ATEN 10-K & 10-Q changes, risk factors and insider trading

•Companies that sell CGN products, which were originally designed for other networking purposes, such as edge routers and security appliances from vendors like Cisco Systems, Inc. (“Cisco Systems”), Hewlett Packard Enterprise (division f/k/a Juniper Networks, Inc. (“Juniper Networks”)) and Fortinet, Inc. (“Fortinet”);

•broader distribution and established relationships with distribution channel partnerschannels in a greater number of worldwide locations;

We are experiencing an industry-wide trend of customers considering transitioning from purely on-premise network architectures to a computing environment that may utilize a mixture of existing solutions and various new cloud-based solutions. Concurrently with this transition, pricing and delivery models are also evolving. Many companies in our industry, including some of our competitors, are developing and deploying cloud-based solutions for their customers. In addition, the emergence of new cloud infrastructures and artificial intelligenceAI or other tools may enable new companies to compete with our business. These new competitors may include large cloud providers who can provide their own ADC functionality as well as smaller companies targeting applications that are developed exclusively for delivery in the cloud. We are dedicating significant resources to develop and offer our customers new cloud-based solutions and are training our sales teams as necessary to adapt to market trends. Also, some of our largest customers are cloud providers that utilize our existing solutions, and we believe that as cloud infrastructures continue to grow our existing solutions may provide benefits to other cloud providers. While we believe our expertise and dedication of resources to developing new cloud-based solutions, together with the benefits that our existing solutions offer cloud providers, represent advantages that provide us with a strong foundation to compete, it is uncertain whether our efforts to develop new cloud-based and related solutions or our efforts to market and sell our existing solutions to cloud providers will attract the customers or generate the revenue necessary to successfully compete in this new business model. Nor is it clear when or in what manner this new business model will evolve, and this uncertainty may delay purchasing decisions by our customers or prospective customers. Whether we are able to successfully compete depends on our execution in a number of areas, including maintaining the utility, compatibility and performance of our software on the growing assortment of cloud computing platforms and the enhanced interoperability requirements associated with orchestration of cloud computing environments. We will also need to enhance and develop the infrastructure necessary to support the delivery of these services as well as the skills of our personnel who sell, provide and maintain them. Any failure to adapt to these evolving trends may reduce our revenue or operating margins and could have a material adverse effect on our business, results of operations and financial condition.

•greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including antitrust regulations, relevant accounting standards the U.S. Foreign Corrupt Practices Act (“FCPA”), and any trade regulations ensuring fair trade practices; and

We outsource the manufacturing of our hardware components to third-party original design manufacturers who assemble these hardware components to our specifications. Our primary manufacturers are Lanner and AEWIN, each of which is located in Taiwan. Deterioration of international relations including but not limited to those between Taiwan and China, the resulting actions taken by either country, and other factors affecting the political or economic conditions of Taiwan in the future, could cause disruption to the manufacturing of our hardware components, which could materially adversely affect our business, financial condition and results of operations and the market price and the liquidity of our shares. Our reliance on these third-party manufacturers reduces our control over the manufacturing process and exposes us to risks, including reduced control over quality assurance, product costs, and product supply and timing. Any manufacturing or other form of disruption at these manufacturers, including but not limited to disruptions due to tensions with China, could severely impair our ability to fulfill orders. In addition, the ongoing global supply chain issues are expected to continue and may adversely impact our suppliers to a degree that could materially impact us. Our reliance on outsourced manufacturers also may create the potential for infringement or misappropriation of our intellectual property rights or confidential information. If we are unable to manage our relationships with these manufacturers effectively, or if these manufacturers suffer delays or disruptions for any reason, experience increased manufacturing lead-times, experience capacity constraints or quality control problems in their manufacturing operations, or fail to meet our future requirements for timely delivery, our ability to ship products to our end-customers would be severely impaired, and our business and operating results would be seriously harmed.

Our use of open source software and position regarding the potential use of generative artificial intelligence (AI) in our products could negatively affect our ability to sell our products and subject us to possible litigation.

