Aruba Networks Reports Double-Digit Revenue Growth and Record Revenues for Fiscal Fourth Quarter and Fiscal Year 2009 Financial Results
- Press Release
- Source: Aruba Networks, Inc.
- On 4:05 pm EDT, Thursday August 27, 2009
SUNNYVALE, CA--(Marketwire - 08/27/09) - Aruba Networks, Inc. (NASDAQ:ARUN - News)
�
-- Revenue Increases Sequentially by 16.4%, 10.5% Year-over-Year, to a
Record $53.3 Million
-- Company Adds Over 600 New Customers In Fiscal Q4 Pushing Total
Customer Count Over 7,600
-- Short-Term Deferred Revenue Grows Sequentially by 40.8% to a Record
$34.7 Million
-- Cash Increases by $11.4 Million Sequentially to a Record $123.1
Million with No Debt
Aruba Networks, Inc. (NASDAQ:ARUN - News), a global leader in wireless LANs and secure mobility solutions, today released financial results for its fiscal fourth quarter and fiscal year ended July 31, 2009.
Revenues for the fiscal fourth quarter of 2009 were $53.3 million, an increase of 10.5% over the $48.3 million reported in the fiscal fourth quarter of 2008. GAAP net loss for the fiscal fourth quarter of 2009 improved to $4.5 million, or $0.05 per share, compared to a net loss of $6.8 million, or $0.08 per share, in the fiscal fourth quarter of 2008. GAAP results for the fiscal fourth quarter of 2009 included $6.4 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 fourth quarter of 2009 increased $3.0 million from the fiscal fourth quarter of 2008 to $3.2 million, or $0.03 per share. Non-GAAP net income for these periods excludes the impact of non-cash stock-based expenses and amortization expenses of acquired intangible assets in all periods.
Revenues for the fiscal year ended July 31, 2009 were approximately $199.3 million, an increase of 11.8% from $178.3 million reported in the prior year. GAAP net loss for the fiscal year 2009 was $23.4 million, or $0.28 per share, compared to a net loss of $17.1 million, or $0.22 per share in 2008. Non-GAAP net income for the fiscal year was $7.6 million, or $0.08 per share, compared to non-GAAP net income of $4.0 million, or $0.04 per share in 2008.
"We are pleased to report record revenues and double-digit, year-over-year revenue growth for our fiscal fourth quarter and year ended July 31, 2009," said Dominic Orr, president and chief executive officer of Aruba. "We believe that we are gaining market share and deriving significant traction from both new and existing customers despite challenging market conditions. During the quarter, we added over 600 new customers across a broad range of industries, most notably in the education, healthcare, and government verticals. We had strong bookings in the period and are encouraged by our growing pipeline for both our network rightsizing and newly introduced Virtual Branch Networking (VBN) solutions. Both of these opportunities have significant incremental growth potential because they leverage the convergence of customers' wired and wireless networks. The resulting reduction of operating and capital expenses is resonating with customers, bolstering our competitive position."
"In the fourth quarter, our strong top line performance, sequential improvement in gross margins and operating leverage enabled us to increase our operating margin and improve our bottom line results," said Steffan Tomlinson, Aruba's chief financial officer. "Due to strong bookings and record deferred revenues, our visibility has improved as we enter Q1 2010. During the quarter, short term deferred revenues increased by $10.0 million on a sequential basis to a record $34.7 million, and we generated a record cash flow of $11.4 million."
Recent Highlights
Recent highlights include:
�
-- Hitesh Sheth Appointed Chief Operating Officer -- Aruba appointed
Hitesh Sheth to the newly created position of Chief Operating Officer. Mr.
Sheth brings with him over 20 years of enterprise and service provider
experience, most recently as the Executive Vice President and General
Manager of Juniper Networks' Ethernet Platforms Business Group. Mr. Sheth
will report to Dominic Orr, Chief Executive Officer, and will oversee
Aruba's expanding operations, marketing, engineering, and support
organizations
-- Second Largest 802.11n Wireless Enterprise Vendor -- Aruba was again
ranked by Dell'Oro as the second largest enterprise 802.11n vendor, in
terms of both revenue and unit shipments, in the report titled "First
Quarter 2009 Wireless LAN Report."
-- Best of Interop 2009 Award Winner -- Aruba won "Best of Interop 2009"
in the Wireless and Mobility category from Interop and InformationWeek
Analytics for its new 600 Series Branch Office Controllers, a component of
the company's new VBN solution.
