A10 Networks Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Note Regarding Forward-Looking Statements” and other risk factors contained in Part I, Item 1A “Risk Factors” in our 2023 Annual Report.

Current wording

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Note Regarding Forward-Looking Statements” and other risk factors contained in Part I, Item 1A “Risk Factors” in the 2024 Annual Report.

Previous wording

We are a leading provider of security and infrastructure solutions and services for on-premises, hybrid cloud and edge-cloud environments that enable a new generation of intelligently connected companies with the ability to continuously improve cyber protection and digital responsiveness across dynamic Information Technology (“IT”) and network infrastructures. Our product portfolio seeks to address many of the cyber protection challenges and solution requirements. The portfolio consists of six secure application solutions; Thunder Application Delivery Controller (“ADC”), Lightning Application Delivery Controller (“Lightning ADC”), Thunder Carrier Grade Networking (“CGN”), Thunder Threat Protection System (“TPS”), Thunder SSL Insight (“SSLi”) and Thunder Convergent Firewall (“CFW”), and two intelligent management and automation tools; Harmony Controller and aGalaxy TPS. Our solutions are available in a variety of form factors, such as optimized hardware appliances, bare metal software, containerized software, virtual appliances and cloud-native software. Our 7000+ customers span global large enterprises and communications, cloud and web service providers, and government organizations.

Current wording

We are a leading provider of secure application solutions and services that enable a new generation of intelligently connected companies with the ability to continuously improve cyber protection and digital responsiveness across dynamic Information Technology (“IT”) and network infrastructures. Our product portfolio seeks to address many of the cyber protection challenges and solution requirements. The portfolio consists of network infrastructure and security products. The infrastructure portfolio powers the delivery of internet services and applications while the security products protect applications, application programming interfaces (“APIs”), infrastructure and enterprises from cyber-attacks. Our security suite is known as A10 Defend. In addition, we have an intelligent management and automation tool known as A10 Control (formally Harmony Controller), which provides intelligent management, automation and analytics for secure application delivery in multi-cloud environments to help simplify operations.

Previous wording

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes post contract support (“PCS”), professional services, training and software-as-a-service offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and over time once the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years.

Current wording

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software licenses and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes post contract support (“PCS”), professional services, training and software-as-a-service (”SaaS”) offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and over time once the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products.

Previous wording

We sell substantially all of our solutions through our high-touch sales organization as well as distribution channels, including distributors, value-added resellers and system integrators, and fulfill nearly all orders globally through such channels. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations.

Current wording

We sell substantially all of our solutions through our high-touch sales organization as well as distribution channels, including distributors, value-added resellers and system integrators, and fulfill nearly all orders globally through such resellers. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations.

Previous wording

During the three months ended September 30, 2024, (i) 51% of our total revenue was generated from the Americas region, of which 45% was generated from the United States and 6% was generated from the Americas-other, (ii) 34% from the APJ region and (iii) 14% from the EMEA region. During the three months ended September 30, 2023, (i) 45% of our total revenue was generated from the Americas region, of which 41% was generated from the United States and 4% was generated from the Americas-other, (ii) 37% from the APJ region and (iii) 19% from the EMEA region. One of our priorities is to strengthen our sales efforts in North America. Our enterprise customers accounted for 45% and 50% of our total revenue during the three months ended September 30, 2024 and 2023, respectively, and our service provider customers accounted for 55% and 50% of our total revenue during the three months ended September 30, 2024 and 2023, respectively.

Current wording

During the three months ended March 31, 2025, (i) 51% of our total revenue was generated from the Americas region, of which 46% was generated from the United States and 5% was generated from the Americas-other, (ii) 28% from the APJ region and (iii) 21% from the EMEA region. During the three months ended March 31, 2024, (i) 45% of our total revenue was generated from the Americas region, of which 38% was generated from the United States and 7% was generated from the Americas-other, (ii) 41% from the APJ region and (iii) 13% from the EMEA region. One of our priorities is to strengthen our sales efforts in North America. Our enterprise customers accounted for 41% and 38% of our total revenue during the three months ended March 31, 2025 and 2024, respectively, and our service provider customers accounted for 59% and 62% of our total revenue during the three months ended March 31, 2025 and 2024, respectively.

Previous wording

As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of large customers, including service providers and enterprise customers, in any period. Purchases by our ten largest end-customers accounted for 44% and 29% of our total revenue for the three months ended September 30, 2024 and 2023, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles. The timing of these purchases and the delivery of the purchased products are difficult to predict. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest customers could materially impact our revenue and operating results in any quarterly period. This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict.

