Attached files
| file | filename |
|---|---|
| 8-K - ARUBA NETWORKS, INC. 8-K - ARUBA NETWORKS, INC. | a50755659.htm |
Exhibit 99.1
Aruba Networks Reports Fiscal First Quarter 2014 Financial Results
- Record Revenue of $160.9 Grew 11 Percent Year-Over-Year
- 6.4 Million Shares Repurchased Under Stock Repurchase Program
SUNNYVALE, Calif.--(BUSINESS WIRE)--November 21, 2013--Aruba Networks, Inc. (NASDAQ: ARUN) today released financial results for its first quarter of fiscal year 2014 ended October 31, 2013.
Record revenue of $160.9 million grew 11 percent from the $144.5 million reported in Q1’13. GAAP net loss for Q1’14 was $7.8 million, a loss of $0.07 per share, compared with GAAP net loss of $0.8 million, or a loss of $0.01 per share, in Q1’13.
Non-GAAP net income for Q1’14 was $18.9 million, or $0.16 per share, compared with non-GAAP net income of $22.1 million, or $0.18 per share, in Q1’13. A reconciliation between GAAP and non-GAAP information is contained in the tables below and can also be found in the supplementary tables located in the investor section of the company’s website at www.arubanetworks.com.
“In the first quarter, we surpassed our revenue expectations and executed well on our initiatives to grow our sales and channel engine,” said Dominic Orr, Aruba’s president and chief executive officer. “The early strong performance of our 802.11ac solutions validate our technology leadership position in the industry. Additionally, we expanded our addressable market with the launch of our Aruba Central cloud-based management service, bringing Aruba’s enterprise-class performance, manageability and reliability to the cloud. Our competitive position continues to grow as IT teams recognize that upgrading their wired closet will not solve their most pressing needs brought about by an increasingly wireless world and the proliferation of devices needing access to their networks.”
Commenting on the company’s financial results, Michael Galvin, Aruba’s chief financial officer, added, “We delivered a solid quarter achieving record revenue. Leveraging our strong cash position and working capital management, we repurchased $113 million of stock in the quarter.”
Recent Highlights
- Positioned as a Leader in Gartner Inc.’s latest “Magic Quadrant for Wired and Wireless LAN Infrastructure” report published in September 2013. This year’s “Magic Quadrant for Wired and Wireless LAN Infrastructure” marks the second time that Gartner combined wireless and wired LAN infrastructure into one report. Both times, Aruba was positioned in the Leader’s quadrant.
- Introduced a new cloud-managed Wi-Fi solution that combines the new Aruba Central cloud-based management service with Aruba Instant access points to serve the requirements of diverse, distributed organizations as well as mid-sized networks. Aruba cloud Wi-Fi has 10x faster speeds than competitive solutions as well as all the features of a traditional enterprise-class wireless LAN.
- Increased the company’s stock repurchase program with the authorization by Aruba’s Board of Directors to repurchase up to an additional $100 million of its outstanding common stock under its existing share repurchase program. During the first fiscal quarter of 2014, the company repurchased 6.4 million shares of its common stock under its stock repurchase program.
Conference Call Information
Aruba will host a conference call for analysts and investors to discuss its first quarter of fiscal year 2014 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 +1-719-325-4782. 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 at least 90 days. To hear an audio replay of the call, parties in the United States and Canada should call +1-888-203-1112 and enter passcode 7751971. International parties can access the replay at +1-719-457-0820 and should enter passcode 7751971.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about anticipated advantages from our competitive positioning and our cloud capabilities, the demand for wireless networks and the proliferation of devices needing access to wireless networks. 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, economic and competitive conditions and growth trends in the wireless networking industry, our vertical markets and various geographic regions; (2) changes in overall information technology spending, particularly in emerging growth regions; (3) our sales leadership transition; and (4) 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, 2013, which was filed with the SEC on September 24, 2013, 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 U.S. generally accepted accounting principles (GAAP), the Form 8-K 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. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to Aruba’s GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in its financial results for the foreseeable future.
