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A10 Networks (ATEN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 5, 2026

Source: earnings call transcript

Executive summary

A10 Networks Q2 FY26 — Strong Revenue and EPS Growth, Outlook Raised

A10 Networks delivered strong Q2 FY26 results, driven by increasing demand for its next-generation networking and security platform, particularly in the Americas and enterprise segments. The company raised its full-year revenue and EPS outlook, reflecting confidence in the demand environment and its strategic focus on AI-driven traffic management and security. A significant expansion of its partnership with Microsoft and the acquisition of AI security firm TrojAI underscore its commitment to innovation and market relevance.

Highlights

5

  • Revenue grew 15.5% year-over-year to $80.1 million in Q2 FY26.

  • Full year 2026 revenue outlook raised to 12%-14% growth, up from 10%-12% previously.

  • Full year 2026 EPS growth outlook raised to 14%-16%, up from 12%-14% previously.

  • Non-GAAP gross margin was 80.3%, in line with stated goals.

  • Generated $26.9 million in free cash flow in Q2 FY26.

Concerns

3

  • EMEA service provider demand was impacted by the geopolitical environment.

  • Japan (within APJ region) continues to experience macroeconomic pressures impacting spending cycles.

  • The company continues to navigate cost and delivery challenges related to the supply chain.

Guidance & targets

CategoryTargetConfidence
Full year 2026 Revenue Growth
12% to 14%
high materiality
High
Full year 2026 EPS Growth
14% to 16%
high materiality
High
Full year Free Cash Flow Growth
grow year-over-year
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Product Revenue
Security-led revenue continues to drive product revenue growth and meet long-term goals as a percentage of total revenue.
% of total revenue: 61%
$49 million———
Service Revenue
% of total revenue: 39%
$31.1 million———
Enterprise Customers
In line with corporate goals of driving balanced growth.
% of Q2 revenues: 60%Trailing 12-month % of total revenue: approximately 50%
————
Americas Region
Reflects deliberate focus on the Americas as a growth region, driven by AI infrastructure build-outs and strength in the enterprise market.
% of global revenue: 68%
————

Product announcements

ProductTypeDetails
TrojAIlaunch

Deals & partnerships

Microsoft Expanded relationship and long-term partnership long-term

Significant expansion of relationship with Microsoft, reflecting a shared commitment to a long-term partnership with mutual performance commitments. More firmly aligned with Microsoft's long-term roadmap as they build out their own architecture and infrastructure.

TrojAI Acquisition of an AI security company

Acquired TrojAI in June, an AI security company that helps organizations secure, test and govern AI applications and agentic workflows. This acquisition adds two layers to A10's platform: Red Teaming and real-time protection at run time.

Risks & headwinds

Geopolitical environment impacting demand Q2 FY26

Impacted EMEA service provider demand

Macroeconomic pressures impacting spending cycles Q2 FY26

Impacting spending cycles in Japan

Supply chain cost and delivery challenges

Ongoing challenges

Mitigation:Customer satisfaction and on-time delivery remain top priorities; strength of business model allows raising EPS outlook despite costs.

Memory constraint many more quarters

Expected to last for a while

Mitigation:Company is navigating, prioritizing customer delivery and satisfaction, and aims to still deliver EPS.

What to watch in Q3 FY26

Service Provider (ex-Microsoft) Growth

next quarter
Current Slightly better than 2025 levels (North America improving, Japan slightly worse, Europe neutral)
Target Continued improvement, especially in North America

Why it matters

Indicates recovery in a key segment outside of the largest customer, contributing to diversified growth.

overall, we expect it to be slightly better versus 2025.

Find out whether ATEN delivers this. Inve re-checks your case every morning.

Q&A highlights

What are the changing drivers of strong product revenue growth, and how long will the current spending cycle last?

Product revenue growth is driven by new customer acquisition and broader engagement with customers on longer-term AI roadmaps, leading to adoption of more products. This is a lead indicator for new business. The spending cycle is sustainable for several years as it's linked to the increasing use of AI.

“as we get new business, the product growth is the lead driver and grows faster than service at that point.”

asked by Gray Powell · answered by Dhrupad Trivedi

2 min read 5 chapters

Detailed narrative

AI and Next-Generation Networking Driving Demand

A10's platform is increasingly relevant due to the demands of next-generation networking, combining advanced application management with integrated security. AI is creating new challenges for customers, including greater traffic volume, expanding security threats, and the need for lower latency. The company's focus on these areas positions it to benefit from the evolving landscape where enterprises and service providers face similar workloads and security requirements.

Expanded Microsoft Partnership and Strategic Acquisitions

Subsequent to the quarter, A10 announced a significant expansion of its relationship with Microsoft, aligning more firmly with the industry leader's long-term roadmap. This partnership validates A10's market relevance and the depth of its relationship. Additionally, A10 acquired TrojAI in June, an AI security company, adding Red Teaming and real-time protection capabilities to its platform for securing AI applications and agentic workflows.

Product Revenue Strength and Growth Drivers

Product revenue grew 25% year-over-year in Q2 FY26, driven by new customer acquisition and broader engagement with customers on longer-term AI roadmaps. This growth is a lead indicator for new business. The company clarifies that prior 'pull-forward' dynamics were related to specific project timelines, not a relocation of future demand, and Q2 similarly balanced customer needs without impacting future quarters.

Geographic and Vertical Performance

The Americas region represented 68% of global revenue, reflecting a deliberate focus on this growth region driven by AI infrastructure build-outs and strength in the enterprise market. Enterprise customers accounted for 60% of Q2 revenues, aligning with the corporate goal of balanced growth (approximately 50% on a trailing 12-month basis). However, EMEA service provider demand was impacted by geopolitical factors, and Japan experienced macroeconomic pressures.

Operating Discipline and Capital Allocation

A10 maintained strong operating discipline, balancing targeted investments in AI-facing innovation, next-gen networking, and security with EPS expansion. The company generated $26.9 million in free cash flow in the quarter. It returned $6.7 million to shareholders through $4.3 million in cash dividends and $2.4 million in share repurchases, demonstrating a commitment to shareholder returns.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.