What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-29 · 168 added, 127 removed, 850 unchanged (26% of the section changed)

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Index to Consolidated Financial Statements

Report s of Independent Registered Public Accounting Firm - Grant Thornton LLP (PCAOB ID:

Reports of Independent Registered Public Accounting Firm - Grant Thornton LLP (PCAOB ID:

Report of Independent Registered Public Accounting Firm - Armanino LLP (PCAOB ID:

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Opinion on the financial statements

We have audited the accompanying consolidated balance sheet of A10 Networks, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of A10 Networks, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 25, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

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The principal consideration for our determination that estimates of standalone selling price is a critical audit matter is that auditing the estimates involved subjective auditor judgment due to the absence of directly observable data which requires the Company to make subjective assumptions used to estimate the standalone selling price for each performance obligation.

If the Company does not have an observable standalone selling price, such as when they do not sell a product or service separately, then standalone selling price is estimated using judgment and considering all reasonably available information such as market

conditions and information about the size and/or purchase volume of the customer.

If the Company does not have an observable standalone selling price, such as when they do not sell a product or service separately,

then standalone selling price is estimated using judgment and considering all reasonably available information such as market conditions and information about the size and/or purchase volume of the customer.

The Company generally uses a range of amounts to estimate standalone selling price for individual products and services based on multiple factors including, but not limited to the sales channel (reseller, distributor or end-customer), the geographies in which products and services are sold, and the size of the end-customer.

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of A10 Networks, Inc.

and subsidiaries (the Company) as of December 31, 2022 and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the two years ended December 31, 2022, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the two years ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows of A10 Networks, Inc.

and subsidiaries (the Company) for the year ended December 31, 2022, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows for the Company for the year ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

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San Jose, California

February 27, 2023

February 27, 2023, except for the effect of the segment reporting discussed in Note 11 and stock award disclosures discussed in Note 8 as to which the date is February 25, 2025.

We served as the Company’s auditor since 2019.

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Dividends paid ( 55,417 ) ( 37,619 )

Accumulated other comprehensive loss ( 71 ) ( 726 )

Accumulated other comprehensive income (loss) 194 ( 71 )

Accumulated deficit ( 40,344 ) ( 90,484 )

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Income before income taxes 58,099 43,795 52,716

Provision for (benefit from) income taxes 3,825 5,808 ( 63,245 )

Provision for income taxes 7,959 3,825 5,808

Net income $ 50,140 $ 39,970 $ 46,908

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Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on marketable securities, net of tax 911 ( 497 ) ( 327 )

Unrealized gain (loss) on marketable securities 214 911 ( 497 )

Foreign currency translation adjustment 51 ( 256 ) —

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Payments for dividends — — — — ( 17,817 ) — — ( 17,817 )

Unrealized loss on marketable securities, net of tax — — — — — ( 497 ) — ( 497 )

Unrealized gain on marketable securities, net of tax — — — — — 911 — 911

Other comprehensive loss — — — — — ( 256 ) — ( 256 )

Net Income — — — — — — 39,970 39,970

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Unrealized gain on marketable securities, net of tax — — — — — 214 — 214

Other comprehensive loss — — — — — ( 256 ) — ( 256 )

Other comprehensive income — — — — — 51 — 51

Net Income — — — — — — 50,140 50,140

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Stock-based compensation 17,048 14,081 13,331

Provision for credit losses and sales returns ( 699 ) ( 36 ) ( 616 )

Release of deferred tax asset valuation allowance and other adjustments — — ( 64,186 )

Provision for (recovery from) credit losses and sales returns 59 ( 699 ) ( 36 )

Other non-cash items ( 424 ) 117 793

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Transfers between inventory and property and equipment $ 2,277 $ 2,473 $ 733

Purchases of property and equipment included in accounts payable $ 3,298 $ 230 $ 6

Capital expenditures included in accounts payable $ 672 $ 3,298 $ 230

See accompanying notes to consolidated financial statements.

