Aruba Networks Conference Call Highlights

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Aruba Networks
ARUN
reported its third quarter earnings on Friday. Shares of the company are down 13 percent. Below are some key highlights from its conference call: Financial Metrics: • We were pleased to once again deliver an outstanding quarter across all of our key financial metrics. • Record revenues of $207.8 million exceeded the top end of our guidance range growing 29% year-over-year and up 2% sequentially. • While we saw broad based improvement, geographically, the standout performance was in EMEA. • Further, we saw strong growth in the enterprise, federal and retail verticals where our differentiated offering continues to enable us to take market share. • Based on publicly disclosed numbers of our competitors, both large and small, we were the fastest growing business on year-over-year basis in the enterprise wireless market. • We believe our industry leading gross margins serve as a strong indicator of our product differentiation. • Q1 non-GAAP gross margins grew to 72.3% up from 71.5% in Q4. • This performance was up from 47% in the previous quarter and 11% a year ago. • As expected, we saw nice growth in sales of our newer AP-205 and AP-215s, which also contributed to our stronger gross margin performance. • In addition, our flagship AP-225s continue to perform very well. • We're encouraged to see signs that the all-wireless workplace is becoming not only a CIO level priority, but also a key requirement for line of business heads, leaders of HR, CMOs and even CEOs. • The all-wireless workplace addresses many key business initiatives, including recruiting top talent, improving productivity, and in the case of public-facing enterprises, deepening customer loyalty and expanding revenues. Financial Metrics: • In Q1, total revenue was $207.8 million, growing 29% year-over-year and 2% quarter-over-quarter. • Product revenue of $168.5 million grew 29% year-over-year and 1% sequentially. • Support and professional services revenue of $39.4 million increased 31% year-over-year and 12% sequentially. • Services revenue in Q1 included a $1.2 million support transaction that will not repeat in Q2. • U.S. revenue grew 23% year-over-year representing 64% of total Q1 revenue. • EMEA revenue grew 73% year-over-year, representing 22% of total revenue. • And Asia Pacific revenue grew 13% year-over-year representing 13% of total revenue. • Total non-GAAP gross margin in Q1 grew to 72.3% compared with 71.5% in Q4 and 72.5% in Q1 2014. • Q1 non-GAAP product gross margin was 71% compared to 70.6% in Q4 and 71.6% in Q1 2014. • Product gross margins in our major product categories were in our normal historical ranges. • Q1 non-GAAP services gross margin was 77.9%, up from 75.7% in the prior quarter and up from 76.3% in the same period a year ago. • Our near-term target range for total non-GAAP gross margin will continue to be 71% to 73%. • Non-GAAP research and development expense was $31.6 million in Q1, as a percentage of revenue R&D was 15.2% an improvement from 15.5% in Q4. • In total, Q1 non-GAAP operating expenses were $105 million or 50.5% of revenue, an improvement from 51.4% of revenue in Q4. • Q1 SBC decreased to 11.9% of revenue down from 13.4% in Q4 and 17% in Q1 2014. • Our expected range for SBC expense for fiscal 2015 continues to be 12% to 14% of revenue. • Improved profitability and effective working capital management led to approximately $47 million in cash flow from operations. • In the first quarter, we purchased 1.1 million shares of common stock at an average price of $22.17 per share, for an aggregate purchase of approximately $25 million. • The weighted average shares outstanding impact of the buyback on the quarter's diluted share count was approximately 0.7 million shares. • Q2 2015 will reflect the full benefit of the 1.1 million shares repurchased. • We have approximately $106 million remaining in our stock repurchase program. • Net of these repurchases, cash and short-term investments at quarter-end were • $315.3 million, an increase of $30 million from the prior quarter. • As we move forward, we plan to continue to utilize our repurchase program to mitigate stock dilution, balancing our capital structure needs in any given quarter. • We ended Q1 with a $107.2 million of accounts receivable, an increase of $4.9 million from Q4. • Days sales outstanding in Q1 were 46 days compared to 45 days in Q4 and 38 days in Q1 2014. • Our target range remains 45 to 55 days. • Total deferred revenue of $195 million increased 8% from Q4 2014 and 24% year-over-year. • Short-term deferred revenue of $146.2 million increased 8% sequentially and 25% year-over-year.
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Posted In: EarningsNews
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