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What changed in A10 Networks, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of A10 Networks, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+287 added−294 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-29)

Top changes in A10 Networks, Inc.'s 2024 10-K

287 paragraphs added · 294 removed · 245 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+16 added−5 removed66 unchanged
Biggest changeFor this reason, we believe that our product backlog at any given date is not a reliable indicator of future revenues. 13 For the years ended December 31, 2023, 2022 and 2021, our total revenue was $251.7 million, $280.3 million, and $250.0 million, respectively, and our gross margin was 80.9%, 79.7%, and 78.6%, respectively.
Biggest changeFor the years ended December 31, 2024, 2023 and 2022, our total revenue was $261.7 million, $251.7 million, and $280.3 million, respectively, and our gross margin was 80.4%, 80.9%, and 79.7%, respectively. We had net income of $50.1 million, $40.0 million and $46.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
In 2017, we enhanced the A10 Defend Mitigator solution with the launch of a dedicated detector function, improved workflow and automation in A10 9 Defend Orchestrator. In 2018, we enhanced our detection capabilities with the One-DDoS solution, which enables Thunder ADC, CGN, and CFW solutions to act as in-line detectors to enhance application and infrastructure detection.
In 2017, we enhanced the A10 Defend Mitigator solution with the launch of a dedicated detector function, improved workflow and automation in A10 Defend Orchestrator. In 2018, we enhanced our detection capabilities with the One-DDoS solution, which enables 9 Thunder ADC, CGN, and CFW solutions to act as in-line detectors to enhance application and infrastructure detection.
Below are some of the types of health and wellness related benefits offered to employees: • Medical, dental and vision insurance; • Retirement plan with Company matching contribution feature; • Flexible Spending Accounts for medical expenses, childcare, parking and transit; • Health Savings Account (with employer contribution); • Life insurance; 15 • Short & long-term disability; • Paid time off and leave of absences; and • Employee assistance program Employees have an opportunity for financial inclusion at A10 Networks with an ownership interest in our company.
Below are some of the types of health and wellness related benefits offered to employees: • Medical, dental and vision insurance; • Retirement plan with Company matching contribution feature; • Flexible Spending Accounts for medical expenses, childcare, parking and transit; • Health Savings Account (with employer contribution); • Life insurance; • Short & long-term disability; • Paid time off and leave of absences; and • Employee assistance program Employees have an opportunity for financial inclusion at A10 Networks with an ownership interest in our company.
We also added A10 Defend Mitigator Dynamic Attack Pattern Recognition (“DAPR”) for automatic attack learning, to identify and thwart zero-day attacks, and enhanced machine learning (“ML”) with always-on adaptive learning. Defend Mitigator is augmented by the A10 Threat Control and software licensed from ThreatSTOP, Inc., which can block known bad connections (i.e., IP addresses) from entering protected networks.
We also added A10 Defend Mitigator Dynamic Attack Pattern Recognition (“DAPR”) for automatic attack learning, to identify and thwart zero-day attacks, and enhanced machine learning (“ML”) with always-on adaptive learning. Defend Mitigator is augmented by the A10 Threat Control and software licensed from ThreatSTOP, Inc., which can block known bad connections (i.e., IP addresses) from entering protected networks. 5.
Furthermore, we expect employees to conduct themselves in a professional and dignified manner at all times; in doing so, we seek to avoid making employees feel uncomfortable at work. As new employees join us, they learn more about our policies and culture through orientation and onboarding, our Employee Handbook, Code of Business Conduct and Ethics, and compliance trainings.
Furthermore, we expect employees to conduct themselves in a professional and dignified manner at all times; in doing so, we seek to avoid making employees feel uncomfortable at work. 15 As new employees join us, they learn more about our policies and culture through orientation and onboarding, our Employee Handbook, Code of Business Conduct and Ethics, and compliance trainings.
The effectiveness of application performance and security depends greatly on the level of visibility a business has into its application traffic. That visibility should effectively span any number of data centers and cloud types to provide a holistic view of security threats and performance issues affecting applications.
The effectiveness of application performance and security depends greatly on the level of visibility a business has into its application and API traffic. That visibility should effectively span any number of data centers and cloud types to provide a holistic view of security threats and performance issues affecting applications.
Our supply chain has sustained audits based on the Validated Assessment Program. Further, we have established standards and practices to which our Board of Directors, executives and employees are obligated to adhere, as outlined on our website under Corporate Responsibility.
Our supply chain has sustained audits based on the Validated Assessment Program. 14 Further, we have established standards and practices to which our Board of Directors, executives and employees are obligated to adhere, as outlined on our website under Corporate Responsibility.
Traditional IT vendors may need to shift from hardware-centric models to software-defined approaches across several operating environments to improve agility for critical applications, and subsequently, their business operations. Enabling product portfolios to adapt and diversify to include newer virtualized software, container-based software and cloud-based offerings are key factors determining future market leadership and competitive landscapes. Growing Importance of Automation, Orchestration.
Traditional IT vendors may want to shift from hardware-centric models to software-defined approaches across several operating environments to improve agility for critical applications, and subsequently, their business operations. Enabling product portfolios to adapt and diversify to include newer virtualized software, container-based software and cloud-based offerings are key factors determining future market leadership and competitive landscapes. Growing Importance of Automation, Orchestration.
The key competitive factors in our markets include: • Ability to innovate and respond to customer needs rapidly; • Ability to prepare for, detect and mitigate large-scale cyber security threats; • Ability for products to scale to facilitate high-speed network traffic; • Ability to address on-premise and cloud application environments in a secure, centrally managed manner; • Ability to accommodate any IT delivery model or combination of models, regardless of form factor and customer consumption model; • Level of customer intimacy and application know-how; • Total cost of ownership including ease-of-use and a common platform approach for multiple products; • Brand awareness and reputation; and 12 • Ability to attract and retain talented employees.
The key competitive factors in our markets include: • Ability to innovate and respond to customer needs rapidly; • Ability to prepare for, detect and mitigate large-scale cybersecurity threats; • Ability for products to scale to facilitate high-speed network traffic; • Ability to address on-premise and cloud application environments in a secure, centrally managed manner; • Ability to accommodate any IT delivery model or combination of models, regardless of form factor and customer consumption model; • Level of customer intimacy and application know-how; • Total cost of ownership including ease-of-use and a common platform approach for multiple products; 12 • Brand awareness and reputation; and • Ability to attract and retain talented employees.
Thunder Carrier Grade Networking . Thunder CGN extends the life of increasingly scarce IPv4 address blocks and their associated infrastructure using Carrier-Grade network address translation (“CGNAT”), and also provides translation solutions to the IPv6 addressing standard. Our CGN solution is typically deployed in service provider networks to provide standards-compliant address and protocol translation services between varying types of IP addresses.
Thunder Carrier Grade Networking . Thunder CGN extends the life of increasingly scarce IPv4 address blocks and their associated infrastructure using Carrier-Grade network address translation (“CGNAT”) and translation solutions to the IPv6 addressing standard. Our CGN solution is typically deployed in service provider networks to provide standards-compliant address and protocol translation services between varying types of IP addresses.
We do not have any long-term manufacturing contracts that guarantee fixed capacity or pricing. Quality assurance and testing is performed at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations. We warehouse and deliver our products out of our San Jose warehouse for the Americas and direct from Taiwan for APAC and EMEA.
We do not have any long-term manufacturing contracts that guarantee fixed capacity or pricing. Quality assurance and testing is performed at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations. We warehouse and deliver our products out of our San Jose warehouse for the Americas and direct from Taiwan for APJ and EMEA.
A10 Harmony Controller is built on microservices and container technologies and offers a multi-tenant, highly scalable controller architecture that incorporates real-time and predictive analytics at the application level and central management and orchestration of secure application services across hybrid environments, from physical data centers to public, private and hybrid clouds.
A10 Control is built on microservices and container technologies and offers a multi-tenant, highly scalable controller architecture that incorporates real-time and predictive analytics at the application level and central management and orchestration of secure application services across hybrid environments, from physical data centers to public, private and hybrid clouds.
Corporate Responsibility A10 Networks’ mission is to enable business-critical networks that are secure, available and efficient. In our rapidly expanding digital economy, this has never been more relevant and critical. Our customers rely on us to help them drive better business outcomes now and into the future.
Corporate Responsibility Our mission is to enable business-critical networks that are secure, available and efficient. In our rapidly expanding digital economy, this has never been more relevant and critical. Our customers rely on us to help them drive better business outcomes now and into the future.
While our revenue to date has predominantly derived from delivery of our proprietary software on a perpetual license basis embedded in optimized hardware, this model has begun to evolve in various ways including among others, term licenses, subscriptions, and software-only models.
While our revenue to date has predominantly derived from delivery of our proprietary software on a perpetual license basis embedded in optimized hardware, this model has begun to evolve in various ways including among others, term licenses, cloud offerings, subscriptions, and software-only models.
There is a need for increased operational efficiency and agility, improved detection and reporting of security anomalies, enhanced end-user experiences and reduced total cost of ownership (“TCO”), simplified management of distributed application services, improved capacity planning and optimized multi-cloud software lifecycle management.
There is a desire for increased operational efficiency and agility, improved detection and reporting of security anomalies, enhanced end-user experiences and reduced total cost of ownership (“TCO”), simplified management of distributed application services, improved capacity planning and optimized multi-cloud software lifecycle management.
A10 Defend Mitigator is our h igh precision, automated, scalable, and intelligent DDoS mitigation solution that is delivered as hardware or virtual appliances ranging from 1Gbps to over 1Tbps. A10 Defend Mitigator is typically deployed at the perimeter of the networks to protect internal network resources from large-scale, volumetric and multi-vector attacks.
A10 Defend Mitigator is our high precision, automated, scalable, and intelligent DDoS mitigation solution that is delivered as hardware or virtual appliances ranging from 1Gbps to over 1Tbps. A10 Defend Mitigator is typically deployed at the perimeter of the networks to protect internal network resources from large-scale, volumetric and multi-vector attacks.
Malicious actors and cybercriminals such as hacktivists, amateur hackers, and foreign military and intelligence organizations target data centers of every type. Distributed Denial of Service (“DDoS”) attacks are increasing in size, frequency, complexity and notoriety. IT defenders are faced with the increasing sophistication of adversaries who are responsible for the size and frequency of these attacks.
Malicious actors and cyber criminals such as hacktivists, amateur hackers, and foreign military and intelligence organizations target data centers of every type. Distributed Denial of Service (“DDoS”) attacks are increasing in size, frequency, complexity and notoriety. IT defenders are faced with the increasing sophistication of adversaries who are responsible for the size and frequency of these attacks.
Our professional services team provides a full range of fee-based consulting services, including pre-sale network assessment, comprehensive network analysis and capacity planning, post-sale migration and implementation services, on-site installation and ongoing support. 11 Customers Our customers operate in a variety of industries, including telecommunications, technology, industrial, government, retail, financial, gaming, and education.
Our professional services team provides a full range of fee-based consulting services, including pre-sale network assessment, comprehensive network analysis and capacity planning, post-sale migration and implementation services and ongoing support. 11 Customers Our customers operate in a variety of industries, including telecommunications, technology, industrial, government, retail, financial, gaming, and education.
The following is an overview of our portfolio: Secure application solutions: 1. Thunder Application Delivery Controller (“ADC”) 2. Thunder Carrier Grade Networking (“CGN”) 3. Thunder SSL Insight (“SSLi”) 4. Thunder Convergent Firewall (“CFW”) Intelligent management and automation tool: 1. Harmony Controller A10 Defend Suite of Products: 1. A10 Defend Threat Control 2. A10 Defend Orchestrator (formerly aGalaxy management system) 3.
The following is an overview of our portfolio: Secure infrastructure solutions: 1. Thunder Application Delivery Controller (“ADC”) 2. Thunder Carrier Grade Networking (“CGN”) 3. Thunder SSL Insight (“SSLi”) 4. Thunder Convergent Firewall (“CFW”) Intelligent management and automation tool: 1. A10 Control (formerly Harmony Controller) A10 Defend Suite of Products: 1. A10 Defend Threat Control 2.
To address this shift, businesses will need solutions that bridge both traditional and cloud-based application environments and centrally manage all secure application services holistically in this multi-cloud world. Increased Network Complexity and New Infrastructure Paradigms.
To address this shift, businesses will benefit from solutions that bridge both traditional and cloud-based application environments and centrally manage all secure application services holistically in this multi-cloud world. Increased Network Complexity and New Infrastructure Paradigms.
Our sales team is comprised of inside sales and field sales personnel who are organized by geography and maintain sales presence in 28 countries as of December 31, 2023, including in the following countries and regions: United States, Western Europe, the Middle East, Japan, Taiwan, South Korea, Southeast Asia and Latin America.