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Our product portfolio seeks to address many of the cyber protection challenges and solution requirements.

The portfolio consists of six secure application solutions;

Thunder Application Delivery Controller (“ADC”), Lightning Application Delivery Controller (“Lightning ADC”), Thunder Carrier Grade Networking (“CGN”), Thunder Threat Protection System (“TPS”), Thunder SSL Insight (“SSLi”) and Thunder Convergent Firewall (“CFW”), and two intelligent management and automation tools;

Harmony Controller and aGalaxy TPS.

The portfolio consists of network infrastructure and security products.

The infrastructure portfolio powers the delivery of internet services and applications while the security products protect applications, APIs, infrastructure and enterprises from cyber-attacks.

Our security suite is known as A10 Defend.

In addition, we have an intelligent management and automation tool known as A10 Control (formally Harmony Controller), which provides intelligent management, automation and analytics for secure application delivery in multi-cloud environments to help simplify operations.

Our secure infrastructure solutions include;

Thunder Application Delivery Controller (“ADC”), Thunder Carrier Grade Networking (“CGN”), Thunder SSL Insight (“SSLi”) and Thunder Convergent Firewall (“CFW”).

Our security products include;

A10 Defend Threat Control, A10 Defend Orchestrator, A10 Defend Detector, A10 Defend Mitigator and A10 Defend ThreatX Protect.

Our solutions are available in a variety of form factors, such as optimized hardware appliances, bare metal software, containerized software, virtual appliances and cloud-native software.

Our customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises.

Basis of Presentation

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The Company also invests in equity securities with readily determinable fair values which consist of investments in publicly traded companies.

These investments are measured at fair value with changes in fair value recognized in our consolidated statements of operations.

These investments are measured at fair value with changes in fair value recognized in non-operating income (expense) in our consolidated statements of operations.

Fair Value Measurement

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We did not identify impairment of goodwill for any periods presented.

Intangible Assets

Intangible assets are recorded at fair value and amortized on a straight-line basis over their estimated useful lives, which ranged from 5 to 11 years.

We evaluate our intangible assets for impairment at least annually and when indicators of impairment may exist.

There were no impairment charges to our intangible assets during the years ended December 31, 2023, 2022 and 2021.

Our purchased intangible assets were fully amortized as of December 31, 2021.

Impairment of Long-Lived Assets

We evaluate our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of our long-lived assets may not be recoverable.

Recoverability of an asset group is measured by comparison

of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate.

Recoverability of an asset group is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate.

If it is determined that an asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset group exceeds its fair value.

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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 software-as-a-service;

and (ii) services revenue, which includes post contract support (“PCS”), professional services, and training.

(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”), 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 over time once the subscription term has commenced.

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We generally use a range of amounts to estimate SSP for individual products and services based on multiple factors including, but not limited to the sales channel (reseller, distributor or end-customer), the geographies in which our products and services are sold, and the size of the end-customer.

We account for multiple contracts with a single partner as one arrangement if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract.

We account for multiple contracts with a single customer as one arrangement if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract.

We may occasionally accept returns to address customer satisfaction issues even though there is generally no contractual provision for such returns.

We estimate returns for sales to customers based on historical return rates applied against

current-period shipments.

We estimate returns for sales to customers based on historical return rates applied against current-period shipments.

Specific customer returns and allowances are considered when determining our sales return reserve estimate.

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Capitalization of Internally Developed Software to be Marketed and Sold

In the first quarter of 2020, we began capitalizing software engineering labor costs related to certain long-term projects that are expected to take more than a year to complete.

We capitalize software engineering labor costs related to certain long-term projects that are expected to take more than a year to complete.

We account for the capitalization of labor costs under Accounting Standards Codification (“ASC”) Topic 985-20, Software to be Sold, Leased or Marketed .

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Accordingly, we have one reportable segment and one operating segment.

See Note 11 Segment and Geographic Information in the accompanying notes to the consolidated financial statements for further detail.

