[November 15, 2012] |
 |
Aruba Networks Reports Record Fiscal First Quarter 2013 Financial Results
SUNNYVALE, Calif. --(Business Wire)--
Aruba Networks, Inc. (NASDAQ: ARUN) today released financial results for
its first quarter of fiscal year 2013 ended October 31, 2012.
Revenue for Q1'13 of $144.5 million grew 21 percent from the $119.4
million reported in Q1'12. GAAP net loss for Q1'13 was $0.8 million, or
a loss of $0.01 per share, compared with GAAP net loss of $0.5 million,
or $0.00 per share, in Q1'12.
Non-GAAP net income for Q1'13 was $22.1 million, or $0.18 per share,
compared with non-GAAP net income of $16.7 million, or $0.14 per share,
in Q1'12. A reconciliation between GAAP and non-GAAP information is
contained in the tables below.
"We delivered a strong first quarter with 21 percent revenue growth
year-over-year and our fourteenth consecutive quarter of record
revenue," said Dominic Orr, Aruba's president and chief executive
officer. "During the quarter, we saw healthy growth across our major
products and core verticals."
"The proliferation of mobile devices, BYOD and new applications such as
Unified Communications continue to drive demand for our solutions and
make mobility a clear priority for CIOs around the world. We believe
that with our industry leading technology and strong momentum in the
marketplace, we are well positioned to capitalize on these trends and
expand our market share."
Commenting on the company's financial results, Michael Galvin, Aruba's
chief financial officer, added, "In addition to achieving record
revenue, we delivered strong gross margin and operating margin results.
Due to solid working capital management, we generated $36.9 million in
cash flow from operations and ended the quarter with $377.5 million in
cash, cash equivalents and short-term investments."
Recent Highlights
-
Introduced Controller-Less WLAN Solutions with Leading Enterprise
Grade Performance. Aruba Instant Enterprise is a major new
software release that delivers the first controller-less Wi-Fi
solution for best-in-class security, resiliency and scale for
distributed enterprises. Also as part of Aruba Instant Enterprise,
Aruba unveiled Aruba Activate, a cloud-based, zero-touch provisioning
service that enables enterprise IT, managed service providers and
resellers to dramatically reduce the operational expenses associated
with large scale, distributed Wi-Fi deployments.
-
Introduced a New Software Release to Deliver New Levels of High
Availability, Resilient Connectivity, for Mobile Devices and
Applications. The new Aruba OS software release for its mobility
controllers will help enterprises ensure consistent, predictable
performance and fast recovery for today's challenging mobile
environments.
-
Regional Medical Center at Memphis (The MED) Selected Aruba to
Replace its Cisco Wireless Network with an Aruba WLAN. The
existing Cisco 802.11/b/g wireless network will be replaced with an
Aruba 802.11n wireless network and will expand coverage across its
main hospital and four clinics. The MED also will deploy the AirWave
network management system, Aruba ClearPass Policy Manager and
ClearPass Guest.
Conference Call Information
Aruba will host a conference call for analysts and investors to discuss
its first quarter of fiscal year 2013 results today at 4:30 p.m. Eastern
time (1:30 p.m. Pacific time). Open to the public, investors may access
the call by dialing +1-480-629-9808. A live webcast of the conference
call will also be accessible from the "Investor Relations" section of
the company's website at www.arubanetworks.com.
Following the webcast, an archived version will be available on the
website for twelve months. To hear the replay, parties in the United
States and Canada should call 1-800-406-7325 and enter passcode 4573529.
International parties can access the replay at +1-303-590-3030 and
should enter passcode 4573529.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about our expectation that the proliferation of mobile
devices, BYOD and new applications will continue to drive demand for our
solutions and that with our industry leading technology and strong
momentum in the marketplace, we are well positioned to capitalize on
these trends and expand our market share.
