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8-K - FORM 8-K - ARUBA NETWORKS, INC. | f59249e8vk.htm |
Exhibit 99.1
ARUBA NETWORKS REPORTS RECORD THIRD QUARTER 2011 FINANCIAL RESULTS
| Record Revenue of $105.8 Million in Q3 Increased 53 Percent Year-over-Year and 13 Percent Quarter-over-Quarter | ||
| Added Over 1,200 New Customers in Q3 to Surpass 14,000 Cumulative Customers | ||
| Cash and Short Term Investments Increased $23.0 Million to $210.8 Million With No Debt |
SUNNYVALE, Calif., May 19, 2011 Aruba Networks, Inc. (NASDAQ: ARUN), a global leader
in distributed enterprise network solutions, today released financial results for its fiscal 2011
third quarter ended April 30, 2011.
Revenue for Q311 was $105.8 million, an increase of 53 percent from the $69.0 million reported in
Q310. GAAP net income for Q311 was $3.2 million, or $0.03 per share, compared with a net loss of
$5.3 million, or $0.06 per share, in Q310.
Non-GAAP net income for Q311 was $18.8 million, or $0.16 per share. This compares with $8.5
million or $0.08 per share in Q310. A reconciliation between GAAP and non-GAAP information is
contained in the tables below.
Aruba Networks is helping companies and organizations transform the network edge and move to a
mobility-centric architecture, said Dominic Orr, President and Chief Executive Officer of Aruba.
In the third quarter, we benefited from strong demand across all of our major geographies and
increasing acceptance of our solutions in both the general enterprise and across our other
verticals. Our continued innovation is a key factor in our rapid customer acquisition, as we added
over 1,200 new customers in the third quarter, a record for the Company.
We are pleased with our financial performance this quarter, said Michael Galvin, Arubas Interim
Chief Financial Officer. With 53 percent year-over-year revenue growth we delivered a strong
quarter and generated $9.3 million in cash from operations.
Recent Highlights
| Mobile Architecture Aruba launched its Mobile Virtual Enterprise (MOVE) architecture designed to accelerate the enterprise network mobility revolution. Aruba MOVE provides context-aware networking for the post wired infrastructure era. Aruba MOVE delivers a comprehensive portfolio of thin network on-ramps. These on-ramps are enabled by Aruba Mobility Network Services, delivered centrally from the data center. | ||
| New Outdoor WLAN Solutions Aruba launched the Aruba AirMesh outdoor wireless solutions portfolio designed to be the most scalable and high-performance outdoor mesh portfolio available in the industry today. The Aruba AirMesh solution was deployed at the port of Yokohama in Japan to transfer its traffic from IP cameras, weather sensors, Z-Wave and other Wi-Fi enabled devices to the iPhones and iPads used by workers and security at the port. |
| Mobile Device Access Control (MDAC) Solution Aruba also announced the availability of its MDAC solution, providing easy, secure network access to facilitate the Bring Your Own Device (BYOD) phenomenon. This solution is designed for zero-touch, secure provisioning of Apple® iOS mobile devices. Due to strong market demand, Aruba also introduced its MDAC solution for customers with Cisco WLAN infrastructure. | ||
| Industry Recognition Gartner, Inc. positioned Aruba in the Leaders quadrant of its recently released Magic Quadrant for Wireless LAN Infrastructure (Global) report.* The Magic Quadrant evaluates vendors based on two criteria, ability to execute and completeness of vision. Aruba was also named to CRNs 2011 Partner Programs Guide and was also awarded a 5-Star Partner rating. CRNs Partner Programs Guide and 5-Star Partner ratings serve as the definitive list of vendors who have robust partner programs or products that service solution providers offer directly to the IT channel. | ||
| ArubaEdge Partner Program Aruba announced the ArubaEdge Partner Program. This program certifies and promotes end-to-end mobility solutions from an ecosystem of technology partners leveraging the Aruba MOVE architecture. Ecosystem partners participating in the ArubaEdge include Avaya, Citrix, Dell, Microsoft, Polycom and many more. |
Conference Call Information
Aruba will host a conference call for analysts and investors to discuss its fiscal third
quarter results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the
conference call will also be accessible from the Investor Relations section of the Companys
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 4436777. International parties can access the replay at
+1-303-590-3030 and should enter passcode 4436777.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about (1) our belief
that the enterprise network is transitioning from a wired-centric to a mobility-centric
architecture which will impact Arubas sales and (2) our expectations regarding customer adoption
of our MOVE architecture and our AirMesh and MDAC solutions.