Our sales team is comprised of inside sales and field sales personnel who are organized by geography and maintain sales presence in 24 countries as of December 31, 2024, including in the following countries and regions: United States, Western Europe, the Middle East, Japan, Taiwan, South Korea, Southeast Asia and Latin America.
To address these requirements, mobile and other operators will need new solutions that provide hyperscale and increased performance, richer feature sets, and rich automation, analytics and threat intelligence. Need for Advanced Multi-Cloud Secure Application Service Solutions. To address these challenges, advanced and integrated solutions for managing secure application services across businesses’ application environments are needed.
To address these requirements, mobile and other operators want new solutions that provide hyperscale and increased performance, richer feature sets, and rich automation, analytics and threat intelligence. Need for Advanced Multi-Cloud Secure Application Service Solutions. To address these challenges, advanced and integrated solutions for managing secure application services across businesses’ application environments are desirable.
Thunder ADC provides advanced server load balancing, including global server load balancing, high availability, aFleX scripting, aVCS, ADP multi-tenancy, SSL, offload, acceleration, caching and compression, web application firewall (“WAF”), domain name server (“DNS”) application firewall (“DAF”) and others. ADCs are typically deployed in front of a server farm within a data center, including web, application and database servers. 2.
Thunder ADC provides advanced server load balancing, including global server load balancing, high availability, aFleX scripting, aVCS, ADP multi-tenancy, SSL, offload, acceleration, caching and compression, next-generation web application firewall (“NG-WAF”), domain name server (“DNS”) application firewall (“DAF”) and others. ADCs are typically deployed in front of a server farm within a data center, including web, application and database servers. 2.
A10 engages with an independent audit firm to ensure the Company complies with relevant requirements such as the 2002 Sarbanes-Oxley Act. The Company’s governance and code of conduct policies are outlined in the Code of Business Conduct and Ethics, Corporate Governance Guidelines, Whistleblower Policy and the Employee Handbook.
We engage with an independent audit firm to ensure the Company complies with relevant requirements such as the 2002 Sarbanes-Oxley Act. The Company’s governance and code of conduct policies are outlined in the Code of Business Conduct and Ethics, Corporate Governance Guidelines, Whistleblower Policy and the Employee Handbook.
We fulfill nearly all orders globally through our distribution channels, which include distributors, value added resellers and system integrators. Revenue fulfilled through our distribution channels accounted for 95%, 83% and 89% of our total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
We fulfill nearly all orders globally through our distribution channels, which include distributors, value added resellers and system integrators. Revenue fulfilled through our distribution channels accounted for 94%, 95% and 83% of our total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
A10 Defend Detector is our high-performance Netflow, Sflow, IPFIX-based DDoS detector and is used to easily manage the scale and heterogenous nature of SP networks, resulting in a unified DDoS protection solution. Defend Detector can be used by SPs to deliver DDoS services to downstream customers. 4. A10 Defend Mitigator (formerly Thunder TPS).
A10 Defend Detector is our high-performance Netflow, Sflow, IPFIX-based DDoS detector and is used to easily manage the scale and heterogenous nature of SP networks, resulting in a unified DDoS protection solution. Defend Detector can be used by service providers to deliver DDoS services to their customers. 4. A10 Defend Mitigator (formerly Thunder TPS).
We outsource delivery to a third-party logistics provider for deliveries in Japan. Backlog As of December 31, 2023 and 2022, we had product backlog of approximately $3.8 million and $8.1 million, respectively. Backlog represents orders confirmed with a purchase order for products to be shipped generally within 90 days to customers with approved credit status.
We outsource delivery to a third-party logistics provider for deliveries in Japan. 13 Backlog As of December 31, 2024 and 2023, we had product backlog of approximately $11.6 million and $3.8 million, respectively. Backlog represents orders confirmed with a purchase order for products to be shipped generally within 90 days to customers with approved credit status.
Information provided includes press releases and other information about financial performance, information on environmental, social and governance and details related to the Company’s annual 16 meeting of shareholders.
Information provided includes press releases and other information about financial performance, information on environmental, social and governance and details related to the Company’s annual meeting of stockholders.
The value and significance of our high-performance offerings reside in our portfolio’s underlying software operating system. With the exception of Lightning ADC, our products are built on the Advanced Core Operating System (“ACOS”) platform and leverage its performance optimization and security features.
The value and significance of our high-performance offerings reside in our portfolio’s underlying software operating system. Our products are built on the Advanced Core Operating System (“ACOS”) platform and leverage its performance optimization and security features.
Our comprehensive and flexible application solutions portfolio, combined with our Harmony Controller, positions us to address the growing need for shifting workloads to a mix of private clouds and public clouds.
Our comprehensive and flexible application solutions portfolio, combined with A10 Control positions us to address the growing need for shifting workloads to a mix of private clouds and public clouds.
We work with our contract manufacturers and suppliers to maintain compliance with, for example, RoHS, REACH and WEEE in the EU and elsewhere across the globe for other such environmental requirements.
We work with our contract manufacturers and suppliers to maintain compliance with, for example, RoHS, REACH and WEEE in the European Union (“EU”) and elsewhere across the globe for other such environmental requirements.
Risk Factors included in this Annual Report on Form 10-K for additional information regarding the risks associated with protecting our intellectual property. Human Capital As of December 31, 2023, we had 525 full-time employees, including 236 engaged in research and development and customer support, 235 in sales and marketing and 54 in general and administrative and other activities.
Risk Factors included in this Annual Report on Form 10-K for additional information regarding the risks associated with protecting our intellectual property. Human Capital As of December 31, 2024, we had 481 full-time employees, including 217 engaged in research and development and customer support, 210 in sales and marketing and 54 in general and administrative and other activities.
The Nominating and Corporate Governance Committees of the Board of Directors, consisting entirely of independent directors, evaluates the appropriate governance practices as defined by law and industry best practice and takes those recommendations to the Board of Directors. Currently, four of five Board members are independent and three of five have less than five years of tenure.
The Nominating and Corporate Governance Committees of the Board of Directors, consisting entirely of independent directors, evaluates the appropriate governance practices as defined by law and industry best practice and takes those recommendations to the Board of Directors. Currently, four of five Board members are independent.
Our software solutions are available to be delivered in a variety of form factors, such as embedded in optimized hardware appliances, as bare metal software, containerized software, virtual appliances and cloud-native software.
A10 solutions are available in a variety of form factors, such as embedded in optimized hardware appliances, as bare metal software, containerized software, virtual appliances and cloud-native software.
As applications increasingly move to a multi-cloud environment, the deployment of orchestration and automation tools enable efficient automation for the deployment and operations of security and application services.
As applications increasingly move to a multi-cloud environment, automation tools help enable efficient operations of security and application services.
The appliance family provides a variety of other security and performance options. vThunder virtual appliances operate on all major hypervisor platforms, including VMware, Microsoft Hyper-V and Linux KVM. vThunder is also available from cloud providers like Amazon Web Services (“AWS”), Microsoft Azure, Google Cloud Compute (“GCP”) and service providers.
The appliance family provides a variety of other security and performance options. vThunder virtual appliances operate on all major hypervisor platforms, including VMware and Linux KVM. vThunder is also available from cloud providers like Amazon Web Services (“AWS”), Microsoft Azure, Google Cloud Compute (“GCP”) and service providers. The vThunder Series products support throughput ranges from 200 Mbps to 100 Gbps.
These all provide guidance on how we expect to operate in order to foster diversity, equity and inclusion across our company. We are an equal opportunity employer and a Vietnam Era Veterans' Readjustment Assistance Act (“VEVRAA”) federal subcontractor.
They are also given access to our Statement Against Discrimination and are expected to comply with it. These all provide guidance on how we expect to operate in order to foster diversity, equity and inclusion across our company. We are an equal opportunity employer and a Vietnam Era Veterans' Readjustment Assistance Act (“VEVRAA”) federal subcontractor.
The vThunder Series products support throughput ranges from 200 Mbps to 100 Gbps. Thunder for Bare Metal is a software version of our ADC and CGN solutions that is designed to run on a variety of Intel x86 servers, allowing the customer to design and select their own hardware platform.
Thunder for Bare Metal is a software version of our ADC and CGN solutions that is designed to run on a variety of Intel x86 servers, allowing the customer to design and select their own hardware platform.
This avoids the overhead associated with Inter-Processor Communication architectures deployed in 10 first-generation approaches. We optimize memory to be visible to processor cores simultaneously, while minimizing communication overhead and contention among processors for allocated memory space. All processors share a common memory pool, which dynamically allocates memory space based on application processing requirements without constraints.
We optimize memory to be visible to processor cores simultaneously, while minimizing communication overhead and contention among processors for allocated memory space. All processors share a common memory pool, which dynamically allocates memory space based on application processing requirements without constraints.
A10 Defend Detector 4. A10 Defend Mitigator (formerly Thunder TPS) The following is a further overview of our portfolio: Secure Application Solutions 1. Thunder Application Delivery Controller.
A10 Defend Orchestrator (formerly aGalaxy management system) 3. A10 Defend Detector 4. A10 Defend Mitigator (formerly Thunder TPS) 5. A10 Defend ThreatX Protect The following is a further overview of our portfolio: Secure Infrastructure Solutions 1. Thunder Application Delivery Controller.
Infrastructure and application operations teams can centrally manage and automate configuration and application policies for our Thunder and Lightning application and security services, such as load balancing, application delivery, web application firewall, SSL decryption, Gi/SGi firewall, Carrier Grade NAT and Cloud Access Proxy solutions.
Infrastructure and application operations teams can centrally manage and automate configuration and application policies for our Thunder application and security services, such as load balancing, application delivery, web application firewall, SSL decryption, Gi/SGi firewall, Carrier Grade NAT and Cloud Access Proxy solutions. Configuration and control can also be automated via API and integrated with orchestration systems used within organizations.
The Gi/SGi firewall protects the mobile operator infrastructures from Internet-based DDoS and other security threats. • A high-performance IPsec VPN, a security product designed to strengthen security postures and protect application data. Intelligent Management and Automation Tool 1. Harmony Controller. Harmony Controller provides intelligent management, automation and analytics for secure application delivery in multi-cloud environments to help simplify operations.
The Gi/SGi firewall protects the mobile operator infrastructures from Internet-based DDoS and other security threats. • A high-performance IPsec VPN, a security product designed to strengthen security postures and protect application data. Intelligent Management and Automation Tool 1. A10 Control (formerly Harmony Controller).
Defend Threat Control is based on proprietary A10 research. 2. A10 Defend Orchestrator (formerly aGalaxy management system). A10 Defend Orchestrator integrates with A10 Defend Detector and A10 Defend Mitigator for intelligent and automated DDoS protection, providing a centralized point of control for seamless DDoS defense management and execution.
A10 Defend Orchestrator integrates with A10 Defend Detector and A10 Defend Mitigator for intelligent and automated DDoS protection, providing a centralized point of control for seamless DDoS defense management and execution.
(“Cisco Systems”), Juniper Networks, Inc. (“Juniper Networks”) and Fortinet, Inc. (“Fortinet”); and • Companies that sell products in the traditional application delivery market, such as F5 Networks, NetScaler from Cloud Software Group, Inc., VMware from Broadcom (through its acquisition of Avi Networks) as well as many startups.
(“Fortinet”); • Companies that sell products in the traditional application delivery market, such as F5 Networks, NetScaler from Cloud Software Group, Inc., VMware from Broadcom (through its acquisition of Avi Networks) as well as many startups; and • Companies that sell Cloud WAAP solutions such as Imperva, Akamai, Cloudlare and Amazon Web Services (“AWS”).
The Advent of 5G Networks and a Smart World . The growing deployment of commercial 5G networks will bring massive increases in network throughput and significant new business opportunities for mobile carriers and others. It will also require a new generation of security infrastructure capable of handling the growing capacity requirements and complex management needs of 5G networks.
The Advent of 5G Networks and a Smart World . The growing deployment of commercial 5G networks will bring massive increases in network throughput and significant new business opportunities for mobile carriers and others.
We believe that a cooperative work environment, based on trust and mutual respect, is essential to our success. We embrace the diversity of our workforce and celebrate the creative value added by individuals with differing backgrounds. We expressly prohibit intimidation, hostility, harassment, discrimination and other inappropriate behavior.
We are committed to ensuring our team members are treated with fairness, dignity and respect. We believe that a cooperative work environment, based on trust and mutual respect, is essential to our success. We embrace the diversity of our workforce and celebrate the creative value added by individuals with differing backgrounds.
Thunder Series: ADC, CGN, TPS, SSLi, and CFW products are available on the Thunder Series family of physical appliances. The Thunder Series products support throughput ranges from 200 Mbps to 550 Gbps.
