Aruba Networks (ticker: ARUN, exchange: NASDAQ Global Market (.O))
News Release -
26-Feb-2008
Aruba Networks Announces Fiscal Second Quarter Financial ResultsBoard of Directors Approves Stock Repurchase PlanSUNNYVALE, CA, Feb 26, 2008 (MARKET WIRE via COMTEX News Network) -- Aruba Networks, Inc. (NASDAQ: ARUN), a global leader in wireless
LANs and secure unified mobility solutions, today released financial
results for the fiscal second quarter ended January 31, 2008.
Revenues for the fiscal second quarter of 2008 were approximately
$40.6 million, an increase of 53% from $26.6 million reported in the
fiscal second quarter of 2007. GAAP net loss for the fiscal second
quarter of 2008 was $3.5 million, or $0.04 per share, compared to a
net loss of $7.2 million, or $0.52 per share, in the fiscal second
quarter of 2007. GAAP results for the second fiscal quarter of 2008
included $4.1 million of non-cash stock-based expenses.
Non-GAAP net income for the fiscal second quarter of 2008 was $0.6
million, or $0.01 per diluted share, compared to a non-GAAP net loss
of $3.2 million, or $0.23 per diluted share, in the fiscal second
quarter of 2007. Non-GAAP net income excludes the impact of
stock-based expenses in all periods and, for the second fiscal
quarter of 2007, expense related to the revaluation of warrants to
fair value.
"Despite short term softness in our Federal and retail verticals, we
added a record number of customers in the second quarter and saw
continued strength in our education, healthcare and high tech
verticals," said Dominic Orr, president and chief executive officer
of Aruba Networks. "Moving forward, we expect the Federal vertical to
return to normal levels with the approval of the Federal budget.
Additionally, we continue to believe that two key drivers in the
retail sector -- the need for PCI compliance and the need to replace
aging wireless infrastructure -- will drive long term growth for our
wireless LAN solutions. With strong growth of new customer
acquisitions, we now have a base of over 3,750 total customers
worldwide."
"We have been especially pleased with the strong interest in our
802.11n solutions," continued Mr. Orr. "The education vertical
accounts for approximately 50% of our current pipeline for this
technology; however, we are seeing orders and evaluations by
companies spread across our different vertical markets. We believe
that the competitive differentiation of our architecture and products
will continue to drive sales and help grow our business in the coming
quarters."
"Gross margins were very strong, reflecting a favorable product mix,"
said Steffan Tomlinson, Aruba's chief financial officer. "We closely
managed expenses during the period and were able to deliver non-GAAP
profitability in a tougher quarter."
Stock Repurchase Plan
Aruba also announced today that it has been authorized by its Board
of Directors to institute a stock repurchase program for up to $10
million worth of its common stock. Purchases may be made, from time
to time, in the open market and will be funded from available working
capital. The number of shares to be purchased and the timing of
purchases will be based on the price of the Company's common stock,
general business and market conditions, and other investment
considerations.
Recent Highlights
Aruba's focus on providing secure mobility solutions that integrate
seamlessly with existing legacy network infrastructure enabled the
Company to accomplish several key objectives over the past three
months. Some highlights include:
-- Rollout of 802.11n Technology -- Aruba rolled out its new high
performance 802.11n Access Points at events sponsored by value-added
distributors Avnet Technology Solutions, an operating group of Avnet, Inc.,
Catalyst Telecom, a division of ScanSource, Inc., and Westcon Group, Inc.
The theme of the rollouts, The All-Wireless Workplace: Now Open For
Business, highlighted how Aruba's 802.11n products and unified mobility
solutions make it practical to deploy a highly secure, completely all-
wireless workplace.
-- Recognition for Voice-Over-IP Innovation -- Aruba obtained first place
ranking in innovation in ABI Research's "Voice Over Wi-Fi Ecosystems Vendor
Matrix" report. The innovation ranking is based on how a technology
addresses roaming, call management, endpoint security, VoWi-Fi reporting,
intrusion detection and protection, troubleshooting, fixed-mobile
convergence schemes, fast handoffs, load balancing, battery life, quality
of service, and architecture.
-- Positioned by Gartner as an Industry Leader -- Aruba was positioned in
the "Leaders" quadrant in Gartner's "Magic Quadrant for Wireless LAN
Infrastructure, 2007" report. Magic Quadrants depict markets using a two-
dimensional matrix that evaluates vendors based on the completeness of
their vision and ability to execute. Among other characteristics a Leader
has demonstrated the ability to fulfill a broad variety of customer
requirements, provides an end-to-end infrastructure-based solution with no
obvious gaps within the portfolio, and has the financial viability to
continue that support beyond the single installation.
