A10 Networks, Inc. (NYSE: ATEN)

Sector: Technology Industry: Software - Infrastructure CIK: 0001580808
Market Cap 1.24 Bn
P/B 6.04
P/E 24.61
P/S 4.38
ROIC (Qtr) 10.39
Div Yield % 1.74
Rev 1y % (Qtr) 11.93
Total Debt (Qtr) 218.45 Mn
Debt/Equity (Qtr) 1.06

About

A10 Networks, Inc. (A10), a prominent player in the networking solutions industry, offers a diverse range of products and services that cater to various industries such as telecommunications, technology, industrial, government, retail, financial, gaming, and education. The company's solutions are designed to operate in cloud, on-premise, or hybrid environments, providing customers with rapid return on investment and protection for their technology investments. A10's primary business activities revolve around the provision of advanced networking...

Read more

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 87.90M provides robust 0.40x coverage of total debt 218.45M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 598.36M provides 2.74x coverage of total debt 218.45M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 72.05M exceeds capital expenditure of 15.85M by 4.55x, indicating strong organic growth funding capability.
  • Short-term investments of 284.30M provide solid 2.42x coverage of other current liabilities 117.51M, indicating strong liquidity.
  • Tangible assets of 598.36M provide robust 5.09x coverage of other current liabilities 117.51M, indicating strong asset backing.

Bear case

  • Operating cash flow of 87.90M barely covers its investment activities of (215.22M), with a coverage ratio of -0.41, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (215.22M) provide weak support for R&D spending of 63.73M, which is -3.38x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 87.90M provides thin coverage of dividend payments of (17.50M) with a -5.02 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 86.56M provide limited coverage of acquisition spending of (19.10M), which is -4.53x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 87.90M provides insufficient coverage of deferred revenue obligations of 143.49M, which is 0.61x, raising concerns about future service delivery capabilities.

Geographical Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.95 2.69
EV to Cash from Ops. EV/CFO 13.77 28.91
EV to Debt EV to Debt 5.54 19.83
EV to EBIT EV/EBIT 20.90 -9.95
EV to EBITDA EV/EBITDA 18.79 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 16.79 26.09
EV to Market Cap EV to Market Cap 0.97 0.36
EV to Revenue EV/Rev 4.25 -9.34
Price to Book Value [P/B] P/B 6.04 3.88
Price to Earnings [P/E] P/E 24.61 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.89 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 34.30 2.71
Dividend per Basic Share Div per Share (Qtr) 0.24 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 23.95 1.68
Interest Coverage Int. cover (Qtr) 0.00 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -21.61 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 10.88 226.39
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 1.64 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 18.54 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 3.98 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 3.98 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 4.48 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 32.24 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.87 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.46 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.01
Cash Ratio Cash Ratio (Qtr) 0.67 1.22
Current Ratio Curr Ratio (Qtr) 3.64 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 1.06 -0.96
Interest Cover Ratio Int Coverage (Qtr) 0.00 -14.20
Times Interest Earned Times Interest Earned (Qtr) 0.00 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 25.30 -548.16
EBIT Margin % EBIT Margin % (Qtr) 20.36 -199.84
EBT Margin % EBT Margin % (Qtr) 20.36 -607.20
Gross Margin % Gross Margin % (Qtr) 79.70 51.88
Net Profit Margin % Net Margin % (Qtr) 17.80 -610.00