睿科網路 (ATEN) 2024 Q2 法說會逐字稿

Thank you for joining. I would like to welcome you all to the A10 Network's second-quarter 2024 financial results conference call. My name is Brika and I'll be your moderator for today. (Operator Instructions)

感謝您的加入。歡迎大家參加 A10 Network 2024 年第二季財務業績電話會議。我的名字是 Brika，我將擔任今天的主持人。（操作員說明）

I would now like to pass the conference over to your host, Tom Bauman with FNK IR. Thank you. You may proceed Tom.

現在我想將會議交給主持人 FNK IR 的 Tom Bauman。謝謝。你可以繼續湯姆。

Thank you all for joining us today. This call is being recorded and webcast live and may be accessed for at least 90 days via the A10 Networks' website, atennetworks.com. Hosting the call today are Dhrupad Trivedi, A10's President and CEO; and CFO, Brian Becker.

感謝大家今天加入我們。本次通話將被錄音並進行網路直播，並且可以透過 A10 Networks 的網站 atennetworks.com 存取至少 90 天。今天主持電話會議的是 A10 總裁兼執行長 Dhrupad Trivedi；和財務長布萊恩·貝克爾。

Before we begin, I would like to remind you that shortly after the market closed today, A10 Networks issued a press release announcing its second-quarter 2024 tour financial results. Additionally, A10 published a presentation and supplemental trended financial statement. You may access the press release, presentation, and trended financial statements on the Investor Relations section of the company's website.

在我們開始之前，我想提醒您，今天收盤後不久，A10 Networks 發布了一份新聞稿，宣布其 2024 年第二季巡迴財務業績。此外，A10 還發布了簡報和補充趨勢財務報表。您可以在公司網站的投資者關係部分存取新聞稿、簡報和趨勢財務報表。

During the course of today's call, management will make forward-looking statements, including statements regarding projections for future operating results, including timing, including our potential revenue growth, demand, industry and customer trends, our capital allocation strategy, profitability, expenses and investments, our positioning, our repurchase and dividend programs and our market share. These statements are based on current expectations and beliefs as of today, July 30, 2024.

在今天的電話會議期間，管理階層將做出前瞻性陳述，包括有關未來營運績效預測的陳述，包括時間安排，包括我們的潛在收入成長、需求、產業和客戶趨勢、我們的資本配置策略、獲利能力、費用和投資、我們的定位、我們的回購和股息計劃以及我們的市場份額。這些陳述是基於截至今天（2024 年 7 月 30 日）的當前預期和信念。

These forward-looking statements involve a number of risks and uncertainties. Some of which are beyond our control that could cause actual results to differ materially, and you should not rely on them as predictions of future events.

這些前瞻性陳述涉及許多風險和不確定性。其中一些超出了我們的控制範圍，可能會導致實際結果出現重大差異，您不應依賴它們作為對未來事件的預測。

A10 does not intend to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. For a more detailed description of these risks and uncertainties, please refer to our most recent 10-K and quarterly report on Form 10-Q.

A10 無意更新這些前瞻性聲明中包含的信息，無論是由於新信息、未來事件還是其他原因，除非法律要求。有關這些風險和不確定性的更詳細描述，請參閱我們最新的 10-K 和 10-Q 表格季度報告。

Please note that with the exception of revenue, financial measures discussed today are on a non-GAAP basis and have been adjusted to exclude certain charges. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for prepared results in accordance with GAAP and may be different from non-GAAP financial metrics presented by other companies. A reconciliation between GAAP and non-GAAP measures can be found in the press release issued today and on the trended quarterly financial statements posted on the company's website.

請注意，除收入外，今天討論的財務指標均基於非公認會計準則，並已進行調整以排除某些費用。非 GAAP 財務指標無意單獨考慮或作為根據 GAAP 準備的結果的替代品，並且可能與其他公司提出的非 GAAP 財務指標不同。GAAP 和非 GAAP 指標之間的調整可以在今天發布的新聞稿以及公司網站上發布的趨勢季度財務報表中找到。

Now, I would like to turn the call over to Dhrupad Trivedi, President and CEO of A10 Networks.

現在，我想將電話轉給 A10 Networks 總裁兼執行長 Dhrupad Trivedi。

Thank you, Tom, and thank you all for joining us today. The North American Service Provider market remains choppy, even as spending is trending positive in and overall direction. The market sentiment improved in the first quarter versus second half of 2023, but we still saw projects moving across quarters.

謝謝你，湯姆，也謝謝大家今天加入我們。儘管整體支出呈現正面趨勢，但北美服務供應商市場仍波動。與 2023 年下半年相比，第一季的市場情緒有所改善，但我們仍然看到專案在各個季度發生變化。

Year-to-date, our Service Provider revenue, excluding North America is up 20%, demonstrating that this is largely a North American market issue related to timing of carrier CapEx. Encouragingly, much of these headwinds in the second quarter were offset by improving strength in the Enterprise segment.