Non-GAAP net income and EPS. Aruba defines non-GAAP net income as net income plus stock-based compensation expenses and related payroll taxes, amortization expense of acquired intangible assets and other acquisition-related expenses, and the change in the valuation of the contingent rights liability. In addition, Aruba provides for non-GAAP income tax expense by applying generally accepted accounting principles to non-GAAP income, including direct and indirect tax effects of the pre-tax non-GAAP adjustments above, excluding tax related to the internal transfer of intellectual property, and accounting for non-GAAP taxes according to the annual method compared to accounting for GAAP taxes according to the discrete method. 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 compensation 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 compensation 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, non-recurring patent-infringement settlements 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 compensation expenses and related payroll taxes, that are recurring. Stock-based compensation 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 impact 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, as well as the supplementary materials located on the IR landing page of the Aruba web site, provide reconciliations between these financial measures and their most directly comparable GAAP equivalents.
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. To learn more, visit Aruba at http://www.arubanetworks.com. For real-time news updates follow Aruba on Twitter and Facebook, and for the latest technical discussions on mobility and Aruba products visit Airheads Social at http://community.arubanetworks.com.
© 2013 Aruba Networks, Inc. Aruba Networks’ trademarks include Aruba Networks®, Aruba The Mobile Edge Company® (stylized), Aruba Mobility Management System®, People Move Networks Must Follow®, Mobile Edge Architecture®, RFProtect®, Green Island®, ETips®, ClientMatchTM, Virtual Intranet AccessTM, ClearPass Access Management SystemsTM, Aruba InstantTM, ArubaOSTM, xSecTM, ServiceEdgeTM, Aruba ClearPass Access Management SystemTM, AirmeshTM, AirWaveTM, Aruba CentralTM, and “ARUBA@WORKTM. All rights reserved. All other trademarks are the property of their respective owners.
| Aruba Networks, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| October 31, | July 31, | |||||||
| 2013 | 2013 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 81,913 | $ | 144,919 | ||||
| Short-term investments | 243,028 | 269,882 | ||||||
| Accounts receivable, net | 68,258 | 93,191 | ||||||
| Inventory, net | 34,364 | 28,895 | ||||||
| Deferred cost of revenue | 13,778 | 12,657 | ||||||
| Prepaids and other current assets | 22,005 | 20,090 | ||||||
| Deferred income tax assets, current | 28,208 | 29,076 | ||||||
| Total current assets | 491,554 | 598,710 | ||||||
| Property and equipment, net | 28,545 | 27,536 | ||||||
| Goodwill | 67,242 | 67,242 | ||||||
| Intangible assets, net | 24,573 | 26,937 | ||||||
| Deferred income tax assets, non-current | 20,310 | 19,788 | ||||||
| Other non-current assets | 6,881 | 6,530 | ||||||
| Total non-current assets | 147,551 | 148,033 | ||||||
| Total assets | $ | 639,105 | $ | 746,743 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 82,245 | $ | 119,523 | ||||
| Income taxes payable, current | 479 | 662 | ||||||
| Deferred revenue, current | 117,200 | 109,765 | ||||||
| Total current liabilities | 199,924 | 229,950 | ||||||
| Deferred revenue, non-current | 39,576 | 31,578 | ||||||
| Other non-current liabilities |
9,537 |
8,990 | ||||||
| Total non-current liabilities | 49,113 | 40,568 | ||||||
| Total liabilities | 249,037 | 270,518 | ||||||
| Stockholders' equity | ||||||||
| Common stock | 11 | 11 | ||||||
| Additional paid-in capital | 544,707 | 623,155 | ||||||