-- Navy Exchange Service Command (NEXCOM) -- Aruba's adaptive wireless
LANs and identity-based security were selected for, and deployment
commenced at, 344 NEXCOM retail stores located at 107 U.S. Navy
installations worldwide. NEXCOM chose Aruba's FIPS 104-2 certified platform
as the solution to address rigorous payment card industry (PCI) data
security standards designed to prevent the theft of consumer personal and
financial data. Aruba's solution is being overlaid on NEXCOM's legacy wired
network to defend it against network breaches, while providing high
security wireless networking for legacy point-of-sale devices, bar code
readers, mobile computers, and printers.
-- Secure Mobility Solution Rated Avaya Compliant -- Avaya rated Aruba's
Multi-Service Mobility Controllers and wireless LAN Remote Access Points
compliant with Avaya IP telephony and messaging solutions. Used in
conjunction with Avaya IP telephones, Aruba Remote Access Points allow
enterprises to extend communication and messaging capabilities to remote
workers simply and securely, without the cost and complexity of VPN or
router-based solutions. The Avaya compliant rating ensures businesses that
they can add best-in-class capabilities to their networks without having to
replace their existing infrastructure, speeding deployment of new
applications and reducing both network complexity and implementation costs.
-- AirWave Wireless Acquisition -- Aruba announced the execution of a
definitive agreement to purchase AirWave Wireless, Inc, a leading provider
of specialized tools to centrally manage large, multi-vendor wireless LAN,
mesh, and WiMax networks. AirWave's management software is used by hundreds
of IT organizations, including many Fortune 500 companies, and will provide
Aruba with best-in-class multi-vendor mobility management tools, as well as
a vehicle for better supporting its expanding technology partner eco-
system. Aruba will acquire AirWave in exchange for total consideration of
$37 million in stock and cash, and the acquisition is expected to close in
the third quarter of Aruba's 2008 fiscal year.
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). A live Webcast of the conference call
will also be accessible from the "Investor Relations" section of the
Company's Web site at www.arubanetworks.com. Following the Webcast,
an archived version will be available on the Web site for twelve
months. To hear the replay, parties in the United States and Canada
should call 800-405-2236 and enter passcode 11108078. International
parties can access the replay at +1-303-590-3000 and should enter
passcode 11108078.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements relating to our expectations (1) that contributions from
the Federal vertical will rebound, (2) that the need to become PCI
compliant and the need to replace aging wireless infrastructure will
drive long term growth for our wireless LAN solutions in the retail
sector, (3) that the competitive differentiation of our architecture
and products will continue to drive sales and help us grow our
business in coming quarters (4) regarding the benefits to be achieved
by our acquisition of AirWave Wireless and our belief that the
acquisition will close in our third fiscal quarter and (5) regarding
our stock repurchase program, including statements regarding the
factors that will impact the amount and timing of repurchases under
the new stock repurchase program.
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 our ability to react to trends and challenges in our business
and the markets in which we operate; training and logistical
challenges that we face in establishing our two-tier distribution
model; business and economic conditions and growth trends in the
networking industry, our vertical markets and various geographic
regions; changes in customer order patterns or customer mix; overall
information technology spending; the adoption rate of our products;
our ability to establish and maintain successful relationships with
our distribution partners; our ability to compete in our industry;
fluctuations in demand, sales cycles and prices for our products and
services; rapid technological and market change; our ability to
successfully market and transition customers to next generation
products; the number of shares ultimately purchased under our stock
repurchase program; fluctuations in our stock price and in the stock
market generally; competing future investment opportunities and
alternative uses of cash; and our ability to successfully acquire
businesses and technologies and to successfully integrate and operate
these acquired businesses and technologies, 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 report on Form 10-Q for the
quarter ended October 31, 2007, which was filed with the SEC on
December 12, 2007, and is available on Aruba's investor relations
website at www.arubanetworks.com and on the SEC 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.
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, for the fiscal second
quarter of 2007, expense related to the revaluation of warrants to
fair value. Aruba defines non-GAAP EPS as non-GAAP net income
divided by the weighted average diluted shares outstanding. Aruba's
management believes that these non-GAAP financial measures provide
meaningful supplemental information regarding the company's
performance by excluding certain non-cash expenses. Because of
varying available valuation methodologies, subjective assumptions and
the variety of award types that companies can use under FAS 123R,
Aruba's management believes that providing these non-GAAP financial
measures 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 (excluding the impact of selected
non-cash charges) over different periods of time.
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, that are recurring. Stock-based
expenses 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' website at www.arubanetworks.com.
About Aruba Networks
People move. Networks must follow. Aruba securely delivers networks
to users, wherever they work or roam. Our unified mobility solutions
include Wi-Fi networks, identity-based security, remote access and
cellular services, and centralized network management to enable the
Follow-Me Enterprise that moves in lock-step with users:
-- Follow-Me Connectivity: 802.11a/b/g/n Wi-Fi networks ensure that
users are always within reach of mission-critical information;
-- Follow-Me Security: Identity-based security assigns access
policies to users, enforcing those policies whenever and wherever a
network is accessed;
-- Follow-Me Applications: Remote access solutions and cellular
network integration ensure uninterrupted access to applications as
users move.