FlexPool allows businesses to flexibly allocate and re-distribute capacity across applications, multiple clouds and data centers. Thunder Series: ADC, CGN, TPS, SSLi, and CFW products are available on the Thunder Series family of physical appliances. The Thunder Series products support throughput ranges from 200 Mbps to 550 Gbps.
Our failure to enforce and protect our intellectual property rights could harm our business, operating results and financial condition. We license software from third parties for development of, or integration into, our products, including proprietary and open source software. We pursue registration of our trademarks and domain names in the United States and other jurisdictions. See Part I, Item 1A.
We license software from third parties for development of, or integration into, our products, including proprietary and open source software. We pursue registration of our trademarks and domain names in the U.S. and other jurisdictions. See Part I, Item 1A.
Orders may be subject to cancellation, rescheduling by customers and product specification changes by customers. Although we believe that the backlog orders are firm, purchase orders may be canceled by the customer prior to shipment without significant cost.
Orders may be subject to cancellation, rescheduling by customers and product specification changes by customers. Although we believe that the backlog orders are firm, purchase orders may be canceled by the customer prior to shipment without significant cost. For this reason, we believe that our product backlog at any given date is not a reliable indicator of future revenues.
Governance Our Board of Directors believes that our board should be a diverse body, and our Nominating and Corporate Governance Committee considers a broad range of backgrounds and experiences when selecting nominees for our board. Sixty percent of our directors currently self-identify as being from one or multiple diverse groups, including gender.
Governance Our Board of Directors believes that our board should be a diverse body, and our Nominating and Corporate Governance Committee considers a broad range of backgrounds and experiences when selecting nominees for our board.
In 2021, one distribution channel partner accounted for 12% of our total revenue. Competition As security, 5G and cloud trends continue to gain prominence, changes in application delivery needs, cyber security threats, and the technology landscape result in evolving customer requirements.
Competition As security, 5G and cloud trends continue to gain prominence, changes in application delivery needs, cybersecurity threats, and the technology landscape result in evolving customer requirements.
Our global footprint provides an additional level of sustainability for business performance, and we drive this responsibility across all our global locations.
We believe these practices will deliver the highest value for our employees, customers, partners and stockholders. Our global footprint provides an additional level of sustainability for business performance, and we drive this responsibility across all our global locations.
Our future success depends in part on our ability to protect our proprietary rights to the technologies used in our principal products. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use trade secrets or other information that we regard as proprietary.
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use trade secrets or other information that we regard as proprietary. In addition, the laws of some foreign countries do not protect our proprietary rights as fully as do the laws of the U.S.
Our customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises. Industry Trends & Market Drivers The digitization of business has made applications a critical ingredient in virtually every aspect of operations. The safety and efficiency of applications can directly impact business and financial performance, and security shortfalls can impact brand value and customer retention.
Industry Trends & Market Drivers The digitization of business has made applications and APIs a critical ingredient in network operations. The safety and efficiency of applications can directly impact business and financial performance, and security shortfalls can impact brand value and customer retention.
Environmental, Social and Governance (“ESG”) Environmental We are committed to business practices that preserve the environment upon which our society and economy depend. We are committed to meeting or exceeding all legal and compliance guidelines for our people, products and operations.
Environmental, Social and Governance (“ESG”) Environmental We are committed to business practices that preserve the environment, recognizing its fundamental role in sustaining our society and economy. We are committed to meeting and strive to exceed all legal and compliance requirements related to our people, products, and operations.
Product Form Factors Our products are offered in a variety of form factors and payment models, including physical appliances and perpetual and subscription-based software licenses, as well as pay-as-you-go licensing models and FlexPool, a flexible consumption-based software model. FlexPool allows businesses to flexibly allocate and re-distribute capacity across applications, multiple clouds and data centers.
A10 Defend ThreatX Protect comes from our acquisition of the ThreatX Protect assets. Product Form Factors Our products are offered in a variety of form factors and payment models, including physical appliances and perpetual and subscription-based software licenses, as well as pay-as-you-go licensing models and FlexPool, a flexible consumption-based software model.
Our Flexible Traffic Accelerator (“FTA”) also performs certain hardware-based security checks for each packet and can isolate suspicious traffic before it can impact system performance. Scalable and Efficient Memory Usage. To improve the performance of the multi-core processor architecture, we have developed a shared memory technology to allow processors to share common memory and the state of the system simultaneously.
Our Flexible Traffic Accelerator (“FTA”) also performs certain hardware-based security checks for each packet and can isolate suspicious traffic before it can impact system performance. 10 Scalable and Efficient Memory Usage.
Employees are generally eligible for medical, dental, vision and other comprehensive benefits, most of which become effective on their start date.
We believe that we employ a fair and merit-based total compensation system for our employees and offer a variable bonus plan for eligible employees. Employees are generally eligible for medical, dental, vision and other comprehensive benefits, most of which become effective on their start date.
Our corporate headquarters in San Jose, California, is compliant with the California Building Energy Efficiency Standards - Title 24 to reduce wasteful and unnecessary energy consumption. The Company has planned for greater use of renewable energy in partnership with the local utility, PG&E.
This strategy aligns with the 1.5°C initiative scope protocols. • Sustainable Facilities & Energy Efficiency : Our corporate headquarters in San Jose, California, complies with the California Building Energy Efficiency Standards (Title 24) to reduce wasteful and unnecessary energy consumption. We have also planned for increased use of renewable energy in partnership with PG&E.
Secure application service solutions must leverage machine learning and AI to rapidly detect and mitigate sophisticated cybersecurity threats, such as malicious threats hiding in encrypted traffic and DDoS attacks.
Secure application service solutions must leverage machine learning and AI to rapidly detect and mitigate sophisticated cybersecurity threats, such as malicious threats hiding in encrypted traffic and DDoS attacks. To defend against the rising volume of sophisticated cyber-attacks, customers want solutions that provide exceptional performance and scale without dramatically increasing footprint and total cost of ownership.
Capacity requirements increase dramatically in 5G networks due to substantial increases in concurrent sessions, lower packet size and higher connections per second. Operators must dramatically lower latency, reduce total cost of ownership, and improve efficiency which may require advanced consolidation of network functions at the core.
Operators strive to dramatically lower latency, reduce total cost of ownership, and improve efficiency which may require advanced consolidation of network functions at the core.
We continuously review and improve our corporate governance guidelines in response to changing requirements and feedback from employees, customers, partners, vendors and shareholders.
Sixty percent of our directors currently self-identify as being from one or multiple diverse groups, including gender. 16 We continuously review and improve our corporate governance guidelines in response to changing requirements and feedback from employees, customers, partners, vendors and stockholders.
During the years ended December 31, 2023, 2022 and 2021, purchases from our 10 largest end-customers accounted for approximately 33%, 41% and 39% of our total revenue, respectively. In 2023, one distribution channel partner accounted for 19% of our total revenue. In 2022, two distribution channel partners accounted for 15% and 13% of our total revenue.
During the years ended December 31, 2024, 2023 and 2022, purchases from our 10 largest end-customers accounted for approximately 38%, 33% and 41% of our total revenue, respectively. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors.
Configuration and control can also be automated via application program interface (“API”) and integrated with orchestration systems used within organizations. In addition, the Harmony Controller provides comprehensive infrastructure and per-application metrics and analytics for performance and security monitoring, anomaly detection and faster troubleshooting. The container-based, microservices architecture allows controller capacity to be scaled without interrupting operations.
In addition, A10 Control provides comprehensive infrastructure and per-application metrics and analytics for performance and security monitoring, anomaly detection and faster troubleshooting. The container-based, microservices architecture allows controller capacity to be scaled without interrupting operations. A10 Control is available in two deployment models: A10 managed software-as-a-service (“SaaS”), or as a self-managed, on-premise deployment. A10 Defend Suite of Products 1.
In addition, the laws of some foreign countries do not protect our proprietary rights as fully as do the laws of the United States. Any issued patent may not preserve our proprietary position, and competitors or others may develop technologies similar to or superior to our technology.
Any issued patent may not preserve our proprietary position, and competitors or others may develop technologies similar to or superior to our technology. Our failure to enforce and protect our intellectual property rights could harm our business, operating results and financial condition.
We make employment decisions on the basis of a person’s qualifications, and our business needs. We believe in the richness and quality of a working environment that is informed by people from all walks of life and strive to create a genuinely inclusive environment.
We believe in the richness and quality of a working environment that is informed by people from all walks of life and strive to create a genuinely inclusive environment. We have implemented Diversity, Equal Opportunity, and Inclusion action planning teams focused on analysis from diversity surveys and focus groups. We have ongoing outreach efforts to recruit a diverse candidate pool.
Our Harmony Controller is available in two deployment models: A10 managed software-as-a-service (“SaaS”), or as a self-managed, on-premise deployment. A10 Defend Suite of Products 1. A10 Defend Threat Control. A10 Defend Threat Control is a standalone SaaS platform that proactively establishes a robust first layer of defense by offering actionable analytics and blocklists.
A10 Defend Threat Control. A10 Defend Threat Control is a standalone SaaS platform that proactively establishes a robust first layer of defense by offering actionable analytics and blocklists. Defend Threat Control is based on proprietary A10 research. 2. A10 Defend Orchestrator (formerly aGalaxy management system).
With our mission in mind, we are committed to maintaining the highest standards of ethics and corporate governance, and to fostering a diverse and inclusive workforce and customer and partner ecosystem. We believe these practices will deliver the highest value for our employees, customers, partners and shareholders.
With our mission in mind, we are committed to maintaining the highest standards of ethics and corporate governance, and to fostering a customer and partner ecosystem. These standards are described in our Code of Business Conduct and Ethics, which can be accessed at https://investors.a10networks.com/corporate-responsibility/default.aspx .
At our headquarters, we offer EV charging stations to our employees and visitors, and where applicable according to local requirements, we offer recycling and we properly dispose of e-waste. Social Diversity, Inclusion & Equal Opportunity We are committed to providing a work environment that is free of discrimination and harassment. We are an equal-opportunity employer.
Social Diversity, Inclusion & Equal Opportunity We are committed to providing a work environment that is free of discrimination and harassment. We are an equal-opportunity employer. We make employment decisions on the basis of a person’s qualifications, and our business needs.
As cyber-attacks increase in volume and complexity, we integrate security as a key attribute in essentially all our solutions that further enable our customers to continue to adapt to market trends in the cloud, internet of things and the ever-increasing need for more efficient data processing, building upon our strong global footprint and leadership in application and network infrastructure.
As cyber-attacks increase in volume and complexity, we integrate security and artificial intelligence (“AI”) enabled capabilities in our solutions that enable our customers to continue to adapt to market trends in hybrid cloud, AI-ready data centers and the ever-increasing need for high performance, high availability and low latency.
We had net income of $40.0 million, $46.9 million and $94.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws, and restrictions on disclosure to protect our intellectual property rights.
Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws, and restrictions on disclosure to protect our intellectual property rights. As of December 31, 2024, we had 210 United States (“U.S.”) patents issued, 3 U.S. patent applications pending, 78 overseas patents issued and 7 overseas patent applications pending.
Total Rewards We offer an attractive mix of compensation and benefit plans to support our employees and their families’ physical, mental, and financial well-being. We believe that we employ a fair and merit-based total compensation system for our employees and offer a variable bonus plan for eligible employees.
Our Code of Business Conduct and Ethics and our Statements Against Discrimination and Modern Slavery can be found on our corporate website at https://investors.A10networks.com within the “Governance - Governance Documents” section. Total Rewards We offer an attractive mix of compensation and benefit plans to support our employees and their families’ physical, mental, and financial well-being.
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Item 1. Business Overview We are a leading provider of networking solutions that enable next-generation networks focused on reliability, availability, scalability and cybersecurity. Our portfolio supports customers operating in the cloud, on-premise or in hybrid environments providing rapid return on their investment as well as investment protection with best-in-class technical performance.
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Item 1. Business Overview We are a leading provider of security and infrastructure solutions for on-premises, hybrid cloud, and edge-cloud environments of our global enterprise, communication, cloud and web service provider customers who strive to provide business-critical applications and networks that are secure, available, and efficient.
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To defend against the rising volume of sophisticated cyber-attacks, customers want solutions that provide exceptional performance and scale without dramatically increasing footprint and total cost of ownership. 7 Product Portfolio Our product portfolio seeks to address many of the aforementioned challenges and solution requirements. The portfolio consists of six secure application solutions and two intelligent management and automation tools.
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This provides the foundation for our strong global footprint and leadership in application and network security and infrastructure. In February 2025, we acquired the assets and key personnel of ThreatX Protect, which expanded our cybersecurity portfolio with web application and application programming interfaces protection (“WAAP”). ThreatX Protect is ideally suited for securing applications and application programming interfaces (“APIs”).