-- Lifetime Warranty Program -- Aruba announced a limited lifetime
warranty program for its line of indoor access points and the RAP-5 Remote
Access Point.
-- Product Development -- Aruba released the VBN solution for remote
offices, clinics, home offices, and teleworkers. Aruba also released its
new AirWave Wireless Management Suite 6.3 and new OS 3.4 software with
performance and feature-set enhancements. Also announced was a new
decorative, flush-mounted, vandal-resistant indoor access point, the AP-
65WB.
-- Polycom VIEW Certification -- Aruba was the first vendor to have its
802.11n solution certified under Polycom's VIEW program. In addition,
Aruba's adaptive 802.11n wireless LAN was the first to be Polycom View
certified.
-- KPMG Rightsizes Its Enterprise Network -- KPMG Netherland saved $2
million of build-out expenses at its new headquarters in The Netherlands by
rightsizing its enterprise network with an 802.11n Wi-Fi solution from
Aruba and partner BT.
-- Carousel Industries Increases Strategic Partnership -- Aruba signed a
key distribution agreement with Carousel Industries, a premier technology
solutions provider for enterprise customers nationwide, under which
Carousel will resell Aruba's complete line of wireless LAN products and
network management solutions.
-- Wins and Deployments -- New customer wins and/or deployments included
Karunya University, University of Manchester, University of Toronto
affiliate Hospital for Sick Children, Washington and Lee University,
Universidad de Valladolid Spain, Sierra Community College District, King
Khalid University Hospital, Virginia Union University, Groupe FM Logistic,
West Chester University of Pennsylvania, Export-Import Bank of Thailand,
Ocean Beach School District, Santos Brasil S.A., and Babson College.
Conference Call Information
Aruba will host a conference call for analysts and investors to discuss its fiscal fourth quarter and fiscal year 2009 results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live Web cast 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 Web cast, 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 1-800-406-7325 and enter passcode 4134579. International parties can access the replay at +1-303-590-3030 and should enter passcode 4134579.
Forward-Looking Statements
This press release contains forward-looking statements, including statements that (1) we are gaining market share and deriving significant traction from both new and existing customers, (2) our pipeline for our network rightsizing and VBN solutions is growing, which presents significant incremental growth potential, and (3) 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 (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; (3) changes in overall information technology spending; (4) our ability to establish and maintain successful relationships with our distribution partners; and (5) our ability to compete in our industry, 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 fiscal third quarter ended on April 30, 2009, which was filed with the SEC on June 9, 2009, 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, amortization expense of acquired intangible assets, restructuring expenses (for the fiscal year ended July 31, 2009 only), acquisition related severance expense (for the fiscal year ended July 31, 2008 only), and, a benefit related to the revaluation of warrants to fair value (for the fiscal year ended July 31, 2008 only). 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 expenses that may not be indicative of Aruba's "recurring operating results," meaning its operating performance excluding not only non-cash charges, such as stock-based expenses, but also discrete cash charges that are infrequent in nature, such as restructuring and severance 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 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, restructuring expenses, severance expense and the benefit related to the revaluation of warrants to fair value, 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, 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, using a combination of award-winning solutions:
�
-- Adaptive 802.11n Wi-Fi networks optimize themselves to ensure that
users are always within reach of mission-critical information. Rightsizing
expensive wired LANs by replacing them with high-speed 802.11n Wi-Fi
reduces both capital and operating expenses;
-- Identity-based security assigns access policies to users, enforcing
those policies whenever and wherever a network is accessed;
-- Remote networking solutions for branch offices, fixed telecommuters,
and satellite facilities ensures uninterrupted remote access to
applications;
-- 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. For real-time news updates follow Aruba on Twitter at http://twitter.com/ArubaNetworks.
