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Aruba Networks Goes Red

By Seth Jayson – Updated Apr 10, 2017 at 7:14AM

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Just the facts, Fool.

Aruba Networks (Nasdaq: ARUN) reported earnings on May 16. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended April 30 (Q3), Aruba Networks met expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share dropped significantly. GAAP earnings per share contracted to a loss.

Gross margins grew, operating margins shrank, net margins dropped.

Revenue details
Aruba Networks chalked up revenue of $147.1 million. The 19 analysts polled by S&P Capital IQ predicted sales of $146.2 million on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $131.9 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.11. The 19 earnings estimates compiled by S&P Capital IQ predicted $0.12 per share. Non-GAAP EPS of $0.11 for Q3 were 31% lower than the prior-year quarter's $0.16 per share. GAAP EPS were -$0.18 for Q3 compared to $0.05 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 70.1%, 10 basis points better than the prior-year quarter. Operating margin was -1.6%, 410 basis points worse than the prior-year quarter. Net margin was -13.7%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $149.0 million. On the bottom line, the average EPS estimate is $0.12.

Next year's average estimate for revenue is $596.1 million. The average EPS estimate is $0.62.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 285 members out of 316 rating the stock outperform, and 31 members rating it underperform. Among 66 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 56 give Aruba Networks a green thumbs-up, and 10 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Aruba Networks is hold, with an average price target of $26.38.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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