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As of December 31, 2023, we had 210 United States (“U.S.”) patents issued, 5 U.S. patent applications pending, 79 overseas patents issued and 9 overseas patent applications pending. Our issued U.S. patents, excluding 14 patents that we acquired, expire between 2024 and 2042. Our issued overseas patents, excluding 5 patents that we acquired, expire between 2024 and 2037.
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It will also require a new generation of security and internet delivery infrastructure capable of handling the growing capacity requirements and complex management needs of 5G networks. Capacity requirements increase dramatically in 5G networks due to substantial increases in concurrent sessions, lower packet size and higher connections per second.
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In addition, we strive to deliver products and services that minimize the impact to the environment throughout our value chain. 14 Our environmental initiatives are aligned with the 1.5°C ambition as outlined in the Paris Agreement, and we have corporate goals to support the initiative.
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Product Portfolio Our product portfolio seeks to address many of the aforementioned challenges and solution requirements. The portfolio consists of network infrastructure and security products. The infrastructure portfolio powers the delivery of internet 7 services and applications while the security products protect applications, APIs, infrastructure and enterprises from cyber-attacks. Our security suite is known as A10 Defend.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, as a well-known provider of enterprise security solutions, our networks, products, and services could be targeted by attacks specifically designed to disrupt our business and harm our reputation. For example, in January 2023, we identified a cyber-security incident in our corporate IT infrastructure (not related to any of our products or solutions used by customers) (the “Cyber Incident”).
Biggest changeFor example, in January 2023, we identified a cybersecurity incident in our corporate IT infrastructure (not related to any of our products or solutions used by customers) (the “Cyber Incident”). Upon detecting the Cyber Incident, we launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals and external counsel to support the investigation.
We cannot guarantee that our use of open source software has been, and will be, managed effectively for our intended business purposes and/or compliant with applicable open source licenses. We may face legal action by third parties seeking to enforce their intellectual property rights related to our use of such open source software.
We cannot guarantee that our use of open source software has been, and will be, managed effectively for our intended business purposes and/or compliant with applicable open source licenses. We may face legal action by third parties seeking to enforce their intellectual property rights related to our use of such software.
See Note 1 Description of Business and Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for the effect of new accounting pronouncements on our financial statements.
See Note 1 Description of Business and Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for the effect of new accounting pronouncements on our consolidated financial statements.
These provisions include: • the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preference and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by the chairman of our Board of Directors, our Chief Executive Officer, our president (in the absence of a chief executive officer), or a majority vote of our Board of Directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; 40 • the ability of our Board of Directors, by majority vote, to amend the bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or not to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
These provisions include: • the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preference and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by the chairman of our Board of Directors, our Chief Executive Officer, our president (in the absence of a chief executive officer), or a majority vote of our Board of Directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • the ability of our Board of Directors, by majority vote, to amend the bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or not to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer 40 from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Any disruption in the business of our supply chain, manufacturers, logistics providers, channels or end-customers that impacts sales at the end of a quarter could have a significant adverse impact on our quarterly results. All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate.
Any 33 disruption in the business of our supply chain, manufacturers, logistics providers, channels or end-customers that impacts sales at the end of a quarter could have a significant adverse impact on our quarterly results. All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate.
End-customers often view the purchase of our products as a significant and strategic 30 decision that can have important implications on their existing networks and data centers and, as a result, require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order to ensure that our products will successfully interoperate with our end-customers’ complex network and data centers.
End-customers often view the purchase of our products as a significant and strategic decision that can have important implications on their existing networks and data centers and, as a result, require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order to ensure that our products will successfully interoperate with our end-customers’ complex network and data centers.
Additionally, the budgetary decisions at these entities can be lengthy and require multiple organization reviews. The length of time that end-customers devote to their evaluation of our products and decision-making process varies significantly. The length of our products’ sales cycles typically ranges from three to 12 months but can be longer for our large end-customers.
Additionally, the budgetary decisions at these entities can be lengthy and require multiple organization reviews. The length of time that end-customers 30 devote to their evaluation of our products and decision-making process varies significantly. The length of our products’ sales cycles typically ranges from three to 12 months but can be longer for our large end-customers.
Our management and Board will determine the timing and amount of any repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. The Company plans to fund repurchases from its existing cash balance and cash provided by operating activities.
Our management and Board will determine the timing and 43 amount of any repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. The Company plans to fund repurchases from its existing cash balance and cash provided by operating activities.
If we are unable to do so, or if we are required to restate our financial statements as a result of ineffective internal control over financial reporting, or if our auditors are unable to attest on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.
If we are unable to do so, or if we are required to restate our consolidated financial statements as a result of ineffective internal control over financial reporting, or if our auditors are unable to attest on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.
With respect to any acquisitions we may undertake, we may find that the acquired businesses, products or technologies do not further our business strategy as expected, that we paid more than what the assets are later worth or that economic conditions change, all of which may generate future impairment charges.
With respect to any acquisitions we have or may undertake, we may find that the acquired businesses, products or technologies do not further our business strategy as expected, that we paid more than what the assets are later worth or that economic conditions change, all of which may generate future impairment charges.
We rely on a combination of patent, copyright, trademark and trade secret laws, and contractual restrictions on disclosure of confidential and proprietary information, to protect our intellectual property. Despite the efforts we take to protect our intellectual property and other proprietary rights, these efforts may not be sufficient or effective at preventing their 34 unauthorized use.
We rely on a combination of patent, copyright, trademark and trade secret laws, and contractual restrictions on disclosure of confidential and proprietary information, to protect our intellectual property. Despite the efforts we take to protect our intellectual property and other proprietary rights, these efforts may not be sufficient or effective at preventing their unauthorized use.
To the extent potential end-customers or industry analysts believe that the occurrence of any actual or perceived failure of our products to detect or prevent malware, viruses, worms or similar threats is a flaw or indicates that our products do not provide significant value, our reputation and business could be harmed.
To the extent potential end-customers or industry 27 analysts believe that the occurrence of any actual or perceived failure of our products to detect or prevent malware, viruses, worms or similar threats is a flaw or indicates that our products do not provide significant value, our reputation and business could be harmed.
These problems have in the past and may in the future cause us to incur significant warranty and repair costs, divert the 28 attention of our engineering personnel from our product development efforts and cause significant customer relations problems. We may also be subject to liability claims for damages related to product errors or defects.
These problems have in the past and may in the future cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts and cause significant customer relations problems. We may also be subject to liability claims for damages related to product errors or defects.
Additionally, future actual, potential or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. A significant number of our employees are currently working from home or other remote locations.
Additionally, future actual, potential or 36 anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. A significant number of our employees are currently working from home or other remote locations.
In addition, large-scale cybersecurity attacks, acts of war or terrorism, 33 global pandemics such as the COVID-19 pandemic or other geo-political unrest could cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, channels, or end-customers or the economy as a whole.
In addition, large-scale cybersecurity attacks, acts of war or terrorism, global pandemics such as the COVID-19 pandemic or other geo-political unrest could cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, channels, or end-customers or the economy as a whole.
In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which we have rights. There may be instances where we are not able to protect intellectual property or other proprietary rights in a manner that maximizes competitive advantage.
In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which we have rights. There may be instances where we are not able to protect intellectual 34 property or other proprietary rights in a manner that maximizes competitive advantage.
As a result, most of our subscription revenue arises from agreements entered into during previous periods. A shortfall in orders for our subscription-based solutions in any one period would most likely not significantly reduce our subscription revenue for that period, but could adversely affect 31 the revenue contribution in future periods.
As a result, most of our subscription revenue arises from agreements entered into during previous periods. A shortfall in orders for our subscription-based solutions in any one period would most likely not significantly reduce our subscription revenue for that period, but could adversely affect the revenue contribution in future periods.
To the extent this impacts our ability to react timely to specific market or business opportunities, our financial results may be harmed. Future acquisitions we may undertake may not result in the financial and strategic goals that are contemplated at the time of the transaction.
To the extent this impacts our ability to react timely to specific market or business opportunities, our financial results may be harmed. 32 Future acquisitions we may undertake may not result in the financial and strategic goals that are contemplated at the time of the transaction.
Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.
Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the 41 timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.
We are also subject to the European Union Directive, known as the Waste Electrical and Electronic Equipment Directive (“WEEE Directive”), which requires producers of certain electrical and electronic equipment to properly label products, register as a WEEE producer, and provide for the collection, disposal and recycling of waste electronic products.
We are also subject to the European Union Directive, known as the Waste Electrical and Electronic Equipment Directive (“WEEE Directive”), which requires producers of certain electrical and electronic equipment to 38 properly label products, register as a WEEE producer, and provide for the collection, disposal and recycling of waste electronic products.
If any companies or governments that are publicly known to use our platform are the subject of a cyber-attack that becomes publicized, our other current or potential channel partners or end-customers may look to our competitors for 27 alternatives to our products.
If any companies or governments that are publicly known to use our platform are the subject of a cyber-attack that becomes publicized, our other current or potential channel partners or end-customers may look to our competitors for alternatives to our products.
Trade Representative (the “USTR”) enacted tariffs on imports into the U.S. from 35 China, including communications equipment products and components manufactured and imported from China. In October 2021 the USTR confirmed these enacted U.S. tariffs will stay in place for the time being.
Trade Representative (the “USTR”) enacted tariffs on imports into the U.S. from China, including communications equipment products and components manufactured and imported from China. In October 2021 the USTR confirmed these enacted U.S. tariffs will stay in place for the time being.
We may need to raise additional funds in future private or public offerings, and such funds may not be available on acceptable terms, if at all. If we do raise additional funds, existing stockholders will suffer dilution.
We may need to or may elect to raise additional funds in future private or public offerings, and such funds may not be available on acceptable terms, if at all. If we do raise additional funds, existing stockholders will suffer dilution.
While we carry insurance policies covering this type of liability, these policies may not provide sufficient protection should a claim be asserted. A material product liability claim may harm our business and results of operations.
While we carry insurance policies 28 covering this type of liability, these policies may not provide sufficient protection should a claim be asserted. A material product liability claim may harm our business and results of operations.
A subscription revenue model also makes it difficult for us to rapidly increase our revenue through additional subscription sales in any one period, as revenue is generally recognized over a longer period.
A subscription revenue model also makes it difficult for us to rapidly 31 increase our revenue through additional subscription sales in any one period, as revenue is generally recognized over a longer period.
Enhanced United States tariffs, import/export restrictions, Chinese regulations or other trade barriers may have a negative effect on global economic conditions, financial markets and our business. There is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.
Enhanced United States tariffs, import/export restrictions, Chinese regulations or other trade barriers may have a negative effect on global economic conditions, financial markets and our business. There is currently significant uncertainty about the future relationship between the U.S. and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.
Such substantive changes could adversely impact our operations and financial results. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
Such substantive changes could adversely impact our operations and financial results. 39 Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
On July 30, 2019, we announced that our Board of Directors had formed a Strategy Committee tasked and empowered with overseeing and executing specific activities directed to increasing shareholder value. No assurance can be given that a strategic transaction will be consummated in the near term or at all.
On July 30, 2019, we announced that our Board of Directors had formed a Strategy Committee tasked and empowered with overseeing and executing specific activities directed to increasing stockholder value. No assurance can be given that a strategic transaction will be consummated in the near term or at all.
Some within the U.S. government have called for substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the United States. In 2018, the Office of the U.S.
Some within the U.S. government have called for substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S. In 2018, the Office of the U.S.
As our business grows, we are required to comply with increasingly complex taxation rules and practices. We are subject to tax in multiple U.S. tax jurisdictions and foreign tax jurisdictions due to our international expansion. The development of our tax strategies requires additional expertise and may impact how we conduct our business.
As our business grows, we are required to comply with increasingly complex taxation rules and practices. We are subject to tax in multiple U.S. tax jurisdictions and foreign tax jurisdictions due to our international operations. The development of our tax strategies requires additional expertise and may impact how we conduct our business.
If we are unable to establish or maintain our sales channels or if our distribution channel partners are unable to adapt to our future sales focus and needs, our business and results of operations will be harmed. Our products must conform to industry standards in order to be accepted by end-customers in our markets.
If we are unable to establish or maintain our sales channels or if our distribution channels are unable to adapt to our future sales focus and needs, our business and results of operations will be harmed. Our products must conform to industry standards in order to be accepted by end-customers in our markets.
We cannot provide any assurance that we will be able to sustain or increase our revenue from our largest end-customers nor that we will be able to offset any absence of significant purchases by our largest end-customers in any particular period with purchases by new or existing end-customers in that or a subsequent period.