These forward-looking statements involve risks and uncertainties, as
well as assumptions which, if they do not fully materialize or prove
incorrect, could cause Aruba's results to differ materially from those
expressed or implied by such forward-looking statements. The risks and
uncertainties that could cause our results to differ materially from
those expressed or implied by such forward-looking statements include:
(1) business and economic conditions and growth trends in the networking
industry, our vertical markets and various geographic regions; and (2)
changes in overall information technology spending; as well as those
risks and uncertainties included under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," in Aruba's Annual Report on Form 10-K for the fiscal
year ended July 31, 2012, which was filed with the SEC on October 11,
2012, and is available on Aruba's investor relations website at www.arubanetworks.com
and on the SEC's website at www.sec.gov.
All forward-looking statements in this press release are based on
information available to us as of the date hereof, and we assume no
obligation to update these forward-looking statements to reflect events
that occur or circumstances that exist after the date on which they were
made.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with
Generally Accepted Accounting Principles (GAAP), this press release and
the accompanying tables contain the following non-GAAP financial
measures: non-GAAP net income and non-GAAP earnings per share (EPS). The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with GAAP.
Non-GAAP net income and EPS. Aruba defines non-GAAP net income as
net income plus stock-based expenses and related payroll taxes,
amortization of acquired intangible assets and other acquisition related
expenses, and the change in the valuation of the contingent rights
liability, less the related tax effects. Aruba defines non-GAAP EPS as
non-GAAP net income divided by the weighted average diluted shares
outstanding. Aruba's management regularly uses these non-GAAP financial
measures to understand and manage its business and believes that these
non-GAAP financial measures provide meaningful supplemental information
regarding the company's performance by excluding certain expenses that
may not be indicative of Aruba's "recurring operating results," meaning
its operating performance excluding not only stock-based expenses and
related payroll taxes, but also discrete charges that are infrequent in
nature. Further, Aruba's management excludes from non-GAAP net income
the tax effects of these non-GAAP financial measures, as without
excluding these tax effects, investors would only see the gross effect
that excluding these expenses had on the company's operating results.
Because of varying available valuation methodologies, subjective
assumptions and the variety of award types that companies can use,
Aruba's management believes that providing non-GAAP financial measures
that exclude stock-based expenses allows investors to compare these
results with those of other companies, as well as providing management
with an important tool for financial and operational decision making and
for evaluating the company's operating results over different periods of
time. Similarly, by excluding amortization expense of acquired
intangible assets and other acquisition related expenses, and the change
in the valuation of the contingent rights liability, less the related
tax effects, Aruba's management believes that investors can better
understand and measure the company's recurring operating results.
There are a number of limitations related to the use of non-GAAP net
income and EPS versus net income and EPS calculated in accordance with
GAAP. First, these non-GAAP financial measures exclude some costs,
namely stock-based expenses and related payroll taxes, that are
recurring. Stock-based expenses and related payroll taxes have been and
will continue to be for the foreseeable future a significant recurring
expense in Aruba's business. Second, stock-based awards are an important
part of Aruba's employees' compensation and impacts their performance.
Third, the components of the costs that Aruba excludes in its
calculation of non-GAAP net income may differ from the components that
its peer companies exclude when they report their results of operations.
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from these non-GAAP
financial measures and evaluates these non-GAAP financial measures
together with their most directly comparable financial measures
calculated in accordance with GAAP. The accompanying tables provide
reconciliations between these financial measures and their most directly
comparable GAAP equivalents.
A copy of this press release can be found on the investor relations page
of Aruba Networks' website at www.arubanetworks.com.
About Aruba Networks, Inc.
Aruba Networks is a leading provider of next-generation network access
solutions for the mobile enterprise. The company's Mobile Virtual
Enterprise (MOVE) architecture unifies wired and wireless network
infrastructures into one seamless access solution for corporate
headquarters, mobile business professionals, remote workers and guests.
This unified approach to access networks enables IT organizations and
users to securely address the Bring Your Own Device (BYOD) phenomenon,
dramatically improving productivity and lowering capital and operational
costs.
