A10 Networks reported second quarter 2025 revenue of $69.4 million, up 15% year-over-year, driven by a more normalized service provider quarter and strategic investments in enterprise and AI infrastructure, with product revenue of $39.2 million (56% of revenue) posting its strongest growth in over five years. Gross margin was 80% and adjusted EBITDA was $19.7 million, or 28.3% of revenue, both in line with the company's long-term goals, while non-GAAP net income rose to $15.5 million ($0.21 per diluted share) from $13.2 million ($0.18) a year earlier. On a trailing 12-month basis, total revenue grew 11%, with enterprise up 8% and service provider up 14%, and management expressed comfort in delivering annual revenue growth in the high single-digit range. Management emphasized alignment with two secular catalysts, artificial intelligence and cybersecurity, highlighting its selection by a global cloud leader to help build future AI infrastructure and the addition of the ThreadX WAP solution to its A10 Defend portfolio. The company generated $22.2 million in cash from operations, ended the quarter with $367.4 million in cash and marketable securities, and continued returning capital through a $0.06 quarterly dividend and share repurchases. Management noted choppy market conditions persist, with some North American service providers still holding off on CapEx, and said AI firewall and analytics engagements would likely translate into revenue in 2026 and beyond.
Thank you, and 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, a10networks.com. Hosting the call today are Dhrupad Trivedi, A10's President and CEO, and CFO Brian Becker. 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 2025 Financial Results. Additionally, A10 published a presentation and supplemental trended financial statements. You may access the press release, presentation, and trended financial statements on the Investor Relations section of the company's website.
During the course of today's call, management will make forward-looking statements, including statements regarding projections for future operating results, demand, industry and customer trends, macroeconomic factors, strategy, potential new products and solutions, our capital allocation strategy, profitability, expenses, and investments, positioning, and our dividend program. These statements are based on current expectations and beliefs as of today, August 5, 2025. 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. 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.
Please note, 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 results prepared in accordance with GAAP and may be different from non-GAAP financial measures 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 at www.a10networks.com. Now, I'd like to turn the call over to Dhrupad Trivedi, President and CEO of A10 Networks.
Thank you, Tom, and thank you all for joining us today. A10 Networks continues to deliver growth and profitability in the second quarter. This performance demonstrates the continued validation of our strategy. We have strategically aligned our technology roadmap and go-to-market focus with the evolving cybersecurity landscape, where our customers are facing increasingly complex challenges. Our solutions emphasize high performance and advanced security, two areas that are increasingly central to both the service provider and enterprise customers. This strategic focus and delivery of innovation are resonating in the market. This concentration was further validated by our recent selection by a global cloud leader to help build their future AI infrastructure, indicating that A10 Networks' offering is well-positioned at the intersection of today's most urgent priorities for the world's most demanding customers.
Increasingly, that alignment with the key drivers of technology investment is the most important point I want to share with investors today. A10 Networks is exceedingly well aligned with these two primary catalysts influencing IT and infrastructure spending: artificial intelligence and cybersecurity. We believe we have the right technology, the right product roadmap, and increasingly the right go-to-market execution to fully capitalize on these trends. Our intentional diversification enhances our resilience. In the second quarter, we saw an improvement in parts of global service provider spending, driven by the factors I mentioned earlier. Our balanced exposure across verticals and geographies is a core strength of our business model, and it allows us to maintain momentum while we capitalize on secular tailwinds in AI and cybersecurity. Looking at performance on a trailing 12-month basis provides a view of our underlying momentum.
Total revenue grew 11% year-over-year, with enterprise up 8% and service provider revenue increasing 14%. Even after adjusting for the favorable year-over-year comparison, we believe this reflects a sustainable growth trend aligned with our strategy, and we remain comfortable in our ability to deliver annual revenue growth in the high single-digit range. Our first-half results are consistent with these expectations. We will continue to navigate choppy market conditions while focusing on execution and aligning investments with long-term growth expectations and business model goals. Our service provider revenue during the period benefited from improved demand from data center expansions and AI infrastructure investments. As I mentioned in the past, AI applications are power-hungry, making our solutions, which provide industry-leading efficiency in terms of throughput, low latency, and best-in-class security, more attractive as customers can achieve better ROI on those investments.
