and losses.
The Company recorded $5.3 million of investment gains in the year ended December 31, 2024, compared to an immaterial loss in the year ended December 31, 2023.
Foreign currency exchange gains and losses had a favorable change of $2.1 million in the year ended December 31, 2024 compared to a favorable change of $0.1 million in 2023.
Provision for Income Taxes We recorded a provision for income tax of $8.0 million for the year ended December 31, 2024 and $3.8 million for the year ended December 31, 2023.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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