A10 Networks, Inc.

Good afternoon and welcome to the A10 Network's fourth quarter and year 2018 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Maria Riley with Investor Relations. Please go ahead.

Thank you all for joining us today. This call is being recorded in webcast live and may be accessed for one year via the ATEN Networks website, www.atennetworks.com. Members of ATEN's management team joining me today are Lee Chen, founder and CEO of Tom Constantino, CFO, and Chris White, EVP of Worldwide Sales. Before we begin, I would like to remind you that shortly after the market closed today, ATEN Networks issued a press release announcing its fourth quarter in year 2018 financial results. Additionally, ATEN published a presentation along with its prepared comments for this call and supplemental trended financial statements. You may access the press release presentation with prepared comments and trended financial statements on the investor relations section of the company's website, www.a10networks.com. During the course of today's call, management will make forward-looking statements, including statements regarding our projections for our future operating results, the capabilities of our sales team, our expectations regarding future opportunities, and our ability to execute on those opportunities, our commitment to innovation and bringing new solutions to market, our expectations for future revenue and market growth, the development and performance of our products, our current and future strategies, our beliefs relating to our competitive advantages, our expectations with respect to the 5G market, responses to new security threats, our partnerships with key technology providers, our ability to penetrate certain markets, anticipated customer benefits from use of our products, the refining of our marketing engine, improvements in productivity, our priorities relating to 5G growth in our security solutions, expected product launches and adoption of recent new product or software releases, the general growth of our business, and our ability to incrementally grow operating margin annually and timeline to achieve our target operating margins. These statements are based on current expectations and beliefs as of today, February 7, 2019. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, that could cause actual results to differ materially, and you should not rely on them as predictions of future events. A-10 disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise. For a more detailed description of these risks and uncertainties, please refer to our most recent 10Q and 10K. Please note that with the exception of revenue, financial measures discussed today are on a non-GAAP basis and have been adjusted to exclude certain charges. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. and may be different from non-GAAP financial measures presented by other companies. A reconciliation between GAAP and non-GAAP measures can be found in the press release issued today and on the trended quarterly financial statements posted on the company's website. We will provide our current expectations for the first quarter of 2019 as well as our long-term model on a non-GAAP basis. However, we are unable to make available a reconciliation of non-GAAP guidance measures to corresponding GAAP measures on a forward-looking basis due to high variability and low visibility with respect to the charges, which are excluded from these non-GAAP measures. Now, I would like to turn the call over to Lee Chen, founder and CEO of ATEN Network.