Current wording

As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of large customers, including service providers and enterprise customers, in any period. Purchases by our ten largest end-customers accounted for 44% of our total revenue for both the three months ended March 31, 2025 and 2024. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles. The timing of these purchases and the delivery of the purchased products are difficult to predict. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest customers could materially impact our revenue and operating results in any quarterly period. This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict.

Previous wording

As of September 30, 2024, we had $78.1 million of cash and cash equivalents and $104.0 million of marketable securities. Cash provided by operating activities was $64.8 million during the nine months ended September 30, 2024, compared to $41.8 million in the same period of 2023.

Current wording

As of March 31, 2025, we had $243.8 million of cash and cash equivalents and $112.0 million of marketable securities. Cash provided by operating activities was $17.2 million during the three months ended March 31, 2025, compared to $32.4 million in the same period of 2024.

Previous wording

A summary of our condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023 is as follows (dollars in thousands):

Current wording

A summary of our condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024 is as follows (dollars in thousands):

Previous wording

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes post contract support (“PCS”), professional services, training and software-as-a-service offerings.

Current wording

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based software license agreements; and (ii) services revenue, which includes post contract support (“PCS”), professional services, training and software-as-a-service offerings.

Previous wording

Our products revenue primarily consists of revenue from sales of our hardware appliances upon which our software is installed. Such software includes our ACOS software platform plus one or more of our ADC, CGN, TPS, SSLi or CFW solutions. Purchase of a hardware appliance includes a perpetual license to the included software. With respect to sales of our hardware appliances, we recognize products revenue upon transfer of control, generally at the time of shipment, provided that all other revenue recognition criteria have been met. Revenue for term-based license agreements is recognized at a point in time when we deliver the software license to the customer and the subscription term has commenced. As a percentage of revenue, our products revenue may vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates and the impact of significant transactions with unique terms and conditions.

Current wording

Our products revenue primarily consists of revenue from sales of our hardware appliances upon which our software is installed. Such software includes our ACOS software platform plus one or more of our ADC, CGN, TPS, SSLi or CFW solutions. Purchase of a hardware appliance often includes a perpetual license to the included software. Additionally, a portion of our products revenue comes from subscription revenue. We offer several products by subscription, primarily through either term-based license agreements or as a service through our cloud-based platform. With respect to sales of our hardware appliances, we recognize products revenue upon transfer of control, generally at the time of shipment, provided that all other revenue recognition criteria have been met. Revenue for term-based license agreements is recognized at a point in time when we deliver the software license to the customer and the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of our software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized ratably as the services are provided. As a percentage of revenue, our products revenue may vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates and the impact of significant transactions with unique terms and conditions.

Previous wording

We generate services revenue from sales of PCS, which is bundled with sales of products and technical services. We offer tiered PCS services under renewable, fee-based PCS contracts, primarily including technical support, hardware repair and replacement parts, and software upgrades on a when-and-if-available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years. For our software-as-a-service offerings, our customers do not take possession of our software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. Additionally, an immaterial portion of our services revenue comes from subscription revenue. We offer several services by subscription, primarily through either term-based license agreements or as a service through our cloud-based platform.

Current wording

We generate services revenue from sales of post contract support (“PCS”), which is bundled with sales of products and technical services. We offer tiered PCS services under renewable, fee-based PCS contracts, primarily including technical support, hardware repair and replacement parts, and software upgrades on a when-and-if-available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years.

Previous wording

Total net revenue increased $8.9 million, or 15%, during the three months ended September 30, 2024, compared to the same period of 2023. Changes in revenue were due primarily to (i) an increase of $8.4 million in the Americas region, comprised of increases of $6.5 million in the United States and $1.9 million in Americas-other, (ii) an increase of $1.8 million in the APJ region, and (iii) a decrease of $1.3 million in the EMEA region. The overall increase in revenue was attributable to a $8.0 million increase in revenue from service provider customers and a $0.9 million increase in revenue from enterprise customers during the three months ended September 30, 2024 compared to the same period of 2023. Products revenue increased $6.6 million, of which the Americas region increased $6.9 million and the APJ region increased $1.3 million, partially offset by a decrease of $1.6 million in the EMEA region for the three months ended September 30, 2024, compared to the same period of 2023. Services revenue increased $2.3 million, comprised of increases of $1.6 million, $0.5 million and $0.3 million in the Americas, APJ and EMEA regions, respectively, for the three months ended September 30, 2024, compared to the same period of 2023.

