A10 Networks Inc (NYSE:ATEN) will be reporting its 4Q2015 earnings after market close on Tuesday, Feb. 9. Rating firm D.A. Davidson has recently weighed in on the stock with projections of what investors can expect from the upcoming report. Overall, D.A. Davidson is looking for a solid 4Q, backed by strong U.S. and Japanese sales.

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The rating firm expects A10 Networks to report revenue of $53.5 million for 4Q, indicating an 18% increase from last year. The products segment is projected to contribute the majority of that revenue at 71% of the total with the services segment accounting for 29%.

In terms of segment improvement, D.A. Davidson expects Products revenue to increase 17% YoY, outpaced by services revenue growing at 20%.

In terms of regions, A10 Networks is expected to register strong top line growth in the U.S., accounting for about 50% of total revenue. Japan is also predicted to be a bright spot in the quarter, contributing about 20% of total revenue.

Flat gross margins

Material gross margin improvement is not expected, however. The firm is looking for a gross margin of 75.9% for the quarter, almost at the same level as the 75.8% it saw in the previous quarter and 76.3% in the prior year’s same quarter.

The reason for the limited gross margin growth is that A10 Networks is investing in two OEM partners. While the investments are taking a hit at gross margins, they are expected to pay back over the long-term.

Looking back

In the last quarter, A10 Networks posted an EPS loss of $0.07, which was better than the consensus estimate of EPS loss of $0.09. Revenue of $50.8 million for the last quarter also compared favorably with the consensus estimate of $50.5 billion.

D.A. Davidson has a BUY rating and price target of $9 on A10 Networks. The stock is presently changing hands in the vicinity of $5.