� 2009 Aruba Networks, Inc. AirWave�, Aruba Networks�, Aruba Mobility Management System�, Bluescanner, For Wireless That Works�, Mobile Edge Architecture, People Move. Networks Must Follow., The All-Wireless Workplace Is Now Open For Business, RFprotect, Green Island, and The Mobile Edge Company� are trademarks of Aruba Networks, Inc. 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)
July 31, July 31,
2009 2008
Assets --------- ---------
Current assets:
Cash and cash equivalents $ 41,298 $ 37,602
Short-term investments 81,839 64,130
Accounts receivable, net 33,466 32,679
Inventory 8,450 11,644
Deferred costs 5,152 4,317
Prepaids and other 2,350 3,196
--------- ---------
Total current assets 172,555 153,568
Property and equipment, net 7,426 7,181
Goodwill 7,656 7,656
Intangible assets, net 14,091 19,027
Deferred costs 9 239
Other assets 1,317 1,130
--------- ---------
Total other assets 30,499 35,233
--------- ---------
Total assets $ 203,054 $ 188,801
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 930 $ 5,844
Accrued liabilities 20,722 16,908
Income taxes payable 610 576
Deferred revenue 34,654 27,143
--------- ---------
Total current liabilities 56,916 50,471
Deferred revenue 8,524 7,338
Other long-term liabilities 29 117
--------- ---------
Total other liabilities 8,553 7,455
--------- ---------
Total liabilities 65,469 57,926
--------- ---------
Stockholders' equity
Preferred Stock: $0.0001 par value; 10,000 shares
authorized at July 31, 2009 and 2008;
no shares issued and outstanding at July 31, 2009
and 2008 - -
Common Stock: $0.0001 par value; 350,000 shares
authorized at July 31, 2009 and 2008; 86,744 and
82,836 shares issued and outstanding at July 31,
2009 and 2008, respectively 9 8
Additional paid-in capital 279,026 249,131
Accumulated other comprehensive income (loss) 182 (45)
Accumulated deficit (141,632) (118,219)
--------- ---------
Total stockholders' equity 137,585 130,875
--------- ---------
Total liabilities and stockholders' equity $ 203,054 $ 188,801
========= =========
Aruba Networks, Inc.
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Three months ended Years ended
July 31, July 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenues:
Product $ 43,366 $ 40,444 $ 161,927 $ 148,550
Professional services and
support 9,675 7,136 35,946 26,244
Ratable product and related
professional services and
support 285 699 1,386 3,466
--------- --------- --------- ---------
Total revenues 53,326 48,279 199,259 178,260
Cost of revenues:
Product 15,938 14,049 59,917 48,126
Professional services and
support 1,852 1,908 7,437 7,761
Ratable product and related
professional services and
support 98 242 483 1,228
--------- --------- --------- ---------
Total cost of revenues 17,888 16,199 67,837 57,115
--------- --------- --------- ---------
Gross profit 35,438 32,080 131,422 121,145
--------- --------- --------- ---------
Operating expenses:
Research and development 9,886 10,245 40,293 37,393
Sales and marketing 23,722 24,252 90,241 86,008
General and administrative 6,045 4,416 23,198 17,740
Acquisition related severance
expense - - - 197
Restructuring expenses - - 1,447 -
--------- --------- --------- ---------
Total operating expenses 39,653 38,913 155,179 141,338
--------- --------- --------- ---------
Operating loss (4,215) (6,833) (23,757) (20,193)
Other income (expense), net
Interest income 265 609 1,837 4,083
Other income (expense), net (267) (305) (705) (47)
--------- --------- --------- ---------
Total other income
(expense), net (2) 304 1,132 4,036
--------- --------- --------- ---------
Loss before income tax
provision (4,217) (6,529) (22,625) (16,157)
Income tax provision 281 255 788 967
--------- --------- --------- ---------
Net loss $ (4,498) $ (6,784) $ (23,413) $ (17,124)
========= ========= ========= =========
Shares used in computing net
loss per common share, basic
and diluted 86,315 82,147 84,612 79,467
Net loss per common share,
basic and diluted $ (0.05) $ (0.08) $ (0.28) $ (0.22)
Aruba Networks, Inc.
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)
Three months ended Years ended
July 31, July 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
GAAP net loss $ (4,498) $ (6,784) $ (23,413) $ (17,124)
Plus:
a) Stock-based expenses 6,425 5,727 24,579 19,277
b) Amortization expense of
acquired intangible
assets 1,234 1,234 4,937 2,385
c) Acquisition related
severance expense - - - 197
d) Revaluation of warrants
to fair value - - - (715)
e) Restructuring expenses - - 1,447 -
--------- --------- --------- ---------
Non-GAAP net income $ 3,161 $ 177 $ 7,550 $ 4,020
========= ========= ========= =========
GAAP net loss per common share $ (0.05) $ (0.08) $ (0.28) $ (0.22)
Plus:
a) Stock-based expenses 0.07 0.07 0.29 0.24
b) Amortization expense of
acquired intangible
assets 0.01 0.01 0.06 0.03
c) Acquisition related
severance expense - - - -
d) Revaluation of warrants
to fair value - - - (0.01)
e) Restructuring expenses - - 0.01 -
--------- --------- --------- ---------
Non-GAAP net income per common
share $ 0.03 $ 0.00 $ 0.08 $ 0.04
========= ========= ========= =========
Shares used in computing
diluted GAAP net loss per
common share 86,315 82,147 84,612 79,467
Shares used in computing
diluted Non-GAAP net income
per common share 98,424 88,880 90,173 90,403
Aruba Networks, Inc.