Current wording

Total net revenue increased $5.5 million, or 9%, during the three months ended March 31, 2025, compared to the same period of 2024. Changes in revenue were due primarily to (i) an increase of $5.8 million in the EMEA region, (ii) an increase of $6.1 million in the Americas region, comprised of an increase of $7.0 million in the United States and a decrease of $0.9 million in Americas-other, and (iii) a decrease of $6.4 million in the APJ region. The overall increase in revenue was attributable to a $4.1 million increase in revenue from enterprise customers and a $1.3 million increase in revenue from service provider customers during the three months ended March 31, 2025 compared to the same period of 2024. Products revenue increased $5.9 million, of which the EMEA region increased $5.8 million and the Americas region increased $4.8 million, partially offset by a decrease of $4.7 million in the APJ region for the three months ended March 31, 2025, compared to the same period of 2024. Services revenue decreased $0.4 million, of which the APJ region decreased $1.7 million, partially offset by an increase of $1.2 million in the Americas region, while EMEA was flat for the three months ended March 31, 2025, compared to the same period of 2024.

Previous wording

Products revenue increased $6.6 million, or 22%, during the three months ended September 30, 2024 compared to the same period of 2023, as a result of an increase in demand from our service provider customers in the Americas and APJ regions.

Current wording

Products revenue increased $5.9 million, or 20%, during the three months ended March 31, 2025 compared to the same period of 2024, as a result of an increase in demand from both our enterprise and service provider customers in the Americas and EMEA regions.

Previous wording

Products revenue decreased $4.1 million, or 4%, during the nine months ended September 30, 2024 compared to the same period of 2023, as a result of a decrease in demand from our service provider customers in the Americas regions.

Current wording

Services revenue decreased $0.4 million, or 1%, during the three months ended March 31, 2025, compared to the same period of 2024, as a result of a decrease in demand from our service provider customers in the APJ region.

Previous wording

During the three months ended September 30, 2024, $34.3 million, or 51% of total revenue, was generated from the Americas region, which represents a 33% increase in revenue compared to the same period of 2023. The increase was primarily due to higher products revenue due to an increase in demand from our service provider customers in the Americas region.

Current wording

During the three months ended March 31, 2025, $33.5 million, or 51% of total revenue, was generated from the Americas region, which represents a 22% increase in revenue compared to the same period of 2024. The increase was primarily due to higher products revenue due to an increase in demand from both our enterprise and service provider customers in the Americas region.

Previous wording

During the nine months ended September 30, 2024, $67.3 million, or 36% of total revenue, was generated from the APJ region, which represents a 14% increase compared to the same period of 2023. The increase was primarily due to higher products and services revenue due to an increase in demand from our service provider customers in the APJ region.

Current wording

During the three months ended March 31, 2025, $18.6 million, or 28% of total revenue, was generated from the APJ region, which represents a 26% decrease compared to the same period of 2024. The decrease was primarily due to lower services revenue due to an increase in demand from our service provider customers in the APJ region.

Previous wording

During the three months ended September 30, 2024, $23.0 million, or 35% of total revenue, was generated from the APJ region, which represents an 8% increase compared to the same period of 2023. The increase was primarily due to higher services revenue due to an increase in demand from both our enterprise and service provider customers in the APJ region.

Current wording

During the three months ended March 31, 2025, $14.0 million, or 21% of total revenue, was generated from the EMEA region, which represents an 71% increase compared to the same period of 2024. The increase was primarily due to higher products revenue due to an increase in demand from both our enterprise and service provider customers in the EMEA region.

Previous wording

Cost of products revenue is primarily comprised of cost of third-party manufacturing services and cost of inventory for the hardware component of our products. Cost of products revenue also includes warehouse personnel costs, shipping costs, inventory write-downs, certain allocated facilities and information technology infrastructure costs, and expenses associated with logistics and quality control.

Current wording

Cost of products revenue is primarily comprised of cost of third-party manufacturing services and cost of inventory for the hardware component of our products. Our component suppliers change their selling prices frequently in response to market trends, including industry-wide increases in demand. Cost of products revenue also includes warehouse personnel costs, shipping costs, inventory write-downs, certain allocated facilities and information technology infrastructure costs, and expenses associated with logistics and quality control.

Previous wording

Cost of services revenue is primarily comprised of personnel costs for our technical support and training teams. Cost of services revenue also includes the costs of inventory used to provide hardware replacements to end- customers under PCS contracts and certain allocated facilities and information technology infrastructure costs.

