Aruba Networks (ARUN) 8-K Aruba Networks Reports Record Third Quarter 2011 Financial Results

Exhibit 99.1

ARUBA NETWORKS REPORTS RECORD THIRD QUARTER 2011 FINANCIAL RESULTS

• Record Revenue of $105.8 Million in Q3 Increased 53 Percent Year-over-Year and 13 Percent Quarter-over-Quarter

• Added Over 1,200 New Customers in Q3 to Surpass 14,000 Cumulative Customers

• Cash and Short Term Investments Increased $23.0 Million to $210.8 Million With No Debt

SUNNYVALE, Calif., May 19, 2011— Aruba Networks, Inc. (NASDAQ: ARUN), a global leader in distributed enterprise network solutions, today released financial results for its fiscal 2011 third quarter ended April 30, 2011.

Revenue for Q3’11 was $105.8 million, an increase of 53 percent from the $69.0 million reported in Q3’10. GAAP net income for Q3’11 was $3.2 million, or $0.03 per share, compared with a net loss of $5.3 million, or $0.06 per share, in Q3’10.

Non-GAAP net income for Q3’11 was $18.8 million, or $0.16 per share. This compares with $8.5 million or $0.08 per share in Q3’10. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“Aruba Networks is helping companies and organizations transform the network edge and move to a mobility-centric architecture,” said Dominic Orr, President and Chief Executive Officer of Aruba. “In the third quarter, we benefited from strong demand across all of our major geographies and increasing acceptance of our solutions in both the general enterprise and across our other verticals. Our continued innovation is a key factor in our rapid customer acquisition, as we added over 1,200 new customers in the third quarter, a record for the Company.”

“We are pleased with our financial performance this quarter,” said Michael Galvin, Aruba’s Interim Chief Financial Officer. “With 53 percent year-over-year revenue growth we delivered a strong quarter and generated $9.3 million in cash from operations.”

Recent Highlights

• Mobile Architecture —Aruba launched its Mobile Virtual Enterprise(MOVE) architecture designed to accelerate the enterprise network mobility revolution. Aruba MOVE provides context-aware networking for the post wired infrastructure era. Aruba MOVE delivers a comprehensive portfolio of thin network on-ramps. These on-ramps are enabled by Aruba Mobility Network Services, delivered centrally from the data center.

• New Outdoor WLAN Solutions —Aruba launched the Aruba AirMesh outdoor wireless solutions portfolio designed to be the most scalable and high-performance outdoor mesh portfolio available in the industry today. The Aruba AirMesh solution was deployed at the port of Yokohama in Japan to transfer its traffic from IP cameras, weather sensors, Z-Wave and other Wi-Fi enabled devices to the iPhones and iPads used by workers and security at the port.

• Mobile Device Access Control (MDAC) Solution— Aruba also announced the availability of its MDAC solution, providing easy, secure network access to facilitate the “Bring Your Own Device” (BYOD) phenomenon. This solution is designed for zero-touch, secure provisioning of Apple^® iOS mobile devices. Due to strong market demand, Aruba also introduced its MDAC solution for customers with Cisco WLAN infrastructure.

• Industry Recognition —Gartner, Inc. positioned Aruba in the “Leaders” quadrant of its recently released “Magic Quadrant for Wireless LAN Infrastructure (Global)” report.* The Magic Quadrant evaluates vendors based on two criteria, “ability to execute” and “completeness of vision”. Aruba was also named to CRN’s 2011 Partner Programs Guide and was also awarded a 5-Star Partner rating. CRN’s Partner Programs Guide and 5-Star Partner ratings serve as the definitive list of vendors who have robust partner programs or products that service solution providers offer directly to the IT channel.

• ArubaEdge Partner Program —Aruba announced the ArubaEdge Partner Program. This program certifies and promotes end-to-end mobility solutions from an ecosystem of technology partners leveraging the Aruba MOVE architecture. Ecosystem partners participating in the ArubaEdge include Avaya, Citrix, Dell, Microsoft, Polycom and many more.

Conference Call Information

Aruba will host a conference call for analysts and investors to discuss its fiscal third quarter results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the “Investor Relations” section of the Company’s website at www.arubanetworks.com. Following the webcast, an archived version will be available on the website for twelve months. To hear the replay, parties in the United States and Canada should call 1-800-406-7325 and enter passcode 4436777. International parties can access the replay at +1-303-590-3030 and should enter passcode 4436777.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about (1) our belief that the enterprise network is transitioning from a wired-centric to a mobility-centric architecture which will impact Aruba’s sales and (2) our expectations regarding customer adoption of our MOVE architecture and our AirMesh and MDAC solutions.

