SUNNYVALE, CA -- 11/20/08 --
Aruba Networks, Inc. (NASDAQ: ARUN), a global
leader in wireless LANs and secure mobility solutions, today released
financial results for its fiscal first quarter ended October 31, 2008.
Revenues for the fiscal first quarter of 2009 were $52.4 million, an
increase of 12% over the $46.7 million reported in the fiscal first quarter
of 2008. GAAP net loss for the fiscal first quarter of 2009 was $6.4
million, or $0.08 per share, compared to a net loss of $0.6 million, or
$0.01 per share, in the fiscal first quarter of 2008. GAAP results for the
fiscal first quarter of 2009 included $6.5 million of non-cash stock-based
expenses and $1.2 million of amortization expense of acquired intangible
assets.
Non-GAAP net income for the fiscal first quarter of 2009 was $1.4 million,
or $0.02 per share, compared to non-GAAP net income of $4.1 million, or
$0.04 per share, in the fiscal first quarter of 2008. Non-GAAP net income
excludes the impact of non-cash stock-based expenses, a revaluation of
warrants to fair value benefit and amortization expense of acquired
intangible assets in all periods.
"We are pleased with our strong operating results, particularly in light of
the downturn in the economy during the last six weeks of our quarter," said
Dominic Orr, president and chief executive officer of Aruba. "Customers
have clearly become more focused on the ways in which they can reduce
operating expenses and increase productivity. We believe that Aruba is
well positioned to help them achieve these goals. Our AirWave Wireless
Management Suite is designed to extend the useful life of installed legacy
networks, our 802.11n solutions to support more users with less IT
infrastructure, and our remote networking products to reduce office
build-outs and travel time by supporting teleworkers and temporary workers.
The value offered by these solutions has not gone unnoticed: during this
past quarter we added over 700 new customers and now have over 6,000 total
customers. Education remained our strongest vertical and we believe we
offer a unique centrally managed wireless approach that can greatly improve
efficiencies and lead to significant cost savings for higher education and
school districts worldwide. As expected, we saw revenue from our retail
and government customers increase sequentially due to big new customer wins
reported in our fiscal fourth quarter."
"Entering our second quarter, we remain cautiously optimistic about our
year-over-year growth prospects even in the tougher economy," added Mr.
Orr. "At the same time, we are refocusing our efforts to improve our
profitability and believe that we can achieve greater operating leverage by
examining costs throughout our business."
"Our business showed improving operating leverage and results in the first
quarter," said Steffan Tomlinson, Aruba's chief financial officer.
"Revenue grew nine percent sequentially to a record of $52.4 million, while
operating expense as a percentage of revenue decreased four percentage
points on a sequential basis. Days sales outstanding improved to 55 days
and we generated $5.6 million of cash flow from operations. We ended the
quarter with $108.2 million of cash and short term investments,
representing a $6.5 million increase on a sequential basis, and we have
zero debt."
Recent Highlights
Aruba's focus on providing secure mobility solutions that integrate
seamlessly with existing legacy network infrastructure enabled the Company
to achieve several key objectives during the quarter. Highlights from the
quarter include:
-- FCC Approval for Software-Upgradable Access Points and Use of
Additional 802.11n Radio Channels -- The Federal Communications Commission
(FCC) granted approval for Aruba to use Software Defined Radio (SDR) and
Dynamic Frequency Selection (DFS) technology in its 802.11n access points.
SDR allows customers' access point radios to be modified and updated via
software download over the network, while DFS enables Aruba's wireless LANs
to use otherwise prohibited 5.3 and 5.4GHz radar channels, thereby
enhancing Wi-Fi bandwidth capacity. We expect the SDR and DFS features are
expected to lower customers' ongoing operating and maintenance costs, and
improve network performance.
-- Release of ARM 2.0 Software -- Aruba announced its Adaptive Radio
Management (ARM) 2.0 software which is designed to make 802.11a/b/g/n Wi-Fi
networks run faster, more reliably, and with greater resiliency. The patent-
pending ARM 2.0 software uses infrastructure-based controls that direct the
behavior of Wi-Fi clients so they operate more efficiently. Compatible with
802.11 standards and clients, ARM 2.0 can be used in all new and existing
Aruba deployments.
-- Wins and Deployments -- Deployments announced by Aruba this quarter
included Galderma, Joint Base Balad in Iraq, the University of Macau,
Southeast University, the Escola de Aperfeiçoamento de Oficiais (EsAO)
Brazilian Army School, Tomball Independent School District and Portsmouth
University.
Cost Reduction Efforts
To streamline operations, Aruba is reducing its operating expenses by
approximately 10%, through a combination of a reduction in work force and
reducing other non-headcount related expenditures. Net expense associated
with the reduction in work force, which is primarily for severance and
severance benefits, is expected to total approximately $1.2 million, which
the Company expects to incur in the fiscal second quarter. Aruba expects
these cost reduction measures to result in pretax savings of approximately
$2.0-2.5 million in fiscal Q2 2009 and $5-6 million in the second half of
fiscal 2009.