今年迄今為止，我們的服務提供者收入（不包括北美）成長了 20%，這表明這主要是與營運商資本支出時機相關的北美市場問題。令人鼓舞的是，第二季的大部分不利因素都被企業部門實力的增強所抵消。

We have been devoting resources, both R&D investments and additional sales and marketing muscle to target Enterprise opportunities. These investments are bearing fruit. Enterprise related revenue increased 25%, offsetting much of the 25% decline in the Service Provider segment. Additional investments are in process now and we expect A10's position in the Enterprise market to continue to improve.

我們一直投入資源，包括研發投資以及額外的銷售和行銷力量來瞄準企業機會。這些投資正在取得成果。企業相關收入成長了 25%，抵消了服務提供者領域 25% 下降的大部分影響。目前正在進行額外的投資，我們預計 A10 在企業市場的地位將持續提高。

During the quarter, one of the world's largest digital communications technology company, with nearly 100,000 employees worldwide, chose A10 displacing their previous vendor for their hybrid infrastructure solution.

在本季度，全球最大的數位通訊技術公司之一（在全球擁有近 10 萬名員工）選擇 A10 取代其先前的供應商來提供混合基礎設施解決方案。

Our commitment to technical performance with a re-energized enterprise portfolio, global technical support and alignment with customers business goals led A10 to secure this win in the quarter and showcases our ability to compete and win in the Enterprise space with the most demanding infrastructures.

我們透過重新註入活力的企業產品組合、全球技術支援以及與客戶業務目標的一致性對技術性能的承諾，使A10 在本季度取得了這一勝利，並展示了我們在具有最苛刻基礎設施的企業領域競爭和獲勝的能力。

As we look at our pipeline for the second half of the year, this segment is expected to grow faster than Service Provider segment and provides the basis for continued growth in this vertical. Growing the Enterprise business is a part of our ongoing strategic focus on driving predictable performance. Diversification remains core to our overall strategy, enabling A10 to navigate challenging conditions better than peers and over the long-term, driving growth that outpaces the broader market segment.

當我們審視今年下半年的管道時，預計該細分市場的成長速度將快於服務提供者細分市場，並為該垂直領域的持續成長奠定基礎。發展企業業務是我們持續推動可預測績效策略重點的一部分。多元化仍然是我們整體策略的核心，使 A10 能夠比同行更好地應對充滿挑戰的環境，並從長遠來看，推動超越更廣泛細分市場的成長。

Clearly, 2024 has been a challenging year for North American service providers so far as they navigate market challenges for their own businesses. A10 is not alone in this exposure, but our business model and diversification has enabled us to maintain robust profitability in line with our targets despite these headwinds.

顯然，2024 年對北美服務供應商來說是充滿挑戰的一年，因為他們必須應對自己業務的市場挑戰。A10 並不是唯一面臨這種風險的公司，但我們的業務模式和多元化使我們能夠在面臨這些不利因素的情況下保持強勁的獲利能力，符合我們的目標。

For the first half of 2024, we delivered EPS expansion year-over-year in line with expectations and expect to accomplish this on a full year basis. Longer term, we continue to be built to grow at a low double-digit pace faster than the market, with our profitability and cash generation helping growth faster than the top line.

2024 年上半年，我們的每股盈餘年增符合預期，並預計全年實現這一目標。從長遠來看，我們將繼續以快於市場的兩位數速度成長，我們的獲利能力和現金產生能力將幫助我們實現比營收更快的成長。

Simultaneously, we are investing in our next wave of growth products, including initiatives to capitalize on growth tied to new AI solutions which continue to grow in scope and have some time before they are fully commercialized.

同時，我們正在投資下一波成長產品，包括利用與新人工智慧解決方案相關的成長的舉措，這些解決方案的範圍不斷擴大，並且在完全商業化之前還有一段時間。

As I have discussed in the past, A10 has long used AI in our Security Solutions, especially those that address DDoS attacks. We are increasing the use of AI focused agile solutions to enable our customers to better identify, address and remediate a growing wave of security threats. Bad actors are utilizing AI, and we are evolving our technology to address these new threats. These tools are increasingly must have for our customers and we expect to add to our security and AI backed arsenal of solutions in the coming quarters.