Vendor Business Concentration

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Significant customers, including distribution channel partners and direct customers (“end-customers”), are those which represent 10% or more of our total revenue for each period presented or our gross accounts receivable balance as of each respective balance sheet date.

A substantial portion of our revenue is from sales of our products and services through distribution channel partners, such as resellers and distributors.

In 2024 and 2023, sales through a single distribution channel partner represented 20 % and 19 % of our total revenue, respectively.

In 2022, sales through two distribution channel partners represented 15 % and 13 % of our total revenue.

Revenues from our significant end-customers as a percentage of our total revenue are as follows:

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* represents less than 10% of total revenue

As of December 31, 2023, one customer accounted for 19 % of our total gross accounts receivable.

As of December 31, 2022, two customers accounted for 21 % and 21 % of our total gross accounts receivable.

As of December 31, 2024, one distribution channel partner accounted for 34 % of our total gross accounts receivable.

As of December 31, 2023, one distribution channel partner accounted for 19 % of our total gross accounts receivable.

Recent Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07 , as well as all existing segment disclosures and reconciliation requirements in ASC 280, on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-07 .

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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We are currently evaluating the impact of adopting ASU 2023-09 .

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the consolidated financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03.

Recently Adopted Accounting Standard

In November 2023, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-07 during the year ended December

See Note 11 Segment and Geographic Information in the accompanying notes to the consolidated financial statements for further detail.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the year ended December 31, 2024 that are of significance or potential significance to us.

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The following table reflects contract balances with customers (in thousands):

Balance Sheet Line Reference As of December 31, 2023 As of December 31, 2022

Accounts receivables, net $ 74,307 $ 72,928

Balance Sheet Line Reference As of December 31, 2024 As of December 31, 2023 As of December 31, 2022

Accounts receivable, net $ 76,687 $ 74,307 $ 72,928

Deferred revenue, current 78,335 82,657 74,340

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Deferred revenue consisted of the following (in thousands):

As of December 31, 2023 As of December 31, 2022

As of December 31, 2024 As of December 31, 2023 As of December 31, 2022

Deferred revenue:

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Commercial paper — — — — 998 — — 998

Asset-backed securities — — — — 8,331 — ( 94 ) 8,237

Debt securities $ 100,176 $ 265 $ ( 12 ) 100,429 $ 56,354 $ 8 $ ( 34 ) 56,328

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Corporate securities $ 12,516 $ ( 12 ) $ — $ — $ 12,516 $ ( 12 )

Treasury and agency securities 24,304 ( 32 ) — — 24,304 ( 32 )

Asset-backed securities — — — — — —

Total $ 12,516 $ ( 12 ) $ — $ — $ 12,516 $ ( 12 )

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Treasury and agency securities 24,304 ( 32 ) — — 24,304 ( 32 )

Asset-backed securities 8,237 ( 94 ) — — 8,237 ( 94 )

Total $ 33,722 $ ( 34 ) $ — $ — $ 33,722 $ ( 34 )

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Fair Value Measurements

The following is a summary of the Company’s cash, cash equivalents and marketable securities measured at fair value on a recurring basis (in thousands):

The following is a summary of the Company’s cash, cash equivalents and marketable securities.

The Company records cash and cash equivalents at cost, which approximates fair value.

Marketable securities are measured at fair value on a recurring basis (in thousands):

As of December 31, 2024 As of December 31, 2023

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Commercial paper — — — — — 998 — 998

Asset-backed securities — — — — — 8,237 — 8,237

$ 133,154 $ 62,404 $ — 195,558 $ 109,945 $ 43,627 $ — 153,572

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The Company does not enter into derivatives for speculative or trading purposes.

The Company enters into foreign exchange forward contracts primarily to mitigate the effect of gains and losses generated by foreign currency transactions related to certain operating expenses and remeasurement of certain assets and liabilities denominated in foreign currencies.

For foreign exchange forward contracts not designated as hedging instruments, the fair value of the derivatives in a net gain or not loss position are recorded in prepaid expenses and other current assets in the consolidated balance sheets.