Listed on the NASDAQ and Russell 2000® Index, Aruba is based in
Sunnyvale, California, and has operations throughout the Americas,
Europe, Middle East, Africa and Asia Pacific regions. For real-time news
updates, follow Aruba on Twitter and Facebook or
read our corporate blog, Aruba
Atmosphere.
© 2012 Aruba Networks, Inc. Aruba Networks' trademarks include the
design mark for AirWave, Aruba Networks®, Aruba
Wireless Networks®, the registered Aruba the
Mobile Edge Company logo, the registered AirWave logo, Aruba Mobility
Management System®, Mobile Edge Architecture®,
People Move. Networks Must Follow®, RFProtect®,
Green Island®. All rights reserved. All other
trademarks are the property of their respective owners.
Aruba Networks, Inc.
|
Condensed Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
July 31,
|
|
|
|
|
2012
|
|
|
|
2012
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
157,319
|
|
|
$
|
133,629
|
|
Short-term investments
|
|
|
|
220,187
|
|
|
|
212,601
|
|
Accounts receivable, net
|
|
|
|
73,016
|
|
|
|
80,190
|
|
Inventory
|
|
|
|
28,164
|
|
|
|
22,202
|
|
Deferred costs
|
|
|
|
11,176
|
|
|
|
11,241
|
|
Prepaids and other
|
|
|
|
19,513
|
|
|
|
18,996
|
|
Deferred income tax assets, current
|
|
|
|
35,328
|
|
|
|
34,584
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
544,703
|
|
|
|
513,443
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
22,688
|
|
|
|
19,901
|
|
Goodwill
|
|
|
|
56,947
|
|
|
|
56,947
|
|
Intangible assets, net
|
|
|
|
25,115
|
|
|
|
27,036
|
|
Deferred income tax assets, non-current
|
|
|
|
19,794
|
|
|
|
20,664
|
|
Other non-current assets
|
|
|
|
9,446
|
|
|
|
10,905
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
133,990
|
|
|
|
135,453
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
678,693
|
|
|
$
|
648,896
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
69,178
|
|
|
$
|
74,879
|
|
Income taxes payable
|
|
|
|
4,553
|
|
|
|
2,032
|
|
Deferred revenue, current
|
|
|
|
88,230
|
|
|
|
80,602
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
161,961
|
|
|
|
157,513
|
|
|
|
|
|
|
|
Deferred revenue, non-current
|
|
|
|
25,670
|
|
|
|
22,375
|
|
Other non-current liabilities
|
|
|
|
1,391
|
|
|
|
2,118
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
27,061
|
|
|
|
24,493
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
189,022
|
|
|
|
182,006
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
11
|
|
|
|
11
|
|
Additional paid-in capital
|
|
|
|
605,693
|
|
|
|
582,077
|
|
Accumulated other comprehensive loss
|
|
|
|
(1,414
|
)
|
|
|
(1,405
|
)
|
Accumulated deficit
|
|
|
|
(114,619
|
)
|
|
|
(113,793
|
)
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
|
489,671
|
|
|
|
466,890
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
678,693
|
|
|
$
|
648,896
|
|
Aruba Networks, Inc.
