Aruba Networks Has a Strong Beat-and-Raise Quarter With Plans to Accelerate Leverage


Aruba delivered the clean print and guide that the bulls expected for some time. And in a nod to shareholders, management announced plans to accelerate operating leverage. For the fourth quarter, revenue was above consensus by $8 million, gross margin improved by 100 basis points sequentially, operating margin hit management’s 20% target on the nose, and non-GAAP EPS were $0.01 ahead of the Street. First-quarter guidance was roughly $5 million ahead of consensus, and EPS were $0.01 to $0.02 better.

For the full year, management raised operating margin guidance from 19%-21% to 21%- 22%, based on a strong revenue growth outlook and an announced cost optimization plan that includes a 4% reduction in force and a relocation of 4% of the workforce to lower-cost geographies (i.e., India, Ireland, and Oregon). We believe this cost structure adjustment reflects a maturity in management’s beliefs regarding how to scale the business and a cultural shift at the board and management levels toward a deeper focus on profits and operating leverage. We project Aruba to exit the fiscal year at an operating margin of roughly 23%, which would be an all-time high for the company.

Slowly but surely, Aruba is addressing many investor concerns on the story, including potential Wi-Fi commoditization, risks around Cisco competition, lack of operating leverage (Aruba showed sharp expansion, as outlined above), and abnormally high stock compensation. We believe these factors are likely to create an inflection point in sentiment on the stock and rebuild management credibility, which should lead to an upward re-rating of the multiple.

Top-line strength during the fourth quarter was broad based with strong year-over-year growth across all geographies, especially North America, which was helped by strong enterprise momentum as well as a reacceleration in federal sales. From a product perspective, Aruba saw continued strength in the 11ac ramp-up, Aruba Instant, and ClearPass. Notably, Aruba also saw a record quarter in its core controller-based business, which speaks to the diversity and durability of its revenue base.

On the 11ac side, management noted that the new standard is accelerating the speed at which enterprises adopt the all-wireless workplace, in line with our field research. Management noted strong revenue visibility based on a robust enterprise pipeline (led by 11ac and ClearPass), an accelerating SME segment (driven by Instant), and growing opportunities with public-facing enterprises.

Set Your Business Up For Success
Want to make this your most successful year yet? Make sure to cover all your bases. Focus on what you do best and find experts for all of the rest. Fiverr is a great place to find professional help in every field imaginable. Have countless to-dos? Fiverr’s freelancers can be counted on to do them all. On time and on budget.

Wondering where to start? Here are your 3 steps to business success:
1. Build a Better Brand
Want a brand that earns your customers’ trust and loyalty? Don’t confuse them with a bland brand.
Create a standout brand across every aspect of your marketing: Brand your logo, your website, your app, your social media.
You get the picture. (but make sure that picture looks good)
  • Get a world-class logo design

  • Design your social media to reflect your brand

  • Tailor your web and mobile design to fit your brand

Social Media Design
Logo Design
Web Design
2. Grow Your Customer Base
They’re not going to walk in your door if they don’t know who you are. Catch them while they’re browsing the Internet at home. Pop up on mobile while they’re walking around town. Whatever it takes to reel them in.
Pump up your presence online with these easy fixes:
  • Boost your social media marketing (SMM): Target your ideal customers and appear in their social media feeds.

  • Level up your search engine marketing (SEM): Pop to the top of the search results with your targeted ads.

  • Step up your SEO: Rank first on Google search results and get the attention your brand deserves.

Social Marketing
ASearch Engine Marketing
3. Stay Ahead of Your Digital Game
To keep pace with the latest digital trends, you have to keep up with the times. This means you need to give your users what they demand.
Constant content updates: Who wants yesterday’s news?
Short, engaging videos: Your customers crave them.
Seamless user experience (UX): Because no one wants to waste time looking around your site for info when they can find it elsewhere faster. A clean, user-friendly user interface (UI) can clean out the clutter and make your users even more engaged.
Stay ahead of the pack with:
  • Website Content

  • Short Video Ads

  • WordPress Site Building

Video Ads
Website Content
Everything your business needs is just 3 steps away!
Learn more about how to build and grow your business with
Fiverr Business Guides.


Please enter your comment!
Please enter your name here