We cannot provide any assurance that we will be able to sustain or increase our revenue from our largest end-customers nor that we will be able to offset any absence of significant purchases by our largest end-customers in any particular period with purchases by new or existing end-customers in that or subsequent periods.
Our sales channel structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our distribution channel partners misrepresent the functionality of our products or services to end-customers or violate laws or our corporate policies.
Our sales channel structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our distribution channels misrepresent the functionality of our products or services to end-customers or violate laws or our corporate policies.
Our products are subject to U.S. export controls and may be exported outside the United States only with the required level of export license or through an export license exception because we incorporate encryption technology into our products.
Our products are subject to U.S. export controls and may be exported outside the U.S. only with the required level of export license or through an export license exception because we incorporate encryption technology into our products.
Security incidents that occur or are believed to have occurred could damage our reputation and brand, could cause our business to suffer, could require us to expend significant capital and other resources to alleviate problems caused by such actual or perceived breaches, could expose us to a risk of loss, litigation or regulatory action and possible liability, and could impair our ability to operate our business, including our ability to provide maintenance and support services to our channel partners and end-customers.
Security incidents that occur or are believed to have occurred could damage our reputation and brand, could cause our business to suffer, could require us to expend significant capital and other resources to alleviate problems caused by such actual or perceived breaches, could expose us to a risk of loss, litigation or regulatory action and possible liability, and could impair our ability to operate our business, including our ability to provide maintenance and support services to our distribution channels and end-customers.
These data protection and privacy-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.
These data protection, privacy and cyber resilience-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.
Factors that could cause fluctuations in the trading price of our common stock include the following: 42 • announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors; • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general and of companies in our industry; • fluctuations in the trading volume of our shares or the size of our public float; • actual or anticipated changes or fluctuations in our results of operations; • whether our results of operations meet the expectations of securities analysts or investors; • actual or anticipated changes in the expectations of investors or securities analysts; • litigation or investigations involving us, our industry, or both; • regulatory developments in the United States, foreign countries or both; • general economic conditions and trends; • major catastrophic events, including pandemics, acts of terrorism or war, or other events affecting the global economy, and the responses thereto; • cyberattacks and other information or security breaches; • sales of large blocks of our common stock; or • departures of key personnel.
Factors that could cause fluctuations in the trading price of our common stock include the following: • announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors; • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general and of companies in our industry; • fluctuations in the trading volume of our shares or the size of our public float; • actual or anticipated changes or fluctuations in our results of operations; • whether our results of operations meet the expectations of securities analysts or investors; • actual or anticipated changes in the expectations of investors or securities analysts; 42 • litigation or investigations involving us, our industry, or both; • regulatory developments in the U.S., foreign countries or both; • general economic conditions and trends; • major catastrophic events, including pandemics, acts of terrorism or war, or other events affecting the global economy, and the responses thereto; • cyber-attacks and other information or security breaches; • sales of large blocks of our common stock; or • departures of key personnel.
Inventory shortages might delay shipments to resellers, distribution channel partners and customers and cause us to lose sales. These shortages may diminish the loyalty of our distribution channel partners or customers. The difficulty in forecasting demand also makes it difficult to estimate our future financial condition and results of operations from period to period.
Inventory shortages might delay shipments to resellers, distribution channels and customers and cause us to lose sales. These shortages may diminish the loyalty of our distribution channels or customers. The difficulty in forecasting demand also makes it difficult to estimate our future financial condition and results of operations from period to period.
If our support organization or our distribution channel partners do not assist our end-customers in deploying our products effectively, succeed in helping our end-customers resolve post-deployment issues quickly, or provide ongoing support, it could adversely affect our ability to sell our products to existing end-customers and could harm our reputation with potential end-customers.
If our support organization or our distribution channels do not assist our end-customers in deploying our products effectively, succeed in helping our end-customers resolve post-deployment issues quickly, or provide ongoing support, it could adversely affect our ability to sell our products to existing end-customers and could harm our reputation with potential end-customers.
If any of the distribution channel partners or end-customers responsible for a significant portion of our revenue becomes insolvent or suffers a deterioration in its financial or business condition and is unable to pay for our products, our results of operations could be harmed.
If any of the distribution channels or end-customers responsible for a significant portion of our revenue becomes insolvent or suffers a deterioration in its financial or business condition and is unable to pay for our products, our results of operations could be harmed.
Additionally, although we price our products and subscriptions worldwide in U.S. Dollars (except in Japan), currency fluctuations in certain countries and regions may negatively impact actual prices that channel partners and end-customers are willing to pay in those countries and regions. Furthermore, we anticipate that the sales prices and gross profits for our products will decrease over product life cycles.
Additionally, although we price our products and subscriptions worldwide in U.S. Dollars (except in Japan), currency fluctuations in certain countries and regions may negatively impact actual prices that distribution channels and end-customers are willing to pay in those countries and regions. Furthermore, we anticipate that the sales prices and gross profits for our products will decrease over product life cycles.
Our use of open source software and generative artificial intelligence (AI) in our products could negatively affect our ability to sell our products and subject us to possible litigation. We incorporate open source software such as the Linux operating system kernel into our products.
Our use of open source software and position regarding the potential use of generative artificial intelligence (AI) in our products could negatively affect our ability to sell our products and subject us to possible litigation. We incorporate open source software such as the Linux operating system kernel into our products.
If economic conditions in the United States, Europe and other key markets for our products continue to be volatile in response to geopolitical developments, macroeconomic trends, or otherwise, and do not improve, or those markets experience a prolonged downturn, many end-customers may delay or reduce their IT spending.
If economic conditions in the U.S., Europe and other key markets for our products continue to be volatile in response to geopolitical developments, macroeconomic trends, or otherwise, and do not improve, or those markets experience a prolonged downturn, many end-customers may delay or reduce their IT spending.
We have not yet received security clearance from the United States government, which prevents us from being able to sell directly for certain governmental uses. There can be no assurance that such clearance will be obtained, and failure to do so may adversely affect our operating results.
We have not yet received security clearance from the U.S. government, which prevents us from being able to sell directly for certain governmental uses. There can be no assurance that such clearance will be obtained, and failure to do so may adversely affect our operating results.
For example, in 2023, we experienced longer sales cycles and customer uncertainty that resulted in delayed orders. We face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position .
For example, in 2023, we experienced longer sales cycles and customer uncertainty that resulted in delayed orders. These circumstances normalized in 2024. We face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position .
We may not be able to increase our number of distributor or reseller relationships or maintain our existing relationships. Recruiting and retaining qualified distribution channel partners and training them on our technologies requires significant time and resources.
We may not be able to increase our number of distributor or reseller relationships or maintain our existing relationships. Recruiting and retaining qualified distribution channels and training them on our technologies requires significant time and resources.
During the years ended December 31, 2023, 2022 and 2021, purchases by our ten largest end-customers accounted for approximately 33%, 41% and 39% of our total revenue, respectively. The composition of the group of these ten largest end-customers changes from period to period, but often includes service providers and enterprise customers.
During the years ended December 31, 2024, 2023 and 2022, purchases by our ten largest end-customers accounted for approximately 38%, 33% and 41% of our total revenue, respectively. The composition of the group of these ten largest end-customers changes from period to period, but often includes service providers and enterprise customers.
For example, the European Union’s General Data Protection Regulation, or GDPR, which took effect in May 2018, has caused EU data protection requirements to be more stringent and provide for greater penalties.
For example, the European Union’s General Data Protection Regulation, or GDPR, which took effect back in May 2018, has caused EU data protection requirements to be more stringent and provides for greater penalties.
Business practices in the international markets that we serve may differ from those in the United States and may require us in the future to include terms in customer contracts other than our standard terms. To the extent that we may enter into customer contracts in the future that include non-standard terms, our operating results may be adversely impacted.
Business practices in the international markets that we serve may differ from those in the U.S. and may require us in the future to include terms in customer contracts other than our standard terms. To the extent that we may enter into customer contracts in the future that include non-standard terms, our operating results may be adversely impacted.
We currently have technical support centers in the United States, Japan, India and the Netherlands. As we continue to expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training and documentation in languages other than English.
We currently have technical support centers in the U.S., Japan, India and the Netherlands. As we continue to expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training and documentation in languages other than English.
We may not be able to sustain or develop new distributor and reseller relationships, and a reduction or delay in sales to significant distribution channel partners could hurt our business. We sell our products and services through multiple distribution channels in the United States and internationally.
We may not be able to sustain or develop new distributor and reseller relationships, and a reduction or delay in sales to significant distribution channel partners could hurt our business. We sell our products and services through multiple distribution channels in the U.S. and internationally.
New developments in these areas, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between these nations and the United States.
New developments in these areas, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between these nations and the U.S.
Changes in tax laws or regulations or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition. We are subject to income taxes and other taxes in the United States and various foreign jurisdictions.
Changes in tax laws or regulations or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition. We are subject to income taxes and other taxes in the U.S. and various foreign jurisdictions.
These distribution channel partners may also market, sell and support products and services that are competitive with ours and may devote more resources to the marketing, sales and support of such competitive products.
These distribution channels may also market, sell and support products and services that are competitive with ours and may devote more resources to the marketing, sales and support of such competitive products.
Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations that can affect our operating income. The currency exchange impact of the foreign exchange rates on our net income was $0.1 million favorable during the year ended December 31, 2023.
Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations that can affect our operating income. The currency exchange impact of the foreign exchange rates on our net income was $2.1 million and $0.1 million favorable during the years ended December 31, 2024 and 2023, respectively.
In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.
In certain jurisdictions, these regulatory requirements may be more stringent than those in the U.S. Noncompliance or perceived noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.
We cannot be certain that the steps we have taken or will take will prevent misappropriation of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.
We cannot be certain that the steps we have taken or will take will prevent misappropriation of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the U.S.
Deterioration of relations between Taiwan and China, the resulting actions taken by either country, and other factors affecting the political or economic conditions of Taiwan in the future, could cause disruption to the manufacturing of our hardware components, which could materially adversely affect our business, financial condition and results of operations and the market price and the liquidity of our shares.
Deterioration of international relations including but not limited to those between Taiwan and China, the resulting actions taken by either country, and other factors affecting the political or economic conditions of Taiwan in the future, could cause disruption to the manufacturing of our hardware components, which could materially adversely affect our business, financial condition and results of operations and the market price and the liquidity of our shares.
Additionally, the current uncertainty about the future relationship between the United States and China, as well as other countries, with respect to the trade policies, treaties, taxes, government regulations and tariffs makes it difficult to plan for the future.
Additionally, the current uncertainty about the future relationship between the U.S. and China, as well as other countries, with respect to the trade policies, treaties, taxes, government regulations and tariffs makes it difficult to plan for the future.
During the years ended December 31, 2023, 22 2022 and 2021, service providers accounted for approximately 58%, 66% and 63%, of our total revenue, respectively, and enterprise customers accounted for approximately 42%, 34% and 37% of our total revenue, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long initial sales cycles.
During the years ended December 31, 2024, 22 2023 and 2022, service providers accounted for approximately 57%, 58% and 66%, of our total revenue, respectively, and enterprise customers accounted for approximately 43%, 42% and 34% of our total revenue, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long initial sales cycles.
Under the stock repurchase program, we may repurchase shares in the open market, privately negotiated transactions, in block trades or a combination of the foregoing.
Under the Company’s stock repurchase programs, we may repurchase shares in the open market, privately negotiated transactions, in block trades or a combination of the foregoing.
Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including significant fines, imprisonment of company officials and public censure, claims for damages by end-customers and other 37 affected persons and entities, damage to our reputation and loss of goodwill (both in relation to existing and prospective channel partners and end-customers), and other forms of injunctive or operations-limiting relief, any of which could have a material adverse effect on our operations, financial performance, and business.
Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including significant investigatory costs, fines, imprisonment of company officials and public censure (in the most serious, criminal cases, in certain jurisdictions), claims for damages by end-customers and other affected persons and entities, damage to our reputation and loss of goodwill (both in relation to existing and prospective channel partners and end-customers), and other forms of injunctive or operations-limiting relief, any of which could have a material adverse effect on our operations, financial performance, and business.
If our tax strategies are ineffective or we are not in compliance with domestic and international tax laws, our financial position, operating results and cash flows could be adversely affected. 39 In addition, from time to time the United States, foreign, state and local governments make substantive changes to tax rules, including tax policies and rates, that apply to businesses and shareholders.
If our tax strategies are ineffective or we are not in compliance with domestic and international tax laws, our financial position, operating results and cash flows could be adversely affected. In addition, from time to time the U.S., foreign, state and local governments make substantive changes to tax rules, including tax policies and rates, that apply to businesses and stockholders.