|
Condensed Consolidated Statements of Operations
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
Three months ended
|
|
October 31,
|
|
October 31,
|
|
|
2012
|
|
|
|
2011
|
|
Revenue:
|
|
|
|
Product
|
$
|
119,222
|
|
|
$
|
101,131
|
|
Professional services and support
|
|
25,260
|
|
|
|
18,220
|
|
|
|
|
|
Total revenue
|
|
144,482
|
|
|
|
119,351
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
Product
|
|
36,161
|
|
|
|
32,068
|
|
Professional services and support
|
|
5,957
|
|
|
|
4,546
|
|
|
|
|
|
Total cost of revenue
|
|
42,118
|
|
|
|
36,614
|
|
|
|
|
|
Gross profit
|
|
102,364
|
|
|
|
82,737
|
|
|
|
|
|
Operating expenses:
|
|
|
|
Research and development
|
|
31,963
|
|
|
|
24,468
|
|
Sales and marketing
|
|
53,919
|
|
|
|
45,615
|
|
General and administrative
|
|
11,951
|
|
|
|
11,100
|
|
|
|
|
|
Total operating expenses
|
|
97,833
|
|
|
|
81,183
|
|
|
|
|
|
Operating income
|
|
4,531
|
|
|
|
1,554
|
|
|
|
|
|
Other income (expense), net
|
|
|
|
Interest income
|
|
316
|
|
|
|
276
|
|
Other income (expense), net
|
|
276
|
|
|
|
827
|
|
|
|
|
|
Total other income (expense), net
|
|
592
|
|
|
|
1,103
|
|
|
|
|
|
Income before income taxes
|
|
5,123
|
|
|
|
2,657
|
|
|
|
|
|
Provision for income taxes
|
|
5,949
|
|
|
|
3,124
|
|
|
|
|
|
Net loss
|
$
|
(826
|
)
|
|
$
|
(467
|
)
|
|
|
|
|
Shares used in computing net loss per common share, basic
|
|
111,976
|
|
|
|
105,937
|
|
|
|
|
|
Net loss per common share, basic
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
Shares used in computing net loss per common share, diluted
|
|
111,976
|
|
|
|
105,937
|
|
|
|
|
|
Net loss per common share, diluted
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
Note: Certain prior year amounts have been reclassified to
conform to the current year presentation.
|
Aruba Networks, Inc.
|
Consolidated Statements of Operations
|
(GAAP to Non-GAAP Reconciliation)
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
October 31,
|
|
October 31,
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
$
|
(826
|
)
|
|
$
|
(467
|
)
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
a) Stock-based compensation expenses
|
|
|
|
22,562
|
|
|
|
19,265
|
|
b) Payroll taxes on stock-based compensation expenses
|
|
|
|
636
|
|
|
|
505
|
|
c) Amortization expense of acquired intangible assets and other
acquisition related expenses
|
|
|
|
2,664
|
|
|
|
1,988
|
|
d) Change in valuation of contingent rights liability
|
|
|
|
(401
|
)
|
|
|
(918
|
)
|
e) Income tax effect of non-GAAP exclusions
|
|
|
|
(2,547
|
)
|
|
|
(3,658
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
|
|
|
$
|
22,088
|
|
|
$
|
16,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per common share
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
a) Stock-based compensation expenses
|
|
|
|
0.18
|
|
|
|
0.16
|
|
b) Payroll taxes on stock-based compensation expenses
|
|
|
|
0.01
|
|
|
|
-
|
|
c) Amortization expense of acquired intangible assets and other
acquisition related expenses
|
|
|
|
0.02
|
|
|
|
0.02
|
|
d) Change in valuation of contingent rights liability
|
|
|
|
-
|
|
|
|
(0.01
|
)
|
e) Income tax effect of non-GAAP exclusions
|
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per common share
|
|
|
$
|
0.18
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
Shares used in computing diluted GAAP net loss per common share
|
|
|
|
111,976
|
|
|
|
105,937
|
|
|
|
|
|
|
|
Shares used in computing diluted non-GAAP net income per common share
|
|
|
|
122,355
|
|
|
|
118,470
|
|
Aruba Networks, Inc.