We incorporate open source software such as the Linux operating system kernel into our products. We have implemented a formal open source use policy, including written guidelines for use of open source software and business processes for approval of that use. We have developed and implemented our open source policies according to industry practice; however, best practices in this area are subject to change, because there is little reported case law on the interpretation of material terms of many open source licenses. We are in the process of reviewing our open source use and our compliance with open source licenses and implementing remediation and changes necessary to comply with the open source licenses related thereto. While we do not currently utilize software generated by artificial intelligenceAI tools in our products we may at some point choose to do so, and, if we do, we will likely treat AI generated code as a form of open source software. We cannot guarantee that our use of open source software has been, and will be, managed effectively for our intended business purposes and/or compliant with applicable open source licenses. We may face legal action by third parties seeking to enforce their intellectual property rights related to our use of such software. Failure to adequately manage open source license compliance and our use of open source or AI generated software may result in unanticipated obligations regarding our products and services, such as a requirement that we license proprietary portions of our products or services on unfavorable terms, that we make available source code for modifications or derivative works we created based upon, incorporating or using open source software, that we license such modifications or derivative works under the terms of the particular open source license and/or that we redesign the affected products or services, which could result, for example, in a loss of intellectual property rights, or delay in providing our products and services. From time to time, there have been claims against companies that distribute or use third-party open source or other software in their products and services, asserting that the open source or AI generated software or its combination with the products or services infringes third parties’ patents or copyrights, or that the companies’ distribution or use of the open source software does not comply with the terms of the applicable licenses. Use of certain open source or AI generated software can lead to greater risks than use of warranted third-party commercial software, as open source licensors and AI generated software generally do not provide warranties or controls on the origin of such software. From time to time, there have been claims against companies that use open source or AI generated software in their products, challenging the ownership of rights in such open source or AI generated software. As a result, we could also be subject to suits by parties claiming ownership of rights in such software and so challenging our right to use such software in our products. If any such claims were asserted against us, we could be required to incur significant legal expenses defending against such a claim. Further, if our defenses to such a claim were not successful, we could be, for example, subject to significant damages, be required to seek licenses from third parties in order to continue offering our products and services without infringing such third party’s intellectual property rights, be required to re-engineer such products and services, or be required to discontinue making available such products and services if re-engineering cannot be accomplished on a timely or successful basis. The need to engage in these or other remedies could increase our costs or otherwise adversely affect our business, operating results and financial condition.

We may collect, store and use certain confidential information in the course of providing our services, and we have invested in preserving the security of this data. We may also outsource operations to third-party service providers to whom we transmit certain confidential data. While the Cyber Incident we experienced in January 2023 did not result in material degradation of our systems, it did expose a vulnerability in our security measures which we believe has been corrected. We may also outsource operations to third-party service providers to whom we transmit certain confidential data. There are no assurances that any security measures we have in place, or any additional security measures that our subcontractors may have in place, will be sufficient to protect this confidential information from unauthorized security breaches. While the Cyber Incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation.

A significant number of our employees are currently working from home or other remote locations. There are additional risks and challenges associated with having a large portion of our workforce working remotely, and our IT systems may experience additional stress as a result. There is also increased risk of breaches to our network. While the Company has implemented a variety of security measures to address these heightened risks, including, but not limited to, advanced firewalls and firewall policy improvements, enhanced access controls, improved monitoring, network management and incident management and response process, and prioritization of our cybersecurity committee to continuously evaluate and strengthen our security posture, there can be no assurance that such measures will prevent breaches. Any such breaches could negatively impact our reputation and business as set forth above.

