A10 Networks, Inc.

Previous report

Risks Related to Intellectual Property, Litigation, Laws and Regulations

Previous report

Enhanced United States tariffs, import/export restrictions, Chinese regulations, countermeasures taken by affected countries or other trade barriers may have a negative effect on global economic conditions, financial markets and our business.

Previous report

There is currently significant uncertainty about the future relationship between the U.S. and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes. The current U.S. administration has imposed a range of tariff actions on U.S. trading partners. In April 2025, acting under the International Economic Emergency Powers Act (“IEEPA”), the Trump administration temporarily increased IEEPA tariffs on Chinese imports to 145% (reduced back to 30% in May 2025) and set a baseline 10% tariff applicable to almost every country, with exemptions for certain products. In August 2025, the United States increased reciprocal tariffs on many trading partners to individually-set levels, subject again to certain exemptions. Ongoing trade investigations, including investigations under Section 232 of the Trade Expansion Act and Section 301 of the Trade Adjustment Act, could also lead to greater restrictions on international trade and further increases in tariffs on goods imported into the U.S. These include investigations by the U.S. Trade Representative (“USTR”) into Chinese legacy semiconductors and the U.S. Department of Commerce (“Commerce”) into semiconductors and derivative articles, among other actions.

Previous report

On August 1, Commerce imposed 50% duties under Section 232 on certain articles of copper and copper derivative products, followed by Section 232 duties on imports of wood products in September. Commerce continues to investigate the national security impact of imports of myriad other products, including semiconductors, polysilicon, and pharmaceuticals, with decisions likely to be made later this year or early 2026. Further, the United States continues to negotiate and enter into trade agreement frameworks with various countries, which may result in lower tariffs on those trading partners. China has also imposed, or threaten to impose, various export restrictions on its products, including certain critical minerals, rare earth elements, and lithium-ion batteries. In response, President Trump has threatened to impose an additional 100% tariff on imports from China.

Previous report

Although A10's supply chain does not depend exclusively upon imports from China, an increase in tariffs generally will cause our costs to increase, which could narrow the profits we earn from sales of products requiring such materials and/or compel us to increase our prices to customers. Furthermore, while we are not presently aware of duties applicable to digital services, if trade restrictions or barriers are placed on our products by foreign governments, the prices for such products may increase, which may result in the loss of customers and harm to our business, financial condition and results of operations. There can be no assurance that we will not experience a disruption in business related to these or other changes in trade practices and the process of changing suppliers in order to mitigate any such tariff costs could be complicated, time consuming and costly.

Previous report

Furthermore, the U.S. tariffs may cause customers to delay orders as they evaluate where to take delivery of our products in connection with their efforts to mitigate their own tariff exposure. Such delays create forecasting difficulties for us and increase the risk that orders might be canceled or never be placed. Current or future tariffs may also negatively impact our customers’ revenue, thereby causing an indirect negative impact on our sales. Any reduction in customers’ revenue, and/or any apprehension among distributors and customers of a possible reduction in such revenue, could cause an indirect negative impact on our own sales. As noted, the current U.S. administration has taken a variety of tariff actions against other countries, and other countries such as China have at times responded with retaliatory tariffs and non-tariff measures as trade negotiations continue. The duration and magnitude of these tariffs and other trade disruptions remains uncertain and could lead to economic decline in affected countries, which could negatively impact purchases of our products. Moreover, an increase in the cost of our products due to tariffs or other trade actions could cause us to be impacted to a greater degree than our competitors who are based in countries that are not subject to tariffs, placing us at a disadvantage. Simply put, future U.S. tariffs on imports and retaliatory tariffs could increase the cost of, and reduce demand for, our products, which may materially adversely affect our results of operations.

Previous report

Additionally, the current uncertainty about the future relationship between the U.S. and other countries with respect to the trade policies, treaties, taxes, sanctions, government regulations and tariffs makes it difficult to plan for the future. New developments in these areas, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between these nations and the U.S. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations and affect our strategy. Given the uncertainty of further developments related to tariffs, international trade agreements and policies we can give no assurance that our business, financial condition and operating results would not be adversely affected.

Previous report

Risks Related to Our Convertible Indebtedness

Previous report

The issuance of shares of our common stock could depress the trading price of our common stock.

Previous report

We have the right to elect to settle conversion of the 2030 Notes either entirely in cash or in combination of cash and shares of common stock. Our election to convert the 2030 Notes into common stock may further dilute the economic and voting rights of our existing stockholders and/or reduce the market price of our common stock. In addition, the market’s expectation that conversions may occur could depress the trading price of our common stock even in the absence of actual conversions. Moreover, the expectation of conversions could encourage the short selling of our common stock, which could place further downward pressure on the trading price of our common stock. In addition, our issuance of additional shares of common stock will dilute the ownership interests of our existing common stockholders.

Previous report

We may be unable to raise the funds necessary to repurchase the 2030 Notes for cash following a fundamental change or to pay the cash amounts due upon maturity or conversion of the 2030 Notes, and our future indebtedness may limit our ability to repurchase the 2030 Notes or to pay any cash amounts due upon their maturity or conversion.

Previous report

Noteholders may, subject to a limited exception, require us to repurchase their 2030 Notes following a “fundamental change” (which is defined in the 2030 Notes Indenture to include certain change-of-control events and the delisting of our common stock) at a cash repurchase price generally equal to the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid interest, if any. Upon maturity of the 2030 Notes, we must pay their principal amount and accrued and unpaid interest in cash, unless they have been previously repurchased, redeemed or converted. In addition, all conversions of the 2030 Notes will be settled partially or entirely in cash. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2030 Notes or pay any cash amounts due upon their maturity or conversion. In addition, applicable law, regulatory authorities and the agreements governing our future indebtedness may restrict our ability to repurchase the 2030 Notes or to pay the cash amounts due upon their maturity or conversion. Our failure to repurchase 2030 Notes or to pay any cash amounts due upon their maturity or conversion when required will constitute a default under the indenture governing the 2030 Notes. A default under the 2030 Notes Indenture or the fundamental change itself could also lead to a default under agreements governing our other or future indebtedness, which may result in that other or future indebtedness becoming immediately payable in full. If repayment of the related indebtedness were to be accelerated after an applicable notice or grace periods, we may not have sufficient funds to satisfy all amounts due under the 2030 Notes, any other indebtedness, repurchase such notes or make cash payments upon conversion of such notes, if applicable.

Previous report

Provisions in the 2030 Notes Indenture could delay or prevent an otherwise beneficial takeover of us.

Previous report

Certain provisions in the 2030 Notes and the 2030 Notes Indenture could make a third-party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a fundamental change, then noteholders will have the right to require us to repurchase their 2030 Notes for cash. In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate for the 2030 Notes. In either case, and in other cases, our obligations under the 2030 Notes and the 2030 Notes Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.

Previous report

The conversion of 2030 Notes could impair our financial position and liquidity.

Previous report

Because we must settle at least a portion of our conversion obligation for the 2030 Notes in cash, the conversion of 2030 Notes could materially and adversely affect our financial position and liquidity. Before December 1, 2029, noteholders will have the right to convert their 2030 Notes only upon the occurrence of certain events. From and after December 1, 2029, noteholders may convert their 2030 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. However, many of the conditions that permit the conversion of 2030 Notes before December 1, 2029 are beyond our control. We could be required to expend a significant amount of cash to settle conversions, which could significantly harm our financial position and liquidity.