Back in late March, Aruba Networks
Aruba develops technologies to secure wireless networks. Its more than 2,400 customers include Google
Judging from Q3 results, Aruba is in the midst of a growth spurt. Over the past year, revenues increased 65% to $34.7 million, while the sequential growth rate was an impressive 30%.
Despite intense competition from Cisco
The firm posted a Q3 loss of $9.3 million, or $0.26 per share. Keep in mind that there was about $10.4 million in non-cash expenses for stock option compensation and warrants.
Gross margins have enjoyed a healthy increase from 60.2% to 69.8% over the past year. Management has been adept at outsourcing manufacturing to offshore areas and to outfits like Flextronics International
As I mentioned in a recent article, Aruba's valuation is far from cheap, currently hovering around 11 times revenues. But as seen with other networking companies like Riverbed Technologies
On the conference call, management indicated that existing customers are ramping up their deployments, and that its pipeline of new customers looks healthy. It's a nice formula to sustain the growth story, and it should be attractive for momentum investors. As for those investors on the conservative side, Aruba is likely to still be volatile and stomach churning.