The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Business Wire

Aruba Networks Reports Record Fiscal Second Quarter 2012 Financial Results

<ul> <li class='bwlistitemmargb'> <i>Revenue Increased 35 percent Year-Over-Year to $126.3 million</i> </li> <li class='bwlistitemmargb'> <i>Added Over 1,500 New Customers in Q2 to Surpass 19,000 Cumulative Customers</i> </li> <li class='bwlistitemmargb'> <i>Cash and Short Term Investments Increased to $275.8 million in Q2</i> </li> </ul>

Thursday, February 16, 2012

Aruba Networks Reports Record Fiscal Second Quarter 2012 Financial Results16:03 EST Thursday, February 16, 2012 SUNNYVALE, Calif. (Business Wire) -- Aruba Networks, Inc. (NASDAQ:ARUN), a global leader in distributed enterprise network solutions, today released financial results for its fiscal second quarter 2012 ended January 31, 2012. Revenue for Q2'12 was $126.3 million, an increase of 35 percent from the $93.9 million reported in Q2'11. GAAP net loss for Q2'12 was $11.4 million, or $0.11 per share, compared with $2.8 million, or $0.03 per share, for the same period in the previous year. Non-GAAP net income for Q2'12 was $19.4 million, or $0.16 per share, compared with of $16.3 million, or $0.14 per share, in Q2'11. A reconciliation between GAAP and non-GAAP information is contained in the tables below. “Second quarter revenue grew by 35 percent over last year as new and existing customers looked to Aruba's differentiated solution to solve some of their most strategic IT needs,” said Dominic Orr, president and chief executive officer. “Our differentiation in security, scalability and mobility software has been built over the last ten years and continues to help us win. To further address our customers mobility needs, we continue to expand our innovative product portfolio with software solutions leveraging our Avenda and Amigopod acquisitions.” “We delivered a strong second quarter with record revenue and record gross margin,” said Michael Galvin, Aruba's Chief Financial Officer. “We also generated $25.7 million in cash from operations, ending the quarter with $275.8 million in cash and short term investments.” Recent HighlightsIntroduced New App to Ensure Remote Security for iPad, iPhone, and iPod Touch. The Virtual Intranet Access (VIA) App is a Wi-Fi aware VPN application that enables seamless security on both public and private wireless networks. VIA builds on Aruba's Remote Networking portfolio, which offers automatic configuration of wireless device settings, requiring zero-touch for the end-user. The App scans and selects the best secure connection back to the corporate network along with using military-grade Suite B cryptography when used with the ArubaOS™ Advanced Cryptography module running on an Aruba mobility Controller. MOVE in Health Care – Aruba deployed an 802.11n wireless network using the MOVE architecture in The Ottawa Hospital to support more than 3,000 Apple iPads, iPhones, and iPod Touches. Physicians and other healthcare professionals are using these devices to access electronic medical records and physician order entry systems at patients' bedsides to facilitate decision-making and enhance patient interaction. The Ottawa Hospital is the largest hospital in Canada for acute care and the wireless network covers the hospital's entire 12 million square foot campus. Expanded Retail Point-of-Sale Solution – Aruba developed a Smartphone- and Tablet-based Point-of-Sale Solution for retailers in partnership with Infinite Peripherals and LightSpeed. This technology will support the retail migration from static to mobile PoS enabling retail sales staff to execute sales transactions reliably and securely from any location in the store. Access networks based on Aruba's MOVE architecture enables policy enforcement based on device-fingerprinting, application-fingerprinting and location, which enables retailers to prioritize mobile PoS applications over less critical traffic to ensure a good customer experience. Formed Airheads Community for Enterprise Mobility Experts. Aruba's Airheads Community offers social networking, technical certifications, member events and an industry-first MVP program for IT engineers in wireless LAN, security and mobile device management. Conference Call Information Aruba will host a conference call for analysts and investors to discuss its fiscal second quarter results today at 5:00 p.m. Eastern Time (2:00 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 4512788. International parties can access the replay at +1-303-590-3030 and should enter passcode 4512788. Forward-Looking Statements This press release contains forward-looking statements, including statements about (1) our expectation that employees will continue to bring their own devices to work, resulting in increased demand for our enterprise mobility solutions, and (2) expansion of our product portfolio. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2011, which was filed with the SEC on December 8, 2011, and is available on Aruba's 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, 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 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. 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 dramatically improves productivity and lowers 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, 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. © 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.Consolidated Balance Sheets(In thousands, except per share data)(Unaudited)   January 31,July 31,20122011 Assets   Current assets: Cash and cash equivalents $ 64,425 $ 80,773 Short-term investments 211,398 153,185 Accounts receivable, net 69,233 68,598 Inventory 24,490 29,895 Deferred costs 8,927 6,999 Prepaids and other 7,106 5,097 Deferred income tax assets   32,861     53,310     Total current assets 418,440 397,857   Property and equipment, net 18,502 14,772 Goodwill 56,747 33,143 Intangible assets, net 29,874 20,863 Deferred income tax assets 20,373 20,143 Other assets   18,399     2,093     Total other assets   143,895     91,014     Total assets $ 562,335   $ 488,871     Liabilities and Stockholders' Equity   Current liabilities: Accounts payable $ 6,113 $ 11,278 Accrued liabilities 47,584 61,461 Income taxes payable 2,936 767 Deferred income tax liability 61 - Deferred revenue   72,631     54,451     Total current liabilities 129,325 127,957   Deferred income tax liability 1,893 815 Deferred revenue 18,147 14,000 Other long-term liabilities   1,041     757     Total other liabilities   21,081     15,572     Total liabilities   150,406     143,529     Stockholders' equity Common Stock: $0.0001 par value; 350,000 shares authorized at January 31, 2012 and July 31, 2011; 109,215 and 104,905 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively 11 10 Additional paid-in capital 530,894 450,147 Accumulated other comprehensive income/(loss) (2,185 ) 127 Accumulated deficit   (116,791 )   (104,942 )   Total stockholders' equity   411,929     345,342     Total liabilities and stockholders' equity $ 562,335   $ 488,871       Aruba Networks, Inc.Consolidated Statements of Operations(On a GAAP basis)(In thousands, except per share data)(Unaudited)         Three months endedSix months endedJanuary 31,January 31,2012201120122011 Revenues: Product $ 105,970 $ 79,100 $ 207,101 $ 148,304 Professional services and support 20,091 14,602 38,175 28,402 Ratable product and related professional services and support   214     156     351     299     Total revenues 126,275 93,858 245,627 177,005   Cost of revenues: Product 30,452 24,173 62,521 46,236 Professional services and support 5,030 3,542 9,576 6,448 Ratable product and related professional services and support   -     -     -     9     Total cost of revenues   35,482     27,715     72,097     52,693     Gross profit   90,793     66,143     173,530     124,312     Operating expenses: Research and development 27,926 21,608 52,393 38,722 Sales and marketing 49,720 36,936 95,335 70,350 General and administrative   12,698     10,183     23,798     17,371     Total operating expenses   90,344     68,727     171,526     126,443     Operating income (loss) 449 (2,584 ) 2,004 (2,131 )   Other income (expense), net Interest income 299 240 575 474 Other income (expense), net   2,731     (61 )   3,558     1,583     Total other income (expense), net   3,030     179     4,133     2,057     Income (loss) before income tax provision 3,479 (2,405 ) 6,137 (74 )   Income tax provision   14,861     428     17,986     624     Net loss $ (11,382 ) $ (2,833 ) $ (11,849 ) $ (698 )   Shares used in computing net loss per common share, basic 108,084 98,795 107,010 97,416   Net loss per common share, basic $ (0.11 ) $ (0.03 ) $ (0.11 ) $ (0.01 )   Shares used in computing net loss per common share, diluted 108,084 98,795 107,010 97,416   Net loss per common share, diluted $ (0.11 ) $ (0.03 ) $ (0.11 ) $ (0.01 )     Aruba Networks, Inc.Consolidated Statements of Operations(GAAP to Non-GAAP Reconciliation)(In thousands, except per share data)(Unaudited)         Three months endedSix months endedJanuary 31,January 31,2012201120122011   GAAP net loss $ (11,382 ) $ (2,833 ) $ (11,849 ) $ (698 )   Plus: a) Stock-based compensation expenses 22,924 16,664 42,189 28,232 b) Payroll taxes on stock-based compensation expenses 541 714 1,046 992 c) Amortization expense of acquired intangible assets and other acquisition related expenses 2,634 2,122 4,622 3,799 d) Change in valuation of contingent rights liability (2,321 ) (327 ) (3,238 ) (2,104 ) e) Income tax effect of non-GAAP exclusions 6,969 - 