Please ensure Javascript is enabled for purposes of website accessibility

Why A10 Networks Stock Plunged Today

By Evan Niu, CFA – Apr 28, 2017 at 12:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors weren't impressed by first-quarter results.

What happened

Shares of A10 Networks (ATEN 1.77%) have plunged today, down by 17% as of 12 p.m. EDT, after the company reported first-quarter earnings.

So what

Revenue in the first quarter rose 12% to $60.3 million, which translated into non-GAAP net income of $0.7 million, or $0.01 per share. Those figures topped the Street's expectations of $59.8 million in sales and $0.00 per share in adjusted profit.

Servers in a data center

Image source: Getty Images.

Despite earnings coming in above consensus estimates, investor expectations may have been even higher, as shares have risen over 40% over the past year. On a GAAP basis, A10 lost $3.9 million, or $0.06 per share.

Now what

"The first quarter was a solid start to the year with revenue growth driven by our security and cloud-focused solutions gaining momentum among cloud provider, service provider and web-scale customers," CEO Lee Chen said in a statement. "We believe the cloud presents a long-term growth opportunity for A10, and we are focused on bringing new solutions to market that give customers the visibility, agility, flexibility and security they need for their cloud deployments."

On the call, Chen acknowledged "softer sales" in the low end of the North American market that was "mostly due to the end-of-sale of our entry-level appliances." A10 plans on releasing a new series of entry-level appliances in the third quarter once new chips are available.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.