While the Cyber Incident we experienced in January 2023 did not result in material degradation of our systems, it did expose a vulnerability in our security measures which we have corrected.
While the Cyber Incident we experienced in January 2023 did not result in material degradation of our systems, it did expose a vulnerability in our security measures which we believe has been corrected.
We have personnel in numerous countries including in the following countries and regions: the United States, Western Europe, India, the Middle East, Japan, Taiwan, South Korea, Southeast Asia and Latin America.
We have personnel in numerous countries including in the following countries and regions: the U.S., Western Europe, India, the Middle East, Japan, Taiwan, South Korea, Southeast Asia and Latin America.
We may incur significant additional costs in the future to address problems caused by any actual or perceived security breaches . 36 Breaches of our security measures or those of our third-party service providers, or other security incidents, has and could result in: unauthorized access to our sites, networks and systems; unauthorized access to, misuse or misappropriation of information, including personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our sites, networks or systems; deletion or modification of content or the display of unauthorized content on our sites; interruption, disruption or malfunction of operations; costs relating to notification of individuals, or other forms of breach remediation; deployment of additional personnel and protection technologies; response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, regulatory investigations, prosecutions, and other actions; and other potential liabilities.
Breaches of our security measures or those of our third-party service providers, or other security incidents, has and could result in: unauthorized access to our sites, networks and systems; unauthorized access to, misuse or misappropriation of information, including personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our sites, networks or systems; deletion or modification of content or the display of unauthorized content on our sites; interruption, disruption or malfunction of operations; costs relating to notification of individuals, or other forms of breach remediation; deployment of additional personnel and protection technologies; response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, regulatory investigations, prosecutions, and other actions; and other potential liabilities.
Generally accepted accounting principles (“GAAP”) in the United States are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.
Generally accepted accounting principles (“GAAP”) in the U.S. are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.
A significant portion of our revenue is generated in international markets, including Japan, Western Europe, Taiwan and South Korea. During the years ended December 31, 2023, 2022, and 2021, approximately 55%, 54% and 60% of our total revenue, respectively, was generated from customers located outside of the United States.
A significant portion of our revenue is generated in international markets, including Japan, Western Europe, Taiwan and South Korea. During the years ended December 31, 2024, 2023, and 2022, approximately 55%, 55% and 54% of our total revenue, respectively, was generated from customers located outside of the U.S.
Evolving and changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere, especially relating to classification of Internet Protocol (“IP”) addresses, machine identification, location data, biometric data and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data.
Evolving and changing definitions of personal data and personal information, within the EU, the U.S., and elsewhere, especially relating to classification of Internet Protocol (“IP”) addresses, machine identification, location data, biometric data and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of 37 data.
As such, if we or our intermediaries, such as channel partners and distributors, fail to comply with the requirements of the FCPA or similar legislation, governmental authorities in the United States and elsewhere could seek to impose civil and/or criminal fines and penalties which could have a material adverse effect on our business, operating results and financial condition.
As such, if we or our intermediaries, such as resellers and other channels and distributors, fail to comply with the requirements of the FCPA or similar legislation, governmental authorities in the U.S. and elsewhere could seek to impose civil and/or criminal fines and penalties which could have a material adverse effect on our business, operating results and financial condition.
In response to the January 2023 Cyber Incident, we launched an investigation and engaged the services of cyber-security experts and advisors, incident response professionals and external counsel to support the investigation. While to date, this incident has not had a material impact on the Company, it did result in additional expense incurred in connection with the investigation.
In response to the Cyber Incident, we launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals and external counsel to support the investigation. While the Cyber Incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation.
If we fall out of compliance with, or are deemed to be in violation of, any applicable export or import regulations, we may incur penalties and face other consequences that could harm our sales process and financial results.
If we fall out of compliance with, or are deemed to be in violation of, any applicable export or import regulations, we may incur penalties and face other consequences that could harm our sales process and financial results. We are subject to various environmental laws and regulations that could impose substantial costs upon us.
We may not be able to successfully implement improvements to these systems, processes and controls in an efficient or timely manner. In addition, our systems and processes may not prevent or detect all errors, omissions or fraud.
We need to continue to improve our internal systems, processes, and controls to effectively manage our operations and growth. We may not be able to successfully implement improvements to these systems, processes and controls in an efficient or timely manner. In addition, our systems and processes may not prevent or detect all errors, omissions or fraud.
Similarly, California recently enacted the California Consumer Privacy Act as well as the California Privacy Rights Act (collectively referred to as “CCPA/CPRA”), which, among other things, requires covered companies to provide new disclosures to California consumers and affords such consumers new rights including not sharing personal information upon the consumer’s request and opt-out provisions for the sales of consumer’s personal information.
Similarly, California recently enacted the California Consumer Privacy Act (which was then amended by the California Privacy Rights Act) (“CCPA”) which, among other things, requires covered companies to provide new disclosures to California consumers and affords such consumers new rights including not sharing personal information upon the consumer’s request and opt-out provisions for the sales of consumer’s personal information.
Additionally, the implementation of these initiatives imposes additional costs on us. If our ESG initiatives fail to satisfy investors, customers, partners and our other stakeholders, our reputation, our ability to sell products and services to customers, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
If our ESG initiatives fail to satisfy investors, customers, partners and our other stakeholders, our reputation, our ability to sell products and services to customers, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
We may need to raise additional funds in private or public offerings, and these funds may not be available to us when we need them or on acceptable terms, if at all.
We may need to raise additional funds in private or public offerings, and these funds may not be available to us when we need them or on acceptable terms, if at all. We may also elect to raise additional funds to help us pursue our business or strategic objectives.
In certain prior periods, we have significantly increased the number of our employees and independent contractors. As we hire new employees and independent contractors and expand into new locations outside the United States, we are required to comply with varying local laws for each of these new locations.
In certain prior periods, we have significantly increased the number of our employees and independent contractors. As we hire new employees and independent contractors and expand into new locations outside the U.S., we are required to comply with varying local laws for each of these new locations. We anticipate that further expansion of our infrastructure and headcount will be required.
To date, the Cyber Incident has not had a material impact on the Company, although it did result in additional expense incurred in connection with the investigation.
While the Cyber Incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation.
This could harm our ability to ship or support our products, and our financial results may be harmed. 32 In addition, reconfiguring or upgrading our information technology systems or other business processes in response to changing business needs may be time-consuming and costly and is subject to risks of delay or failed deployment.
In addition, reconfiguring or upgrading our information technology systems or other business processes in response to changing business needs may be time-consuming and costly and is subject to risks of delay or failed deployment.
Future acquisitions we may undertake may not result in the financial and strategic goals that are contemplated at the time of the transaction. We may make future acquisitions of complementary companies, products or technologies.
Future acquisitions we may undertake may not result in the financial and strategic goals that are contemplated at the time of the transaction. We may make future acquisitions of complementary companies, products or technologies. For example, in February 2025 we acquired the assets and key personnel of ThreatX Protect.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeMost recently, he served as CISO at Business Wire, where he was responsible for transforming the security and compliance organizations to meet the needs of a globally distributed SaaS newswire. Prior to Business Wire, Mr. Pike held leadership positions at VMware, IDC, and Nielsen Radio.
Biggest changeMost recently, he served as Chief Information Security Officer at Business Wire, where he was responsible for transforming the security and compliance organizations to meet the needs of a globally distributed SaaS newswire. Prior to Business Wire, Mr. Pike held leadership positions at VMware, IDC, and Nielsen Radio.
Our IT cybersecurity team maintains an incident response plan designed to respond to potential cybersecurity threats, such as security breaches and cyberattacks, and to protect and preserve the confidentiality, integrity, and continued availability of information owned by, or in the care of, the Company.
Our IT cybersecurity team maintains an incident response plan designed to respond to potential cybersecurity threats, such as security breaches and cyber-attacks, and to protect and preserve the confidentiality, integrity, and continued availability of information owned by, or in the care of, the Company.
His work at the Company includes aligning cybersecurity, product security, and security compliance initiatives to business goals. Mr. Pike holds a JD in law from Syracuse University and a M.S. in telecommunications and network management from Syracuse University.
His work at the Company includes aligning cybersecurity, product security, and security compliance initiatives to business goals. Mr. Pike holds a Juris Doctor in law from Syracuse University and a M.S. in telecommunications and network management from Syracuse University.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease space for offices internationally and for sales offices in locations throughout the United States and various international locations, including, among others, Japan, the United Kingdom, the Netherlands, Taiwan, South Korea, Singapore and India. We believe that our current facilities are adequate to meet our current needs.
Biggest changeWe also lease space for offices internationally and for sales offices in locations throughout the U.S. and various international locations, including, among others, Japan, the UK, the Netherlands, Taiwan, South Korea, Singapore and India. We believe that our current facilities are adequate to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed3 unchanged
Biggest changeCommitments and Contingencies, in the notes to consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated by reference.
Biggest changeAdditional information with respect to this Item may be found in Note 7 Commitments and Contingencies, in the notes to consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated by reference. Item 4. Mine Safety Disclosures Not applicable. 46 PART II
Due to the inherent uncertainties of the legal processes in the multiple jurisdictions in which we operate, our judgments may be materially different than the actual outcomes, which could have material adverse effects on our business, financial conditions and results of operations. Additional information with respect to this Item may be found in Note 7.
Due to the inherent uncertainties of the legal processes in the multiple jurisdictions in which we operate, our judgments may be materially different than the actual outcomes, which could have material adverse effects on our business, financial conditions and results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+3 added−1 removed5 unchanged
Biggest changeComparison Of Cumulative Total Return Among A10 Networks, Inc., NASDAQ Composite, Russell 1000 Index, Russell 2000 Index and NYSE Technology Index Issuer Purchases of Equity Securities On November 7, 2023, the Company announced its Board of Directors had authorized a stock repurchase program of up to $50 million of its common stock over a period of twelve months.
Biggest changeComparison Of Cumulative Total Return Among A10 Networks, Inc., NASDAQ Composite, Russell 2000 Index, NYSE Technology Index and S&P 600 Index Issuer Purchases of Equity Securities On November 7, 2024, the Company announced its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock.
The graph assumes $100 was invested on December 31, 2018 in our common stock and each index and all dividends were reinvested. The historic stock price performance is not necessarily indicative of future stock price performance.
The graph assumes $100 was invested on December 31, 2019 in our common stock and each index and all dividends were reinvested. The historic stock price performance is not necessarily indicative of future stock price performance.
Because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these holders of record. 48 Company Stock Performance The following graph compares the cumulative total return on our common stock, the NASDAQ Composite Index, the Russell 1000 Index, the Russell 2000 Index and the NYSE Technology Index.
Because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these holders of record. 47 Company Stock Performance The following graph compares the cumulative total return on our common stock, the NASDAQ Composite, the Russell 2000 Index, the NYSE Technology Index and the S&P 600 Index.
However, the payment, amount and timing of future dividends remain within the discretion of our Board of Directors and will depend on our results of operations, financial condition, cash requirements, and other factors. There were approximately 73 stockholders of record on February 16, 2024.
However, the payment, amount and timing of future dividends remain within the discretion of our Board of Directors and will depend on our results of operations, financial condition, cash requirements, and other factors. There were approximately 44 stockholders of record on February 20, 2025.
As of December 31, 2023, the Company had $49.7 million available to repurchase shares under this program. Under the stock repurchase program, we may repurchase shares of common stock in the open market, privately negotiated transactions, in block trades or a combination of the foregoing.
As of December 31, 2024, the Company had $44.2 million available to repurchase shares under this program. Under the stock repurchase program, we may repurchase shares of common stock in the open market, privately negotiated transactions, in block trades or a combination of the foregoing.
The Company has elected to replace the Russell 1000 Index with the Russell 2000 because the Company is a component of the Russell 2000 Index and the Company believes the Russell 2000 represents a group of companies more aligned with our peer group.
The Company has elected to replace the NASDAQ Composite with the S&P 600 Index because the Company is a component of the S&P 600 Index and the Company believes the S&P 600 Index represents a group of companies more aligned with our peer group.
Removed
No shares were repurchased by the Company during the three months ended December 31, 2023. Unregistered Sales of Equity Securities None. Item 6. [Reserved] 49
Added
Share repurchase activity during the three months ended December 31, 2024 was as follows (in thousands, except per share amounts): 48 Periods Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) October 1 - 31, 2024 — $ — — November 1 - 30, 2024 330 $ 15.73 330 December 1 - 31, 2024 31 $ 18.81 31 Total 361 $ 44,237 (1) Average price paid per share includes broker commission fees, if applicable.
Added
(2) The $44.2 million in the table above represents the amount available to repurchase shares under the authorized repurchase program as of December 31, 2024. The Company’s stock repurchase program does not obligate it to acquire any specific number of shares.
