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    ATEN
    Earnings call· Jun 2026(Q2 FY26)

    A10 Networks Q2 FY26 earnings call ATEN

    Aug 5, 2026 Source

    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

    3
    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

    4
    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%
    		————

    Operational metrics

    15
    Non-GAAP gross margin
    80.3in line with stated goals
    Q2 FY26
    Operating expenses
    $43.9
    Q2 FY26

    Prioritized investments in AI-facing innovation, next-gen networking and security.

    Non-GAAP operating margin
    25.5
    Q2 FY26
    Non-GAAP net income
    $18.7
    Q2 FY26
    Non-GAAP diluted EPS
    $0.25vs $0.21 in year-ago period
    Q2 FY26
    Diluted weighted share count
    75.7
    Q2 FY26
    Adjusted EBITDA
    $25.4
    Q2 FY26
    Adjusted EBITDA margin
    30.5consistent with business model goals
    Q2 FY26
    Cash and marketable securities balance
    $357.3
    as of June 30, 2026
    Deferred revenue
    $154.8
    as of June 30, 2026
    Cash dividends paid
    $4.3
    Q2 FY26
    Shares repurchased
    $2.4
    Q2 FY26
    Total capital returned to shareholders
    $6.7
    Q2 FY26

    Comprised of cash dividends and share repurchases.

    Share repurchase authorization remaining
    $53out of $75 million authorization
    as of Q2 FY26
    Quarterly cash dividend
    $0.06
    Q3 FY26

    Approved by the Board.

    Industry KPIs

    4
    MetricValueDetails
    Revenue growth$80.1million
    Customer account count60%
    Operating FCF margin rule of 4025.5%
    Ai product adoption monetization—

    Product announcements

    1
    ProductTypeDetails
    TrojAIlaunch

    Deals & partnerships

    2
    MicrosoftExpanded relationship and long-term partnershiplong-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.

    TrojAIAcquisition 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

    4
    Geopolitical environment impacting demandQ2 FY26

    Impacted EMEA service provider demand

    Macroeconomic pressures impacting spending cyclesQ2 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 constraintmany 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

    5

    Service Provider (ex-Microsoft) Growth

    next quarter
    CurrentSlightly better than 2025 levels (North America improving, Japan slightly worse, Europe neutral)
    TargetContinued 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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🌐.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.