Current wording

Cost of services revenue is primarily comprised of personnel costs for our technical support, training and professional service teams. Cost of services revenue also includes the costs of inventory used to provide hardware replacements to end- customers under PCS contracts and certain allocated facilities and information technology infrastructure costs.

Previous wording

Products cost of revenue increased 10.5% and decreased 5.3% during the three and nine months ended September 30, 2024, respectively, compared to the same periods of 2023, primarily due product and regional mix.

Current wording

Products cost of revenue increased 6.8% during the three months ended March 31, 2025, compared to the same period of 2024, primarily due product and regional mix.

Previous wording

Services cost of revenue increased 31.3% and 24.5% during the three and nine months ended September 30, 2024, respectively, compared to the same periods of 2023, primarily driven by the mix of services delivered, which include technical support, training and service costs.

Current wording

Services cost of revenue increased 33.0% during the three months ended March 31, 2025, compared to the same period of 2024, primarily driven by an increase in personnel-related support costs and the mix of services delivered, which include technical support, training and service costs.

Previous wording

Gross margin may vary and be unpredictable from period to period due to a variety of factors. These may include the mix of revenue from each of our regions, the mix of our products sold within a period, discounts provided to customers, inventory write-downs and foreign currency exchange rates.

Current wording

Gross margin may vary and be unpredictable from period to period due to a variety of factors. These may include the mix of revenue from each of our regions, the mix of our products sold within a period, discounts provided to customers, cost of inventory for the hardware component of our products, inventory write-downs and foreign currency exchange rates.

Previous wording

Products gross margin increased 2.1% and 0.3% during the three and nine months ended September 30, 2024, respectively, compared to the same periods of 2023, primarily due to product and regional mix.

Current wording

Products gross margin increased 2.4% during the three months ended March 31, 2025, compared to the same period of 2024, primarily due to product and regional mix.

Previous wording

Services gross margin decreased 3.2% and 1.6% during the three and nine months ended September 30, 2024, respectively, compared to the same periods of 2023, primarily driven by the mix of services delivered, which include technical support, training and service costs.

Current wording

Services gross margin decreased 5.3% during the three months ended March 31, 2025, compared to the same period of 2024, primarily driven by an increase in personnel-related support costs and the mix of services delivered, which include technical support, training and service costs.

Previous wording

Our operating expenses consist of sales and marketing, research and development and general and administrative expenses. The largest component of our operating expenses is personnel costs which consist of wages, benefits, bonuses, and, with respect to sales and marketing expenses, sales commissions. Personnel costs also include stock-based compensation.

Current wording

Our operating expenses consist of sales and marketing, research and development, general and administrative and restructuring expenses. The largest component of our operating expenses is personnel costs which consist of wages, benefits, bonuses, and, with respect to sales and marketing expenses, sales commissions. Personnel costs also include stock-based compensation.

Previous wording

Sales and marketing operating expenses decreased $0.3 million, or 1.5%, in the three months ended September 30, 2024, compared to the same period in 2023, and decreased $2.8 million, or 4.4%, in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to a decrease in personnel costs.

Current wording

Sales and marketing operating expenses decreased $1.7 million, or 7.9%, in the three months ended March 31, 2025, compared to the same period in 2024, primarily due to a decrease in personnel costs.

Previous wording

For the full year 2024, we expect sales and marketing expenses to decrease from 2023 levels as we apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

Current wording

For the full year 2025, we expect sales and marketing expenses to increase modestly from 2024 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

Previous wording

Research and development operating expenses decreased $1.9 million, or 10.5%, in the three months ended September 30, 2024, compared to the same period in 2023, and increased $1.3 million, or 3.0%, in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to fluctuations in personnel costs.

Current wording

Research and development operating expenses increased $1.8 million, or 13.1%, in the three months ended March 31, 2025, compared to the same period in 2024, primarily due to fluctuations in personnel costs.

Previous wording

For the full year 2024, we expect research and development expenses to increase from 2023 levels reflecting strategic investments in our growth priorities, including cybersecurity technology.

Current wording

For the full year 2025, we expect research and development expenses to increase from 2024 levels reflecting strategic investments in our growth priorities, including cybersecurity technology and artificial intelligence technologies.