These forward-looking statements involve risks and uncertainties, as well as assumptions
which, if they do not fully materialize or prove incorrect, could cause Arubas 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) our ability to react to trends and challenges in our business and the markets in which
we operate; (2) business and economic conditions and growth trends in the networking industry, our
vertical markets and various geographic regions; and (3) changes in overall information technology
spending; as well as those risks and uncertainties included under the captions Risk Factors and
Managements Discussion and Analysis of Financial Condition and Results of Operations, in Arubas
report on Form 10-Q for the fiscal second quarter ended January 31, 2011, which was filed with the
SEC on March 11, 2011, and is available on Arubas investor relations Web site at
www.arubanetworks.com and on the SEC Web site 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.
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 expense of acquired intangible assets and other
acquisition related expenses, the change in the valuation of the contingent rights liability and
litigation reserves. Aruba defines non-GAAP EPS as non-GAAP net income divided by the weighted
average diluted shares outstanding. Arubas 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 companys performance by excluding
certain expenses that may not be indicative of Arubas 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, such as litigation reserves. Because of varying
available valuation methodologies, subjective assumptions and the variety of award types that
companies can use, Arubas 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 companys operating results over different periods of time.
Similarly, by excluding amortization expense of acquired intangible assets and other acquisition
related expenses, the change in the valuation of the contingent rights liability and litigation
reserves, Arubas management believes that investors can better understand and measure the
companys 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 Arubas business. Second, stock-based awards
are an important part of Arubas 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 evaluating these non-GAAP financial
measures together with their most directly comparable financial measures calculated in accordance
with GAAP. The accompanying tables have more details on these non-GAAP financial measures,
including 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 Web
site at www.arubanetworks.com.
# # #
*Gartner Magic Quadrant for Wireless LAN Infrastructure (Global) by Michael J. King and Tim
Zimmerman, March 3, 2011.
About Aruba Networks
Aruba is a global leader in distributed enterprise networks. Its award-winning portfolio of campus,
branch/teleworker, and mobile solutions simplify operations and secure access to all corporate
applications and services regardless of the users device, location, or network. This
dramatically improves productivity and lowers capital and operational costs.
Listed on the NASDAQ and Russell 2000(R) Index, Aruba is based in Sunnyvale, California, and has
operations throughout the Americas, Europe, Middle East, and Asia Pacific regions. To learn more,
visit Aruba at http://www.arubanetworks.com. For real-time news updates follow Aruba on
Twitter or Facebook.
# # #
IR Contacts |
||
Aruba Networks, Inc.
