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Why A10 Networks Stock Fell Sharply on Wednesday

What happened

Shares of A10 Networks (NYSE: ATEN) fell as much as 19.8% on Wednesday. As of 12:10 p.m. EST, however, the stock was down about 18%.

The infrastructure software company saw its shares decline following its fourth-quarter update. Investors may be disappointed in the company's decelerated revenue growth rate for the period.

Image source: Getty Images.

So what

In A10 Networks' fourth quarter, revenue rose 4% year over year to $62.7 million. This growth rate was slower than the company's 7.1% revenue growth in the third quarter.

Nevertheless, management was happy with A10 Networks' year-end results.

"This was a dynamic year for A10, as we increased full-year earnings by $36 million compared to last year's $18 million loss while successfully navigating a challenging economy," said A10 Networks CEO Dhrupad Trivedi on the company's fourth-quarter earnings call.

Also worth highlighting is the fact that A10 Networks reported record quarterly adjusted earnings before interest, depreciation, and amortization (EBITDA) of $16.1 million, up from $10 million in the year-ago period.

Now what

The tech company is optimistic about 2021, with management noting that it enters the year with a strong competitive position, leading products, and a healthy balance sheet. Key focuses for the year, explained Trivedi in the company's earnings release, will be "to drive our portfolio and continue to invest in faster growth opportunities like cybersecurity, 5G and cloud-leveraging our historic leadership position in those markets."

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Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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