A10 Networks, Inc.

Good day, and welcome to the A10 Network's second quarter 2020 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Rob Fink, of FNKIR. Please go ahead, sir.

Thank you, Operator, and thank you all for joining us today. This call is being recorded and webcasted live and will be accessible for at least 90 days via ATEN Network's website at atennetworks.com. Hosting the call today are Drew Patruvetti, ATEN's President and CEO, and Tom Constantino, CFO. Before we begin, I would like to remind you that shortly after the market closed today, A10 Networks issued a press release announcing its second quarter 2020 financial results. Additionally, the company published a presentation and supplemental trended financial statements to its website. You can ask for a press release, presentation, and trended financial statements on the investor relations section of the site. During the course of today's call, managers will make forward-looking statements, including statements regarding their projections for future operating results, continued reductions in operating expenses, continued efforts to improve operational efficiency, their focus on driving growth, business optimization, and overall profitability. Their belief is that we can continue to build upon customer momentum going forward and their expectations regarding future opportunities and their ability to execute on those opportunities. their expectations for future market growth and the general growth of its business, the development and performance of their products, and anticipated customer benefits from use of their products, their expectations and priorities with respect to 5G. These statements are based on current expectations and beliefs as of today, July 28, 2020. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond the company's control, such as the potential impact of COVID-19 pandemic on the business and operations that could cause actual results to differ materially, and you should not rely on them as predictions for future events. ATEN does not intend 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 the risks and uncertainties, please refer to the company's most recent 10Q report, 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 company's press release issued earlier today and on the trended quarterly financial statement posted on the company's website. With all that said, I'd like to turn the call over to Dhruv Head. Dhruv Head, the call is yours.

Thank you, Rob, and thank you all for joining us today. During the second quarter, we continued to make progress on our business transformations. While the environment remains highly fluid, with sales cycles elongated by the COVID pandemic and business restrictions in different markets, A10 continued to focus on execution and fundamental progress. I want to thank our entire team of employees and partners for their professionalism and flexibility during this unprecedented environment. To date, we have experienced a modest and manageable COVID-related impact on our business with only a slight impact on our supply chain. Customers are taking longer to make decisions and some larger deployments have been delayed as our customers deal with business restrictions and challenges related to the pandemic. We do not believe we have lost any business and we continue to enjoy strong and steady demand for our solutions. In fact, we delivered increases in both product and service revenue compared to last year, despite these COVID related slowdowns and delays. Overall, our revenue in the second quarter was $52.5 million up 6.7% year over year. From a regional standpoint, Our revenue in Japan and Asia has been more impacted than other areas. And we were able to offset these challenges with strong revenue in other geographies. Increasingly, our geographic diversification with a global footprint provides resiliency and flexibility for the business. Additionally, our strong balance sheet with $143.4 million in cash and marketable securities and no debt positions us well to weather these storms while investing in innovation for our customers. We continue to take structural actions to streamline our business model, which will continue to bolster this advantage further. We remain laser focused on improving our execution to maximize growth and profitability. As part of this, we continue to evaluate our investment decisions with the goal of actively aligning resources to the best opportunities and driving efficiencies in all functions. Our results in the second quarter demonstrate progress against these objectives. During the quarter, compared to the same period last year, and on a non-GAAP basis, we achieved an $8.2 million improvement in operating income, a $7.4 million improvement in non-GAAP net income, all on a $3.3 million improvement in revenue. We continue to believe we can reduce our total annualized operating expenses in line with our strategic initiatives and deliver sustained profitability. We previously stated we would reduce operating expenses for the full year by $10 million compared to 2019. We are raising that goal to at least $14 million for the full year, even as we expect sales and marketing expenses to go up based on economies around the world beginning to open up in second half of the year. Our gross margins in the second quarter were in line with our expectations. We added a total of 95 new customers in Q2 and believe that we can continue to build upon that momentum going forward with strong focus on improving execution in all areas. To that end, I'm proud to highlight some signature wins from the quarter. First, we closed a deal with a new service provider account in Eastern Europe requiring network address translation technology to support their network traffic growth. ATAN solution was selected due to superior product performance. Second, a large investment bank requiring an upgraded secure application delivery solution selected ATAN after a competitive proof-of-concept analysis performed by the customer. We were awarded this business due to our demonstrated low latency, technical feature set, rich analytic capabilities, and reputation for providing strong customer support. Finally, a government agency in Latin America, requiring a solution to enhance its visibility and inspection across its network traffic, selected ATEN to replace the incumbent vendor. ATEN was selected based on its past ADC performance, demonstrated security enhancements, and a unified management platform with ATEN Harmony solution. During Q2, the COVID-related disruption had most impact on Japan and Asia. In Japan, the postponement of the Tokyo Olympic Games shifted projects towards end of the year or in some cases, next year. Many other Asian economies were locked down due to COVID-19 concerns. In the second quarter, revenues in Japan and Asia Pacific decreased by $3.2 million compared to the same quarter last year. This was offset by a $5.5 million improvement in North American revenues and a $1.1 million improvement in revenue from Europe and Middle East. Our improving results in America were driven by expected strong demand from a large web giant accounting for greater than 10% of Q2 revenue and included in the service provider category. It is important to note that while we continue to have a strong market position with service providers, We are also dependent on their investment cycles, which can last multiple years and result in variable demand levels. We continue to drive demand from a diverse global customer base, and that gives us the best opportunity to deliver solid, consolidated results, even as short-term demand patterns fluctuate. In the meantime, we continue to take structural actions to improve our business models. I'm truly excited about the progress we have made on rapidly adjusting our product roadmap and portfolio to better align with market and customer trends and deliver the most meaningful business outcomes for them. These ongoing actions create a strong foundation for sustainable growth in the future in conjunction with our adjustments in the go-to-market strategy. The recently announced partnership with Dell is an example of where we can create value while partnering with a strong player in the market. With that, I'd now like to turn the call over to Tom to review the quarterly operating results in more detail. Tom?