The cost, convenience, and security benefits of our unified mobility
solutions are fundamentally changing how and where we work. 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.
Copyright 2008 Aruba Networks, Inc. Aruba Networks, The All Wireless
Workplace Is Now Open For Business, People Move. Networks Must
Follow., RFProtect, Bluescanner, The Mobile Edge Company and Mobile
Edge Architecture are trademarks of Aruba Networks, Inc. All rights
reserved.
Aruba Networks, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
January 31, July 31,
2008 2007
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 65,412 $ 42,570
Short-term investments 47,879 62,430
Accounts receivable, net 25,748 23,722
Inventory 17,329 8,991
Deferred costs 2,781 3,217
Prepaids and other 2,973 2,432
----------- -----------
Total current assets 162,122 143,362
Property and equipment, net 6,380 3,709
Intangible assets, net 3,445 3,912
Deferred costs 447 722
Other assets 796 428
----------- -----------
Total other assets 11,068 8,771
----------- -----------
Total assets $ 173,190 $ 152,133
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,732 $ 2,201
Accrued liabilities 20,342 15,317
Income taxes payable 522 281
Deferred revenue 20,253 16,067
----------- -----------
Total current liabilities 42,849 33,866
Deferred revenue 6,174 5,780
Other long-term liabilities 161 -
----------- -----------
Total other liabilities 6,335 5,780
----------- -----------
Total liabilities 49,184 39,646
----------- -----------
Stockholders' equity
Preferred Stock: $0.0001 par value; 10,000
shares authorized at January 31, 2008 and
July 31, 2007; no shares issued and
outstanding at January 31, 2008 and July 31,
2007 - -
Common Stock: $0.0001 par value; 350,000
shares authorized at January 31, 2008 and
July 31, 2007; 80,129 and 76,927 shares issued
and outstanding at January 31, 2008 and
July 31, 2007 8 8
Additional paid-in capital 228,967 213,545
Accumulated other comprehensive income 243 29
Accumulated deficit (105,212) (101,095)
----------- -----------
Total stockholders' equity 124,006 112,487
----------- -----------
Total liabilities and stockholders' equity $ 173,190 $ 152,133
=========== ===========
Aruba Networks, Inc.
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
January 31, January 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Product $ 34,170 $ 22,662 $ 72,627 $ 41,768
Professional services and
support 5,548 2,656 12,822 4,777
Ratable product and related
professional services and
support 927 1,329 1,926 4,607
--------- --------- --------- ---------
Total revenues 40,645 26,647 87,375 51,152
Cost of revenues:
Product 10,984 8,562 22,841 15,863
Professional services and
support 1,386 1,131 4,203 2,305
Ratable product and related
professional services and
support 330 505 692 1,691
--------- --------- --------- ---------
Total cost of revenues 12,700 10,198 27,736 19,859
--------- --------- --------- ---------
Gross profit 27,945 16,449 59,639 31,293
--------- --------- --------- ---------
Operating expenses:
Research and development 9,086 5,771 17,386 10,862
Sales and marketing 18,826 12,146 40,525 22,954
General and administrative 4,403 3,395 8,595 6,008
--------- --------- --------- ---------
Total operating expenses 32,315 21,312 66,506 39,824
--------- --------- --------- ---------
Operating loss (4,370) (4,863) (6,867) (8,531)
Other income (expense), net
Interest income 1,264 197 2,620 309
Interest expense - (28) - (63)
Other income (expense), net (144) (2,419) 582 (3,250)
--------- --------- --------- ---------
Total other income
(expense), net 1,120 (2,250) 3,202 (3,004)
--------- --------- --------- ---------
Loss before income tax
provision (3,250) (7,113) (3,665) (11,535)
Income tax provision 228 123 452 211
--------- --------- --------- ---------
Net loss $ (3,478) $ (7,236) $ (4,117) $ (11,746)
========= ========= ========= =========
Shares used in computing net
loss per common share, basic
and diluted 77,974 13,980 77,538 13,630
Net loss per common share,
basic and diluted $ (0.04) $ (0.52) $ (0.05) $ (0.86)
Aruba Networks, Inc.