3,310 -                           Non-GAAP net income $ 19,365   $ 16,340   $ 36,080   $ 30,221       GAAP net loss per common share $ (0.11 ) $ (0.03 ) $ (0.11 ) $ (0.01 )   Plus: a) Stock-based compensation expenses 0.20 0.14 0.36 0.25 b) Payroll taxes on stock-based compensation expenses 0.01 0.01 0.01 0.01 c) Amortization expense of acquired intangible assets and other acquisition related expenses 0.02 0.02 0.04 0.03 d) Change in valuation of contingent rights liability (0.02 ) - (0.03 ) (0.02 ) e) Income tax effect of non-GAAP exclusions 0.06 - 0.03 -                           Non-GAAP net income per common share $ 0.16   $ 0.14   $ 0.30   $ 0.26     Shares used in computing diluted GAAP net loss per common share 108,084 98,795 107,010 97,416   Shares used in computing diluted non-GAAP net income per common share 120,045 116,230 119,258 114,750     Aruba Networks, Inc.Consolidated Statements of OperationsAs a Percentage of Total Revenues(On a GAAP Basis)(Unaudited)         Three months endedSix months endedJanuary 31,January 31,2012201120122011 Revenues: Product 83.9 % 84.3 % 84.3 % 83.8 % Professional services and support 15.9 % 15.5 % 15.6 % 16.0 % Ratable product and related professional services and support 0.2 % 0.2 % 0.1 % 0.2 %   Total revenues 100.0 % 100.0 % 100.0 % 100.0 %   Cost of revenues: Product 24.1 % 25.7 % 25.5 % 26.1 % Professional services and support 4.0 % 3.8 % 3.9 % 3.7 % Ratable product and related professional services and support 0.0 % 0.0 % 0.0 % 0.0 %   Total cost of revenues 28.1 % 29.5 % 29.4 % 29.8 %   Gross profit 71.9 % 70.5 % 70.6 % 70.2 %   Operating expenses: Research and development 22.1 % 23.0 % 21.3 % 21.9 % Sales and marketing 39.4 % 39.4 % 38.8 % 39.7 % General and administrative 10.0 % 10.9 % 9.7 % 9.8 %   Total operating expenses 71.5 % 73.3 % 69.8 % 71.4 %   Operating income (loss) 0.4 % (2.8 %) 0.8 % (1.2 %)   Other income (expense), net Interest income 0.2 % 0.3 % 0.2 % 0.3 % Other income (expense), net 2.2 % (0.1 )% 1.5 % 0.9 %   Total other income (expense), net 2.4 % 0.2 % 1.7 % 1.2 %   Income (loss) before income tax provision 2.8 % (2.6 %) 2.5 % 0.0 %   Income tax provision 11.8 % 0.4 % 7.3 % 0.4 %   Net loss (9.0 %) (3.0 %) (4.8 %) (0.4 %)     Aruba Networks, Inc.Consolidated Statements of Cash Flows(In thousands)(Unaudited)     Six months endedJanuary 31,20122011Cash flows from operating activities Net loss $ (11,849 ) $ (698 )   Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 8,974 7,198 Provision for doubtful accounts (19 ) (26 ) Write downs for excess and obsolete inventory 2,696 1,386 Compensation related to stock options and share awards 42,189 28,233 Accretion of purchase discounts on short-term investments 603 668 Loss (gain) on disposal of fixed assets 10 (6 ) Change in carrying value of contingent rights liability (3,238 ) (2,105 ) Deferred income taxes 19,250 - Recovery of escrow funds (702 ) - Excess tax benefit associated with stock-based compensation (12,066 ) (231 ) Changes in operating assets and liabilities: Accounts receivable (778 ) (10,144 ) Inventory 1,558 (3,110 ) Prepaids and other (3,003 ) (136 ) Deferred costs (2,336 ) (930 ) Other assets (15,614 ) (479 ) Accounts payable (6,814 ) (2,922 ) Deferred revenue 22,322 3,230 Other current and noncurrent liabilities (11,319 ) 5,499 Income taxes payable   12,520     104     Net cash provided by operating activities   42,384     25,531     Cash flows from investing activities Purchases of short-term investments (109,952 ) (59,188 ) Proceeds from sales of short-term investments 26,525 17,376 Proceeds from maturities of short-term investments 24,500 26,480 Purchases of property and equipment (5,345 ) (4,263 ) Cash paid in purchase acquisitions, net of cash acquired   (21,086 )   (4,303 )   Net cash used in investing activities   (85,358 )   (23,898 )   Cash flows from financing activities Proceeds from issuance of common stock 15,200 16,138 Excess tax benefit associated with stock-based compensation   12,066     231     Net cash provided by financing activities   27,266     16,369     Effect of exchange rate changes on cash and cash equivalents   (640 )   2     Net (decrease) increase in cash and cash equivalents (16,348 ) 18,004   Cash and cash equivalents, beginning of period   80,773     31,254     Cash and cash equivalents, end of period $ 64,425   $ 49,258     Supplemental disclosure of cash flow information Income taxes paid $ 3,410 $ 590   Supplemental disclosure of non-cash investing and financing activities Common stock issued in purchase acquisitions $ 12,000 $ 30,691 Contingent rights issued in purchase acquisition $ - $ 9,486 Aruba Networks, Inc.Michael GalvinChief Financial Officerir@arubanetworks.comorThe Blueshirt GroupChris Danne or Maria Riley, +1-415-217-7722Investor Relationsir@arubanetworks.com