A10 Networks, which offers virtualized security software and services to enterprises and telecom operators, announced that it hired Bank of America Merrill Lynch to advise the company on "strategic matters, including a near term exploration of a potential sale or change of control transaction."
In conjunction with that announcement, the company's founder and CEO, Lee Chen, said he's going to leave the company as soon as A10's board can find a replacement.
Chen sought to offer a rosy outlook: “A10's future remains bright and I continue to be very excited about the innovations we have brought to market and our position in security, 5G and multi-cloud," he said in a statement from the company.
However, in comments on the company's second-quarter earnings call to investors, Chen acknowledged that the company's revenue came in below expectations "as a number of large deals in our pipeline pushed into future quarters or were downsized. These deals were primarily in North America and within the service provider and web giant verticals. And we continue to see this dynamic in Q3."
Overall A10 reported $49 million in revenue in the second quarter, a 19% year-over-year decline. Roughly a third of the company's revenues come from the US market, and though A10 boasts of 6,300 end customers across 116 countries, in its latest quarterly SEC filing the company noted that "a substantial portion of our revenue comes from a limited number of large customers." Comcast, Box and LinkedIn are listed among A10's customers.
A10's stock remained relatively unchanged on the news, hovering at around $7.50 per share.
A10 has long sold software for network balancing, analytics and cybersecurity, but in recent years had worked to leverage that into a strategy around virtualized, cloud-based 5G networks, promising improved security, reliability and performance. "We continue to see early success in 5G as we secured follow-on 5G orders during the quarter," Chen said on the company's earnings conference call. "Additionally, we are pleased with the level of engagement we see with several service providers across the globe as they prepare and ready their networks for 5G."
However, A10's revenues and profits have remained relatively stagnant over the past few years.