Changes in the fair value of derivatives are recorded in other income, net in the consolidated statements of operations.

The Company enters into foreign exchange forward contracts primarily to mitigate the effect of gains and losses generated by

foreign currency transactions related to certain operating expenses and remeasurement of certain assets and liabilities denominated in foreign currencies.

For foreign exchange forward contracts not designated as hedging instruments, the fair value of the derivatives in a net gain or net loss position are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

Changes in the fair value of derivatives are recorded in other income, net in the accompanying consolidated statements of operations.

As of December 31, 2024 and 2023, foreign exchange forward currency contracts not designated as hedging instruments had the total notional amount of $ 7.6 million and $ 34.5 million, respectively.

These contracts have maturities of less than 30 days.

For the years ended December 31, 2023 and 2022, the Company recorded a net loss of $ 0.1 million and a net gain of $ 0.4 million, respectively, in its consolidated statements of operations related to these contracts.

For foreign exchange forward contracts designated as hedging instruments, unrealized gains and losses arising from these contracts are recorded as a component of accumulated other comprehensive loss on the consolidated balance sheets.

The hedging gains and losses in accumulated other comprehensive loss in the consolidated balance sheet are subsequently reclassified to expenses, as applicable, in the consolidated statements of operations in the same period in which the underlying transactions affect the Company’s earnings.

As of December 31, 2023, foreign exchange forward currency contracts designated as hedging instruments had a notional amount of $ 10.8 million.

These contracts have 30 days maturities.

The Company leases various facilities in the United States, Asia and Europe under non-cancellable operating lease arrangements that expire on various dates through July 2027.

These contracts have maturities of approximately 30 days.

For the years ended December 31, 2024 and 2023, the Company recorded unrealized net losses of $ 0.2 million and $ 0.1 million, respectively, in its consolidated statements of operations related to these contracts.

For the years ended December 31, 2024 and 2023, the net realized gain recorded in the consolidated statements of operations from these contracts was $ 4.5 million and $ 2.1 million, respectively.

These hedging contracts have 30 day maturities.

The hedging gains and losses in accumulated other comprehensive income (loss) in the consolidated balance sheet are subsequently reclassified to expenses, as applicable, in the consolidated statements of operations in the same period in which the underlying transactions affect the Company’s earnings.

As of December 31, 2024, there were no outstanding foreign exchange forward contracts designated as hedging instruments.

As of December 31, 2023, foreign exchange forward currency contracts designated as hedging instruments had notional amounts of $ 10.8 million.

The Company leases various facilities in the U.S., Asia and Europe under non-cancellable operating lease arrangements that expire on various dates through July 2027.

These arrangements require the Company to pay certain operating expenses, such as taxes, repairs and insurance, and contain renewal and escalation clauses.

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In addition to base rent, the Company will also be responsible for operating and other facility expenses.

The Company has accounted for the lease under ASC 842 and has a right-of-use asset of $ 16.4 million recorded in other non-current assets and has lease liabilities of $ 5.0 million and $ 11.8 million, recorded in accrued liabilities and other non-current liabilities, respectively, in the consolidated balance sheet as of December 31, 2023.

The Company has accounted for the lease under ASC 842 and has a right-of-use asset of $ 11.5 million recorded in other non-current assets and has lease liabilities of $ 4.7 million and $ 7.2 million, recorded in accrued liabilities and other non-current liabilities, respectively, in the consolidated balance sheets as of December 31, 2024.

The Company had a right-of-use asset of $ 16.4 million recorded in other non-current assets and has lease liabilities of $ 5.0 million and $ 11.8 million, recorded in accrued liabilities and other non-current liabilities, respectively, in the consolidated balance sheets as of December 31, 2023.

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Internally Developed Software to be Marketed and Sold

During the years ended December 31, 2023, 2022 and 2021, capitalized costs associated with internally developed software to be marketed and sold totaled $ 0.5 million, $ 2.1 million and $ 2.6 million, respectively.