We are actively leveraging this competitive advantage, along with our networking expertise in opportunities for large data center projects around the world. Our EBITDA as % of revenue grew year-over-year, even as we aggressively invest in new areas. As an indicator, we had two AI products win the top awards at the prestigious Interop Japan event, competing against much larger players as well as startups. Our comprehensive A10 Defend portfolio of solutions provides hybrid DDoS protection, threat intelligence, web application, and bot protection, and now adds a fully featured WAP solution, all integrated into a single solution with end-to-end delivery and stronger security for mission-critical applications. Stepping back, I am increasingly confident in our strategic positioning. Our deliberate focus on aligning A10 Networks' growth and investment strategy with structural tailwinds of AI and cybersecurity continues to pay dividends. Our focus on systematically growing the enterprise market adds another growth vector.
We believe A10 Networks is well-positioned to serve both enterprise and service provider customers, employing an intentional diversification strategy that delivers resiliency in our results. We are also well-diversified across regions. The business continues to effectively navigate short-term market volatility, delivering consistent profitability and returning capital to shareholders. As markets evolve, we are well-positioned to outpace the market in terms of revenue growth while increasing our profitability in line with our business model. With that, I'd like to turn the call over to Brian for a detailed review of the quarter. Brian?
Thank you, Dhrupad. Second quarter revenue was $69.4 million, an increase of 15% year-over-year. The results benefited from a more normalized service provider quarter compared to last year and the strategic investments we've made in enterprise and AI infrastructure. The overall trends are positive, and we continue to maintain our focus on global diversification. Product revenue for the quarter was $39.2 million, representing 56% of total revenue. Services revenue was $30.2 million, or 44% of total revenue. Total deferred revenue increased to $144.4 million. As expected, we see strong uptake of our cutting-edge portfolio, evidenced by continued product revenue growth, and renewal rates on eligible contracts remain above 90%. The high renewal rates are an indicator that we are not losing any customers or market share. 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 is provided in our press release and on our website. Gross margin in the second quarter was 80%, in line with our stated goals of 80%-82%. Adjusted EBITDA was $19.7 million for the quarter, reflecting 28.3% of revenue, in line with our stated long-term goals. Non-GAAP net income for the quarter was $15.5 million, or $0.21 per diluted share, compared to $13.2 million, or $0.18 per diluted share in the year-ago quarter. Diluted weighted shares used for computing non-GAAP EPS for the second quarter were approximately 73.1 million shares, down 2.4 million shares year-over-year due to our continued share buyback. On a GAAP basis, net income for the quarter was $10.5 million, or $0.14 per diluted share, compared to net income of $9.5 million, or $0.13 per diluted share in the year-ago quarter.
During the quarter, we generated $22.2 million in cash from operations. Turning to the year-to-date results, revenue for the first six months of 2025 was $135.5 million, compared to $120.8 million, an increase of 12%. Non-GAAP gross margin was 80.4% year-to-date. We continue to navigate macro uncertainties and are aggressively supporting our key AI customers. Adjusted EBITDA was $39.2 million year-to-date, reflecting 28.9% of revenue. Non-GAAP net income on a year-to-date basis was $30.5 million, or $0.41 per diluted share, compared to $26 million, or $0.35 per diluted share last year. On a GAAP basis, net income for the first six months was $20.1 million, or $0.27 per diluted share, compared to net income of $19.2 million, or $0.26 per diluted share in the first six months of last year.
Turning to the balance sheet, as of June 30, 2025, we had $367.4 million in cash, cash equivalents, and marketable securities, compared to $195.6 million at the end of 2024. We ended the quarter with convertible debt of $218.1 million as a result of our convertible debt offering completed in Q1. During the quarter, we paid $4.3 million in cash dividends and repurchased $3.9 million worth of shares. The board has approved a quarterly cash dividend of $0.06 per share to be paid on September 2, 2025, to shareholders of record on August 15, 2025. The company has $71.1 million remaining of its $75 million share repurchase authorization. I'll now turn the call back over to Dhrupad for closing comments.
Thank you, Brian. We are encouraged by the continued business execution and remain confident that A10 Networks is strategically well-positioned in the market. Technology spending is heavily influenced by increased demand for cybersecurity solutions and the accelerating adoption of AI-related spending. A10 Networks is positioned squarely in front of these two durable secular catalysts. We are investing to enhance our position in the enterprise space and remain aligned with key leaders in the service provider sector around the world. We believe our business model enables us to dynamically allocate resources to address changing market conditions while preserving profitability and shareholder returns. Operator, you can now open the call for questions.