These forward-looking statements involve risks and uncertainties, as well 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: (1) our ability to react to trends and challenges in our business and the markets in which we operate; (2) business and economic conditions and growth trends in the networking industry, our vertical markets and various geographic regions; and (3) changes in overall information technology spending; as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Aruba’s report on Form 10-Q for the fiscal second quarter ended January 31, 2011, which was filed with the SEC on March 11, 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 Financial Measures

In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP net income and non-GAAP earnings per share (EPS). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

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, the change in the valuation of the contingent rights liability and litigation reserves. 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, but also discrete charges that are infrequent in nature, such as litigation reserves. 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 well 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, the change in the valuation of the contingent rights liability and litigation reserves, 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 in accordance with 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 components of the costs that Aruba excludes in its calculation of non-GAAP net income may differ from the components 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 together with their most directly comparable financial measures calculated in accordance with 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.

# # #

*Gartner “Magic Quadrant for Wireless LAN Infrastructure (Global)” by Michael J. King and Tim Zimmerman, March 3, 2011.

About Aruba Networks

Aruba is a global leader in distributed enterprise networks. Its award-winning portfolio of campus, branch/teleworker, and mobile solutions simplify operations and secure access to all corporate applications and services — regardless of the user’s device, location, or network. This dramatically improves productivity and lowers capital and operational costs.

Listed on the NASDAQ and Russell 2000(R) Index, Aruba is based in Sunnyvale, California, and has operations throughout the Americas, Europe, Middle East, and Asia Pacific regions. To learn more, visit Aruba athttp://www.arubanetworks.com. For real-time news updates follow Aruba onTwitter orFacebook.

# # #

IR Contacts
Aruba Networks, Inc.	The Blueshirt Group, Investor Relations
Michael Galvin	Chris Danne, Maria Riley
Interim Principal Financial and Accounting Officer	+1-415-217-7722
+1-408-227-4500	ir@arubanetworks.com
ir@arubanetworks.com

© 2011 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.

Aruba Networks, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)

	April 30,			July 31,
	2011			2010
Assets
Current assets:
Cash and cash equivalents	$	77,245		$	31,254
Short-term investments		133,553			124,167
Accounts receivable, net		67,464			41,269
Inventory		20,685			15,159
Deferred costs		6,703			5,451
Prepaids and other		4,311			5,108
Total current assets		309,961			222,408
Property and equipment, net		12,530			9,919
Goodwill		33,143			7,656
Intangible assets, net		22,915			9,287
Other assets		2,140			1,437
Total other assets		70,728			28,299
Total assets	$	380,689		$	250,707
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	10,486		$	8,082
Accrued liabilities		48,840			36,458
Income taxes payable		819			519
Deferred revenue		49,848			43,422
Total current liabilities		109,993			88,481
Deferred revenue		12,340			10,976
Other long-term liabilities		750			595
Total other liabilities		13,090			11,571
Total liabilities		123,083			100,052
Stockholders’ equity
Common Stock: $0.0001 par value; 350,000 shares authorized at April 30, 2011, and July 31, 2010; 103,819 and 93,606 shares issued and outstanding at April 30, 2011, and July 31, 2010, respectively		10			9
Additional paid-in capital		430,564			326,178
Accumulated other comprehensive income		159			98
Accumulated deficit		(173,127	)		(175,630	)
Total stockholders’ equity		257,606			150,655
Total liabilities and stockholders’ equity	$	380,689		$	250,707

Aruba Networks, Inc.
Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)

	Three months ended						Nine months ended
	April 30,						April 30,
	2011			2010			2011			2010
Revenues:
Product	$	89,415		$	56,634		$	237,719		$	155,909
Professional services and support		16,186			12,167			44,588			32,672
Ratable product and related professional services and support		150			156			449			627
Total revenues		105,751			68,957			282,756			189,208
Cost of revenues:
Product		29,964			19,911			76,199			54,446
Professional services and support		4,167			2,201			10,615			6,437
Ratable product and related professional services and support		—			46			10			199
Total cost of revenues		34,131			22,158			86,824			61,082
Gross profit		71,620			46,799			195,932			128,126
Operating expenses:
Research and development		22,799			13,874			61,521			37,713
Sales and marketing		40,916			27,697			111,266			79,013
General and administrative		10,319			8,840			27,690			23,600
Litigation reserves		—			1,650			—			21,900
Total operating expenses		74,034			52,061			200,477			162,226
Operating loss		(2,414	)		(5,262	)		(4,545	)		(34,100	)
Other income (expense), net
Interest income		284			218			758			616
Other income (expense), net		5,608			(189	)		7,191			(432	)
Total other income (expense), net		5,892			29			7,949			184
Income (loss) before income tax provision		3,478			(5,233	)		3,404			(33,916	)
Income tax provision		277			85			901			504
Net income (loss)	$	3,201		$	(5,318	)	$	2,503		$	(34,420	)
Shares used in computing net income (loss) per common share, basic		102,055			90,874			98,962			88,978
Net income (loss) per common share, basic	$	0.03		$	(0.06	)	$	0.03		$	(0.39	)
Shares used in computing net income (loss) per common share, diluted		119,367			90,874			116,289			88,978
Net income (loss) per common share, diluted	$	0.03		$	(0.06	)	$	0.02		$	(0.39	)