Added
Shares may be repurchased in privately negotiated and/or open market transactions and by withholding shares in connection with vesting equity awards held by certain employees, including under plans complying with Rule 10b5-1 under the Exchange Act. Unregistered Sales of Equity Securities None. Item 6. [Reserved] 49

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur investments in growth in these areas may affect our short-term profitability. 51 Results of Operations A summary of our consolidated statements of operations for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): Years Ended December 31, 2023 2022 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Revenue: Products $ 141,082 56.1 % $ 173,201 61.8 % $ (32,119) (18.5) % Services 110,618 43.9 107,137 38.2 3,481 3.2 % Total revenue 251,700 100.0 280,338 100.0 (28,638) (10.2) % Cost of revenue: Products 31,468 12.5 40,135 14.3 (8,667) (21.6) % Services 16,494 6.6 16,697 6.0 (203) (1.2) % Total cost of revenue 47,962 19.1 56,832 20.3 (8,870) (15.6) % Gross profit 203,738 80.9 223,506 79.7 (19,768) (8.8) % Operating expenses: Sales and marketing 85,976 34.2 88,511 31.6 (2,535) (2.9) % Research and development 55,229 21.9 58,398 20.8 (3,169) (5.4) % General and administrative 23,885 9.5 23,518 8.4 367 1.6 % Total operating expenses 165,090 65.6 170,427 60.9 (5,337) (3.1) % Income from operations 38,648 15.4 53,079 18.8 (14,431) (27.2) % Non-operating income (expense): Interest income 5,078 2.0 1,304 0.5 3,774 289.4 % Interest and other income (expense), net 69 — (1,667) (0.6) 1,736 (104.1) % Total non-operating income (expense), net 5,147 2.0 (363) (0.1) 5,510 (1,517.9) % Income before income taxes 43,795 17.4 52,716 18.7 (8,921) (16.9) % Provision for income taxes 3,825 1.5 5,808 2.1 (1,983) (34.1) % Net income $ 39,970 15.9 % $ 46,908 16.7 % $ (6,938) (14.8) % 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 software-as-a-service; and (ii) services revenue, which includes post contract support (“PCS”), professional services, and training.
Biggest changeOur investments in growth in these areas may affect our short-term profitability. 51 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.
Cash Flows from Financing Activities During the year ended December 31, 2023, cash used in financing activities was $28.8 million consisting primarily of $17.8 million of cash used for the payments of cash dividends and $16.0 million of cash used to repurchase our common stock in the open market, partially offset by $4.9 million of cash proceeds from common stock issuances under our equity incentive plans.
During the year ended December 31, 2023, cash used in financing activities was $28.8 million consisting primarily of $17.8 million of cash used for the payments of cash dividends and $16.0 million of cash used to repurchase our common stock in the open market, partially offset by $4.9 million of cash proceeds from common stock issuances under our equity incentive plans.
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 partner programs and increase awareness of our solutions on a global basis.
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.
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.
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. 59
The decrease was primarily due to lower products revenue driven by a decrease in demand from our service provider customers driven by decreased demand. 53 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.
The decrease was primarily due to lower products revenue driven by a decrease in demand from our service provider customers. 53 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.
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 software-as-a-service; and (ii) services revenue, which includes post contract support (“PCS”), professional services, and training.
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 post contract support (“PCS”), professional services, training and software-as-a-service offerings.
See Note 9 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.
See Note 10 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.
In addition, as described in Note 6 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.
In addition, as described in Note 7 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.
In 2024, we expect sales and marketing expenses to increase from 2023 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.
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. Research and Development Research and development efforts are focused on new product development and on developing additional functionality for our existing products.
Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and 2021 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, 2022 filed with the SEC on February 27, 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.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. 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.
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.
This section of the Form 10-K generally discusses fiscal 2023 and 2022 items and year-to-year comparisons between fiscal 2023 and 2022.
This section of the Form 10-K generally discusses fiscal 2024 and 2023 items and year-to-year comparisons between fiscal 2024 and 2023.
During the year ended December 31, 2023, the Company repurchased 1.3 million shares for a total cost of $16.0 million. During the year ended December 31, 2022, the Company repurchased 6.1 million shares for a total cost of $79.3 million. 56 In October 2021, our Board approved the initiation of a regular quarterly cash dividend on our common stock.
During the year ended December 31, 2023, the Company repurchased 1.3 million shares for a total cost of $16.0 million. In October 2021, our Board approved the initiation of a regular quarterly cash dividend on our common stock.
In 2024, we expect general and administrative expenses to increase from 2023 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities. 55 Non-Operating Income (Expense) - Interest Income Interest income consists primarily of interest income earned on our invested cash, cash equivalents and marketable securities.
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. Non-Operating Income (Expense) - Interest Income Interest income consists primarily of interest income earned on our invested cash, cash equivalents and marketable securities.
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 channel partners, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products.
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 channel partners, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products other than our software-as-a-service offerings.
On November 1, 2022, the Company announced its Board of Directors authorized a stock repurchase program of up to $50 million of its common stock over a period of twelve months, at which point it expired.
On November 1, 2022, the Company announced its Board of Directors authorized a stock repurchase program of up to $50 million of its common stock over a period of twelve months.
The net change in our operating assets and liabilities primarily reflects cash outflows from changes in accounts receivable of $10.1 million and accrued and other liabilities of $1.3 million, partially offset by cash inflows from changes in deferred revenue of $5.4 million, inventory of $2.0 million and prepaid expenses and other assets of $1.6 million.
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.
This decrease was due to a $32.1 million decrease in products revenue, partially offset by an increase of $3.5 million in services revenue.
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.
During the year ended December 31, 2023, cash provided by operating activities was $44.5 million, consisting of net income of $40.0 million and non-cash benefits totaling $22.8 million, partially offset by an unfavorable net change in operating assets and liabilities of $18.3 million.
The unfavorable change in accounts receivable was due to the timing of collections from our customers. During the year ended December 31, 2023, cash provided by operating activities was $44.5 million, consisting of net income of $40.0 million and non-cash benefits totaling $22.8 million, partially offset by an unfavorable net change in operating assets and liabilities of $18.3 million.
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.
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.
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. To date, all repurchases under these programs, other than the repurchase from Summit, have occurred in the open market.
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.
We report two customer verticals: service providers, which accounted for 58% and 66% of our total revenue during 2023 and 2022, respectively, and enterprise, which accounted for 42% and 34% of our total revenue during 2023 and 2022, respectively.
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.
Products revenue decreased $32.1 million, or 19%, in 2023 compared to 2022 primarily driven by lower demand from our service provider customers in the Americas, APAC and EMEA regions, partially offset by higher demand from enterprise customers in Japan. Services revenue increased $3.5 million, or 3%, in 2023 compared to 2022.
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 favorable change in deferred revenues was attributable to the timing of service contract bookings. 57 Cash Flows from Investing Activities During the year ended December 31, 2023, cash provided in investing activities was $13.6 million, consisting of proceeds from maturities of marketable securities of $64.5 million and proceeds from the sales of marketable securities of $45.4 million, partially offset by purchases of marketable securities of $85.4 million and capital expenditures of $10.9 million.
During the year ended December 31, 2023, cash provided in investing activities was $13.6 million, consisting of proceeds from maturities of marketable securities of $64.5 million and proceeds from the sales of marketable securities of $45.4 million, partially offset by purchases of marketable securities of $85.4 million and capital expenditures of $10.9 million.
Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $97.2 million, including $3.4 million held outside the United States in our foreign subsidiaries, and $62.1 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations.
Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $95.1 million, including $3.9 million held outside the U.S. in our foreign subsidiaries, and $100.4 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations.
Statements of Cash Flows The following table summarizes our cash flow related activities (in thousands): Years Ended December 31, 2023 2022 Cash provided by (used in): Operating activities $ 44,514 $ 66,100 Investing activities 13,608 11,087 Financing activities (28,849) (88,141) Net increase (decrease) in cash and cash equivalents $ 29,273 $ (10,954) 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.
Statements of Cash Flows The following table summarizes our cash flow related activities (in thousands): Years Ended December 31, 2024 2023 Cash provided by (used in): Operating activities $ 90,492 $ 44,514 Investing activities (48,350) 13,608 Financing activities (44,257) (28,849) Net increase (decrease) in cash and cash equivalents $ (2,115) $ 29,273 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.
On November 7, 2023, the Company announced its Board of Directors had authorized a stock repurchase program of up to $50 million of its common stock over a period of twelve months. As of December 31, 2023, the Company had $49.7 million available to repurchase shares. Under these repurchase programs, repurchased shares are held in treasury at cost.
On November 7, 2024, the Company announced its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock. As of December 31, 2024, the Company had $44.2 million available to repurchase shares. Under these repurchase programs, repurchased shares are held in treasury at cost.
As of December 31, 2023, we had working capital of $160.8 million, accumulated deficit of $90.5 million and total stockholders’ equity of $207.9 million. We plan to continue to invest for long-term growth, and our investment may increase.
As of December 31, 2024, we had working capital of $183.7 million, accumulated deficit of $40.3 million and total stockholders’ equity of $231.8 million. We plan to continue to invest for long-term growth, and our investment may increase.
Services gross margin percentage increased by 0.7% in 2023 compared to 2022 primarily due to a decrease in personnel-related support costs. Operating Expenses Our operating expenses consist of sales and marketing, research and development, general and administrative, and restructuring expenses.
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. Operating Expenses Our operating expenses consist of sales and marketing, research and development, general and administrative, and restructuring expenses.
Personnel costs also include stock-based compensation. 54 A summary of our operating expenses is as follows (dollars in thousands): Years Ended December 31, Increase (Decrease) 2023 2022 Amount Percent Operating expenses: Sales and marketing $ 85,976 $ 88,511 $ (2,535) (3) % Research and development 55,229 58,398 (3,169) (5) % General and administrative 23,885 23,518 367 2 % Total operating expenses $ 165,090 $ 170,427 $ (5,337) (3) % Sales and Marketing Sales and marketing expenses are our largest functional category of operating expenses and primarily consist of personnel costs.
Personnel costs also include stock-based compensation. 54 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.
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.
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.
Our non-cash benefit consisted primarily of non-cash charges of $13.3 million for stock-based compensation and $7.4 million of depreciation and amortization expense.
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.
A summary of our cost of revenue is as follows (dollars in thousands): Years Ended December 31, Increase (Decrease) 2023 2022 Amount Percent Cost of revenue: Products $ 31,468 $ 40,135 $ (8,667) (22) % Services 16,494 16,697 (203) (1) % Total cost of revenue $ 47,962 $ 56,832 $ (8,870) (16) % Gross Margin Gross margin may vary and be unpredictable from period to period due to a variety of factors.
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.
The increase was primarily attributable to the increase in PCS sales in connection with our increased installed customer base in the Japan, Americas and EMEA regions. During 2023, $132.7 million, or 53% of total revenue, was generated from the Americas region, which represents an 11% decrease compared to 2022.
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.
On September 8, 2022, we entered into a Common Stock Repurchase Agreement (the “Repurchase Agreement”) with Summit Partners Growth Equity Fund VIII-A, L.P., Summit Partners Growth Equity Fund VIII-B L.P., Summit Investors I, LLC and Summit Investors I (UK), L.P. (collectively, “Summit”).
In September 2022, we entered into a Common Stock Repurchase Agreement (the “Repurchase Agreement”) with Summit Partners Growth Equity Fund VIII-A, L.P., Summit Partners Growth Equity Fund VIII-B L.P., Summit Investors I, LLC and Summit Investors I (UK), L.P. (collectively, “Summit”). Pursuant to the Repurchase Agreement, we repurchased 3.5 million shares of common stock from Summit for approximately $44.6 million.
Pursuant to the Repurchase Agreement, we repurchased 3.5 million shares of common stock from Summit for approximately $44.6 million. The common shares repurchased are held in treasury and accounted for under the cost method.
In November 2024, we entered into a Common Stock Repurchase Agreement (the “Repurchase Agreement”) with Summit. Pursuant to the Repurchase Agreement, we repurchased 330 thousand shares of common stock from Summit for approximately $5.2 million. The common shares repurchased are held in treasury and accounted for under the cost method.
The $2.5 million decrease in sales and marketing expenses in 2023 compared to 2022 was primarily due to decreases of $3.5 million in personnel costs as a result of a decrease in headcount and $0.4 million in marketing expenses, partially offset by increases of $0.9 million in credit loss expense and $0.5 million in travel-related expense.
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.
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 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. 58 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.
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 years ended December 31, 2023 and 2022 primarily consisted of state and foreign income taxes.