A wide variety of provincial, state, national, foreign, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data. These data protection, privacy and cyber resilience-related laws and regulations continue to evolve, are evolving andincreasingly being tested in courtscourts, and remain subject to ongoing governmental review and reform. Such laws may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. For example, the European Union’s General Data Protection Regulation, or GDPR, which took effect back in May 2018, has caused EU data protection requirements to be more stringent and provides for greater penalties. The United Kingdom enacted legislation that substantially implements the GDPR, and has since enacted legislation which amends certain aspects of the UK GDPR which may further diverge UK requirements from those applicable in the European Union. In addition, the European Union has proposed amendments to aspects of the GDPR as part of its proposed “Digital Omnibus” legislative package, which remains subject to negotiation and has not yet been adopted. Because the GDPR and related UK data protection laws may be subject to new or changing interpretations by courts,courts and regulators, as well as legislative modification or reform, our interpretation of the law and efforts to comply with the rules and regulations of the law may be challenged or ruled invalid. Noncompliance with the GDPR can trigger regulatorregulatory fines of up to €20 million or 4% of global annual revenues, whichever is higher, in the most serious cases and/or legal claims. The United Kingdom enacted legislation that substantially implements the GDPR. In the EU/UK,European Union, various cyber resilience related laws (for example the EU Cyber Resilience Act, Network and Information Systems Directive 2, and the Digital Operational Resilience Act) have either recently been enacted orand arewill apply in thephases, processincluded ofthrough beingMember enacted,State whichimplementing measures and secondary legislation specifying certain technical and reporting requirements. These frameworks essentially oblige those doing business in the EU/UK to implement robust cybersecurity standards with respect to the products and services they provide.provide, and aspects of these laws, including breach reporting requirements, are also subject to proposed amendments under the EU’s Digital Omnibus initiative. In the United Kingdom, cybersecurity and resilience obligations arise under, among other laws, the UK Network and Information Systems Regulations 2018 (as amended), the Product Security and Telecommunications Infrastructure Act 2022, and financial sector resilience frameworks. The UK government has also proposed reforms to its cyber resilience regime, which may expand the scope of regulated entities and enhance incident reporting and supervisory powers. The EU has also implementedenacted a comprehensive law regulating the development and use of AI systems (the EU AI Act). whichThe EU AI Act imposes enhanced requirements on certain “high-risk” AI systems, including obligations relating to risk management, data governance, documentation, human oversight and conformity assessments, and also protectsestablishes datatransparency obligations that apply to a broad range of AI systems. The EU AI Act is expected to be supplemented by implementing measures and privacy by requiring confidentiality, transparenceguidance, and riskaspects assessmentsof wherethe AIframework systemsare subject to proposed amendments under a broader AI-related legislative “Omnibus” initiative. The timing and builtcontent andof used.certain European Commission guidance has been delayed, creating additional uncertainty regarding implementation expectations. Breaches of such laws could also lead to significant fines and legal claims, and allegations of breach could lead to significant investigative or defense related costs. Similarly, California recently enacted the California Consumer Privacy Act (which was then amended by the California Privacy Rights Act) (“CCPA”) which, among other things, requires covered companies to provide new disclosures to California consumers and affords such consumers new rights including not sharing personal information upon the consumer’s request and opt-out provisions for the sales of consumer’s personal information. In addition, at least 18 other U.S. states have enacted comprehensive privacy legislations that regulates the collection, use, and sale of personal information, and other states have enacted sectoral privacy laws and introduced bills regarding comprehensive privacy laws, and these privacy laws might not be compatible with either the GDPR or the CCPA or may require us to undertake additional practices. At a minimum, these U.S. state comprehensive and sectoral privacy laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Further, U.S. states have passed or introduced legislations regulating the development and deployment or artificial intelligenceAI and automated decision making technologies across different sectors and in some instances have passed or introduced legislations or regulations that apply across sectors. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including significant investigatory costs, fines, imprisonment of company officials and public censure (in the most serious, criminal cases, in certain jurisdictions), claims for damages by end-customers and other affected persons and entities, damage to our reputation and loss of goodwill (both in relation to existing and prospective channel partners and end-customers), and other forms of injunctive or operations-limiting relief, any of which could have a material adverse effect on our operations, financial performance, and business. Evolving and changing definitions of personal data and personal information, within the EU, the U.S., and elsewhere, especially relating to classification of Internet Protocol (“IP”) addresses, machine identification, location data, biometric data and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. We may be required to expend significant resources to modify our solutions and otherwise adapt to these changes, which we may be unable to do on commercially reasonable terms or at all, and our ability to develop new solutions and features could be limited. These developments could harm our business, financial condition and results of operations. Even if not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our products by current and prospective end-customers.

Our business is subject to regulation by various federal, state, local and foreign governmental entities, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, artificial intelligence,AI, data privacy laws, federal securities laws, and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than those in the U.S. Noncompliance or perceived noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results and financial condition.

We have, in the past, and may, in the future, conclude that our internal control over financial reporting is not effective. We have identified significant deficiencies and material weaknessweaknesses in the past that has resulted in a restatement of certain of our financial reports. If any new internal control procedures which may be adopted or our existing internal control procedures are deemed inadequate, or if we identify additional material weaknesses in our disclosure controls or internal controls over financial reporting in the future, we will be unable to assert that our internal controls are effective. If we are unable to do so, or if we are required to restate our consolidated financial statements as a result of ineffective internal control over financial reporting, or if our auditors are unable to attest on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.

Increasing attention on environmental,sustainability, socialhuman capital, governance and governanceother (“ESG”)corporate responsibility matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks.

Companies are facing increasing attention from investors, customers, partners, consumers and other stakeholders relating to ESGsustainability, human capital and governance matters, including environmental stewardship, social responsibility, diversity and inclusion, racial justiceresponsibility and workplace conduct. In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESGthese matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings may lead to negative investor sentiment toward the Company, which could have a negative impact on our stock price and our access to and costs of capital.

