Aruba networks announces 17% year-over-year growth for its fiscal second quarter of 2009

(PresseBox) ( Sunnyvale/CA, )
- Company adds over 500 new customers
- Generated $7.6 million in cash flow from operations
- Cash and marketable securities rise to $115.2 million with no debt

Aruba Networks, Inc. (NASDAQ: ARUN), a global leader in wireless LANs and secure mobility solutions, today released financial results for its fiscal second quarter ended January 31, 2009. Revenues for the fiscal second quarter of 2009 were $47.7 million, an increase of 17% over the $40.6 million reported in the fiscal second quarter of 2008. GAAP net loss for the fiscal second quarter of 2009 was $6.8 million, or $0.08 per share, compared to a net loss of $3.5 million, or $0.04 per share, in the fiscal second quarter of 2008. GAAP results for the fiscal second quarter of 2009 included $6.1 million of non-cash stock-based expenses, $1.2 million of amortization expense of acquired intangible assets, and $1.4 million in restructuring expenses.

Non-GAAP net income for the fiscal second quarter of 2009 increased to $2.0 million, or $0.02 per share, compared to non-GAAP net income of $0.8 million, or $0.01 per share, in the fiscal second quarter of 2008. Non-GAAP net income for these periods excludes the impact of non-cash stock-based expenses, amortization expense of acquired intangible assets in all periods, and, for the fiscal second quarter of 2009, restructuring expenses.

"We achieved 17% year-over-year revenue growth for our second fiscal quarter, even in these tough economic times, and I believe this offers clear evidence that customers see the value and positive ROI of our products," said Dominic Orr, president and chief executive officer of Aruba. "While some projects have been pushed out, customers are being drawn to our value-based networking solutions that we believe lower operating expenses and help rightsize infrastructure investments. For example, migrating to Aruba's high-performance 802.11n wireless LANs help companies significantly scale back expenses by rightsizing their wired network infrastructure - fewer active ports require fewer closet switches, fewer maintenance contracts, and no cabling changes as employees move. Customers are attracted to this approach to IT infrastructure management, and I believe that is a key reason why we added over 500 new customers in the quarter. It is also why I believe we are well positioned to take advantage of our large and growing addressable market opportunity when general macroeconomic conditions improve."

"Gross margin improved by more than 300 basis points over the prior quarter, contributing to our solid bottom line performance. Additionally, we reduced operating expenses by over $2.1 million from the immediately preceding quarter, in line with our cost reduction plan announced last quarter," said Steffan Tomlinson, Aruba's chief financial officer. "During the quarter, we generated $7.6 million of cash flow from operations and ended the quarter with $115.2 million of cash and short term investments, with no 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:

Positioned in the Gartner Magic Quadrant as a Leader - Aruba was positioned in the Leaders quadrant in Gartner's Magic Quadrant for Wireless LAN Infrastructure. This positioning is available only to vendors that have demonstrated an ability to meet a broad variety of customer requirements, shape the market, maintain strong relationships with their channels and customers, and have no obvious gaps within their product portfolio;

Release of AirWave Suite 6.2 Software - We introduced the AirWave Wireless Management Suite 6.2 with Payment Card Industry (PCI) Data Security Standard (DSS) compliance reporting assistance, enhanced rogue detection, RADIUS authentication for administrators, and Cisco 871 router monitoring;

Launch of Investment Protection Program for Nortel Customers - Following Nortel's bankruptcy filing we launched the AirWave investment protection program for Nortel customers. This program is designed to extend the life of existing wireless LAN infrastructure investments and provide multi-vendor support for future network upgrades;

Gold Star Mobile Star Awards(TM) - Aruba was awarded three Gold Star Mobile Star Awards(TM) for its AirWave Wireless Management Suite, AP-120 802.11n Access Point Family, and Remote Access Point technology;

Wins and Deployments - Wins and deployments announced by Aruba this quarter included Giant Eagle, Inc., PETCO Animal Supplies, Inc., Wirral University Teaching Hospital NHS Foundation Trust, Taichung Veterans General Hospital, Denver Public Schools, Tamalpais Union School District, University of Cambridge, and Universidad del Valle de Mexico.

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 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 11126226. International parties can access the replay at +1-303-590-3000 and should enter passcode 11126226.

Forward Looking Statements

This press release contains forward-looking statements, including statements relating to our expectations regarding (1) the ability of our products to lower operating expenses by, among other things, allowing our customers to decrease the size of their wired network infrastructure ; (2) our ability to take advantage of large and growing addressable market opportunities when the general macroeconomic conditions improve ; 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) reductions 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 first quarter ended on October 31, 2008, which was filed with the SEC on December 10, 2008, and the "Risk Factors" contained in our Schedule TO filed with the SEC on February 17, 2009, both of which are available on Aruba's investor relations website at and on the SEC website at 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 second quarter of 2009 only), and, a benefit related to the revaluation of warrants to fair value (for the six months ended January 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 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 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
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