正如我過去所討論的，A10 長期以來在我們的安全解決方案中使用人工智慧，特別是那些解決 DDoS 攻擊的解決方案。我們正在增加使用以人工智慧為中心的敏捷解決方案，使我們的客戶能夠更好地識別、解決和補救不斷增長的安全威脅浪潮。不良行為者正在利用人工智慧，我們正在發展我們的技術來應對這些新威脅。這些工具越來越成為我們的客戶所必需的，我們預計在未來幾季將增加我們的安全和人工智慧支援的解決方案庫。

Security Solutions as a percentage of sales continue to trend in line with our long-term growth goals. Our new engineering investments are related to developing AI based solutions for customers to better manage and secure their networks. This includes better insights to predict network performance, as well as new capabilities to address threats in real time that have emerged with AI network traffic.

安全解決方案佔銷售額的百分比持續與我們的長期成長目標保持一致。我們的新工程投資與開發基於人工智慧的解決方案有關，以便客戶更好地管理和保護他們的網路。這包括更好地預測網路效能，以及即時解決人工智慧網路流量帶來的威脅的新功能。

In keeping with our historic strengths on understanding network traffic in real time, we are also working with customers to evolve our hardware to support next generation data centers needed to support performance and latency needs for AI traffic in all kinds of new models. We are engaged with customers and channel partners to enable their roadmap as the market matures and moves into commercialization phase in the future.

為了保持我們在即時了解網路流量方面的歷史優勢，我們還與客戶合作改進我們的硬件，以支援下一代資料中心，以支援各種新模型中人工智慧流量的效能和延遲需求。我們與客戶和通路合作夥伴合作，隨著市場成熟並在未來進入商業化階段，實現他們的路線圖。

While we invest in new solutions, new technologies and reallocate sales resources A10 remains solidly profitable even as we navigate near-term revenue headwinds. Once again, I'm proud that we have achieved our non-GAAP EPS targets even with these investments and market challenges.

儘管我們投資新解決方案、新技術並重新分配銷售資源，但即使我們面臨近期收入逆風，A10 仍保持穩健獲利。我再次感到自豪的是，即使面臨這些投資和市場挑戰，我們仍然實現了非 GAAP 每股盈餘目標。

Just a few years ago, these factors would have resulted in significant losses. Today, we are systematically profitable. Our gross margins in the second quarter were in line with stated goal of 80% to 82% and our adjusted EBITDA margin was nearly 26% in line with our profitability goals.

就在幾年前，這些因素還會導致重大損失。今天，我們系統性地獲利了。我們第二季的毛利率符合 80% 至 82% 的既定目標，調整後的 EBITDA 利潤率接近 26%，符合我們的獲利目標。

As revenue conditions normalize, we expect our profitability to improve further. We remain committed to achieving our long-term stated goals, while driving growth. A10's consistent ability to meet profitability targets even amidst revenue challenges underscores the resilience of our business model.

隨著收入狀況正常化，我們預計我們的獲利能力將進一步改善。我們仍然致力於實現我們的長期既定目標，同時推動成長。即使在營收挑戰的情況下，A10 仍能始終如一地實現獲利目標，凸顯了我們業務模式的彈性。

The results year-to-date position us to achieve our full year business model objectives, including targets for gross margin and adjusted EBITDA margin, as well as growth in our full year non-GAAP EPS. We have continued to buy back stock and our cash flow has more than funded our buyback and dividend programs.

今年迄今的業績使我們能夠實現全年業務模式目標，包括毛利率和調整後 EBITDA 利潤率的目標，以及全年非公認會計準則每股收益的增長。我們繼續回購股票，我們的現金流超過了我們的回購和股利計劃。

With that, I'd like to turn the call over to Brian for a detailed review of the quarter. Brian?

至此，我想將電話轉給布萊恩，讓他詳細審查本季的情況。布萊恩？

Thank you, Dhrupad. Second quarter revenue was $60.1 million, a decrease of 8.7% year-over-year. As Dhrupad described, quarter-to-quarter volatility in the North American service provider sector continued to be high offset by improvements in the Enterprise segment.

謝謝你，德魯帕德。第二季營收為 6,010 萬美元，年減 8.7%。正如 Dhrupad 所描述的，北美服務供應商產業的季度波動仍然被企業部門的改善所抵消。

Product revenue for the quarter was $29.5 million, representing 49% of total revenue. Services revenue was $30.6 million or 51% of total revenue. Second quarter recurring revenue increased 11% compared to the second quarter last year and deferred revenue increased 6%, demonstrating stronger product sales for the past several quarters and continued demand for our Enterprise solutions. These metrics, coupled with a strong pipeline of opportunities, further validate our confidence that we are not losing opportunities to competitors.