Previous wording

General and administrative expenses primarily consist of personnel costs, professional services and office expenses. General and administrative personnel costs include executive, finance, human resources, information technology, facility and legal related expenses. Professional services primarily consist of fees for outside accounting, tax, external legal counsel (including litigation), recruiting and other administrative services.

Current wording

General and administrative expenses primarily consist of personnel costs, professional services and office expenses. General and administrative personnel costs include executive, finance, human resources, information technology, facility and legal related expenses. Professional services primarily consist of fees for outside accounting, tax, legal, recruiting and other administrative services.

Previous wording

General and administrative operating expenses increased $0.9 million, or 15.7%, in the three months ended September 30, 2024, compared to the same period in 2023, and increased $1.1 million, or 5.6%, in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in personnel costs.

Current wording

General and administrative operating expenses increased $1.7 million, or 25.7%, in the three months ended March 31, 2025, compared to the same period in 2024, primarily due to an increase in personnel costs.

Previous wording

For the full year 2024, we expect general and administrative expenses to increase modestly from 2023 levels as we apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

Current wording

For the full year 2025, we expect general and administrative expenses to increase modestly from 2024 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

Previous wording

Non-Operating income, net, consists primarily of interest income earned on our cash and cash equivalents and marketable securities, foreign currency exchange gains and losses and fair value adjustments on investments in publicly held equity securities. Foreign currency exchange gains and losses are primarily a result of fluctuations in the Japanese Yen versus the U.S. Dollar.

Current wording

Non-Operating income, net, consists primarily of interest income earned on our cash and cash equivalents and marketable securities, interest expense on the 2030 Notes, foreign currency exchange gains and losses and fair value adjustments on investments in publicly held equity securities. Foreign currency exchange gains and losses are primarily a result of fluctuations in the Japanese Yen versus the U.S. Dollar.

Previous wording

We recorded a provision for income tax of $1.8 million and a benefit for income tax of $1.5 million for the three months ended September 30, 2024 and 2023, respectively, and we recorded a provision for income tax expense of $4.8 million and $2.6 million for the nine months ended September 30, 2024 and 2023, respectively. The Company’s income tax provision and benefit for the three and nine months ended September 30, 2024 and 2023 primarily consisted of U.S. federal and state taxes.

Current wording

We recorded a provision for income taxes of $0.9 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively. The Company’s income tax provisions for the three months ended March 31, 2025 and 2024 primarily consisted of U.S. federal and state taxes.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $78.1 million, including $2.9 million held outside the United States in our foreign subsidiaries, and $104.0 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As of September 30, 2024, we had working capital of $156.8 million, accumulated deficit of $58.6 million and total stockholders’ equity of $217.3 million. Our marketable securities are highly liquid and are classified as available for sale should the Company decide to quickly raise cash at any time in the future.

Current wording

As of March 31, 2025, we had cash and cash equivalents of $243.8 million, including $2.8 million held outside the United States in our foreign subsidiaries, and $112.0 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As of March 31, 2025, we had working capital of $345.0 million, accumulated deficit of $30.8 million and total stockholders’ equity of $195.9 million. Our marketable securities are highly liquid and are classified as available for sale should the Company decide to quickly raise cash at any time in the future.

Previous wording

We plan to continue to invest for long-term growth, and our investment may increase. We believe that our existing cash and cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months and beyond. Our future capital requirements will depend on many factors, including our growth rate, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced product and service offerings and the continuing market acceptance of our products. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected.

Current wording

We plan to continue to invest for long-term growth, and our investment may increase. We believe that our existing cash and cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months and beyond. Our future capital requirements will depend on many factors, including our growth rate, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced product and service offerings and the continuing market acceptance of our products. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected. We may also elect to raise additional financing to help us pursue our business and strategic objectives. Any additional financing could be dilutive to our existing stockholders.

Previous wording

The Company’s Board of Directors (the “Board”) has authorized various stock repurchase programs from time to time, including a twelve-month $50 million program approved on November 1, 2022 (the “2022 Program”), a twelve-month $50 million program approved November 7, 2023 (the “2023 Program”) and a $50 million program approved November 7, 2024 (the “2024 Program”). Under all programs, repurchased shares are held in treasury at cost. The Company’s stock repurchase programs do not obligate us to acquire any specific number of shares. Shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. Through December 31, 2023, the Company had repurchased 1.2 million shares for a total cost of $15.7 million under the 2022 Program. Through September 30, 2024, the Company had repurchased 1.8 million shares for a total cost of $24.6 million under the 2023 Program.