During the year ended December 31, 2023, amortization cost totaled $ 0.3 million.

During the years ended December 31, 2023 and 2022, impairment cost totaled $ 3.0 million and $ 0.6 million, respectively.

As of December 31, 2023, 2022 and 2021, the unamortized capitalized balance was $ 3.0 million, $ 5.8 million and $ 4.2 million, respectively.

Intangible Assets

Purchased intangible assets, net, consisted of the following (in thousands):

As of December 31, 2023 As of December 31, 2022

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

Developed technology $ 5,050 $ ( 5,050 ) $ — $ 5,050 $ ( 5,050 ) $ —

Patents 2,936 ( 2,936 ) — 2,936 ( 2,936 ) —

Total $ 7,986 $ ( 7,986 ) $ — $ 7,986 $ ( 7,986 ) $ —

Amortization expense related to purchased intangible assets was $ 0.9 million for the year ended December 31, 2021.

Purchased intangible assets were fully amortized as of December 31, 2021.

During the year ended December 31, 2024, no costs were capitalized associated with internally developed software to be marketed and sold.

During the years ended December 31, 2023 and 2022, capitalized costs totaled $ 0.5 million and $ 2.1 million, respectively.

During the years ended December 31, 2024 and 2023, amortization cost totaled $ 0.5 million and $ 0.3 million, respectively.

During the years ended December 31, 2024, 2023 and 2022, impairment cost totaled $ 0.9 million, $ 3.0 million and $ 0.6 million, respectively.

As of December 31, 2024, the unamortized capitalized balance was $ 1.7 million.

Other Non-Current Assets

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Unless otherwise specifically disclosed in this note, we have determined that no provision for liability nor disclosure is required related to any claim against us because:

(a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim;

(a) there is not a

reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim;

(b) a reasonably possible loss or range of loss cannot be estimated;

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Investigations

In January 2023, the Company identified a cyber-security incident in its corporate IT infrastructure (not related to any of the Company’s products or solutions used by its customers) (the “Cyber Incident”).

Upon detecting the incident, the Company launched an investigation and engaged the services of cyber-security experts and advisors, incident response professionals and external counsel to support the investigation.

While, to date, this incident has not had a material impact on our operations, it did result in additional expense incurred in connection with the investigation.

In January 2023, the Company identified a cybersecurity incident in its corporate IT infrastructure (not related to any of the Company’s products or solutions used by its customers) (the “Cyber Incident”).

Upon detecting the incident, the Company launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals and external counsel to support the investigation.

While this incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation.

Lease Commitments

The Company leases various operating spaces in the United States, Asia and Europe under non-cancelable operating lease arrangements that expire on various dates through July 2027.

The Company leases various operating spaces in the U.S., Asia and Europe under non-cancelable operating lease arrangements that expire on various dates through July 2027.

These arrangements require us to pay certain operating expenses, such as taxes, repairs and insurance, and contain renewal and escalation clauses.

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Exercised ( 77 ) 4.39

Canceled ( 3 ) 12.19

Outstanding as of December 31, 2024 — $ — 0 $ —

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(1) Intrinsic value of options exercised is the difference between the closing price of our common stock at the time of exercise and the exercise price paid.

The Company has granted RSUs to its employees, consultants and members of its Board of Directors, and PSUs to certain executives and employees.

The Company’s PSUs have market performance-based vesting conditions as well as service-based vesting conditions.

The Company has granted Restricted Stock Units (“RSUs”) to its employees, consultants and members of its Board of Directors, and Performance Stock Units (“PSUs”) to certain executives and employees.

RSUs have service-based vesting conditions and PSUs have market performance-based vesting conditions as well as service-based vesting conditions.

As of December 31, 2024, there were 2,496,267 RSUs outstanding that were unvested and 746,422 PSUs outstanding that had not yet achieved their market-performance vesting conditions.

The following table summarizes our stock award activities and related information:

Number of Shares

Our RSUs typically vest over a three or four year service term.

