A10 Networks, Inc.

Hello and welcome to the A10 Network's third quarter 2023 learnings conference call. My name is Elliott and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I would now like to hand over to Rob Fink with FNK IR. The floor is yours. Please go ahead.

Thank you, operator, and thank you all for joining us today. This call is being recorded and webcast live and may be accessed for at least 90 days via the 810 Networks website at 810networks.com. Hosting the call today are Drew Petrovetti, 810's President and CEO, and Brian Becker, CFO. Before we begin, I would like to remind you that shortly after the market closed today, 810 Networks issued a press release announcing its third quarter 2023 financial results. Additionally, 810 published a presentation and supplemental trended financial statements. You may access the press release, presentation, and trended financials on the investor relations section of the company's website. During the course of today's call, management will make forward-looking statements, including statements regarding projections or future operating results, including their potential revenue share, revenue growth, industry and customer trends, and capital allocation strategy, supply chain constraints and expectations, positioning, the repurchase and dividend programs, and market share. These statements are based on current expectations and beliefs as of today, November 7th, 2023. These forward-looking statements involve a number of risks and uncertainties, so much are beyond management's control, such as the potential impact of the COVID-19 pandemic. And these could cause actual results to differ maturely, and you should not rely on those predictions for future events. ATEM does not intend to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise unless required by law. For a more detailed description of these risks and uncertainties, please refer to the company's most recent 10-K. 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 or considered in isolation or substitute for results prepared in accordance with GAAP. and they 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 that was issued today and on the trended quarterly financial statements posted on the company's website. With all that said, I'd now like to turn the call over to Drupad. Drupad, the call is yours.

Thank you, Rob, and thank you all for joining us today. The industry headwinds we discussed on our previous earnings calls impacted our results in the third quarter, resulting in revenue of $57.8 million, which is in line with our preliminary results. Despite these headwinds, year-to-date, we have achieved our stated EBITDA goals of 26% to 28%, and we continue to generate cash. For the past three years, we have been speaking about the importance of our diversified business model and structural profitability. This diversification has enabled us to outperform the market, transition to consistent profitability, and support a buyback program and then a cash dividend. But the real value of our business model, both in terms of diversification and resource allocation, relates to how we adapt to challenging macroeconomic circumstances. In February 2021, we had guided to a business model of 80% to 82% gross margin, 26% to 28% EBITDA, and expanding EPS. In spite of a challenging top line environment, we are on track year to date to deliver on these as a result of our focus on execution and being customer centric. To put it in perspective, our non-GAAP EPS for Q3 2023 of 16 cents was higher than our full year non-GAAP EPS in 2018 and 2019. This demonstrates the progress we have made in establishing durable earnings power building upon a strong technical foundation. We monitor growth opportunities and our sales cycles closely using multiple points of view. During the quarter, and the first few weeks of the third quarter, we saw improving market conditions. But as the quarter progressed, decisions were delayed and our visibility decreased. Even so, we expected higher revenue levels based on several late stage opportunities that we expected to close in the last few weeks of the third quarter. As conditions worsened, these orders shifted from the third quarter into future periods during the last two weeks of the quarter. As a result, we made the decision to pre-announce our revenue just after the quarter ended. As has been widely reported subsequent to our announcement, the North American market, especially with service providers, has been difficult for all of our peers. Buying decisions are being delayed, projects are being pushed, and inventory glutts are being worked through in response to rising interest rates and inflation concerns. ATN has not been completely immune to these headwinds, despite enterprise segment growth, both year to date and in the quarter. Visibility is reduced, customer cycles are elongated, and quarter to quarter volatility has increased. However, our global reach customer diversification and effective supply chain management has enabled us to navigate these challenges as evidenced by performance viewed over longer time periods. And we are confident that as the market normalizes, our solid foundation and commitment to execution will help us to drive sustainable financial results. Our business model enables profitability even when we experience revenue challenges. Few years ago, such challenges would have resulted in significant losses and cash burns. Today, that is clearly not the case, as we reported gap profitability and generated cash, even as we continue to return capital to shareholders while driving innovation. In the last 12 months, we have returned $95.2 million to shareholders in the form of dividends and repurchase. In part, we have adjusted our business priorities to aggressively reallocate and reduce spending amidst a challenging revenue environment. We remain focused on preserving growth-oriented investments while being cognizant of our overall spending. Subsequent to the end of the quarter, we launched a new component of our already strong security product portfolio. Our new ATEN Defense Detector, available as part of ATEN's solution portfolio, provides early warning capabilities to facilitate even more effective and advanced threat mitigation. This product targets the growing threat of DDoS attacks. ATEN Defense Detector helps customers build DDoS defenses before attacks occur. We believe that our portfolio, including ATEN Detector, Orchestrator, and Mitigator, provides the highest levels of scalability and efficacy available in the market today, delivering automated DDoS defenses for the most demanding service provider and enterprise environments. We are also in early trials with enterprise customers for our new DDoS threat intelligence service, and we plan to integrate this into our solution portfolio in early 2024. Our security research team already tracks more than 15.4 million DDoS weapons globally. Our threat intelligence service leverages this expertise. Our global pipeline of opportunities remains strong in both service provider and enterprise segments. Projects have been delayed, but revenue has not been lost. In reality, security and network expansion remain business-critical investments, and while higher interest rates and broad economic uncertainty is impacting the sales cycle, these projects cannot be permanently deferred. Our visibility has been reduced, but we continue to believe that we are well positioned to navigate these challenges and poise to rebound as the market normalizes. This is based on a customer-centric approach combined with innovation. With that, I'd like to turn the call over to Brian for a detailed review of the quarter and the first nine months of the year. Brian?