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8-K - FORM 8-K - ARUBA NETWORKS, INC. | c21907e8vk.htm |
Exhibit 99.1
ARUBA NETWORKS REPORTS RECORD FOURTH QUARTER
AND FISCAL YEAR 2011 FINANCIAL RESULTS
AND FISCAL YEAR 2011 FINANCIAL RESULTS
| Grew Fiscal Year Revenue 49 percent to $396.5 million | ||
| Record Revenue of $113.8 Million in Q4 Increased 47 Percent Year-over-Year | ||
| Added Over 1,500 New Customers in Q4 to Surpass 15,500 Cumulative Customers | ||
| Cash and Short Term Investments Increased $23.2 Million in Q4 to $234.0 Million With No Debt |
SUNNYVALE, Calif., August 25, 2011 Aruba Networks, Inc. (NASDAQ: ARUN), a global leader in
distributed enterprise network solutions, today released financial results for its fiscal fourth
quarter and fiscal year ended July 31, 2011.
Revenue for Q411 was $113.8 million, an increase of 47 percent from the $77.3 million reported in
Q410. GAAP net income for Q411 was $68.2 million, or $0.57 per share, compared with net income of
$0.4 million, or $0.00 per share, in Q410. As a result of our increasing operating profitability
in fiscal 2011 and expectations for continued profits going forward, GAAP net income for the fourth
quarter included a one-time tax benefit of $72.8 million, equivalent to $0.61 per share, due to the
release of the companys valuation allowances and the recording of the associated net deferred tax
assets on its balance sheet. This one-time event is in conjunction with the establishment of
Arubas international operating entities to optimize Arubas long term tax structure.
Non-GAAP net income for Q411 was $20.2 million, or $0.17 per share. This compares with $11.1
million, or $0.10 per share, in Q410. A reconciliation between GAAP and non-GAAP information is
contained in the tables below.
Fiscal year 2011 revenue was $396.5 million, an increase of 49 percent from the $266.5 million
reported in fiscal year 2010. GAAP net income for fiscal year 2011 was $70.7 million, or $0.60 per
share, compared with a net loss of $34.0 million, or $0.38 per share, in fiscal year 2010. Non-GAAP
net income for fiscal year 2011 was $69.3 million, or $0.59 per share, compared with $30.0 million,
or $0.29 per share, in fiscal year 2010.
Demand for our wireless LAN solutions continued to be strong throughout our fiscal fourth quarter,
as revenue increased by 47 percent year-over-year and 8 percent sequentially, said Dominic Orr,
President and Chief Executive Officer of Aruba. Mobile device adoption continues to accelerate
resulting in proliferating demand for Enterprise mobility solutions. Revenue from the existing
customer base remains strong and we are especially encouraged by our rapid new customer
acquisitions adding over 4,500 customers in the last twelve months. With robust Q4 bookings and a
solid pipeline for our wireless LAN solutions, we enter our fiscal 2012 confident in our ability to
grow faster than the market and increase our market share.
In addition to delivering a strong Q4, for the fiscal year, Aruba achieved record revenue,
non-GAAP gross margin, operating margin and net income, said Michael Galvin, Arubas Chief
Financial Officer. We also generated nearly $58 million in cash flow from operations during the
fiscal year.
Recent Highlights
| Proof of High-Density iPad Multimedia Performance over Aruba Wi-Fi Validated by the University of Ottawa information technology (IT) department, six leading multimedia educational applications were delivered to a high density iPad environment, concurrently with 100 percent of the iPads meeting the multimedia Service Level Agreement (SLA). | ||
| Proven High Performance for Microsoft Lync Server 2010 over Wi-Fi Aruba announced that its MOVE architecture for Wi-Fi networking enables wire-like performance for Microsoft Lync Server 2010, with tests showing up to 75 percent better performance for Microsoft Lync Server 2010 compared to an equivalent Cisco Wi-Fi network. | ||
| Suite B Cryptography for Mobile Networks Introduced Aruba announced the expansion of its secure mobility offerings by introducing Suite B cryptography on the Aruba Mobility Controller for use in classified government and high-security enterprise networks to ease government smartphone and tablet adoption. |
Conference Call Information
Aruba will host a conference call for analysts and investors to discuss its fiscal fourth quarter
and full year 2011 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
companys 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 4463275. International parties can access the
replay at +1-303-590-3030 and should enter passcode 4463275.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about (1) our belief
in the companys ability to grow faster than the market and increase market share and (2) our
expectations regarding continued acceleration of mobility device adoption resulting in increased demand for Enterprise mobility solutions.