| Accumulated other comprehensive loss | (1,422 | ) | (1,540 | ) | ||||
| Accumulated deficit | (153,228 | ) | (145,401 | ) | ||||
| Total stockholders' equity | 390,068 | 476,225 | ||||||
| Total liabilities and stockholders' equity | $ | 639,105 | $ | 746,743 | ||||
| Aruba Networks, Inc. | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (In thousands, except per share amount) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| October 31, | October 31, | |||||||
| 2013 | 2012 | |||||||
| Revenue | ||||||||
| Product |
$ |
130,831 |
$ | 119,222 | ||||
| Professional services and support | 30,096 | 25,260 | ||||||
| Total revenue | 160,927 | 144,482 | ||||||
| Cost of revenue | ||||||||
| Product | 40,118 | 36,161 | ||||||
| Professional services and support | 8,433 | 5,957 | ||||||
| Total cost of revenue | 48,551 | 42,118 | ||||||
| Gross profit | 112,376 | 102,364 | ||||||
| Operating expenses | ||||||||
| Research and development | 40,445 | 31,963 | ||||||
| Sales and marketing | 63,044 | 53,919 | ||||||
| General and administrative | 14,515 | 11,951 | ||||||
| Total operating expenses | 118,004 | 97,833 | ||||||
| Operating income (loss) | (5,628 | ) | 4,531 | |||||
| Other income, net | ||||||||
| Interest income | 261 | 316 | ||||||
| Other income, net | 270 | 276 | ||||||
| Total other income, net | 531 | 592 | ||||||
| Income (loss) before income taxes | (5,097 | ) | 5,123 | |||||
| Provision for income taxes | 2,730 | 5,949 | ||||||
| Net loss | $ | (7,827 | ) | $ | (826 | ) | ||
| Shares used in computing net loss per common share, basic | 112,011 | 111,976 | ||||||
| Net loss per common share, basic | $ | (0.07 | ) | $ | (0.01 | ) | ||
|
Shares used in computing net loss per common share,
diluted |
112,011 | 111,976 | ||||||
| Net loss per common share, diluted | $ | (0.07 | ) | $ | (0.01 | ) | ||
| Aruba Networks, Inc. | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (GAAP to Non-GAAP Reconciliation) | ||||||||
| (In thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| October 31, | October 31, | |||||||
| 2013 | 2012 | |||||||
| GAAP net loss | $ | (7,827 | ) | $ | (826 | ) | ||
| Plus: | ||||||||
| a) Stock-based compensation expenses | 27,419 | 22,562 | ||||||
| b) Payroll taxes on stock-based compensation expenses | 688 | 636 | ||||||
|
c) Amortization expense of acquired intangible assets and other acquisition-related expenses |
3,606 | 2,664 | ||||||
| d) Change in valuation of contingent rights liability | - | (401 | ) | |||||
| e) Non-GAAP income tax effects | (5,019 | ) | (2,547 | ) | ||||
| Non-GAAP net income | $ | 18,867 | $ | 22,088 | ||||
| GAAP net loss per common share | $ | (0.07 | ) | $ | (0.01 | ) | ||
| Plus: | ||||||||
| a) Stock-based compensation expenses | 0.23 | 0.18 | ||||||
| b) Payroll taxes on stock-based compensation expenses | 0.01 | 0.01 | ||||||
|
c) Amortization expense of acquired intangible assets and other acquisition-related expenses |
0.03 | 0.02 | ||||||
| d) Change in valuation of contingent rights liability | - | - | ||||||
| e) Non-GAAP income tax effects | (0.04 | ) | (0.02 | ) | ||||
| Non-GAAP net income per common share (*) | $ | 0.16 | $ | 0.18 | ||||
| Shares used in computing diluted GAAP net loss per common share | 112,011 | 111,976 | ||||||
| Shares used in computing diluted non-GAAP net income per common share | 121,110 | 122,355 | ||||||
|
(*) The sum of the EPS impacts may not total to Non-GAAP net income per common share due to different share counts used in calculating GAAP loss per common share and Non-GAAP income per common share. The GAAP loss per common share calculation uses a lower share count as it excludes potentially dilutive shares which are included in calculating non-GAAP income per common share. |
| Aruba Networks, Inc. | ||||||
| Condensed Consolidated Statements of Operations | ||||||
| As a Percentage of Total Revenue | ||||||
| (Unaudited) | ||||||
