Aruba Networks Reports Record Fiscal Second Quarter 2012 Financial Results

Aruba Networks, Inc., a global leader in distributed enterprise network solutions, today released financial results for its fiscal second quarter 2012 ended January 31, 2012.

Revenue for Q2'12 was $126.3 million, an increase of 35 percent from the $93.9 million reported in Q2'11. GAAP net loss for Q2'12 was $11.4 million, or $0.11 per share, compared with $2.8 million, or $0.03 per share, for the same period in the previous year.

"Second quarter revenue grew by 35 percent over last year as new and existing clients looked to Aruba's differentiated solution to solve some of their most strategic IT needs," said Dominic Orr, president and chief executive officer. "Our differentiation in security, scalability and mobility software has been built over the last ten years and continues to help us win. To furthermore address our clients mobility needs, we continue to expand our innovative product portfolio with software solutions leveraging our Avenda and Amigopod acquisitions."

Strong second quarter with record revenue

"We delivered a strong second quarter with record revenue and record gross margin," said Michael Galvin, Aruba's Chief Financial Officer. "We as well generated $25.7 million in cash from operations, ending the quarter with $275.8 million in cash and short term investments."

These forward-looking statements involve risks and uncertainties, as so then 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: business and economic conditions and growth trends in the networking industry, our vertical markets and various geographic regions; and changes in overall information innovation spending; also as those risks and uncertainties included pursuant to this agreement the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Aruba's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2011, which was filed with the SEC on December 8, 2011, and is 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 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, and the change in the valuation of the contingent rights liability, less the related tax effects. Aruba defines non-GAAP EPS as non-GAAP net income divided by the weighted average diluted shares outstanding. Aruba's 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 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 stock-based expenses and related payroll taxes, however also discrete charges that are infrequent in nature. Furthermore, Aruba's management excludes from non-GAAP net income the tax effects of these non-GAAP financial measures, as without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on the Company's operating results. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use, 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 then 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 and other acquisition related expenses, and the change in the valuation of the contingent rights liability, less the related tax effects, 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 pursuant to this agreement 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 Aruba's business. Second, stock-based awards are an important part of Aruba's employees' compensation and impacts their performance. Third, the elements of the costs that Aruba excludes in its calculation of non-GAAP net income may differ from the elements 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 at the same time with their most directly comparable financial measures calculated under 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.

Aruba Networks is a leading provider of straightway-generation network access solutions for the mobile enterprise. The company's Mobile Virtual Enterprise 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.

© 2012 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.