This Zacks Ranked #5 (Strong Sell) company provides software based application networking solutions. Its solutions enable enterprises, service providers, Web giants, and government organizations to enhance, secure, and optimize the performance of their data center applications and networks. The company delivers its solutions on optimized hardware appliances and as virtual appliances across its Thunder Series and AX Series product families. A10 Networks, Inc. (ATEN - Free Report) is headquartered in San Jose, California.
On July 13th management preannounced their Q217 results; both earnings and revenues are now expected to come in significantly below the Zacks consensus estimates. Revenues are now expected to be in a range of $52.5-53.5 million, about $10 below the Zacks expectation. Earnings EPS will now be in a range between -$0.06 and -$0.05, well below the expected $0.02 level.
Management blamed delayed deals in North American, and in Japan. Most believe that many large service provider deals were the main cause of the negative revision of both earnings and revenues. It is estimated that about 40% of the company’s revenues are derived from the service provider segment. Further, these segment deals typically suffer from unpredictable timing, and tend to be lumpy throughout the year.
According to Lee Chen, President and CEO, “We are disappointed with our preliminary results. Revenue came in below our guidance as a number of opportunities in our pipeline did not close primarily in North America and to a lesser degree in Japan. Key deals remain in our pipeline and we are diligently working to improve our execution. We remain confident that our investments in security and cloud will serve as a strong foundation to penetrate these faster-growing segments of our market.”
Price and Earnings Consensus Graph
As you can see in the graph below, the negative preannouncement caused the stock price and future earnings estimates to decline.