|
The Blueshirt Group, Investor Relations | |
Michael Galvin
|
Chris Danne, Maria Riley | |
Interim Principal Financial and Accounting Officer
|
+1-415-217-7722 | |
+1-408-227-4500
|
ir@arubanetworks.com | |
ir@arubanetworks.com |
© 2011 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.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
April 30, | July 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 77,245 | $ | 31,254 | ||||
Short-term investments |
133,553 | 124,167 | ||||||
Accounts receivable, net |
67,464 | 41,269 | ||||||
Inventory |
20,685 | 15,159 | ||||||
Deferred costs |
6,703 | 5,451 | ||||||
Prepaids and other |
4,311 | 5,108 | ||||||
Total current assets |
309,961 | 222,408 | ||||||
Property and equipment, net |
12,530 | 9,919 | ||||||
Goodwill |
33,143 | 7,656 | ||||||
Intangible assets, net |
22,915 | 9,287 | ||||||
Other assets |
2,140 | 1,437 | ||||||
Total other assets |
70,728 | 28,299 | ||||||
Total assets |
$ | 380,689 | $ | 250,707 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 10,486 | $ | 8,082 | ||||
Accrued liabilities |
48,840 | 36,458 | ||||||
Income taxes payable |
819 | 519 | ||||||
Deferred revenue |
49,848 | 43,422 | ||||||
Total current liabilities |
109,993 | 88,481 | ||||||
Deferred revenue |
12,340 | 10,976 | ||||||
Other long-term liabilities |
750 | 595 | ||||||
Total other liabilities |
13,090 | 11,571 | ||||||
Total liabilities |
123,083 | 100,052 | ||||||
Stockholders equity |
||||||||
Common Stock: $0.0001 par value; 350,000
shares authorized at April 30, 2011, and July
31, 2010; 103,819 and 93,606 shares issued and
outstanding at April 30, 2011, and July 31,
2010, respectively |
10 | 9 | ||||||
Additional paid-in capital |
430,564 | 326,178 | ||||||
Accumulated other comprehensive income |
159 | 98 | ||||||
Accumulated deficit |
(173,127 | ) | (175,630 | ) | ||||
Total stockholders equity |
257,606 | 150,655 | ||||||
Total liabilities and stockholders equity |
$ | 380,689 | $ | 250,707 | ||||
Aruba Networks, Inc.
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Three months ended | Nine months ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Product |
$ | 89,415 | $ | 56,634 | $ | 237,719 | $ | 155,909 | ||||||||
Professional services and support |
16,186 | 12,167 | 44,588 | 32,672 | ||||||||||||
Ratable product and related
professional services and support |
150 | 156 | 449 | 627 | ||||||||||||
Total revenues |
105,751 | 68,957 | 282,756 | 189,208 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Product |
29,964 | 19,911 | 76,199 | 54,446 | ||||||||||||
Professional services and support |
4,167 | 2,201 | 10,615 | 6,437 | ||||||||||||
Ratable product and related
professional services and support |
| 46 | 10 | 199 | ||||||||||||
Total cost of revenues |
34,131 | 22,158 | 86,824 | 61,082 | ||||||||||||
Gross profit |
71,620 | 46,799 | 195,932 | 128,126 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
22,799 | 13,874 | 61,521 | 37,713 | ||||||||||||
Sales and marketing |
40,916 | 27,697 | 111,266 | 79,013 | ||||||||||||
General and administrative |
10,319 | 8,840 | 27,690 | 23,600 | ||||||||||||
Litigation reserves |
| 1,650 | | 21,900 | ||||||||||||
Total operating expenses |
74,034 | 52,061 | 200,477 | 162,226 | ||||||||||||
Operating loss |
(2,414 | ) | (5,262 | ) | (4,545 | ) | (34,100 | ) | ||||||||
Other income (expense), net |
||||||||||||||||
Interest income |
284 | 218 | 758 | 616 | ||||||||||||
Other income (expense), net |
5,608 | (189 | ) | 7,191 | (432 | ) | ||||||||||
Total other income (expense), net |
5,892 | 29 | 7,949 | 184 | ||||||||||||
Income (loss) before income tax
provision |
3,478 | (5,233 | ) | 3,404 | (33,916 | ) | ||||||||||
Income tax provision |
277 | 85 | 901 | 504 | ||||||||||||
Net income (loss) |
$ | 3,201 | $ | (5,318 | ) | $ | 2,503 | $ | (34,420 | ) | ||||||
Shares used in computing net income
(loss) per common share, basic |
102,055 | 90,874 | 98,962 | 88,978 | ||||||||||||
Net income (loss) per common share,
basic |
$ | 0.03 | $ | (0.06 | ) | $ | 0.03 | $ | (0.39 | ) | ||||||
Shares used in computing net income
(loss) per common share, diluted |
119,367 | 90,874 | 116,289 | 88,978 | ||||||||||||
Net income (loss) per common share,
diluted |
$ | 0.03 | $ | (0.06 | ) | $ | 0.02 | $ | (0.39 | ) |
Aruba Networks, Inc.