We have established corporate social responsibility programs aligned with soundour environmental,business socialobjectives and governanceapplicable principles.legal and regulatory requirements. An overview of these programs can be found on our corporate website at https://investors.A10networks.com within the “Governance - Governance Documents” section. These programs reflect our current initiatives and are not guarantees that we will be able to achieve them. Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business. Additionally, the implementation of these initiatives imposes additional costs on us. If our ESG initiatives fail to satisfy investors, customers, partners and our other stakeholders, our reputation, our ability to sell products and services to customers, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

Our consolidated results of operations, financial position and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Historically, the majority of our revenue contracts are denominated in U.S. Dollars, with the most significant exception being Japan, where we invoice primarily in the Japanese Yen. Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the Americas and EMEA. Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations that can affect our operating income. The currency exchange impact of the foreign exchange rates on our net income was $0.3 million unfavorable during the year ended December 31, 2025. The currency exchange impact of the foreign exchange rates on our net income was $2.1 million and $0.1 million favorable during the years ended December 31, 2024 and 2023, respectively. The currency exchange impact of the foreign exchange rates on our net income was $0.5 million unfavorable during the year ended December 31, 2022. As exchange rates vary, our operating income may differ from expectations. We deploy normal and customary hedging practices that are designed to proactively mitigate such exposure. The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in currency exchange rates over the limited time the hedges are in place and would not protect us from long term shifts in currency exchange rates.

On October 28, 2021, we announced that our Board of Directors approved a capital allocation strategy to return capital tofor our stockholders. As part of this strategy, the Board of Directors began declaring quarterly cash dividends. The declaration, amount and timing of any cash dividends are subject to capital availability and determinations by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance with all respective laws and our agreements applicable to the declaration and payment of cash dividends. Our ability to pay dividends will depend upon, among other factors, our cash flows from operations, our available capital and potential future capital requirements as well as our results of operations, financial condition and other factors beyond our control that our Board of Directors may deem relevant. A reduction in or suspension or elimination of our dividend payments could have a negative effect on our stock price.

On October 28, 2021, we announced that our Board of Directors approved a capital allocation strategy to return capital tofor our stockholders. As part of this strategy, the Company announced on NovemberMay 7,1, 2024,2025, that its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $50$75 million of its outstanding common stock. Under the Company’s stock repurchase programs, we may repurchase shares in the open market, privately negotiated transactions, in block trades or a combination of the foregoing. We are not obligated under the stock repurchase program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the stock repurchase program at any time. Our management and Board will determine the timing and amount of any repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. The Company plans to fund repurchases from its existing cash balance and cash provided by operating activities.

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include, but are not limited to, those matters discussed under the heading “Forward-looking Statements.” Our actual results could differ materially from those anticipated by these forward‑looking statements due to various factors, including, but not limited to, those set forth under Item 1A. Risk Factors of this Annual Report on Form 10-K and elsewhere in this document.

This section of thethis Annual Report on Form 10-K generally discusses fiscal 20242025 and 20232024 items and year-to-year comparisons between fiscal 2025 and 2024. Discussions of fiscal 2024 items and year-to-year comparisons between fiscal 2024 and 2023. Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 20232024 filed with the SEC on February 29,25, 2024.2025.

We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software licenselicenses 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 channel partners,channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products other than our software-as-a-service offerings.products.

We sell our products globally to service providers and enterprises that depend on data center applications and networks to generate revenue and manage operations efficiently. We report two customer verticals: service providers, which accounted for 60%, 57% and 58% of our total revenue during 2025, 2024 and 2023, respectively, and enterprise, which accounted for 40%, 43% and 42% of our total revenue during 2025, 2024 and 2023, respectively. While we expect total demand to remain strong as the need for cybersecurity solutions continues to increase, we expect the demand shift trend from service provider to enterprise to continue in the near term. We report customer revenues in three broad geographic regions: the Americas, APJ and EMEA regions. The Americas region comprises the U.S. and all other countries in the Americas (excluding the U.S.). The APJ region comprises Asia Pacific region including Japan. The EMEA region comprises Europe, Middle East and Africa. We believe this vertical and geographic view aligns with how we manage the business and maps our product portfolio to customer verticals.

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.

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 end-customersend-customers, including service providers and serviceenterprise providers.customers, in any period. Purchases from our ten largest end-customers accounted for 38%,40%, 33%38% and 41%33% of our total revenue for 2024,2025, 20232024 and 2022,2023, 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 and rely upon customer growth and network enhancements. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest end-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.

In February 2025, we acquired the assets and key personnel of ThreatX Protect, which expanded our cybersecurity portfolio with WAAP protection (web application and application programming interfaces). We offer protection under A10 Defend ThreatX Protect.

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”),PCS, professional services, training and software-as-a-service offerings.

We generate services revenue from sales of post contract support (“PCS”),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.

Total revenue increased by $10.0$28.9 million, or 4%,11%, in 20242025 compared to 2023.2024 Thisas a result of an increase was due to a $11.3 million increase in services revenue, partially offset by a decrease of $1.3$27.3 million in products revenue and an increase of $1.6 million in services revenue.