These forward-looking statements involve risks and uncertainties, as well as assumptions which, if
they do not fully materialize or prove incorrect, could cause Arubas 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 Managements Discussion and Analysis of Financial Condition and
Results of Operations, in Arubas report on Form 10-Q for the fiscal third quarter ended April 30,
2011, which was filed with the SEC on June 7, 2011, and is available on Arubas 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, the change in the valuation of the contingent rights liability,
litigation reserves, and the release of the valuation allowance on deferred income tax assets.
Aruba defines non-GAAP EPS as non-GAAP net income divided by the weighted average diluted shares
outstanding. Arubas 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 companys performance by excluding certain expenses that may
not be indicative of Arubas 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, such as litigation reserves and releases of valuation allowances.
Because of varying available valuation methodologies, subjective assumptions and the variety of
award types that companies can use, Arubas 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 companys
operating results over different periods of time. Similarly, by excluding amortization expense of
acquired intangible assets and other acquisition related expenses, the change in the valuation of
the contingent rights liability, litigation reserves and the release of the valuation allowance on
deferred income tax assets, Arubas management believes that investors can better understand and
measure the companys 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 Arubas business. Second, stock-based awards
are an important part of Arubas 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
Aruba Networks is a leading provider of next-generation network access solutions for the mobile
enterprise. The companys 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 www.arubanetworks.com. For news and real-time updates, please visit one of Arubas
community sites.
© 2011 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.
# # #
IR Contacts |
||
Aruba Networks, Inc.
|
The Blueshirt Group, Investor Relations | |
Michael Galvin
|
Chris Danne, Maria Riley | |
Chief Financial Officer
|
+1-415-217-7722 | |
+1-408-227-4500
|
ir@arubanetworks.com | |
ir@arubanetworks.com |
Aruba Networks, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
July 31, | July 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 80,773 | $ | 31,254 | ||||
Short-term investments |
153,185 | 124,167 | ||||||
Accounts receivable, net |
68,598 | 41,269 | ||||||
Inventory |
29,895 | 15,159 | ||||||
Deferred costs |
6,999 | 5,451 | ||||||
Prepaids and other |
5,097 | 5,108 | ||||||
Deferred income tax assets |
53,310 | | ||||||
Total current assets |
397,857 | 222,408 | ||||||
Property and equipment, net |
14,772 | 9,919 | ||||||
Goodwill |
33,143 | 7,656 | ||||||
Intangible assets, net |
20,863 | 9,287 | ||||||
Deferred income tax assets |
20,143 | | ||||||
Other assets |
2,093 | 1,437 | ||||||
Total other assets |
91,014 | 28,299 | ||||||
Total assets |
$ | 488,871 | $ | 250,707 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 11,278 | $ | 8,082 | ||||
Accrued liabilities |
61,461 | 36,458 | ||||||
Income taxes payable |
767 | 519 | ||||||
Deferred revenue |
54,451 | 43,422 | ||||||
Total current liabilities |
127,957 | 88,481 | ||||||
Deferred income tax liability |
815 | | ||||||
Deferred revenue |
14,000 | 10,976 | ||||||
Other long-term liabilities |
757 | 595 | ||||||
Total other liabilities |
15,572 | 11,571 | ||||||
Total liabilities |
143,529 | 100,052 | ||||||
Stockholders equity |
||||||||
Common Stock: $0.0001 par value; 350,000 shares authorized at July 31, 2011 and 2010;
104,905 and 93,606 shares issued and outstanding at July 31, 2011 and 2010, respectively |
10 | 9 | ||||||
Additional paid-in capital |
450,147 | 326,178 | ||||||
Accumulated other comprehensive income |
127 | 98 | ||||||
Accumulated deficit |
(104,942 | ) | (175,630 | ) | ||||
Total stockholders equity |
345,342 | 150,655 | ||||||
Total liabilities and stockholders equity |
$ | 488,871 | $ | 250,707 | ||||
Aruba Networks, Inc.