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)
Three months ended | Nine months ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP net income (loss) |
$ | 3,201 | $ | (5,318 | ) | $ | 2,503 | $ | (34,420 | ) | ||||||
Plus: |
||||||||||||||||
a) Stock-based expenses |
19,289 | 10,947 | 48,513 | 27,769 | ||||||||||||
b) Amortization
expense of acquired
intangible assets and
other acquisition
related expenses |
2,211 | 1,193 | 6,010 | 3,659 | ||||||||||||
c) Change in valuation
of contingent rights
liability |
(5,887 | ) | | (7,991 | ) | | ||||||||||
d) Litigation reserves |
| 1,650 | | 21,900 | ||||||||||||
Non-GAAP net income |
$ | 18,814 | $ | 8,472 | $ | 49,035 | $ | 18,908 | ||||||||
GAAP net income (loss)
per common share |
$ | 0.03 | $ | (0.06 | ) | $ | 0.02 | $ | (0.39 | ) | ||||||
Plus: |
||||||||||||||||
a) Stock-based expenses |
0.16 | 0.12 | 0.42 | 0.30 | ||||||||||||
b) Amortization
expense of acquired
intangible assets and
other acquisition
related expenses |
0.02 | 0.01 | 0.05 | 0.04 | ||||||||||||
c) Change in valuation
of contingent rights
liability |
(0.05 | ) | | (0.07 | ) | | ||||||||||
d) Litigation reserves |
| 0.01 | | 0.23 | ||||||||||||
Non-GAAP net income per
common share |
$ | 0.16 | $ | 0.08 | $ | 0.42 | $ | 0.18 | ||||||||
Shares used in computing
diluted GAAP net income
(loss) per common share |
119,367 | 90,874 | 116,289 | 88,978 | ||||||||||||
Shares used in computing
diluted Non-GAAP net
income per common share |
119,367 | 106,548 | 116,289 | 102,946 |
Aruba Networks, Inc.
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Three months ended | Nine months ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Product |
84.6 | % | 82.1 | % | 84.1 | % | 82.4 | % | ||||||||
Professional services and support |
15.3 | % | 17.7 | % | 15.8 | % | 17.3 | % | ||||||||
Ratable product and related professional
services and support |
0.1 | % | 0.2 | % | 0.1 | % | 0.3 | % | ||||||||
Total revenues |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of revenues: |
||||||||||||||||
Product |
28.3 | % | 28.8 | % | 26.9 | % | 28.8 | % | ||||||||
Professional services and support |
4.0 | % | 3.2 | % | 3.8 | % | 3.4 | % | ||||||||
Ratable product and related professional
services and support |
0.0 | % | 0.1 | % | 0.0 | % | 0.1 | % | ||||||||
Total cost of revenues |
32.3 | % | 32.1 | % | 30.7 | % | 32.3 | % | ||||||||
Gross profit |
67.7 | % | 67.9 | % | 69.3 | % | 67.7 | % | ||||||||
Operating expenses: |
||||||||||||||||
Research and development |
21.5 | % | 20.1 | % | 21.8 | % | 19.9 | % | ||||||||
Sales and marketing |
38.7 | % | 40.2 | % | 39.3 | % | 41.8 | % | ||||||||
General and administrative |
9.8 | % | 12.8 | % | 9.8 | % | 12.4 | % | ||||||||
Litigation reserves |
0.0 | % | 2.4 | % | 0.0 | % | 11.6 | % | ||||||||
Total operating expenses |
70.0 | % | 75.5 | % | 70.9 | % | 85.7 | % | ||||||||
Operating loss |
(2.3 | %) | (7.6 | %) | (1.6 | %) | (18.0 | %) | ||||||||
Other income (expense), net |
||||||||||||||||
Interest income |
0.3 | % | 0.3 | % | 0.3 | % | 0.3 | % | ||||||||
Other income (expense), net |
5.3 | % | (0.3 | )% | 2.5 | % | (0.2 | )% | ||||||||