Products revenue decreasedincreased $1.3$27.3 million, or 1%,20%, in 20242025 compared to 20232024. The increase was primarily drivena byresult lowerof an increase in demand from our service provider and enterprise customers in the Americas,Americas region and an increase in demand from our service provider customers in the EMEA regions,region, partially offset by higherdecreases in demand from service provider and enterprise customers in APJ.the APJ region and enterprise customers in the EMEA region.

Services revenue increased $11.3$1.6 million, or 10%,1%, in 20242025 compared to 2023.2024. The increase was primarily attributable to the increase in PCS sales in connection with our increased installed customer base in the APJ region, and to a lesser extent in the Americas and EMEA regions.region.

During 2024,2025, $134.4$175.2 million, or 51%60% of total revenue, was generated from the Americas region, which represents a 1%30% increase compared to 2023.2024. The increase was primarily duea toresult of higher products and services revenue driven by an increase in demand from ourboth service provider and enterprise customers.

During 2024,2025, $87.2$70.5 million, or 33%24% of total revenue, was generated from APJ, which represents a 12%19% increasedecrease compared to 2023.2024. The increasedecrease was primarily duea toresult higherof lower products and services revenue driven by ana increasedecrease in demand from our service provider and enterprise customers.

During 2024,2025, $40.2$44.9 million, or 16% of total revenue, was generated from EMEA, which represented a 3%12% decreaseincrease compared to 2023.2024. The decreaseincrease was primarily duea toresult lowerof higher products revenue driven by aan decreaseincrease in demand from our service provider customers.

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. Additionally, cost of services revenue includes a one-time asset impairment cost of $951 thousand for the year ended December 31, 2025.

Products gross margin percentage remainedincreased flatto 80.0% in 20242025 compared to 2023.77.7% in 2024, primarily due to product and regional mix.

Services gross margin percentage decreased byto 1.7%78.4% in 20242025 compared to 202383.4% in 2024 primarily due to an increase in personnel-related support costs,costs especiallyand variablethe compensation.mix of services delivered, which include technical support, training and service costs. Additionally, in 2025 services gross margin percentage was negatively impacted by a one-time asset impairment charge totaling $951 thousand.

The $2.7$1.2 million decreaseincrease in sales and marketing expenses in 20242025 compared to 20232024 was primarily due to decreasesincreases of $3.2$1.8 million in personnel costs as a result of aan decreaseincrease in headcount, $0.3 million in equipment expense and $0.3 million of amortization and depreciation expense, partially offset by ana increasedecrease in marketingbad eventsdebt expense of $0.6$1.2 million.

The $2.5$11.4 million increase in research and development expenses in 20242025 compared to 20232024 was primarily due to an increase of $1.5$12.0 million in personnel costs and a $1.3$1.5 million increase in equipment and software expense, partially offset by a decrease of $0.6$2.3 million in consultants and professional services.

The $1.4$4.5 million increase in general and administrative expenses in 20242025 compared to 20232024 was primarily due to an increaseincreases of $1.3$1.2 million in legal services, $1.0 million in personnel costs primarily as a result of an increase in variable compensation.compensation, $1.0 million in amortization and depreciation, $0.5 million in business insurance and $0.4 million in equipment expense.

In the yearsyear ended December 31, 20242025, interest and 2023,other income (expense), net consisted primarily of interest expense for the 2030 Notes and foreign currency exchange gains and losses. In the year ended December 31, 2024, interest and other income (expense), net consisted primarily of gains on equity investments and foreign currency exchange gains and losses. The Company recorded $6.1 million of interest expense for the 2030 Notes in the year ended December 31, 2025, while no interest expense was recorded during the year ended December 31, 2024. The Company recorded $5.3 million of investment gains in the year ended December 31, 2024, comparedwhile tono aninvestment immaterialgains lossor losses were recorded in the year ended December 31, 2023.2025. Foreign currency exchange gains and losseslosses, net had an unfavorable change of $0.3 million in the year ended December 31, 2025 compared to a favorable change of $2.1 million in the year ended December 31, 2024 compared to a favorable change of $0.1 million in 2023.2024.

We recorded a provision for income tax of $10.3 million for the year ended December 31, 2025 and $8.0 million for the year ended December 31, 2024 and $3.8 million for the year ended December 31, 2023.2024. Our deferred tax assets primarily consist of research and development credits, capitalized research and development expenses and accruals and reserves. The Company’s income tax provision for the year ended December 31, 2024 primarily consisted of U.S. federal2025 and state taxes. The Company’s income tax provision for the year ended December 31, 20232024, primarily consisted of U.S. federal, state and foreign income taxes.

As of December 31, 2024,2025, we had cash and cash equivalents of $95.1$71.1 million, including $3.9$4.1 million held outside the U.S. in our foreign subsidiaries, and $100.4$306.7 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As of December 31, 2024,2025, we had working capital of $183.7$342.3 million, accumulatedretained deficitearnings of $40.3$1.8 million and total stockholders’ equity of $231.8$211.5 million.