| Three months ended | ||||||
|
October 31, |
October 31, | |||||
| 2013 | 2012 | |||||
| Revenue | ||||||
| Product | 81.3 | % | 82.5 | % | ||
| Professional services and support | 18.7 | % | 17.5 | % | ||
| Total revenue | 100.0 | % | 100.0 | % | ||
| Cost of revenue | ||||||
| Product | 25.0 | % | 25.0 | % | ||
| Professional services and support | 5.2 | % | 4.2 | % | ||
| Total cost of revenue | 30.2 | % | 29.2 | % | ||
| Gross profit | 69.8 | % | 70.8 | % | ||
| Operating expenses | ||||||
| Research and development | 25.1 | % | 22.1 | % | ||
| Sales and marketing | 39.2 | % | 37.3 | % | ||
| General and administrative | 9.0 | % | 8.3 | % | ||
| Total operating expenses | 73.3 | % | 67.7 | % | ||
| Operating income (loss) | (3.5 | %) | 3.1 | % | ||
| Other income, net | ||||||
| Interest income | 0.1 | % | 0.2 | % | ||
| Other income, net | 0.2 | % | 0.2 | % | ||
| Total other income, net | 0.3 | % | 0.4 | % | ||
| Income (loss) before income taxes | (3.2 | %) | 3.5 | % | ||
| Provision for income taxes | 1.7 | % | 4.1 | % | ||
| Net loss | (4.9 | %) | (0.6 | %) | ||
| Aruba Networks, Inc. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| October 31, | October 31, | |||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (7,827 | ) | $ | (826 | ) | ||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 7,032 | 5,051 | ||||||
| Provision for doubtful accounts | (85 | ) | 117 | |||||
| Write downs for excess and obsolete inventory | 1,853 | 1,868 | ||||||
| Stock-based compensation expenses | 27,419 | 22,562 | ||||||
| Accretion of purchase discounts on short-term investments | 609 | 263 | ||||||
| Loss on disposal of fixed assets | 109 | - | ||||||
| Change in carrying value of contingent rights liability | - | (401 | ) | |||||
| Deferred income taxes | (351 | ) | 126 | |||||
| Excess tax benefit associated with stock-based compensation | - | (925 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 25,018 | 7,057 | ||||||
| Inventory | (7,322 | ) | (8,602 | ) | ||||
| Prepaids and other current assets | (763 | ) | 208 | |||||
| Deferred cost of revenue | (1,121 | ) | 65 | |||||
| Other non-current assets | (351 | ) | 1,459 | |||||
| Accounts payable and other current and non-current liabilities | (37,643 | ) | (5,198 | ) | ||||
| Deferred revenue | 15,433 | 10,923 | ||||||
| Income taxes payable | (762 | ) | 3,163 | |||||
|
Net cash provided by operating activities |
21,248 | 36,910 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of short-term investments | (62,362 | ) | (67,037 | ) | ||||
| Proceeds from sales of short-term investments | 48,080 | 20,252 | ||||||
| Proceeds from maturities of short-term investments | 40,645 | 38,166 | ||||||
| Purchases of property and equipment | (4,604 | ) | (5,357 | ) | ||||
|
Net cash provided by (used in) investing activities |
21,759 | (13,976 | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock | 7,449 | 11,336 | ||||||
| Repurchases of common stock under stock repurchase program | (113,462 | ) | (11,524 | ) | ||||
| Excess tax benefit associated with stock-based compensation | - | 925 | ||||||
|
Net cash provided by (used in) financing activities |
(106,013 | ) | 737 | |||||
| Effect of exchange rate changes on cash and cash equivalents | - | 19 | ||||||
|
Net increase (decrease) in cash and cash equivalents |
(63,006 | ) | 23,690 | |||||
| Cash and cash equivalents, beginning of period | 144,919 | 133,629 | ||||||
| Cash and cash equivalents, end of period | $ | 81,913 | $ | 157,319 | ||||
|
Supplemental disclosure of cash flow information: |
||||||||
|
Income taxes paid |
$ | 2,099 | $ | 1,180 | ||||
| Non-cash investing and financing activities: | ||||||||
| Unpaid purchases of property and equipment | $ | 1,182 | $ | 212 | ||||
CONTACT:
Aruba Networks, Inc.
IR Contact:
Tonya Chin,
408-598-4924
Senior Director, Investor Relations
tchin@arubanetworks.com