Total other income (expense), net |
5.6 | % | 0.0 | % | 2.8 | % | 0.1 | % | ||||||||
Income (loss) before income tax provision |
3.3 | % | (7.6 | %) | 1.2 | % | (17.9 | %) | ||||||||
Income tax provision |
0.3 | % | 0.1 | % | 0.3 | % | 0.3 | % | ||||||||
Net income (loss) |
3.0 | % | (7.7 | %) | 0.9 | % | (18.2 | %) | ||||||||
Aruba Networks, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine months ended | ||||||||
April 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net income (loss) |
2,503 | (34,420 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
11,201 | 7,493 | ||||||
Provision for doubtful accounts |
4 | 259 | ||||||
Write downs for excess and obsolete inventory |
2,445 | 1,476 | ||||||
Compensation related to stock options and share awards |
45,828 | 26,765 | ||||||
Accretion of purchase discounts on short-term investments |
997 | 482 | ||||||
Loss (gain) on disposal of fixed assets |
(6 | ) | 19 | |||||
Change in carrying value of contingent liability |
(7,991 | ) | | |||||
Excess tax benefit associated with stock-based compensation |
(15 | ) | | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(23,674 | ) | 1,523 | |||||
Inventory |
(7,211 | ) | (9,123 | ) | ||||
Prepaids and other |
(1,111 | ) | (1,147 | ) | ||||
Deferred costs |
(1,252 | ) | (960 | ) | ||||
Other assets |
(426 | ) | 107 | |||||
Accounts payable |
(1,099 | ) | 4,145 | |||||
Deferred revenue |
6,451 | 6,555 | ||||||
Other current and noncurrent liabilities |
8,009 | 12,493 | ||||||
Income taxes payable |
138 | (220 | ) | |||||
Net cash provided by operating activities |
34,791 | 15,447 | ||||||
Cash flows from investing activities |
||||||||
Purchases of short-term investments |
(81,511 | ) | (79,766 | ) | ||||
Proceeds from sales of short-term investments |
19,876 | 3,001 | ||||||
Proceeds from maturities of short-term investments |
51,030 | 42,965 | ||||||
Purchases of property and equipment |
(5,776 | ) | (3,378 | ) | ||||
Proceeds from sales of property and equipment |
14 | 23 | ||||||
Cash paid in purchase acquisitions, net of cash acquired |
(4,303 | ) | | |||||
Net cash used in investing activities |
(20,670 | ) | (37,155 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds from issuance of common stock |
31,856 | 9,957 | ||||||
Repurchases of unvested common stock |
| (36 | ) | |||||
Excess tax benefit associated with stock-based compensation |
15 | | ||||||
Net cash provided by financing activities |
31,871 | 9,921 | ||||||
Effect of exchange rate changes on cash and cash equivalents |
(1 | ) | (1 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
45,991 | (11,788 | ) | |||||
Cash and cash equivalents, beginning of period |
31,254 | 41,298 | ||||||
Cash and cash equivalents, end of period |
$ | 77,245 | $ | 29,510 | ||||
Supplemental disclosure of cash flow information |
||||||||
Income taxes paid |
$ | 781 | $ | 768 | ||||
Supplemental disclosure of non-cash investing and financing activities |
||||||||
Common stock issued in purchase acquisitions |
$ | 30,691 | $ | | ||||
Contingent rights issued in purchase acquisition |
$ | 9,486 | $ | |