|
Condensed Consolidated Statements of Operations
|
As a Percentage of Total Revenue
|
(Unaudited)
|
|
|
|
|
|
Three months ended
|
|
October 31,
|
|
October 31,
|
|
2012
|
|
|
2011
|
|
Revenue:
|
|
|
|
Product
|
82.5
|
%
|
|
84.7
|
%
|
Professional services and support
|
17.5
|
%
|
|
15.3
|
%
|
|
|
|
|
Total revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
Cost of revenue:
|
|
|
|
Product
|
25.0
|
%
|
|
26.9
|
%
|
Professional services and support
|
4.2
|
%
|
|
3.8
|
%
|
|
|
|
|
Total cost of revenue
|
29.2
|
%
|
|
30.7
|
%
|
|
|
|
|
Gross profit
|
70.8
|
%
|
|
69.3
|
%
|
|
|
|
|
Operating expenses:
|
|
|
|
Research and development
|
22.1
|
%
|
|
20.5
|
%
|
Sales and marketing
|
37.3
|
%
|
|
38.2
|
%
|
General and administrative
|
8.3
|
%
|
|
9.3
|
%
|
|
|
|
|
Total operating expenses
|
67.7
|
%
|
|
68.0
|
%
|
|
|
|
|
Operating income
|
3.1
|
%
|
|
1.3
|
%
|
|
|
|
|
Other income (expense), net
|
|
|
|
Interest income
|
0.2
|
%
|
|
0.2
|
%
|
Other income (expense), net
|
0.2
|
%
|
|
0.7
|
%
|
|
|
|
|
Total other income (expense), net
|
0.4
|
%
|
|
0.9
|
%
|
|
|
|
|
Income before income taxes
|
3.5
|
%
|
|
2.2
|
%
|
|
|
|
|
Provision for income taxes
|
4.1
|
%
|
|
2.6
|
%
|
|
|
|
|
Net loss
|
(0.6
|
%)
|
|
(0.4
|
%)
|
|
|
|
|
Note: Certain prior year amounts have been reclassified to
conform to the current year presentation.
|
Aruba Networks, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
October 31,
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
Cash flows from operating activities
|
|
|
|
Net loss
|
$
|
(826
|
)
|
|
$
|
(467
|
)
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by
|
|
|
|
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
5,051
|
|
|
|
4,079
|
|
|
Provision for doubtful accounts
|
|
117
|
|
|
|
12
|
|
|
Write downs for excess and obsolete inventory
|
|
1,868
|
|
|
|
1,403
|
|
|
Stock-based compensation expenses
|
|
22,562
|
|
|
|
19,265
|
|
|
Accretion of purchase discounts on short-term investments
|
|
263
|
|
|
|
308
|
|
|
Change in carrying value of contingent rights liability
|
|
(401
|
)
|
|
|
(918
|
)
|
|
Deferred income taxes
|
|
126
|
|
|
|
13,362
|
|
|
Recovery of escrow funds
|
|
-
|
|
|
|
(702
|
)
|
|
Excess tax benefit associated with stock-based compensation
|
|
(925
|
)
|
|
|
(8,318
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
7,057
|
|
|
|
590
|
|
|
|
Inventory
|
|
(8,602
|
)
|
|
|
2,345
|
|
|
|
Prepaids and other
|
|
208
|
|
|
|
(6,849
|
)
|
|
|
Deferred costs
|
|
65
|
|
|
|
(3,990
|
)
|
|
|
Other assets
|
|
1,459
|
|
|
|
(14,727
|
)
|
|
|
Deferred revenue
|
|
10,923
|
|
|
|
22,830
|
|
|
|
Accounts payable and other liabilities
|
|
(5,198
|
)
|
|
|
(20,899
|
)
|
|
|
Income taxes payable
|
|
3,163
|
|
|
|
9,220
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
36,910
|
|
|
|
16,544
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Purchases of short-term investments
|
|
(67,037
|
)
|
|
|
(53,351
|
)
|
|
Proceeds from sales of short-term investments
|
|
20,252
|
|
|
|
7,523
|
|
|
Proceeds from maturities of short-term investments
|
|
38,166
|
|
|
|
14,000
|
|
|
Purchases of property and equipment
|
|
(5,357
|
)
|
|
|
(3,417
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
(13,976
|
)
|
|
|
(35,245
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from issuance of common stock
|
|
11,336
|
|
|
|
10,856
|
|
|
Repurchase of common stock
|
|
(11,524
|
)
|
|
|
-
|
|
|
Excess tax benefit associated with stock-based compensation
|
|
925
|
|
|
|
8,318
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
737
|
|
|
|
19,174
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
19
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
23,690
|
|
|
|
468
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
133,629
|
|
|
|
80,773
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
$
|
157,319
|
|
|
$
|
81,241
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
Income taxes paid
|
$
|
1,180
|
|
|
$
|
453
|
|

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