OnThe Board of Directors, from time to time, has authorized various stock repurchase programs, 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, 2022,2025 (the Company“2025 announcedProgram”). itsThe Board of Directors authorized a stock repurchase program of up to $50 million of its common stock over a period of twelve months. On November 7, 2023,terminated the Company2024 announcedProgram itson BoardMay of1, Directors had authorized a stock repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock over a period of twelve months. On November 7, 2024, the Company announced its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock. As of December 31, 2024, the Company had $44.2 million available to repurchase shares.2025. Under these repurchaseall 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.Act Toof date,1934 all(the repurchases“Exchange Act”). During the year ended December 31, 2025, the Company had repurchased 3.7 million shares for a total cost of $68.9 million under the Company’s stock repurchase programs have occurred in the open market, in negotiated transactions2025 and from2024 withholding shares in connection with vesting equity awards held by certain employees.Programs. During the year ended December 31, 2024, the Company repurchased 2.2 million shares for a total cost of $30.1 million.million Duringunder the year2024 endedand December2023 31, 2023, the Company repurchased 1.3 million shares for a total cost of $16.0 million.Programs.

In October 2021, ourthe Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. During the year ended December 31, 2025, the Company paid quarterly cash dividends in the amount of $0.06 per share outstanding, for a total of $17.4 million. The firstnext dividend, in the amount of $0.05 per share of common stock outstanding, was paid in December 2021 and was treated as a return of capital, and on November 1, 2022, the Board of Directors increased the dividend amount to $0.06 per share.share, will be paid on March 2, 2026 to stockholders of record on February 16, 2026. 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 ourthe Board of Directors and will depend onupon our results of operations, financial condition, cash requirements, and other factors.

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”),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 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 ratably 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.

In February 2025, we acquired the assets and key personnel of ThreatX Protect, which expanded our cybersecurity portfolio with WAAP protection (web application and application programming interfaces). We offer protection under A10 Defend ThreatX Protect. In March 2025, the Company issued the 2030 Notes and received net proceeds from the offering of approximately $217.7 million.

During the three months ended MarchJune 31,30, 2026, (i) 67%68% of our total revenue was generated from the Americas region, of which 62%65% was generated from the United States and 5%4% was generated from the Americas-other, (ii) 19%21% of our total revenue was generated from the APJ region and (iii) 14%11% of our total revenue was generated from the EMEA region. During the three months ended MarchJune 31,30, 2025, (i) 51%59% of our total revenue was generated from the Americas region, of which 46%55% was generated from the United States and 5%4% was generated from the Americas-other, (ii) 28%26% of our total revenue was generated from the APJ region and (iii) 21%15% of our total revenue was generated from the EMEA region. One of our priorities is to strengthen our sales efforts in North America. During the three months ended MarchJune 31,30, 2026 and 2025, our enterprise customers accounted for 56%60% and 41%40% of our total revenue, respectively, and our service provider customers accounted for 44%40% and 59%60% of our total revenue, respectively.

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 55%58% and 44%46% of our total revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and accounted for 55% and 42% of our total revenue for the six months ended June 30, 2026 and 2025, 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.

As of MarchJune 31,30, 2026, we had $57.9$54.7 million of cash and cash equivalents and $311.9$302.7 million of marketable securities. Cash provided by operating activities was $2.2$31.3 million during the threesix months ended MarchJune 31,30, 2026, compared to $17.2$39.4 million in the same period of 2025.

A summary of our condensed consolidated statements of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 is as follows (dollars in thousands):

Three Months Ended MarchJune 31,30, 2026 and 2025

Total net revenue increased $8.9$10.8 million, or 13%,15%, during the three months ended MarchJune 31,30, 2026, compared to the same period of 2025. Changes in revenue were due primarily to (i) an increase of $17.0$13.6 million in the Americas region, comprised of increases of $16.7$13.5 million in the United States and $0.3$0.1 million in Americas-other, (ii) a decrease of $4.4$1.2 million in the APJ region, and (iii) a decrease of $3.7$1.6 million in the EMEA region. The overall increase in revenue was attributable to a $15.1$20.2 million increase in revenue from enterprise customers, partially offset by a $6.2$9.5 million decrease in revenue from service provider customers during the three months ended MarchJune 31,30, 2026 compared to the same period of 2025. Products revenue increased $8.0$9.9 million, of which the Americas region increased $15.4$11.5 million, partially offset by decreases of $3.7$1.0 million in the APJ region and $3.7$0.7 million in the EMEA region for the three months ended MarchJune 31,30, 2026, compared to the same period of 2025. Services revenue increased $0.9 million, of which the Americas region increased $1.6$2.1 million, partially offset by a decreasedecreases of $0.7$0.3 million in the APJ region and $0.9 million in the EMEA region for the three months ended MarchJune 31,30, 2026, compared to the same period of 2025. Services revenue in the EMEA region was flat for the three months ended March 31, 2026, compared to the same period of 2025.