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
Three months ended | Years ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Product |
$ | 97,141 | $ | 65,564 | $ | 334,860 | $ | 221,474 | ||||||||
Professional services and support |
16,475 | 11,651 | 61,063 | 44,323 | ||||||||||||
Ratable product and related professional services and support |
142 | 111 | 591 | 737 | ||||||||||||
Total revenues |
113,758 | 77,326 | 396,514 | 266,534 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Product |
31,620 | 22,624 | 107,820 | 77,070 | ||||||||||||
Professional services and support |
4,259 | 2,338 | 14,873 | 8,775 | ||||||||||||
Ratable product and related professional services and support |
| 29 | 10 | 229 | ||||||||||||
Total cost of revenues |
35,879 | 24,991 | 122,703 | 86,074 | ||||||||||||
Gross profit |
77,879 | 52,335 | 273,811 | 180,460 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
23,370 | 13,907 | 84,890 | 51,619 | ||||||||||||
Sales and marketing |
42,972 | 30,380 | 154,239 | 109,393 | ||||||||||||
General and administrative |
11,741 | 7,353 | 39,431 | 30,953 | ||||||||||||
Litigation reserves |
| | | 21,900 | ||||||||||||
Total operating expenses |
78,083 | 51,640 | 278,560 | 213,865 | ||||||||||||
Operating income (loss) |
(204 | ) | 695 | (4,749 | ) | (33,405 | ) | |||||||||
Other income (expense), net |
||||||||||||||||
Interest income |
260 | 218 | 1,018 | 834 | ||||||||||||
Other income (expense), net |
(4,407 | ) | (266 | ) | 2,784 | (699 | ) | |||||||||
Total other income (expense), net |
(4,147 | ) | (48 | ) | 3,802 | 135 | ||||||||||
Income (loss) before income tax provision |
(4,351 | ) | 647 | (947 | ) | (33,270 | ) | |||||||||
Income tax provision (benefit) |
(72,536 | ) | 224 | (71,635 | ) | 728 | ||||||||||
Net income (loss) |
$ | 68,185 | $ | 423 | $ | 70,688 | $ | (33,998 | ) | |||||||
Shares used in computing net income (loss) per common share, basic |
104,310 | 92,977 | 100,299 | 89,978 | ||||||||||||
Net income (loss) per common share, basic |
$ | 0.65 | $ | 0.00 | $ | 0.70 | $ | (0.38 | ) | |||||||
Shares used in computing net income (loss) per common share,
diluted |
119,600 | 108,814 | 117,117 | 89,978 | ||||||||||||
Net income (loss) per common share, diluted |
$ | 0.57 | $ | 0.00 | $ | 0.60 | $ | (0.38 | ) |
Aruba Networks, Inc.
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)
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, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP net income (loss) |
$ | 68,185 | $ | 423 | $ | 70,688 | $ | (33,998 | ) | |||||||
Plus: |
||||||||||||||||
a) Stock-based expenses |
18,326 | 9,528 | 66,839 | 37,298 | ||||||||||||
b) Amortization expense of acquired intangible assets and other acquisition related expenses |
2,193 | 1,145 | 8,204 | 4,804 | ||||||||||||
c) Change in valuation of contingent rights liability |
4,394 | | (3,597 | ) | | |||||||||||
d) Litigation reserves |
| | | 21,900 | ||||||||||||
e) Release of valuation allowance on deferred income tax assets |
(72,848 | ) | | (72,848 | ) | | ||||||||||
Non-GAAP net income |
$ | 20,250 | $ | 11,096 | $ | 69,286 | $ | 30,004 | ||||||||
GAAP net income (loss) per common share |
$ | 0.57 | $ | 0.00 | $ | 0.60 | $ | (0.38 | ) | |||||||
Plus: |
||||||||||||||||
a) Stock-based expenses |
0.15 | 0.09 | 0.57 | 0.39 | ||||||||||||
b) Amortization expense of acquired intangible assets and other acquisition related expenses |
0.02 | 0.01 | 0.07 | 0.05 | ||||||||||||
c) Change in valuation of contingent rights liability |
0.04 | | (0.03 | ) | | |||||||||||
d) Litigation reserves |
| | | 0.23 | ||||||||||||
e) Release of valuation allowance on deferred income tax assets |
(0.61 | ) | | (0.62 | ) | | ||||||||||
Non-GAAP net income per common share |
$ | 0.17 | $ | 0.10 | $ | 0.59 | $ | 0.29 | ||||||||
Shares used in computing diluted GAAP net income (loss) per common share |
119,600 | 108,814 | 117,117 | 89,978 | ||||||||||||
Shares used in computing diluted Non-GAAP net income per common share |
119,600 | 108,814 | 117,117 | 104,413 |
Aruba Networks, Inc.