Current wording

The Board has authorized various stock repurchase programs from time to time, including most recently, a twelve-month $50 million program approved November 7, 2023 (the “2023 Program”), a $50 million program approved November 7, 2024 (the “2024 Program”) and a $75 million program approved May 1, 2025 (the “2025 Program”). Under all programs, repurchased shares are held in treasury at cost. The Company’s stock repurchase programs do not obligate us to acquire any specific number of shares. Shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. During the year ended December 31, 2024, the Company repurchased 2.2 million shares for a total cost of $30.1 million under the 2023 and 2024 Programs. Through March 31, 2025, the Company had repurchased 2.2 million shares for a total cost of $43.6 million under the 2024 Program.

Previous wording

In October 2021, our Board approved the initiation of a regular quarterly cash dividend on our common stock. In the three and nine months ended September 30, 2024, the Company paid cash dividends of $0.06 per share outstanding, for a total of $4.5 million and $13.4 million, respectively, as a return of capital. In the three and nine months ended September 30, 2023, the Company paid cash dividends of $0.06 per share outstanding, for a total of $4.4 million $13.4 million, respectively, as a return of capital. The next dividend, in the amount of $0.06 per share, will be paid on December 2, 2024 to stockholders of record on November 18, 2024 as a return of capital. We currently anticipate that we will continue to pay comparable quarterly cash dividends in the future. However, the payment, amount and timing of future dividends remain within the discretion of our Board and will depend upon our results of operations, financial condition, cash requirements, and other factors.

Current wording

In October 2021, the Board approved the initiation of a regular quarterly cash dividend on our common stock. The Company paid cash dividends of $0.06 per share outstanding, for a total of $4.4 million and $4.5 million in the three months ended March 31, 2025 and 2024, respectively, as a return of capital. The next dividend, in the amount of $0.06 per share, will be paid on June 2, 2025 to stockholders of record on May 15, 2025 as a return of capital. We currently anticipate that we will continue to pay comparable quarterly cash dividends in the future. However, the payment, amount and timing of future dividends remain within the discretion of the Board and will depend upon our results of operations, financial condition, cash requirements, and other factors.

Previous wording

During the nine months ended September 30, 2024 cash provided by operating activities was $64.8 million, consisting of net income of $31.8 million, non-cash charges of $19.5 million and an increase in cash resulting from the net change in operating assets and liabilities of $13.4 million. Our non-cash charges consisted primarily of depreciation and amortization expenses of $8.2 million and stock-based compensation expense of $12.3 million. The net change in our operating assets and liabilities primarily reflects cash inflows from the changes in accounts receivable of $8.4 million, accrued liabilities of $5.1 million, deferred revenue of $2.9 million and prepaid expenses and other assets of $0.8 million, partially offset by cash outflows from inventory of $1.9 million and accounts payable of $1.8 million.

Current wording

During the three months ended March 31, 2025, cash provided by operating activities was $17.2 million, consisting of net income of $9.5 million, non-cash charges of $10.7 million and a decrease in cash resulting from the net change in operating assets and liabilities of $3.0 million. Our non-cash charges consisted primarily of depreciation and amortization expenses of $3.4 million and stock-based compensation expense of $6.0 million. The net change in our operating assets and liabilities primarily reflects cash outflows from the changes in accrued liabilities of $8.2 million, accounts payable of $5.6 million and prepaid expenses and other assets of $2.9 million, partially offset by cash inflows from accounts receivable of $10.5 million deferred revenue of $2.0 million and inventory of $1.2 million.

Previous wording

The favorable change in accounts receivable was attributed to timing of billing and cash collections. The favorable change in accrued expenses was primarily due to an increase in accrued variable compensation. The unfavorable change in inventory was attributable to the timing of product shipments. The unfavorable change in accounts payable was attributable to the timing of payments to vendors. The unfavorable change in prepaid expenses and other assets was attributable to an increase in prepaid state and federal taxes. The unfavorable change in deferred revenue was attributable to the timing of service contract bookings.

Current wording

The unfavorable change in accrued liabilities was primarily due to a decrease in accrued variable compensation. The unfavorable change in accounts payable was attributable to the timing of payments to vendors. The unfavorable change in prepaid expenses and other assets was attributable to an increase in prepaid accounting and marketing expenses. The favorable change in accounts receivable was attributable to timing of billing and cash collections. The favorable change in deferred revenue was attributable to the timing of service contract bookings and the acquisition of ThreatX Protect deferred revenue. The favorable change in inventory was attributable to the timing of product shipments.