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Three months ended Years ended
July 31, July 31,
----------------- -----------------
2009 2008 2009 2008
------- ------- ------- -------
Revenues:
Product 81.3% 83.8% 81.3% 83.3%
Professional services and support 18.2% 14.8% 18.0% 14.7%
Ratable product and related
professional services and support 0.5% 1.4% 0.7% 2.0%
------- ------- ------- -------
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues:
Product 29.9% 29.1% 30.1% 27.0%
Professional services and support 3.4% 4.0% 3.7% 4.4%
Ratable product and related
professional services and support 0.2% 0.5% 0.2% 0.6%
------- ------- ------- -------
Total cost of revenues 33.5% 33.6% 34.0% 32.0%
------- ------- ------- -------
Gross profit 66.5% 66.4% 66.0% 68.0%
------- ------- ------- -------
Operating expenses:
Research and development 18.6% 21.2% 20.3% 21.0%
Sales and marketing 44.5% 50.2% 45.3% 48.2%
General and administrative 11.3% 9.2% 11.6% 10.0%
Acquisition related severance
expense - - - 0.1%
Restructuring expenses - - 0.7% -
------- ------- ------- -------
Total operating expenses 74.4% 80.6% 77.9% 79.3%
------- ------- ------- -------
Operating loss (7.9%) (14.2%) (11.9%) (11.3%)
Other income (expense), net
Interest income 0.5% 1.2% 0.9% 2.2%
Other income (expense), net (0.5%) (0.6%) (0.4%) -
------- ------- ------- -------
Total other income (expense),
net 0.0% 0.6% 0.5% 2.2%
------- ------- ------- -------
Loss before income tax
provision (7.9%) (13.6%) (11.4%) (9.1%)
Income tax provision 0.5% 0.5% 0.4% 0.5%
------- ------- ------- -------
Net loss (8.4%) (14.1%) (11.8%) (9.6%)
======= ======= ======= =======
Aruba Networks, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Years ended
July 31,
--------------------
2009 2008
--------- ---------
Cash flows from operating activities
Net loss $ (23,413) $ (17,124)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 9,686 5,640
Provision for doubtful accounts 138 283
Write downs for excess and obsolete inventory 3,397 1,209
Compensation related to stock options and share
awards 24,579 19,278
Net realized gains on short-term investments (7) (22)
Accretion of purchase discounts on short-term
investments (271) (1,381)
Change in carrying value of preferred stock
warrants - (715)
Loss/ (gain) on disposal of fixed assets (15) 51
Excess tax benefit associated with stock-based
compensation (88) (52)
Changes in operating assets and liabilities:
Accounts receivable (924) (8,352)
Inventory (766) (5,092)
Prepaids and other 847 (660)
Deferred costs (606) (617)
Other assets (50) (773)
Accounts payable (4,926) 3,394
Deferred revenue 8,698 10,957
Other current and noncurrent liabilities 4,184 1,924
Income taxes payable 122 347
--------- ---------
Net cash provided by operating
activities 20,585 8,295
--------- ---------
Cash flows from investing activities
Purchases of short-term investments (101,088) (119,856)
Proceeds from sales and maturities of
short-term investments 83,746 119,556
Purchases of property and equipment (4,439) (5,408)
Proceeds from sale of property and equipment 34 -
Cash paid in purchase acquisition, net of cash
acquired - (16,030)
--------- ---------
Net cash used in investing activities (21,747) (21,738)
--------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock 5,761 10,560
Repurchase of common stock under stock
repurchase program (991) (2,142)
Excess tax benefit associated with stock-based
compensation 88 52
--------- ---------
Net cash provided by financing
activities 4,858 8,470
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents - 5
--------- ---------
Net increase/ (decrease) in cash and
cash equivalents 3,696 (4,968)
Cash and cash equivalents, beginning of period 37,602 42,570
--------- ---------
Cash and cash equivalents, end of period $ 41,298 $ 37,602
========= =========
Supplemental disclosure of cash flow information
Income taxes paid $ 673 $ 652
Supplemental disclosure of non-cash investing and
financing activities
Common stock issued in purchase acquisition $ - $ 7,852
Contact:
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
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