We granted 1,424,261 , 1,315,210 and 1,230,180 RSUs in 2024, 2023 and 2022, respectively.

The fair value of RSUs is determined to be the fair value of our common stock on the grant date as quoted on the New York Stock Exchange.

Our PSUs typically have a four year term.

Market performance-based conditions are satisfied upon the achievement of specified 100-day volume weighted average stock price targets for the Company’s common stock.

We granted 363,445 , 326,630 and 314,538 PSUs in 2024, 2023 and 2022, respectively.

The fair value of our PSUs is determined using a Monte Carlo valuation model which incorporates various assumptions including expected stock price volatility, expected term, expected dividend yield and risk-free interest rates.

We estimate the volatility of common stock on the date of grant based on historical volatility of our common stock price.

We estimate the expected term based on various exercise scenarios.

We estimate the expected dividend yield based on the current annual dividend payment per share divided by our grant date common stock price The risk-free interest rate is based on U.S.

Treasury yields in effect at the time of grant.

The following table summarizes our restricted stock unit activities and related information:

Service-Based Restricted Stock Units (RSUs) Number of Shares

(thousands) Weighted-Average Grant Date Fair Value Per Share Weighted-Average Remaining Vesting Term

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Nonvested as of December 31, 2024 2,496 $ 14.26 1.42

Following is additional information pertaining to our stock award activities (in thousands, except per share data):

The following table summarizes our market performance-based restricted stock unit activities and related information:

Market Performance-Based Restricted Stock Units (PSUs) Number of Shares

(thousands) Weighted-Average Grant Date Fair Value Per Share Weighted-Average Remaining Vesting Term

Nonvested as of December 31, 2023 657 $ 10.32

Granted 363 11.51

Released ( 243 ) 7.88

Canceled ( 31 ) 11.99

Nonvested as of December 31, 2024 746 $ 11.63 2.63

The fair values of market performance-based restricted stock units were estimated as of the grant date using a Monte Carlo valuation model with the following assumptions:

Years Ended December 31,

2024 2023 2022

Expected term (in years) 4.0 4.0 4.0

Risk-free interest rate 4.0 % 4.3% 1.4 %

Expected volatility 52.01 % 50.20% 47.98 %

Dividend rate 1.77 % 1.63% 1.39 %

Following is additional information pertaining to our stock award activities for both RSUs and PSUs (in thousands, except per share data):

Years Ended December 31,

2024 2023 2022

Weighted-average grant date fair value of stock awards granted (per share) $ 13.57 $ 14.04 $ 13.76

Total fair value of stock awards released (vested) during the period $ 14,044 $ 13,535 $ 12,226

Repurchase Agreement

On September 8, 2022, the Company entered into a Common Stock Repurchase Agreement with entities affiliated with Summit Partners whereby the Company purchased 3.5 million shares of common stock for $ 12.75 per share, or an aggregate purchase price of $ 44.6 million.

The common shares repurchased are held in treasury and accounted for under the cost method.

Repurchase Agreements

In September 2022, the Company entered into a Common Stock Repurchase Agreement with entities affiliated with Summit Partners whereby the Company purchased 3.5 million shares of common stock for $ 12.75 per share, or an aggregate purchase price of $ 44.6 million.

In November 2024, the Company entered into a Common Stock Repurchase Agreement with entities affiliated with Summit Partners whereby the Company purchased 330 thousand shares of common stock for $ 15.73 per share, or an aggregate purchase price of $ 5.2 million.

The Company’s common shares repurchased are held in treasury and accounted for under the cost method.

Stock Repurchase Programs

On October 28, 2021, the Company announced its Board of Directors authorized a stock repurchase program of up to $ 100 million of its common stock over a period of twelve months.

On November 1, 2022, the Company announced its Board of Directors had authorized a stock repurchase program of up to $ 50 million of its common stock over a period of twelve months.

These repurchase programs expired after being active for twelve months.

On November 7, 2023, the Company announced its Board of Directors had authorized a stock repurchase program of up to $ 50 million of its common stock over a period of twelve months.