該季度產品收入為 2,950 萬美元，佔總營收的 49%。服務收入為 3,060 萬美元，佔總收入的 51%。與去年第二季相比，第二季經常性收入成長了 11%，遞延收入成長了 6%，這顯示過去幾季的產品銷售更加強勁，以及對我們企業解決方案的持續需求。這些指標，加上強大的機會管道，進一步證實了我們的信心，即我們不會將機會輸給競爭對手。

As you can see on our balance sheet, our deferred revenue was $140 million as of June 30, 2024, up 6.3% year-over-year. With the exception of revenue, all of the metrics discussed on this call are on a non-GAAP basis unless otherwise stated. A full reconciliation of GAAP to non-GAAP results are provided in our press release and on our website.

正如您在我們的資產負債表上看到的，截至 2024 年 6 月 30 日，我們的遞延收入為 1.4 億美元，年增 6.3%。除收入外，除非另有說明，本次電話會議討論的所有指標均基於非公認會計原則。我們的新聞稿和網站上提供了 GAAP 與非 GAAP 業績的全面對帳。

Gross margin in the second quarter was 80.9%, in line with our stated goals of 80% to 82%. Adjusted EBITDA was $15.5 million for the quarter, reflecting 25.8% of total revenue. Non-GAAP net income for the quarter was $13.2 million or $0.18 per diluted share compared to $14.5 million or $0.19 per diluted share in the year ago quarter.

第二季的毛利率為80.9%，符合我們既定的80%至82%的目標。本季調整後 EBITDA 為 1,550 萬美元，佔總營收的 25.8%。本季非 GAAP 淨利潤為 1,320 萬美元，即稀釋後每股收益 0.18 美元，去年同期淨利潤為 1,450 萬美元，即稀釋後每股收益 0.19 美元。

Diluted weighted shares used for computing non-GAAP EPS for the second quarter were approximately 75.5 million shares compared to 75.4 million shares in the year ago quarter. On a GAAP basis, net income for the quarter was $9.5 million or $0.13 per diluted share compared to net income of $11.6 million or $0.15 per diluted share in the year ago quarter.

用於計算第二季非公認會計準則每股收益的稀釋加權股票約為 7,550 萬股，而去年同期為 7,540 萬股。以 GAAP 計算，本季淨利為 950 萬美元，即稀釋後每股收益 0.13 美元，而去年同期淨利為 1,160 萬美元，即稀釋後每股收益 0.15 美元。

Turning to the year-to-date results, revenue was $120.8 million, down 2.2% year-over-year. Product revenue was down 15%, representing approximately 49% of total revenue, and services revenue was up 15%, representing about 51% of total revenue. Year-to-date, non-GAAP gross margin was 81.4% in line with our target range.

回顧年初至今的業績，營收為 1.208 億美元，年減 2.2%。產品收入下降15%，約佔總收入的49%，服務收入成長15%，約佔總收入的51%。年初至今，非 GAAP 毛利率為 81.4%，符合我們的目標範圍。

We reported $23.9 million in non-GAAP operating income, down 16% compared with $28.5 million in the first six months last year. Adjusted EBITDA was $29.4 million, reflecting 24.3% of total revenue. Non-GAAP net income for the first six months was $25.9 million or $0.35 per diluted share, up from $24.5 million or $0.32 per diluted share in the year ago quarter period.

我們報告的非 GAAP 營業收入為 2,390 萬美元，比去年前六個月的 2,850 萬美元下降了 16%。調整後 EBITDA 為 2,940 萬美元，佔總營收的 24.3%。前六個月的非公認會計準則淨利潤為 2,590 萬美元，即稀釋後每股收益 0.35 美元，高於去年同期的 2,450 萬美元，即稀釋後每股收益 0.32 美元。

On a GAAP basis, net income for the first six months was $19.2 million or $0.26 per diluted share, compared with net income of $15.6 million or $0.20 per diluted share. During the quarter, we generated $11.3 million in cash from operations. Year-to-date, cash generated by operations was $43.8 million in line with our full year targets.

以 GAAP 計算，前 6 個月的淨利潤為 1,920 萬美元，即稀釋後每股 0.26 美元，而淨利潤為 1,560 萬美元，即稀釋後每股 0.20 美元。本季度，我們從營運中產生了 1,130 萬美元的現金。年初至今，營運產生的現金為 4,380 萬美元，符合我們的全年目標。

Turning to the balance sheet, as of June 30, 2024 we had $177 million in total cash, cash equivalents and marketable securities compared to $159.3 million at the end of 2023. During the quarter, we paid $4.5 million in cash dividends and repurchased $11.8 million worth of shares. We also continue to carry no debt. The Board has approved the quarterly cash dividend of $0.06 per share to be paid on September 3, 2024 to shareholders of record on August 15, 2024.

