Shares of A10 Networks (ATEN 1.23%) have surged today, up by 16% as of 2:50 p.m. EDT, after the company reported second-quarter earnings. The networking technology specialist topped profit expectations but missed sales forecasts.
Revenue in the second quarter increased 7% to $52.5 million, which was shy of the $53.1 million in sales that analysts were modeling for. That resulted in adjusted net income of $7.1 million, or $0.09 per share, topping the consensus estimate of $0.05 by a healthy margin. Adjusted EBITDA was $9.8 million and A10 finished the quarter with $143.4 million in cash. COVID-19 has impacted IT spending and sales cycles while also slightly affecting the company's supply chain.
"A10 continues to make progress on our business model transformation, resulting in improved earnings power, amidst an uncertain environment," CEO Dhrupad Trivedi said in a statement. "To date, we have successfully navigated the challenges related to the pandemic and associated economic disruptions."
The company plans to increase spending on sales and marketing going forward compared to the second quarter. CFO Tom Constantino does expect to maintain profitability in the third quarter and said gross margin should be within its historical range of 76% to 78%.
A10 has suspended its quarterly guidance due to the ongoing macroeconomic uncertainty related to the coronavirus pandemic, but Constantino said that the company remains "committed to advancing our goals for profitable growth in our efforts to advance initiatives to improve operational efficiency."
Following the release, BWS Financial reiterated a buy rating and increased its price target from $9.50 to $13.50.