Products revenue increased $8.0$9.9 million, or 22%,25%, during the three months ended MarchJune 31,30, 2026 compared to the same period of 2025, as a result of an increase in demand from our enterprise customers in the Americas and EMEA regions.region.

Services revenue increased $0.9 million, or 3%, during the three months ended MarchJune 31,30, 2026, compared to the same period of 2025, as a result of an increase in demand from our enterprise and service provider and enterprise customers in the Americas region.

During the three months ended MarchJune 31,30, 2026, $50.5$54.8 million, or 67%68% of total revenue, was generated from the Americas region, which represents a 51%33% increase in revenue compared to the same period of 2025. The increase was primarily due to higher products and services revenue due to an increase in demand from our service provider and enterprise customers in the Americas region.

During the three months ended MarchJune 31,30, 2026, $14.2$16.7 million, or 19%21% of total revenue, was generated from the APJ region, which represents a 24%7% decrease compared to the same period of 2025. The decrease was primarily due to lower products and services revenue due to a decrease in demand from our enterprise and service provider customers in the APJ region.

During the three months ended MarchJune 31,30, 2026, $10.3$8.6 million, or 14%11% of total revenue, was generated from the EMEA region, which represents ana 27%16% decrease compared to the same period of 2025. The decrease was primarily due to lower products and services revenue due to a decrease in demand from our service provider customers in the EMEA region.

Products cost of revenue increased 23.0% during the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods of 2025, primarily due product and regional mix.

Services cost of revenue increased 2.7%3.1% during the three and six months ended MarchJune 31,30, 2026, and increased 2.9% during the six months ended June 30, 2026, compared to the same periodperiods of 2025, primarily driven by an increase in personnel-related support costs and the mix of services delivered, which include technical support, training and service costs.

Products gross margin decreasedincreased 0.1%0.3% to 79.7%79.4% during the three months ended MarchJune 31,30, 2026, and increased 0.2% to 79.6% during the six months ended June 30, 2026, compared to the same periods of 2025, primarily due to product and regional mix.

Services gross margin remaineddecreased consistent0.1% atto 79.5%78.5% for both the three months ended MarchJune 31,30, 2026, and remained consistent at 79.0% during the six months ended June 30, 2026 andcompared to the same periods of 2025. ServiceChanges in services gross margin is impactedprimarily bydue to the mix of services delivered, which include technical support, training and service costs.

Sales and marketing operating expenses increased $0.5$0.9 million, or 2.4%,4.5%, in the three months ended MarchJune 31,30, 2026, and increased $1.4 million, or 3.5%, in the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in personnel costs.

Research and development operating expenses increased $3.1$4.9 million, or 19.6%,30.1%, in the three months ended MarchJune 31,30, 2026, and increased $8.0 million, or 24.9%, in the six months ended June 30, 2026, compared to the same periodperiods in 2025, primarily due to an increase in personnel costs.

General and administrative operating expenses decreasedincreased $0.8$4.1 million, or 9.2%,57.4%, in the three months ended MarchJune 31,30, 2026, and increased $3.3 million, or 21.3%, in the six months ended June 30, 2026, compared to the same periodperiods in 2025, primarily due to aan decreaseincrease in personnel costs.

For the full year 2026, we expect general and administrative expenses to increase modestly from 2025 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities.

Interest income was $3.4$3.3 million and $1.8$3.0 million in the three months ended MarchJune 31,30, 2026 and 2025, respectively, and was $6.7 million and $4.8 million in the six months ended June 30, 2026 and 2025, respectively.

Interest expense was $1.9 million and $0.3$1.9 million in the three months ended MarchJune 31,30, 2026,2026 and 2025, respectively, and was $3.8 million and $2.2 million in the six months ended June 30, 2026 and 2025, respectively, and was related to our outstanding 2030 Notes that were issued in March 2025.

The Company recorded $0.2$0.6 million of net losses and $0.2$0.5 million of net gains in other income (expense) in the three months ended MarchJune 31,30, 2026,2026 and 20252025, respectively, and recorded $0.8 million of net losses and $0.7 million of net gains in other income (expense) in the six months ended June 30, 2026 and 2025, respectively, primarily from foreign currency exchange gains and losses from fluctuations in the Japanese Yen versus the U.S. Dollar.