轉向資產負債表，截至 2024 年 6 月 30 日，我們的現金、現金等價物和有價證券總額為 1.77 億美元，而 2023 年底為 1.593 億美元。本季度，我們支付了 450 萬美元的現金股息，並回購了價值 1,180 萬美元的股票。我們也繼續沒有債務。董事會已批准於 2024 年 9 月 3 日向 2024 年 8 月 15 日登記在冊的股東支付每股 0.06 美元的季度現金股利。

We have $34.8 million remaining in our $50 million share repurchase authorization as of June 30, 2024. We expect 2024 full year EPS growth in single digits in line with expectations, and we continue to target gross margins of 80% to 82% and adjusted EBITDA margins of 26% to 28% on a full year basis.

截至 2024 年 6 月 30 日，我們的 5,000 萬美元股票回購授權中還剩 3,480 萬美元。我們預計 2024 年全年 EPS 將以個位數成長，符合預期，我們繼續將全年毛利率目標定為 80% 至 82%，調整後 EBITDA 利潤率為 26% 至 28%。

I'll now turn the call back to Dhrupad for closing comments.

現在我將把電話轉回 Dhrupad 以徵求結束意見。

Thank you, Brian. A10 maintains a strong competitive position in the markets, supported by durable long-term growth catalysts. Short-term volatility in the North American Service Provider market does not alter our long-term strategy and we are making steady progress to enhance our position in the enterprise market.

謝謝你，布萊恩。在持久的長期成長催化劑的支持下，A10 在市場上保持著強大的競爭地位。北美服務供應商市場的短期波動不會改變我們的長期策略，我們正在穩步進步，以增強我們在企業市場的地位。

Our strategic diversification remains a key advantage, enabling consistent profitability even during periods of revenue headwinds. We also continue to create shareholder value through the return of meaningful capital to shareholders.

我們的策略多元化仍然是一個關鍵優勢，即使在收入逆風時期也能實現持續的獲利能力。我們也透過向股東返還有意義的資本來繼續創造股東價值。

Operator, you can now open the call up for questions.

接線員，現在可以撥打電話詢問問題。

We will now begin the question-and-answer session. (Operator Instructions)

我們現在開始問答環節。（操作員說明）

Anja Soderstrom, Sidoti.

安雅·索德斯特羅姆，西多蒂。

Hi, good afternoon. This is Stephan Guillaume on for Anja Soderstrom. Can you guys hear me? --

嗨，下午好。我是史蒂芬‧紀堯姆 (Stephan Guillaume) 為安雅‧索德斯特羅姆 (Anja Soderstrom) 配音。你們聽得到我說話嗎？--

Thank you. I guess my first question is, are you still seeing service providers come back in the second half, and how are your conversations with them?

謝謝。我想我的第一個問題是，下半年您是否還會看到服務提供者回來，您與他們的對話如何？

Yes, good question. So I think first, as I mentioned in the body of the call, our service provider conversation is very much North America specific, right. Because we have healthy growth outside of that. So within North America, I think there are two things we are seeing.

是的，好問題。所以我認為首先，正如我在電話正文中提到的，我們的服務提供者對話非常適合北美，對吧。因為除此之外我們還有健康的成長。因此，在北美，我認為我們看到了兩件事。

One is they continue to manage sort of the spending level, well, projects can get scoped differently and moved across periods and our assumption, of course, is a lot of their decisions around making significant capital investments are related to; A, cost of capital. B, market uncertainty, including election period right now.

一是他們繼續管理某種支出水平，嗯，專案可以有不同的範圍並跨時期移動，當然，我們的假設是他們圍繞重大資本投資的許多決策都與以下方面有關； A、資金成本。B，市場不確定性，包括現在的選舉期間。

So our conversations with them generally show that they continue to spend a little bit because a lot of the things we do are in the path of either revenue generation or becoming more secure. However, the newer projects tend to be pushed out in time a little bit. When we think of our second half, our assumptions really around delivering results are that we continue to make steady progress on Enterprise footprint.

因此，我們與他們的對話通常表明，他們繼續花一點錢，因為我們所做的很多事情要么是為了創造收入，要么是為了變得更加安全。然而，較新的項目往往會被及時推遲一些。當我們想到下半年時，我們真正圍繞交付成果的假設是我們繼續在企業足跡上取得穩步進展。

Second is we continue to see execution that we saw in the first half from service providers outside of North America and then within North America. I think we continue to find ways between the balance of our customers to deliver that growth. At the point at which they get confident and start reinvesting CapEx. Of course, we will benefit from that as well. But our plan on second half is not predicated on a sharp snap back in spending from them.

其次，我們繼續看到上半年北美以外以及北美境內服務提供者的執行情況。我認為我們將繼續尋找平衡客戶之間的方法來實現這種成長。當他們變得有信心並開始對資本支出進行再投資時。當然，我們也會從中受益。但我們下半年的計畫並不以他們的支出大幅回升為基礎。

Thank you for the color there. Can you also talk about the competitive environment? In the past you've said that you're taking share are you still doing that?