Conference Call Information
Aruba will host a conference call for analysts and investors to discuss its
fiscal first 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 11122222. International parties can access the replay at
+1-303-590-3000 and should enter passcode 11122222.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements relating to our expectations regarding (1) the ability of our
products to improve efficiencies and lead to significant cost savings for
and growth our customers in the education vertical; (2) the strength of our
business and pipeline and our overall growth prospects; (3) our ability to
improve our bottom line profitability and achieve greater operating
leverage by examining costs throughout our business; (4) the ability of our
SDR and DFS technologies to lower customers' ongoing operating and
maintenance costs and improve network performance; (5) the ability of our
ARM 2.0 software to improve the performance of 802.11a/b/g/n Wi-Fi
networks; (6) the timing and amount of expenses we expect to incur as a
result of our cost reduction efforts, as well as the annualized savings we
expect to realize; and (7) other statements as to our future economic
performance, financial condition or results of operations.
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;
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; reductions in overall information
technology spending; our ability to establish and maintain successful
relationships with our distribution partners; our ability to compete in our
industry; 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-K for the fiscal year ended July 31, 2008, which was
filed with the SEC on October 7, 2008, 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 amortization expense of acquired
intangible assets, and, for the fiscal first quarter of 2008, a benefit
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 over different periods of time. Similarly, by excluding
amortization expense of acquired intangible assets, Aruba's management
believes that investors can better understand the impact of such expenses
on the Company's continuing 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, 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' Web site at www.arubanetworks.com.
About Aruba Networks
People move. Networks must follow. Aruba securely delivers networks to
users, wherever they work or roam. Our mobility solutions enable the
Follow-Me Enterprise that moves in lock-step with users:
-- Adaptive 802.11a/b/g/n Wi-Fi networks optimize themselves to ensure
that users are always within reach of mission-critical information;
-- Identity-based security assigns access policies to users, enforcing
those policies whenever and wherever a network is accessed;
-- Remote networking solutions and fixed mobile convergence ensure
uninterrupted access to applications as users move;
-- Multi-vendor network management provides a single point of control
while managing both legacy and new wireless networks from Aruba and its
competitors.
The cost, convenience, and security benefits of our secure mobility
solutions are fundamentally changing how and where we work. 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.
© 2008 Aruba Networks, Inc. AirWave®, Aruba Networks®, Aruba
Mobility Management System®, Bluescanner, For Wireless That Works®,
Mobile Edge Architecture, People Move. Networks Must Follow., RFProtect,
The All Wireless Workplace Is Now Open For Business, Green Island, and The
Mobile Edge Company® are trademarks of Aruba Networks, Inc. All rights
reserved.
Aruba Networks, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
October 31, July 31,
2008 2008
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 45,045 $ 37,602
Short-term investments 63,157 64,130
Accounts receivable, net 32,280 32,679
Inventory 14,085 11,644
Deferred costs 4,201 4,317
Prepaids and other 2,442 3,196
----------- -----------
Total current assets 161,210 153,568
Property and equipment, net 7,790 7,181
Goodwill 7,655 7,656
Intangible assets, net 17,793 19,027
Deferred costs 153 239
Other assets 1,076 1,130
----------- -----------
Total other assets 34,467 35,233
----------- -----------
Total assets $ 195,677 $ 188,801
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 7,464 $ 5,844
Accrued liabilities 17,847 16,908
Income taxes payable 600 576
Deferred revenue 28,889 27,143
----------- -----------
Total current liabilities 54,800 50,471
Deferred revenue 7,655 7,338
Other long-term liabilities 95 117
----------- -----------
Total other liabilities 7,750 7,455
----------- -----------
Total liabilities 62,550 57,926
----------- -----------
Stockholders' equity
Preferred Stock: $0.0001 par value; 10,000
shares authorized at October 31, 2008 and
July 31, 2008; no shares issued and
outstanding at October 31, 2008 and July
31, 2008 - -
Common Stock: $0.0001 par value; 350,000
shares authorized at October 31, 2008 and
July 31, 2008; 84,063 and 82,836 shares
issued and outstanding at October 31, 2008
and July 31, 2008 8 8
Additional paid-in capital 257,878 249,131
Accumulated other comprehensive loss (163) (45)
Accumulated deficit (124,596) (118,219)
----------- -----------
Total stockholders' equity 133,127 130,875
----------- -----------
Total liabilities and stockholders'
equity $ 195,677 $ 188,801
=========== ===========
Aruba Networks, Inc.