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)
Three months ended | Years ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Product |
85.4 | % | 84.8 | % | 84.5 | % | 83.1 | % | ||||||||
Professional services and support |
14.5 | % | 15.1 | % | 15.4 | % | 16.6 | % | ||||||||
Ratable product and related professional
services and support |
0.1 | % | 0.1 | % | 0.1 | % | 0.3 | % | ||||||||
Total revenues |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of revenues: |
||||||||||||||||
Product |
27.8 | % | 29.3 | % | 27.2 | % | 28.9 | % | ||||||||
Professional services and support |
3.7 | % | 3.0 | % | 3.7 | % | 3.3 | % | ||||||||
Ratable product and related professional
services and support |
0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | ||||||||
Total cost of revenues |
31.5 | % | 32.3 | % | 30.9 | % | 32.3 | % | ||||||||
Gross profit |
68.5 | % | 67.7 | % | 69.1 | % | 67.7 | % | ||||||||
Operating expenses: |
||||||||||||||||
Research and development |
20.5 | % | 18.0 | % | 21.4 | % | 19.4 | % | ||||||||
Sales and marketing |
37.8 | % | 39.3 | % | 38.9 | % | 41.0 | % | ||||||||
General and administrative |
10.4 | % | 9.5 | % | 10.0 | % | 11.6 | % | ||||||||
Litigation reserves |
0.0 | % | 0.0 | % | 0.0 | % | 8.2 | % | ||||||||
Total operating expenses |
68.7 | % | 66.8 | % | 70.3 | % | 80.2 | % | ||||||||
Operating income (loss) |
(0.2 | %) | 0.9 | % | (1.2 | %) | (12.5 | %) | ||||||||
Other income (expense), net |
||||||||||||||||
Interest income |
0.2 | % | 0.2 | % | 0.2 | % | 0.3 | % | ||||||||
Other income (expense), net |
(3.8 | )% | (0.3 | )% | 0.7 | % | (0.3 | )% | ||||||||
Total other income (expense), net |
(3.6 | %) | (0.1 | %) | 0.9 | % | 0.0 | % | ||||||||
Income (loss) before income tax provision |
(3.8 | %) | 0.8 | % | (0.3 | %) | (12.5 | %) | ||||||||
Income tax provision (benefit) |
(63.8 | %) | 0.3 | % | (18.1 | %) | 0.3 | % | ||||||||
Net income (loss) |
60.0 | % | 0.5 | % | 17.8 | % | (12.8 | %) | ||||||||
Aruba Networks, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Years ended | ||||||||
July 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net income (loss) |
70,688 | (33,998 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
15,042 | 10,091 | ||||||
Provision for doubtful accounts |
16 | 265 | ||||||
Write downs for excess and obsolete inventory |
2,647 | 2,949 | ||||||
Compensation related to stock options and share awards |
63,750 | 36,081 | ||||||
Accretion of purchase discounts on short-term investments |
1,290 | 837 | ||||||
Loss (gain) on disposal of fixed assets |
(3 | ) | (3 | ) | ||||
Change in carrying value of contingent rights liability |
(3,597 | ) | | |||||
Deferred income taxes |
(72,638 | ) | | |||||
Excess tax benefit associated with stock-based compensation |
194 | (107 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(24,821 | ) | (8,069 | ) | ||||
Inventory |
(16,900 | ) | (10,653 | ) | ||||
Prepaids and other |
(1,658 | ) | (2,757 | ) | ||||
Deferred costs |
(1,548 | ) | (290 | ) | ||||
Other assets |
(240 | ) | 50 | |||||
Accounts payable |
(167 | ) | 5,937 | |||||
Deferred revenue |
12,713 | 11,220 | ||||||
Other current and noncurrent liabilities |
13,331 | 14,360 | ||||||
Income taxes payable |
(109 | ) | (79 | ) | ||||
Net cash provided by operating activities |
57,990 | 25,834 | ||||||
Cash flows from investing activities |
||||||||
Purchases of short-term investments |
(144,512 | ) | (122,750 | ) | ||||
Proceeds from sales of short-term investments |
28,927 | 10,419 | ||||||
Proceeds from maturities of short-term investments |
84,870 | 69,007 | ||||||
Purchases of property and equipment |
(9,909 | ) | (5,299 | ) | ||||
Proceeds from sales of property and equipment |
11 | 42 | ||||||
Cash paid in purchase acquisitions, net of cash acquired |
(4,303 | ) | | |||||
Net cash used in investing activities |
(44,916 | ) | (48,581 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds from issuance of common stock |
36,640 | 12,631 | ||||||
Repurchases of unvested common stock |
| (36 | ) | |||||
Excess tax benefit associated with stock-based compensation |
(194 | ) | 107 | |||||
Net cash provided by financing activities |
36,446 | 12,702 | ||||||
Effect of exchange rate changes on cash and cash equivalents |
(1 | ) | 1 | |||||
Net increase (decrease) in cash and cash equivalents |
49,519 | (10,044 | ) | |||||
Cash and cash equivalents, beginning of period |
31,254 | 41,298 | ||||||
Cash and cash equivalents, end of period |
$ | 80,773 | $ | 31,254 | ||||
Supplemental disclosure of cash flow information |
||||||||
Income taxes paid |
$ | 1,152 | $ | 899 | ||||
Supplemental disclosure of non-cash investing and financing activities |
||||||||
Common stock issued in purchase acquisitions |
$ | 30,691 | $ | | ||||
Contingent rights issued in purchase acquisition |
$ | 9,486 | $ | |