A10 Network (ATEN)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	54,058	37,871	39,694	38,648	36,908	50,367	51,244	53,079	48,658	43,293	37,366	33,388	29,807	26,224	23,151	19,149	11,458	5,241	-4,536	-16,175
Interest expense (ttm)	US$ in thousands	1,509	69	731	1,976	2,371	2,810	4,501	3,769	4,600	4,359	2,118	2,788	1,493	1,295	1,184	1	16	46	82	237
Interest coverage		35.82	548.86	54.30	19.56	15.57	17.92	11.39	14.08	10.58	9.93	17.64	11.98	19.96	20.25	19.55	19,149.00	716.12	113.93	-55.32	-68.25

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $54,058K ÷ $1,509K
= 35.82

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a greater capacity of the company to make interest payments.

Analyzing the interest coverage ratios of A10 Network from December 31, 2019, to December 31, 2024, reveals fluctuating trends. The company experienced significant negative interest coverage in 2019 and early 2020, indicating challenges in meeting interest obligations. However, the ratio improved substantially as of September 30, 2020, and continued to show healthy levels through the end of 2021.

There was a notable spike in the interest coverage ratio as of December 31, 2020, reaching a significant value of 19,149.00, which might indicate a period of exceptionally strong earnings relative to interest expenses. This high value could be an anomaly or could reflect a specific event in the company's financials that needs further investigation.

Subsequently, the interest coverage ratio fluctuated within a narrower range, generally indicating the company's ability to comfortably cover its interest expenses. The ratio remained above 10 for most periods, signifying a decent buffer to service its interest payments.

The sudden rise in the interest coverage ratio as of March 31, 2024, to 54.30 followed by a further increase by September 30, 2024, to 548.86 might raise concerns about the reliability and sustainability of these figures. Such significant fluctuations could be due to one-time events, changes in the company's financial structure, or irregular earnings patterns.

Overall, a detailed examination of the reasons behind the extreme values in the interest coverage ratios, especially the remarkable spike in December 31, 2020, and the subsequent drastic fluctuations, is crucial to fully understand A10 Network's financial performance and its ability to meet interest obligations in the long term.