Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 5, 2026 · Beat 7 of last 7 quarters
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A10's results underscore the AI infrastructure buildout as a durable demand driver, with product revenue growth accelerating and the expanded Microsoft relationship signaling deeper integration into AI infrastructure deployments. The acquisition of Troj.ai positions A10 to address AI-specific security needs, which are becoming critical as enterprises and service providers deploy AI workloads. Management's raised guidance reflects confidence in sustained AI-driven demand across both enterprise and service provider segments.
A10 delivered 15.5% YoY revenue growth to $80.1M, with product revenue of $49M (61% of total) and service revenue of $31.1M (39%). Enterprise customers represented 60% of Q2 revenue, and the Americas region was 68% of global revenue. The company generated $26.9M in free cash flow, with adjusted EBITDA of $25.4M (30.5% margin). Subsequent to the quarter, A10 announced an expanded relationship with Microsoft and acquired Troj.ai in June. The company raised its full-year guidance for revenue and EPS growth.
Management raised full-year 2026 revenue growth guidance to 12%-14% (from 10%-12%) and EPS growth to 14%-16% (from 12%-14%), citing continued confidence in demand. They highlighted the expanded Microsoft relationship as a long-term partnership with mutual performance commitments, and the Troj.ai acquisition to add AI security capabilities (red teaming and runtime protection). Service provider spend in the Americas has begun to normalize, while EMEA service provider demand was impacted by the geopolitical environment and Japan continues to experience macroeconomic pressures. Management continues to navigate memory cost and supply chain challenges but prioritizes customer delivery and maintains EPS expansion.
“This agreement reflects a shared commitment to a long term partnership with mutual performance commitments on both sides. As a result, we are more firmly aligned with the long term road map of this industry leader.”
on Microsoft expansion
“So I think, you know, 1 of the most important things for us in going with Troj.ai was the team there had developed a very strong technical solution and which was very much in line with kind of the road map we were driving towards.”
on Troj.ai acquisition
“Our goal is to convert growth into profitability and cash. While continuing to invest in the technical capabilities this demand environment requires. With earnings per share growth exceeding revenue growth, and we remain on track to do just that.”
on Financial discipline
On product revenue growth, it's been consistently strong, 25% growth in Q2 versus a tough comp. Can you talk about how the drivers of growth on the product side have been changing this year versus last year? And how should we think about the duration of the spending cycle?
Product revenue is the lead indicator when we get new business. We've strengthened the commercial side to win enterprise opportunities, and as customers engage with longer-term AI roadmaps, that leads to broader conversations and product growth. The goal is to maintain that as much as we can.
Were there any pre-buy requirements on the part of Microsoft for the expanded relationship? And how are you going to manage the business given that Microsoft is so large of a percentage of revenue?
There are no prebuys; the agreement is aligned with their business needs and rollout forecast, and we are more operationally intertwined. Excluding Microsoft and a few macro-affected countries, our business is growing close to double digits, so we are not solely dependent on that relationship.
Historically, you've included Microsoft within your service provider vertical. I want to confirm that and verify that the shift in mix is not reflective of recategorization. Also, can you give more metrics for the June quarter?
We have not recategorized historical revenue; Microsoft as a service provider is still counted there. New business with Microsoft is categorized as enterprise based on a different product set. The 37% end customer concentration will be similar in Q2, linked to completing the rollout. Service provider excluding Microsoft should be slightly better than 2025, with North America improving, Japan equal or slightly worse, and Europe neutral.