謝謝你那裡的顏色。能談談競爭環境嗎？以前你說過要分享，現在還在這樣做嗎？

Yes. So I would say there are two ways to look at that right. So first is if you look at the broader market and you look at a lot of the growth rates that you are seeing from companies in our sector or industry, they are all kind of plus, minus 2% kind of range, right. So that's one.

是的。所以我想說有兩種方法可以正確看待這一點。首先，如果你看看更廣闊的市場，你會看到我們產業或產業中公司的許多成長率，它們都是正負 2% 的範圍，對吧。這就是其中之一。

Second is the way we think about gaining share is when we can trace and point to an actual displacement of a competitive solution. And I would say that certainly in the Enterprise market, we feel that we are able to replace some of the solutions and I would say that's kind of the most basic way we think about gaining share. And if you look at our Enterprise segment growth on a year-to-date basis, half-to-half, we grew about 7%, which I would say is at least slightly above market average.

其次，我們考慮獲得份額的方式是當我們能夠追蹤並指出競爭解決方案的實際替代方案時。我想說，當然在企業市場，我們認為我們能夠取代一些解決方案，我想說這是我們考慮獲得份額的最基本方式。如果你看看我們的企業部門今年迄今的成長情況，我們的成長率約為 7%，我想說這至少略高於市場平均。

All right. Thank you. And so what kind of pricing power do you have in this environment?

好的。謝謝。那麼在這種環境下你有什麼樣的定價能力呢？

So I would say pricing is a balanced thing. So obviously, we have input cost inflation, which we try to find ways to offset, and we offset that with maybe price increases selectively to customers and then the rest with productivity.

所以我想說定價是個平衡的事情。顯然，我們面臨投入成本通膨，我們試圖找到方法來抵消，我們可能會選擇性地對客戶提價，然後用生產力來抵消這一點。

But I think we are very selective because we want to do it in a very methodical way versus going up and down on prices. I think for us it's a mix of overcoming input costs through productivity and selective price increases where we don't have a choice but to pass it on.

但我認為我們非常有選擇性，因為我們希望以一種非常有條理的方式來做到這一點，而不是在價格上上下下。我認為對我們來說，這是透過生產力克服投入成本和選擇性提價的結合，我們別無選擇，只能轉嫁成本。

Thank you. And the last one for me is, where are you in the innings of seeing results from the changing of your sales team?

謝謝。對我來說最後一個問題是，您在哪一局看到了銷售團隊變更帶來的結果？

So I would say, if you think of our business, two-thirds is Service Provider, one-third Enterprise. Enterprise is a little bit bigger now. On the Service Provider side, of course, we have a very mature, experienced sales team where the focus is on improving our capability to cross sell more products to existing customer base, right. On that dimension, I think we are making good progress. Some regions obviously are farther ahead than others, so there is still room for us to continue growing through that.

所以我想說，如果你想想我們的業務，三分之二是服務供應商，三分之一是企業。現在企業規模有點大了。當然，在服務提供者方面，我們擁有一支非常成熟、經驗豐富的銷售團隊，其重點是提高我們向現有客戶群交叉銷售更多產品的能力，對吧。在這個方面，我認為我們正在取得良好進展。一些地區顯然比其他地區領先，因此我們仍有繼續成長的空間。

On the Enterprise side, we have brought in obviously new sales talent as well as how we go-to-market in terms of our portfolio and products as well. And I would characterize that as we are probably somewhere between -- third and fourth inning on that journey.

在企業方面，我們顯然引進了新的銷售人才，以及我們如何在產品組合和產品方面進入市場。我認為，我們可能處於這趟旅程的第三局和第四局之間。

Gray Powell, BTIG

格雷鮑威爾，BTIG

Okay, great, thanks. So, a few questions from my side. Maybe just to start off at a high level, can you talk about what you saw in terms of the overall spending environment and macro headwinds? And, I mean, I know you've talked about it some in the prepared remarks. It sounds like North American service provider may have caught you by surprise. But outside of that, would you say that things were stable? Did anything change positively or negatively? Just, I don't know any more color you could provide there.

好的，太好了，謝謝。那麼，我這邊有幾個問題。也許只是從高層次開始，您能談談您對整體支出環境和宏觀阻力的看法嗎？而且，我的意思是，我知道您在準備好的發言中已經談到了一些內容。聽起來北美服務提供者可能會讓您大吃一驚。但除此之外，你能說事情是穩定的嗎？有什麼正面或負面的改變嗎？只是，我不知道你還能在那裡提供更多的顏色。

Good question Gray. I would say absolutely that, if I think of my three regions, I would say APJ is stable on Enterprise and Service Provider side. EMEA is stable on enterprise and service provider side. And North America, I would say we are making good progress on enterprise, so it offsets maybe some market weakness and then within North America Service Provider.