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. Our deferred tax assets primarily consist of research and development credits, capitalized research and development expenses and accruals and reserves.
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.
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 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. 50 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.
Revenue is recognized for training when the training course is delivered. Contracts with Multiple Performance Obligations 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.
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.
Non-Operating Income (Expense) - Interest and Other Income (Expense), Net In the years ended December 31, 2023 and 2022, interest and other income (expense), net consisted primarily of foreign currency exchange gains and losses, which had a favorable change of $0.6 million in the year ended December 31, 2023 compared to 2022.
Interest income was $6.7 million and $5.1 million in the years ended December 31, 2024 and 2023, respectively. 55 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.
During the year ended December 31, 2022, cash used in investing activities was $11.1 million, consisting of purchases of marketable securities of $55.4 million and capital expenditures of $10.8 million, partially offset by proceeds from maturities of marketable securities of $71.0 million and sales of marketable securities of $6.3 million.
The favorable change in deferred revenues was attributable to the timing of service contract bookings. 57 Cash Flows from Investing Activities 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.
The $3.2 million decrease in research and development expenses in 2023 compared to 2022 was primarily due to a decrease of $8.5 million increase in personnel costs as a result of a decrease in headcount.
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.
The decrease was primarily due to lower products revenue driven by a decrease in demand from our service provider customers. During 2023, $77.6 million, or 31% of total revenue, was generated from APJ, which represents a 13% decrease compared to 2022. The decrease was mainly due to decreased revenue from both our enterprise and service provider customers.
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.
During the year ended December 31, 2022, cash provided by operating activities was $66.1 million, consisting of net income of $46.9 million, partially offset by a non-cash benefit of $21.5 million and an unfavorable net change in operating assets and liabilities of $2.3 million.
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.
The $0.4 million increase in general and administrative expenses in 2023 compared to 2022 was primarily due to an increase of $1.3 million in professional services expense as a result of increases in accounting and tax fees. Additionally, facility expense increased $0.7 million primarily related to rent expense, equipment expense increased $0.4 million and depreciation expense increased $0.3 million.
Professional services primarily consist of fees for outside accounting, tax, legal, recruiting and other administrative services. 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.
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 customers could materially impact our revenue and operating results in any quarterly period.
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.
Our solutions are available in a variety of form factors, such as optimized hardware appliances, bare metal software, containerized software, virtual appliances and cloud-native software. Our customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises.
Our security products include; A10 Defend Threat Control, A10 Defend Orchestrator, A10 Defend Detector, A10 Defend Mitigator and A10 Defend ThreatX Protect. Our solutions are available in a variety of form factors, such as optimized hardware appliances, bare metal software, containerized software, virtual appliances and cloud-native software.
A summary of our gross profit and gross margin is as follows (dollars in thousands): Years Ended December 31, 2023 2022 Increase (Decrease) Amount Gross Margin Amount Gross Margin Amount Gross Margin Gross profit: Products $ 109,614 77.7 % $ 133,066 76.8 % $ (23,452) 0.9 % Services 94,124 85.1 % 90,440 84.4 % 3,684 0.7 % Total gross profit $ 203,738 80.9 % $ 223,506 79.7 % $ (19,768) 1.2 % Products gross margin percentage decreased by 0.9% in 2023 compared to 2022 primarily driven by changes in product and geographic mix.
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.
The unfavorable change in accounts receivable was due to the timing of collections from our customers. The favorable change in deferred revenues was attributable to the timing of service contract bookings.
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 accrued income taxes and variable compensation. The favorable change in accounts payable is due to the timing of payments to our vendors.
We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements. Inventory Inventory is stated at the lower of cost or net realizable value. Inventory cost is determined using a first-in, first-out method. We regularly evaluate inventory for excess and obsolete products.
We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.
A summary of our total revenue is as follows (dollars in thousands): Years Ended December 31, 2023 2022 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Revenue: Products $ 141,082 56 % $ 173,201 62 % $ (32,119) (19) % Services 110,618 44 107,137 38 3,481 3 % Total revenue $ 251,700 100 % $ 280,338 100 % $ (28,638) (10) % Revenue by geographic region: Americas $ 132,745 53 % $ 148,673 53 % $ (15,928) (11) % United States 113,766 45 % 129,397 46 % (15,631) (12) % Americas-other 18,979 8 % 19,276 7 % (297) (2) % APJ 77,606 31 % 89,702 32 % (12,096) (13) % APAC 29,748 12 % 32,986 12 % (3,238) (10) % Japan 47,858 19 % 56,716 20 % (8,858) (16) % EMEA 41,349 16 % 41,963 15 % (614) (1) % Total revenue $ 251,700 100 % $ 280,338 100 % $ (28,638) (10) % Total revenue decreased by $28.6 million, or 10%, in 2023 compared to 2022.
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.
During the year ended December 31, 2022, cash used in financing activities was $88.1 million consisting primarily of $79.3 million of cash used to repurchase our common stock in the open market and from Summit, and $15.9 million used for the payments of cash dividends, partially offset by $7.0 million of cash proceeds from common stock issuances under our equity incentive plans.
Cash Flows from Financing Activities 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.
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.
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. 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.
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 customers and service providers.
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.
Inventory write downs are included as a component of cost of products revenue in the consolidated statements of operations. Revenue Recognition We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription revenue; and (ii) services revenue, which includes post contract support (“PCS”), professional services, and training.
Our customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises. 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.
Purchases from our ten largest end-customers accounted for 33%, 41% and 39% of our total revenue for 2023, 2022 and 2021, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles.
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.
The Americas region comprises the United States and all other countries in the Americas (excluding the United States). The APJ region comprises Japan and all other countries in APAC (excluding Japan). The EMEA region comprises Europe, Middle East and Africa.
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.
Additionally, we recorded impairment expense of $1.0 million in the year ended December 31, 2022 related to an equity investment in a private company held by the Company. Provision for (Benefit from) Income Taxes We recorded income tax provisions of $3.8 million for the year ended December 31, 2023 and $5.8 million for the year ended December 31, 2022.
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.
Removed
The portfolio consists of six secure application solutions; Thunder Application Delivery Controller (“ADC”), Lightning Application Delivery Controller (“Lightning ADC”), Thunder Carrier Grade Networking (“CGN”), Thunder Threat Protection System (“TPS”), Thunder SSL Insight (“SSLi”) and Thunder Convergent Firewall (“CFW”), and two intelligent management and automation tools; Harmony Controller and aGalaxy TPS.
Added
The portfolio consists of network infrastructure and security products. The infrastructure portfolio powers the delivery of internet services and applications while the security products protect applications, APIs, infrastructure and enterprises from cyber-attacks. Our security suite is known as A10 Defend.
Removed
During 2023, we experienced an increase in demand from our enterprise customers and a decrease in demand from our service provider customers related to lower service provider capital spending and longer sales cycles.
Added
In addition, we have an intelligent management and automation tool known as A10 Control (formally Harmony Controller), which provides intelligent management, automation and analytics for secure application delivery in multi-cloud environments to help simplify operations. Our secure infrastructure solutions include; Thunder Application Delivery Controller (“ADC”), Thunder Carrier Grade Networking (“CGN”), Thunder SSL Insight (“SSLi”) and Thunder Convergent Firewall (“CFW”).
Removed
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 50 products to original design manufacturers.
Added
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.
Removed
This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict, as was the case in 2023. We intend to continue to invest for long-term growth.
Added
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 intend to continue to invest for long-term growth.
Removed
During 2023, $41.3 million, or 16% of total revenue, was generated from EMEA, which represented a 1% decrease compared to 2022.
Added
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.
Removed
This decrease was partially offset by increases of $3.4 million in depreciation expense and $1.9 million in consulting expense as the Company transitions to using non-employee consultants for certain research and development activities. In 2024, we expect research and development expenses to increase from 2023 levels reflecting strategic investments in our growth priorities, including cybersecurity technology.
Added
The Company’s income tax provision for the year ended December 31, 2024 primarily consisted of U.S. federal and state taxes. The Company’s income tax provision for the year ended December 31, 2023 primarily consisted of U.S. federal, state and foreign income taxes.
Removed
Partially offsetting these increases was a decrease of $1.6 million in office expenses as the Company paid catch-up tax fee in 2022 related to a property tax audit. Additionally, consulting expense decreased $0.7 million.
Added
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.
Removed
Interest income was $5.1 million and $1.3 million in the years ended December 31, 2023 and 2022, respectively.
Added
On November 7, 2023, the Company announced its Board of Directors had authorized a stock repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock over a period of twelve months.
Removed
Most of our inventory provisions relate to excess quantities of certain products, based on our inventory levels and future product purchase commitments compared to assumptions based on management’s assessment of future demand and market conditions. Inventory write-downs, once established, are not reversed as they establish a new cost basis for the inventory.
Added
To date, all repurchases under the Company’s stock repurchase programs have occurred in the open market, in negotiated transactions and from withholding shares in connection with vesting equity awards held by certain employees. During the year 56 ended December 31, 2024, the Company repurchased 2.2 million shares for a total cost of $30.1 million.
Removed
Our customers predominantly purchase PCS services in conjunction with purchases of our products. 58 Revenue is recognized, net of applicable taxes, upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Sensitivity Our exposure to market risk for changes in interest rates relates primarily to our marketable securities. Our marketable securities are comprised of certificates of deposit, corporate securities, U.S. Treasury and agency securities, commercial paper and asset-backed securities and equity securities of publicly traded companies. We do not enter into investments for trading or speculative purposes.
Biggest changeWe recorded $0.5 million of net foreign exchange losses during the year ended December 31, 2022. Interest Rate Sensitivity Our exposure to market risk for changes in interest rates relates primarily to our marketable securities. Our marketable securities are comprised of certificates of deposit, corporate securities, U.S.
Our costs and expenses are generally denominated in the currencies where our operations are located, which is primarily in the Americas, EMEA and, to a lesser extent, Japan and the Asia Pacific region. We have a hedging program with respect to foreign currency risk.
Our costs and expenses are generally denominated in the currencies where our operations are located, which is primarily in the Americas, EMEA and, to a lesser extent, the Asia Pacific region, including Japan. We have a hedging program with respect to foreign currency risk.
A significant fluctuation in the exchange rates between our subsidiaries’ local currencies, especially the Japanese Yen, British Pound and Euro, and the U.S. Dollar could have an adverse impact on our consolidated financial position and results of operations. We recorded $0.1 million of net foreign exchange gains in the year ended December 31, 2023.
A significant fluctuation in the exchange rates between our subsidiaries’ local currencies, especially the Japanese Yen, British Pound and Euro, and the U.S. Dollar could have an adverse impact on our consolidated financial position and results of operations. We recorded $2.1 million and $0.1 million of net foreign exchange gains in the years ended December 31, 2024 and 2023, respectively.
The following table presents the hypothetical fair values of our marketable securities assuming immediate parallel shifts in the yield curve of 50 basis points (“BPS”), 100 BPS and 150 BPS as of December 31, 2023 (in thousands): Fair Value as of (150 BPS) (100 BPS) (50 BPS) 12/31/2023 50 BPS 100 BPS 150 BPS Marketable securities $ 62,289 $ 62,211 $ 62,134 $ 62,056 $ 61,978 $ 61,899 $ 61,821 60
The following table presents the hypothetical fair values of our marketable securities assuming immediate parallel shifts in the yield curve of 50 basis points (“BPS”), 100 BPS and 150 BPS as of December 31, 2024 (in thousands): Fair Value as of (150 BPS) (100 BPS) (50 BPS) 12/31/2024 50 BPS 100 BPS 150 BPS Marketable securities $ 101,233 $ 100,965 $ 100,697 $ 100,429 $ 100,161 $ 99,893 $ 99,625 60
Removed
We recorded $0.5 million and $1.9 million of net foreign exchange losses during the years ended December 31, 2022 and 2021, respectively. The effect of a hypothetical 10% change in our exchange rate would not have a significant impact on our consolidated results of operations.
Added
Treasury and agency securities, commercial paper and asset-backed securities and equity securities of publicly traded companies. We do not enter into investments for trading or speculative purposes. At December 31, 2024, our investment portfolio included marketable securities with an aggregate fair market value and amortized cost basis of $100.4 million and $100.2 million, respectively.
Removed
At December 31, 2023, our investment portfolio included marketable securities with an aggregate fair market value and amortized cost basis of $62.1 million and $62.1 million, respectively. The effect of a hypothetical 10% change in interest rates would not have had any impact on our interest expense.
Added
Due to the current nature of our investment portfolio, the effect of a hypothetical 10% increase or decrease in interest rates would not have had a material impact on the fair value of our investment portfolio. Therefore, we do not expect our operating results or cash flows to be materially affected by a sudden change in interest rates.

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