Lee Chen Thank you, Maria, and thank you all for joining us to discuss our fourth quarter and the year 2018 results. We deliver a solid quarter on our piece with our continued momentum in security, 5G, and multi-cloud. Revenue increased 11% year-over-year to $61.8 million, and we maintain a healthy non-GAAP growth margin of 78.2% and generated non-GAAP EPS of 5 cents. We have been investing in security. and believe we are building momentum in the market with our highly scalable and intelligent automation-driven software-based security solutions. We believe our performance, scalability, and software-based solutions position us to grow in the hyperscale converged security 5G and multi-cloud world. In this quarter, we deliver a strong quarter for our security solutions. which included some nice win for our CFW and SSRI offerings. For the years, our security product revenue grew 36% year over year to reach 38% of product revenue as customer continue to focus on security. Our holistic approach has resonate with our customers and we remain committed to innovate and bring new solutions to the market. In TPS, we recently released a new version of software to include dynamic pattern recognition, enhanced detection analytic engine, inclusion prevention systems, and support a new 220-gig high-end appliance. ATAN continues to deliver on its mission of intelligent automation to reduce cost for our customers and we believe our solutions stand out among the competition. We also enhance our analytics and management software for TPS and CFW and introduce a new multi-cloud secure service mesh solution for applications deployed in the open source Kubernetes container environments. This solution provides teams deploy microservices applications with an easy, automated way to integrate enterprise-grade security and load balancing with comprehensive application visibility and analytics. We believe these new solutions demonstrate our commitment to helping customers navigate the evolving multi-cloud threat landscape efficiently and affordably. 5G is an exciting market opportunity for our security solutions. We believe our stronghold in the service provider segment and the high performance and scalability of our solutions position us extremely well to meet the evolving security and performance needs of our 5G customers. Building upon our technology strength, we have developed a robust suite of solutions to help mobile carriers need a significant capacity, performance, and security demand in the age of 5G. Also under CFW, this integrated carrier firewall, multi-vector DDoS protection, carrier-grade map, application visibilities, and traffic-sphering capabilities is a great example of our product advances in this space. This differentiated high performance solution provide a consolidated and secure 5G solution for a effective defense against attacks. We have been hard at work innovating across our entire product portfolio, and our early bets on 5G has been paying off. We secured three additional 5G security wins, which built on the two we announced in the third quarter. These five appraisers are deploying ATAN's 5G GI LAN solutions in a variety of form factors and plan to launch their first commercial 5G services in the first half of 2019. ATAN has a long and successful relation with these appraisers, and we believe our design wins demonstrate our ability to gain share in these large and growing opportunities. Adoption is still early and related standards continue to evolve. We anticipate operators will experience a new set of challenges. Network architectures will require a full spectrum of physical, virtual, and containerized offerings that can handle multi-terabyte scale with reliability, high agility, and automated security. Big data and cutting-edge predictive analytics through AI and machine learning were emerged as key priorities in order to cope with the exploding scale of new security threats, such as IoT attacks. ATN stands in high performance, rich carrier security offerings, and network visibility position as well for 5G. Our Harmony Controller provides the necessary visibility and keep the operator informed and in control of their networks. As a result, network operator will be able to scale and protect their network in real time and manage it from a single pan of glass. We have partnered with key technology providers to develop a product roadmap that will expand the capability of our 5G solutions to further prepare our points position in these large and growing opportunities. In the fourth quarter, we expanded our partnership with NEC to now include the integration of ATAN's CFW solution into NEC's 5G SDN and FV orchestration infrastructures. NEC was looking for a partner who could seamlessly consolidate security application layer networking into AEC's innovative mobile and fixed network solution offering. This partnership will help provide service providers with continuously protected from security challenges and help them to achieve the scale needed to rapidly commercialize their 5G services. I'm also excited to announce that we have partnered with Microsoft Azure to provide our cloud-native ADC solution, including our Harmony Controller vThunder ADC and Lightning ADC on the Microsoft Azure Marketplace. The flexibility and convenience of multi-cloud comes with its challenges, and our Harmony Controller solution with its prescriptive data analysis and machine learning help alleviate these issues. Harmony Control is one of our growing number of product offer on a subscription basis and is driving more software subscription revenue. We believe this is a unique offering in the market today and is a large part of the discussion with our customers. Harmony Control is also gaming industry recognition. It was recently named the finalist in the 2018 CRM Tech Innovators Awards and took top honor in the business intelligence and analytics category. We are very excited about the market's response to them. Many significant advancements we have made to our solutions. I would now like to spend a moment on our sales transformation, which was a major priority for us in 2018. We made good progress during the quarter. We improved sales productivity by 7% year-over-year and were pleased to see the double-digit product revenue growth in North America, Japan, APEC, and Latin America. We are also encouraged to see our pipeline of security opportunities increase 31% year-over-year. While it is still early in our sales transformation, we are pleased with the early results and believe we are on the right path. As we enter the new years, we have several changes taking effect to help further incentivize the sales team to drive new product sales with both new and existing accounts. We are also expanding our go-to-market technical leadership with our recent appointment of Ravi Raj Bhat, as a Senior Vice President and Global Field Sales CTO. While we joined ATEN from Ericsson where he was, he was the Vice President of Engineering. We believe his extensive service provider expertise will be instrumental in helping ATEN capture share in 5G and expand our global alliances. We just wrapped up our annual sales kickoff and I have to tell you that the energy level was dynamic. Our partner, our product team, our field personnel, and all of us at ATEM are energized. Together, we will build on this momentum. We have a very clear vision, a line of sight to what we will accomplish, and our sales force is eager to monetize the company's growth opportunities. in security, 5G, and multi-cloud. We have subscription-only platforms set to grow. We have innovative products set to arrive. And all this is being led by new sales leaders eager to win. With clarity of visions and focus on execution, we are excited about what we can achieve this year and beyond. We are building a strong funnel of opportunities for our security 5G and multi-cloud solutions. Our win rate remains high, and in total, we added 162 new customers in the quarter. Let me share with you some of the recent customer engagement. A multinational retailer based in the U.S. looking to redesign their perimeter of its network. and replace the incumbent proxy solution high standardized on ATAN's Sounder SSRI solution globally. This ATAN customer deploys Sounder SSRI to decrypt outbound traffic and provide visibility and control over traffic management. This win is an expansion of a new logo that we won earlier in 2018, and we are pleased without continued traction with this customer. A federal executive department replaced an incumbent solution with ATEN's sounder SSRI solution and harmony controller to reduce the load on its existing firewall assets and provide a single decryption architecture. The key to winning this new customer was ATEN's superior SSRI performance, analytics, and engineering support. Alongside our partner, Ericsson, we secure a new service provider customer in Latin America. This customer will deploy our CGM solution in Brazil, Colombia, and Argentina as part of its virtual evolved tactic core. ATEM provides the most affordable and comprehensive set of features, which were key selling points for its customers. Moreover, The customer saw immense value in our partnership and integrated offering with Ericsson. Looking into 2019, our top priority for the year will be to drive growth in security, 5G, and multi-cloud. In security, we expect to build on the momentum we have generated with our Thunder CFW solution and further drive sales for our Thunder TTS and SSRI solutions. Our goal is to grow security product revenue to be 40% to 45% of product revenue for 2019. In 5G, we look to add our strong early wings, further leverage our strong base of existing mobile providers. We have a unique value proposition with Harmony Controller, and is resonating with in the market. The launch of our multi-cloud ACoS 4.1.4 goal release will enable our customers to deploy common controller across their ATAN solutions, providing them the full benefit of dynamic visibility, prescriptive data analysis, and machine learning. Along the way, we will increase our subscription revenue fine-tune our marketing engine, and further improve our productivity. In summary, we are excited about the momentum we are building in the market and the results we are seeing from our sales transformation efforts. We provide our customers and partners a differentiated value that we believe sets us apart. We have a clear strategy and believe we are well-positioned to maximize our opportunity in the fast-growing area of security, 5G, and multi-cloud. With that, I would like to turn the call over to Tom to review the details of our first quarter financial performance and the first quarter guidance. Tom?