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Three months ended
October 31,
--------------------
2008 2007
--------- ---------
Revenues:
Product $ 43,868 $ 38,458
Professional services and support 8,137 7,273
Ratable product and related professional services
and support 441 999
--------- ---------
Total revenues 52,446 46,730
Cost of revenues:
Product 16,605 11,857
Professional services and support 1,933 2,817
Ratable product and related professional services
and support 155 362
--------- ---------
Total cost of revenues 18,693 15,036
--------- ---------
Gross profit 33,753 31,694
--------- ---------
Operating expenses:
Research and development 10,423 8,300
Sales and marketing 24,661 21,700
General and administrative 5,285 4,191
--------- ---------
Total operating expenses 40,369 34,191
--------- ---------
Operating loss (6,616) (2,497)
Other income (expense), net
Interest income 648 1,356
Other income (expense), net (316) 726
--------- ---------
Total other income (expense), net 332 2,082
--------- ---------
Loss before income tax provision (6,284) (415)
Income tax provision 93 224
--------- ---------
Net loss $ (6,377) $ (639)
========= =========
Shares used in computing net loss per common share,
basic and diluted 83,071 77,102
Net loss per common share, basic and diluted $ (0.08) $ (0.01)
Aruba Networks, Inc.
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)
Three months ended
October 31,
--------------------
2008 2007
--------- ---------
GAAP net loss $ (6,377) $ (639)
Plus:
a) Stock-based expenses 6,493 5,205
b) Amortization expense of acquired intangible
assets 1,234 234
c) Revaluation of warrants to fair value - (715)
--------- ---------
Non-GAAP net income $ 1,350 $ 4,085
========= =========
GAAP net loss per common share $ (0.08) $ (0.01)
Plus:
a) Stock-based expenses 0.08 0.06
b) Amortization expense of acquired intangible
assets 0.02 -
c) Revaluation of warrants to fair value - (0.01)
--------- ---------
Non-GAAP net income per common share $ 0.02 $ 0.04
========= =========
Shares used in computing diluted GAAP net loss per
common share 83,071 77,102
Shares used in computing diluted Non-GAAP net income
per common share 88,836 94,167
Aruba Networks, Inc.
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Three months ended
October 31,
---------------------
2008 2007
--------- ---------
Revenues:
Product 83.7% 82.3%
Professional services and support 15.5% 15.6%
Ratable product and related professional
services and support 0.8% 2.1%
--------- ---------
Total revenues 100.0% 100.0%
Cost of revenues:
Product 31.6% 25.4%
Professional services and support 3.7% 6.0%
Ratable product and related professional
services and support 0.3% 0.8%
--------- ---------
Total cost of revenues 35.6% 32.2%
--------- ---------
Gross profit 64.4% 67.8%
--------- ---------
Operating expenses:
Research and development 19.9% 17.8%
Sales and marketing 47.0% 46.4%
General and administrative 10.1% 9.0%
--------- ---------
Total operating expenses 77.0% 73.2%
--------- ---------
Operating loss (12.6%) (5.4%)
Other income (expense), net
Interest income 1.2% 2.9%
Other income (expense), net (0.6%) 1.6%
--------- ---------
Total other income (expense), net 0.6% 4.5%
--------- ---------
Loss before income tax provision (12.0%) (0.9%)
Income tax provision 0.2% 0.5%
--------- ---------
Net loss (12.2%) (1.4%)
========= =========
Aruba Networks, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended
October 31,
--------------------
2008 2007
--------- ---------
Cash flows from operating activities
Net loss $ (6,377) $ (639)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,268 903
Provision for doubtful accounts 40 114
Write downs for excess and obsolete
inventory 851 102
Compensation related to stock options and
share awards 6,493 5,205
Accretion of purchase discounts on
short-term investments (104) (619)
Change in carrying value of preferred stock
warrants - (715)
Gain on disposal of fixed assets (20) -
Changes in operating assets and liabilities:
Accounts receivable 358 (5,858)
Inventory (3,552) (3,582)
Prepaids and other 754 (842)
Deferred costs 201 93
Other assets 219 (55)
Accounts payable 1,328 (490)
Deferred revenue 2,064 2,756
Other current and noncurrent liabilities 1,024 2,905
Income taxes payable 24 74
--------- ---------
Net cash provided by (used in)
operating activities 5,571 (648)
--------- ---------
Cash flows from investing activities
Purchases of short-term investments (11,429) (11,654)
Proceeds from sales and maturities of
short-term investments 12,224 18,520
Purchases of property and equipment (1,071) (1,440)
--------- ---------
Net cash (used in) provided by
investing activities (276) 5,426
--------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock 3,139 5,047
Repurchase of common stock under stock
repurchase program (991) -
--------- ---------
Net cash provided by financing
activities 2,148 5,047
--------- ---------
Net increase in cash and cash
equivalents 7,443 9,825
Cash and cash equivalents, beginning of period 37,602 42,570
--------- ---------
Cash and cash equivalents, end of period $ 45,045 $ 52,395
========= =========
Supplemental disclosure of cash flow information
Income taxes paid $ 49 $ 186
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