As of December 31, 2023, the Company had $ 49.7 million available to repurchase shares under the latest 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.

To date, all repurchases under these programs have occurred in the open market.

On November 1, 2022, the Company announced its 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, the Company announced its Board of 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 under this program.

Under all of the Company’s stock repurchase programs, repurchased shares are held in treasury at cost.

The Company’s stock repurchase programs do not obligate it to acquire any specific number of shares.

Shares may be repurchased in privately negotiated and/or open market transactions and by withholding shares in connection with vesting equity awards held by certain employees, including under plans complying with Rule 10b5-1 under the Exchange Act.

To date, all repurchases under the Company’s stock repurchase programs have occurred in the open market, in negotiated transactions and from withholding shares in connection with vesting equity awards held by certain employees.

During the year ended December 31, 2024, the Company repurchased 2.2 million shares for a total cost of $ 30.1 million.

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Stock options, RSUs, PSUs and employee stock purchase rights 23 93 94

The geographical breakdown of income (loss) before income taxes is as follows (in thousands):

The geographical breakdown of income before income taxes is as follows (in thousands):

Years Ended December 31,

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Income before income taxes $ 58,099 $ 43,795 $ 52,716

The provision for (benefit from) income taxes consisted of the following (in thousands):

The provision for income taxes consisted of the following (in thousands):

Years Ended December 31,

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Total deferred 297 252 2,784

Provision for (benefit from) income taxes $ 3,825 $ 5,808 $ ( 63,245 )

The reconciliation of the statutory federal income taxes and the provision for (benefit from) income taxes is as follows (in thousands, except percentages):

Provision for income taxes $ 7,959 $ 3,825 $ 5,808

The reconciliation of the statutory federal income taxes and the provision for income taxes is as follows (in thousands, except percentages):

Years Ended December 31,

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We have elected to account for GILTI as a period cost.

As of December 31, 2023 we had no U.S.

As of December 31, 2024 and 2023, we had no U.S.

federal NOL carryforward balance.

As of December 31, 2022, we had U.S.

federal NOL carryforwards of $ 39.0 million.

As of December 31, 2024 and 2023, we had state NOL carryforwards of $ 51.0 million and $ 54.9 million, respectively.

The state NOL carryforwards expire in various years ending between 2023 and 2039, if not utilized.

The state NOL carryforwards expire in various years beginning in 2025, if not utilized.

Additionally, as of December 31, 2024 and 2023, we had U.S.

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The Company believes NOL’s will not expire unused as a result of any Section 382 annual limitations.

Additionally, as of December 31, 2023 and 2022, we had U.S.

foreign tax credit carryforwards of $ 0.4 million and $ 6.2 million, respectively.

Additionally, as of December 31, 2024, we had no U.S.

foreign tax credit carryforwards and, as of December 31, 2023, we had $ 0.4 million of U.S.

foreign tax credit carryforwards.

With respect to our undistributed foreign subsidiaries’ earnings, we consider those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S.

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Our undistributed earnings through December 31, 2017, have been taxed under the one-time transition tax under the Tax Act.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) amended Section 174 to require research and experimental (“R&E”) expenses incurred in tax years beginning on or after January 1, 2022, to be capitalized and amortized over five years (fifteen years for expenditures attributable to R&E activity performed outside the U.S.) using a half-year convention.

Prior to the amendment, Section 174 expenses were allowed to be expensed in the year incurred.

In 2024, the Company is capitalizing $ 41.5 million of US R&E expenses (amortizable over 5 years) and $ 16.3 million of R&E expenses performed outside the US (amortizable over 15 years) which results in unfavorable book/tax differences as a temporary adjustment.

Since the Section 174 impact is a temporary difference, no material impact to tax expense is expected.

Uncertain Tax Positions

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Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business.

The Company is subject to taxation in the United States, various states, and several foreign jurisdictions.

The Company is subject to taxation in the U.S., various states, and several foreign jurisdictions.