We recorded a provision for income taxes of $2.2$1.0 million and $0.9$1.4 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and we recorded a provision for income taxes of $3.2 million and $2.3 million for the six months ended June 30, 2026 and 2025, respectively. The Company’s income tax provisions for the three and six months ended MarchJune 31,30, 2026 and 2025 primarily consisted of U.S. federal and state taxes.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $57.9$54.7 million, including $3.3$3.5 million held outside the United States in our foreign subsidiaries, and $311.9$302.7 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As of MarchJune 31,30, 2026, we had working capital of $350.4$108.7 million, retained earnings of $13.8$22.7 million and total stockholders’ equity of $220.8$238.0 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.

The Board of Directors 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, 2025, the Company repurchased 3.7 million shares for a total cost of $68.9 million under the 20232024 and 20242025 Programs. During the three months ended MarchJune 31,30, 2026, the Company haddid not repurchase any shares and during the six months ended June 30, 2026, the Company repurchased 0.1$17 millionthousand shares for a total cost of $2.5$317 millionthousand under the 2025 Program.

In October 2021, the Board of Directors 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 $4.3 million and $4.4$8.6 million in the three and six months ended MarchJune 31,30, 2026. The next dividend, in the amount of $0.06 per share, will be paid on JuneSeptember 1, 2026 to stockholders of record on MayAugust 15,17, 2026. 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 of Directors and will depend upon our results of operations, financial condition, cash requirements, and other factors.

During the threesix months ended MarchJune 31,30, 2025,2026, cash provided by operating activities was $17.2$31.3 million, consisting of net income of $9.5$20.9 million, non-cash charges of $10.7$24.3 million and a decrease in cash resulting from the net change in operating assets and liabilities of $3.0$13.9 million. Our non-cash charges consisted primarily of depreciation and amortization expenses of $3.4$8.4 million and stock-based compensation expense of $6.0$13.8 million. The net change in our operating assets and liabilities primarily reflects cash outflows from the changes in inventory of $13.9 million, accounts receivable of $10.1 million, accrued and other liabilities of $8.2 million, accounts payable of $5.6$8.0 million and prepaid expenses and other assets of $2.9$6.1 million, partially offset by cash inflows from accounts receivablepayable of $10.5$12.3 million and deferred revenue of $2.0 million and inventory of $1.2$11.8 million.

The unfavorable change in accrued liabilities was primarily due to a decrease in accrued variable compensation. The unfavorable change in accounts payableinventory was attributable to the timing of paymentsproduct shipments. The unfavorable change in accounts receivable was attributable to vendors.timing of billing and cash collections. The unfavorable change in accrued and other liabilities was primarily due to payments for variable compensation. 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 receivablepayable was attributable to the timing of billingpayments andto cash collections.vendors. 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.bookings.

During the threesix months ended MarchJune 31,30, 2025,2026, cash used in investing activities was $34.7$36.0 million, consisting of purchases of marketable securities of $41.9$112.2 million, cash paid for the acquisition of ThreatX ProtectTrojAI of $19.1$34.7 million and capital expenditures of $4.5 million, partially offset by sales and maturities of marketable securities of $30.7$115.4 million. See Note 5 - Acquisition for additional information.information regarding our acquisitions.

During the threesix months ended MarchJune 31,30, 2026, cash used in financing activities was $6.8$11.8 million, consisting of cash dividend payments of $4.3$8.6 millionmillion, the repurchase of common stock, including the withholding of shares to satisfy income tax withholding and repurchasesremittance obligations resulting from the vesting of certain awards, of $4.9 million, partially offset by proceeds from issuance of common stock under employee equity incentive plans of $2.5$1.7 million.

During the threesix months ended MarchJune 31,30, 2025, cash provided by financing activities was $166.3$159.7 million and primarilymillion, consisting of $217.7 million in net proceeds from the issuancesale on the Company’s 2030 Notes of $217.7 million, proceeds from common stock issued under the 2030Company’s Notes,equity $47.0plans millionof used$1.7 formillion, partially offset by repurchases of common stockstock, including the withholding of shares to satisfy income tax withholding and $4.4remittance obligations resulting from the vesting of certain awards, of $51.0 million used forand cash dividend payments.payments of $8.8 million.

Our contractual obligations consist of non-cancellable operating lease arrangements and totaled $7.6$6.6 million as of MarchJune 31,30, 2026. Our operating lease arrangements expire on various dates through April 2028.2029. These arrangements require us to pay certain operating expenses, such as taxes, repairs and insurance, and contain renewal and escalation clauses.

The Company’s critical accounting policies and estimates are disclosed in Part II – Item 7, “Critical Accounting Estimates” of the 2025 Annual Report. There have been no material changes to the Company’s critical accounting policies and estimates during the threesix months ended MarchJune 31,30, 2026.