好問題，格雷。我絕對會說，如果我考慮我的三個地區，我會說亞太及日本地區在企業和服務提供者方面是穩定的。歐洲、中東和非洲地區在企業和服務提供者方面保持穩定。在北美，我想說我們在企業方面取得了良好的進展，因此它可能抵消了北美服務提供者內部的一些市場弱點。

I think we were not necessarily surprised, but I think what evolved was some of the re-scoping of projects versus cancellations or complete push outs. So that was the only thing. That's why we feel good about full year. And if you remember Q1, we did slightly better than we thought, and Q2 is slightly worse, but it's still plus minus $2 million or $3 million. So that's the sort of volatility or movement we see. And our goal is obviously to use the remaining pieces to offset that so that when North America has the spending comes back and it only helps us from there.

我認為我們不一定感到驚訝，但我認為所發生的事情是對專案範圍的重新界定，而不是取消或完全推出。所以這是唯一的事情。這就是為什麼我們對全年感覺良好。如果你還記得第一季度，我們的表現比我們想像的要好一些，第二季度則稍差一些，但仍然是正負 200 萬美元或 300 萬美元。這就是我們看到的那種波動或變動。我們的目標顯然是用剩下的部分來抵消這一點，這樣當北美的支出回來時，它只會從那裡幫助我們。

And then within the context of the full year, should we still be expecting like maybe low single-digit growth in revenue or closer to flat now?

然後，在全年的背景下，我們是否仍應預期收入可能呈現低個位數成長或接近持平？

I think, we would probably say low single-digit still feels right, although it's more back end loaded, so it's always risky. But our plan is, obviously, if it's slightly below that to that, how do we bridge back to getting out to our non-GAAP EPS results, so either way.

我認為，我們可能會說低個位數仍然感覺正確，儘管它的後端負載更多，所以它總是有風險。但顯然，我們的計劃是，如果略低於這個數字，我們如何回到我們的非公認會計準則每股收益結果，所以無論哪種方式。

Okay, great. And then last question. Free cash flow in the first half of the year was actually really strong. What drove that? And just any directional pointers you can give us or maybe talk about, like free cash flow margins relative to EBITDA margins and pointers there?

好的，太好了。然後是最後一個問題。上半年的自由現金流其實非常強勁。是什麼推動了這一點？您可以向我們提供或談論的任何方向性指示，例如相對於 EBITDA 利潤率的自由現金流利潤率以及那裡的指示嗎？

Yes, good question. Go ahead, Brian

是的，好問題。繼續吧，布萊恩

No free cash flow. A number of factors led into that. I mean, last year we had pretty poor linearity. I think we're seeing the benefits of some of that return to cash spending and releasing cash into the market and benefiting our free cash flow.

沒有自由現金流。造成這種情況的因素很多。我的意思是，去年我們的線性非常差。我認為我們看到了現金支出回歸、向市場釋放現金以及有利於我們的自由現金流的好處。

As you pointed out, we've talked about free cash flow being really strong last quarter at nearly $30 million. So we've got another $10 million of free cash flow approximately this quarter. But our full year cash flow target, from a free cash flow perspective should be in the 60s, if everything continues to go as planned.

正如您所指出的，我們已經談到上個季度的自由現金流非常強勁，接近 3000 萬美元。因此，本季我們大約還有 1000 萬美元的自由現金流。但從自由現金流的角度來看，如果一切繼續按計劃進行，我們的全年現金流目標應該在 60 多歲。

And Brian, our EBITDA is a good proxy for free cash flow precisely because there's not too much CapEx variable here.

Brian，我們的 EBITDA 是自由現金流的良好代表，因為這裡沒有太多的資本支出變數。

Hamed Khorsand, BWS Financial.

Hamed Khorsand，BWS Financial。

Hi. So talking about this North America Service Provider, this has been a topic for about a year now. So is this, given the growth you saw in Q2, it obviously points to actual revenue decline on that part. So are you losing share or how are these service providers just cutting back so much spending without you losing share?

你好。所以說起這個北美服務供應商，這個話題已經持續了大約一年了。考慮到您在第二季度看到的成長，這顯然表明該部分的實際收入下降。那麼，您是否正在失去市場份額，或者這些服務提供者如何在不損失市場份額的情況下削減如此多的支出？

Yes, so I think, good question, Hamed. So maybe just level set on a couple of data points, right. So if you look at North American Service Provider, I think in the last two or three days, I think AT&T, Verizon, they've all published CapEx.