Because the Company has NOL and credit carryforwards, there are open statutes of limitations in which federal, state and foreign taxing authorities may examine our tax returns for all years from 2005 through the current period.

The Company is not currently under examination by any taxing authorities.

Prior to the amendment, Section 174 expenses were allowed to be expensed in the year incurred.

In 2023, the Company is capitalizing $44.8 million of US R&E expenses (amortizable over 5 years) and $18.1 million of R&E expenses performed outside the US (amortizable over 15 years) which results in unfavorable book/tax differences as a temporary adjustment.

Since the Section 174 impact is a temporary difference, no material impact to tax expense is expected.

Segment Information

Segment and Geographic Information

ASC 280 Segment Reporting , establishes standards for reporting information about operating segments.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") to assess performance and to decide how to allocate resources.

The Company manages its business on the basis of one reportable segment and unit and derives revenues from two sources:

products revenue and services revenue.

See Note 1 Description of Business and Summary of Significant Accounting Policies for additional information.

The Company’s CODM is our Chief Executive Officer, Dhrupad Trivedi.

Our CODM assesses the performance of the Company and decides how to allocate resources based upon consolidated net income, which is also reported within the consolidated statements of operations.

The CODM uses consolidated net income to monitor period-over-period results, to assess financial performance and decide where to allocate additional resources within the business.

The CODM does not regularly review significant classifications of expenses outside those shown on the consolidated statements of operations.

The following table depicts the disaggregation of revenue by geographic region based on the ship to location of our customers and is consistent with how we evaluate our financial performance (in thousands):

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APJ 87,175 77,606 89,702

APAC 29,748 32,986 28,674

Japan 47,858 56,716 61,700

EMEA 40,165 41,349 41,963

Total $ 261,696 $ 251,700 $ 280,338

The APJ region comprises Japan and all other countries in APAC (excluding Japan).

The Americas region comprises the U.S.

and all other countries in the Americas (excluding the U.S.).

The APJ region comprises all countries in the Asia Pacific region including Japan.

The EMEA region comprises Europe, Middle East and Africa.

The following table is a summary of our long-lived assets which include property and equipment, net and right-of-use assets based on the physical location of the assets (in thousands):

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Employee Benefit Plan

The Company has a profit sharing plan that qualifies under IRC Section 401(k), which is offered to all of its United States employees.

The Company has a profit sharing plan that qualifies under IRC Section 401(k), which is offered to all of its U.S.

Participants in the plan may elect to contribute up to $ 23,000 of their annual compensation to the plan for the 2024 calendar year and $ 23,500 for the 2025 calendar year.

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The Company’s matching contributions totaled $ 1.1 million, $ 1.2 million and $ 1.1 million during the years ended December 31, 2024, 2023 and 2022, respectively.

Subsequent Event

Subsequent Events

On February 4, 2025 , the Company announced its Board of Directors declared a quarterly dividend.

The dividend, in the amount of $ 0.06 per share of common stock outstanding, will be paid on March 1, 2024 , to shareholders of record on February 16, 2024 as a return of capital.

Future dividends will be subject to further review and approval by the Board in accordance with applicable law.

The dividend, in the amount of $ 0.06 per share of common stock outstanding, will be paid on March 3, 2025 , to stockholders of record on February 14, 2025 as a return of capital.

Future dividends will be subject to further review and approval by the Board in

accordance with applicable law.

The Board of Directors reserves the right to adjust or withdraw the quarterly dividend in future periods as it reviews the Company’s capital allocation strategy from time to time.

In February 2025, the Company acquired the assets and key personnel of ThreatX Protect, which expanded its cybersecurity portfolio with WAAP protection (web application and application programming interfaces).

The total purchase price was approximately $ 19.5 million and was funded with cash on hand.

The Company is in the process of completing its appraisals of tangible and intangible assets relating to this acquisition and the allocation of the purchase price to the assets acquired and liabilities assumed will be completed once the appraisal process has been finalized.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data