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)
Three months ended
------------------------
January 31, January 31,
2008 2007
----------- -----------
GAAP net loss $ (3,478) $ (7,236)
Plus:
a) Stock-based expenses 4,093 1,689
b) Revaluation of warrants to fair-value - 2,335
----------- -----------
Non-GAAP net income (loss) $ 615 $ (3,212)
=========== ===========
GAAP net loss per common share $ (0.04) $ (0.52)
Plus:
a) Stock-based expenses per common share 0.05 0.12
b) Revaluation of warrants to fair-value per
common share - 0.17
----------- -----------
Non-GAAP net income (loss) per common share $ 0.01 $ (0.23)
=========== ===========
Shares used in computing diluted GAAP net loss
per common share 77,974 13,980
Shares used in computing diluted Non-GAAP net
income (loss) per common share 91,255 13,980
Aruba Networks, Inc.
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Three months ended Six months ended
January 31, January 31,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Product 84.0% 85.0% 83.1% 81.7%
Professional services and
support 13.7% 10.0% 14.7% 9.3%
Ratable product and related
professional services and
support 2.3% 5.0% 2.2% 9.0%
-------- -------- -------- --------
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues:
Product 27.0% 32.1% 26.2% 31.0%
Professional services and
support 3.4% 4.3% 4.8% 4.5%
Ratable product and related
professional services and
support 0.8% 1.9% 0.8% 3.3%
-------- -------- -------- --------
Total cost of revenues 31.2% 38.3% 31.8% 38.8%
-------- -------- -------- --------
Gross profit 68.8% 61.7% 68.2% 61.2%
-------- -------- -------- --------
Operating expenses:
Research and development 22.4% 21.7% 19.9% 21.2%
Sales and marketing 46.3% 45.6% 46.4% 44.9%
General and administrative 10.9% 12.7% 9.8% 11.8%
-------- -------- -------- --------
Total operating expenses 79.6% 80.0% 76.1% 77.9%
-------- -------- -------- --------
Operating loss (10.8%) (18.3%) (7.9%) (16.7%)
Other income (expense), net
Interest income 3.1% 0.8% 3.0% 0.6%
Interest expense - (0.1%) - (0.1%)
Other income (expense), net (0.4%) (9.1%) 0.7% (6.4%)
-------- -------- -------- --------
Total other income
(expense), net 2.7% (8.4%) 3.7% (5.9%)
-------- -------- -------- --------
Loss before income tax
provision (8.1%) (26.7%) (4.2%) (22.6%)
Income tax provision 0.5% 0.5% 0.5% 0.4%
-------- -------- -------- --------
Net loss (8.6%) (27.2%) (4.7%) (23.0%)
======== ======== ======== ========
Aruba Networks, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six months ended
January 31,
--------------------
2008 2007
--------- ---------
Cash flows from operating activities
Net loss $ (4,117) $ (11,746)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,878 842
Provision for doubtful accounts 140 91
Write downs for excess and obsolete inventory 549 809
Compensation related to stock options and share
awards 9,299 3,503
Net realized losses on short-term investments 2 -
Non-cash interest expense - 31
Accretion of purchase discounts on short-term
investments (1,481) -
Change in carrying value of preferred stock
warrants (715) 3,118
Loss on disposal of fixed assets - 5
Changes in operating assets and liabilities:
Accounts receivable (2,167) (2,307)
Inventory (9,605) (6,339)
Prepaids and other (541) (1,894)
Deferred costs 711 1,669
Other assets (368) (95)
Accounts payable (677) 1,511
Deferred revenue 4,580 (435)
Other current and noncurrent liabilities 5,514 6,967
Income taxes payable 241 95
--------- ---------
Net cash provided by (used in) operating
activities 3,243 (4,175)
--------- ---------
Cash flows from investing activities
Purchases of short-term investments (53,461) -
Proceeds from sales and maturities of short-term
investments 69,704 -
Purchases of property and equipment (3,155) (1,918)
--------- ---------
Net cash provided by (used in) investing
activities 13,088 (1,918)
--------- ---------
Cash flows from financing activities
Repayments on equipment loan obligations - (389)
Cash received under stock issuance agreement - 1,787
Proceeds from issuance of redeemable convertible
preferred stock, net - 10,597
Proceeds from issuance of common stock 6,511 3,700
--------- ---------
Net cash provided by financing activities 6,511 15,695
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents - 33
--------- ---------
Net increase in cash and cash equivalents 22,842 9,635
Cash and cash equivalents, beginning of period 42,570 9,263
--------- ---------
Cash and cash equivalents, end of period $ 65,412 $ 18,898
========= =========
Supplemental disclosure of cash flow information
Income taxes paid $ 236 $ 87
Interest paid - 28
IR Contacts
Aruba Networks, Inc.
Steffan Tomlinson
Chief Financial Officer
+1-408-754-3058
ir@arubanetworks.com
The Blueshirt Group, Investor Relations
Chris Danne
Jill Isenstadt
+1-415-217-7722
ir@arubanetworks.com
SOURCE: Aruba Networks, Inc.
mailto:ir@arubanetworks.com
mailto:ir@arubanetworks.com
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Aruba Networks