是的，所以我認為，好問題，哈米德。所以也許只是在幾個數據點上設定水平，對吧。因此，如果你看看北美服務供應商，我認為在過去的兩三天裡，AT&T、Verizon 都發布了資本支出。

And you can see that in 2024, they are projecting CapEx declines of between 6% to 8% year-over-year and it's all of them. And the cable companies are projecting slightly less than that. So that's one data point that says it's not that market is plus 10 and we are negative.

您可以看到，他們預計 2024 年資本支出將年減 6% 至 8%，而且都是如此。有線電視公司的預測略低於這個數字。因此，這一數據點表明，市場並不存在正 10 的情況，而我們則持負面看法。

Second is the way our products are designed at these customers. We are in their operational workflow to run the network and publish results on SLA achievement and things like that. So is it likely they are looking at competitors, maybe.

其次是我們的產品針對這些客戶的設計方式。我們在他們的操作工作流程中運行網路並發布 SLA 成就等結果。那麼他們有可能正在尋找競爭對手嗎？

But we have a pretty good understanding of what is deployed. We track all those devices. Our support team knows every device that is active and how much traffic is going through it. So, that gives us confidence that it's more linked to their CapEx spending cycle versus competitive.

但我們對部署的內容有很好的了解。我們追蹤所有這些設備。我們的支援團隊了解每台處於活動狀態的設備以及通過該設備的流量。因此，這讓我們相信，這與他們的資本支出支出週期而不是競爭力有關。

And the last data point is, when they do approve a data center, we do get the PO, right? So we have a reasonably good correlation of when the project is approved and we are in the mix we get that PO. But it is I mean, I think the CapEx plans of these companies are public, right. So you can see those here.

最後一個數據點是，當他們批准資料中心時，我們確實得到了採購訂單，對嗎？因此，我們在專案獲得批准的時間和我們獲得採購訂單的時間之間有相當好的相關性。但我的意思是，我認為這些公司的資本支出計劃是公開的，對吧。所以你可以在這裡看到那些。

Okay. And then if I heard you right, you're investing more on the Enterprise sales side. So does that mean we should see an acceleration in Enterprise revenue eventually, maybe two, three quarters down the line?

好的。如果我沒聽錯的話，您將在企業銷售方面投入更多資金。那麼，這是否意味著我們最終會看到企業收入加速成長，也許是兩、三個季度之後？

Yes, you should, and I think the thing I would point to Hamed is even now, right, which is very early, is that on a year-over-year basis, half-to-half, the Enterprise business grew 7%, which you can compare to our peers. And even on the SP side, by the way you can compare to Juniper, for example, to see relatively if we are losing or gaining.

是的，你應該這樣做，我想我要向哈米德指出的事情是，即使是現在，對，這是非常早的，是，與去年同期相比，企業業務增長了 7%，您可以與我們的同行進行比較。即使在 SP 方面，順便說一句，您也可以與瞻博網路進行比較，看看我們是在虧損還是在獲利。

So on the Enterprise side suddenly as the teams mature and we get better value proposition market fit, we expect that to continue to grow. And as I said, if we don't want to do that, instead of SP sales, we want to do that as a way to reduce the impact of that volatility.

因此，在企業方面，隨著團隊的成熟以及我們獲得更好的價值主張市場契合度，我們預期這一點將繼續成長。正如我所說，如果我們不想這樣做，我們希望透過銷售 SP 來減少波動性的影響。

Okay. My last question is on that when you were talking about digital tech company. How much of an impact does that have on revenue, if any in Q2? And will it be, how significant of this is it for revenue going forward?

好的。我的最後一個問題是關於數位科技公司的。這對第二季度的收入有多大影響（如果有的話）？這對未來的收入有多少影響？

Yes. So I think I would say it was not a 10% customer, but it has the potential to be somewhere between 5% and 10% over time.

是的。所以我想我會說這不是 10% 的客戶，但隨著時間的推移，它有可能達到 5% 到 10% 之間。

(Operator Instructions)

（操作員說明）

We have had no further questions registered. So I'd like to hand back to President and CEO at A10 Networks, Dhrupad Trivedi for some final remarks.

我們沒有收到任何進一步的問題。最後我想請 A10 Networks 總裁兼執行長 Dhrupad Trivedi 做最後的演講。

Thank you. And thank you to all of our shareholders for joining us today and for your continued support. And thanks to also all the A10 employees around the world. Thank you

謝謝。感謝所有股東今天加入我們並感謝你們的持續支持。也要感謝世界各地的所有 A10 員工。謝謝

Thank you for joining today's call of A10. You may now disconnect and please enjoy the rest of you.

感謝您參加今天的 A10 電話會議。現在您可以斷開連接，並享受剩下的時光。