Aruba Networks, Inc.
Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share data)
(Unaudited)

	Three months ended						Nine months ended
	April 30,						April 30,
	2011			2010			2011			2010
GAAP net income (loss)	$	3,201		$	(5,318	)	$	2,503		$	(34,420	)
Plus:
a) Stock-based expenses		19,289			10,947			48,513			27,769
b) Amortization expense of acquired intangible assets and other acquisition related expenses		2,211			1,193			6,010			3,659
c) Change in valuation of contingent rights liability		(5,887	)		—			(7,991	)		—
d) Litigation reserves		—			1,650			—			21,900
Non-GAAP net income	$	18,814		$	8,472		$	49,035		$	18,908
GAAP net income (loss) per common share	$	0.03		$	(0.06	)	$	0.02		$	(0.39	)
Plus:
a) Stock-based expenses		0.16			0.12			0.42			0.30
b) Amortization expense of acquired intangible assets and other acquisition related expenses		0.02			0.01			0.05			0.04
c) Change in valuation of contingent rights liability		(0.05	)		—			(0.07	)		—
d) Litigation reserves		—			0.01			—			0.23
Non-GAAP net income per common share	$	0.16		$	0.08		$	0.42		$	0.18
Shares used in computing diluted GAAP net income (loss) per common share		119,367			90,874			116,289			88,978
Shares used in computing diluted Non-GAAP net income per common share		119,367			106,548			116,289			102,946

Aruba Networks, Inc.
Consolidated Statements of Operations
As a Percentage of Total Revenues
(On a GAAP Basis)
(Unaudited)

	Three months ended						Nine months ended
	April 30,						April 30,
	2011			2010			2011			2010
Revenues:
Product		84.6	%		82.1	%		84.1	%		82.4	%
Professional services and support		15.3	%		17.7	%		15.8	%		17.3	%
Ratable product and related professional services and support		0.1	%		0.2	%		0.1	%		0.3	%
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues:
Product		28.3	%		28.8	%		26.9	%		28.8	%
Professional services and support		4.0	%		3.2	%		3.8	%		3.4	%
Ratable product and related professional services and support		0.0	%		0.1	%		0.0	%		0.1	%
Total cost of revenues		32.3	%		32.1	%		30.7	%		32.3	%
Gross profit		67.7	%		67.9	%		69.3	%		67.7	%
Operating expenses:
Research and development		21.5	%		20.1	%		21.8	%		19.9	%
Sales and marketing		38.7	%		40.2	%		39.3	%		41.8	%
General and administrative		9.8	%		12.8	%		9.8	%		12.4	%
Litigation reserves		0.0	%		2.4	%		0.0	%		11.6	%
Total operating expenses		70.0	%		75.5	%		70.9	%		85.7	%
Operating loss		(2.3	%)		(7.6	%)		(1.6	%)		(18.0	%)
Other income (expense), net
Interest income		0.3	%		0.3	%		0.3	%		0.3	%
Other income (expense), net		5.3	%		(0.3	)%		2.5	%		(0.2	)%
Total other income (expense), net		5.6	%		0.0	%		2.8	%		0.1	%
Income (loss) before income tax provision		3.3	%		(7.6	%)		1.2	%		(17.9	%)
Income tax provision		0.3	%		0.1	%		0.3	%		0.3	%
Net income (loss)		3.0	%		(7.7	%)		0.9	%		(18.2	%)

Aruba Networks, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Nine months ended
	April 30,
	2011			2010
Cash flows from operating activities
Net income (loss)		2,503			(34,420	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		11,201			7,493
Provision for doubtful accounts		4			259
Write downs for excess and obsolete inventory		2,445			1,476
Compensation related to stock options and share awards		45,828			26,765
Accretion of purchase discounts on short-term investments		997			482
Loss (gain) on disposal of fixed assets		(6	)		19
Change in carrying value of contingent liability		(7,991	)		—
Excess tax benefit associated with stock-based compensation		(15	)		—
Changes in operating assets and liabilities:
Accounts receivable		(23,674	)		1,523
Inventory		(7,211	)		(9,123	)
Prepaids and other		(1,111	)		(1,147	)
Deferred costs		(1,252	)		(960	)
Other assets		(426	)		107
Accounts payable		(1,099	)		4,145
Deferred revenue		6,451			6,555
Other current and noncurrent liabilities		8,009			12,493
Income taxes payable		138			(220	)
Net cash provided by operating activities		34,791			15,447
Cash flows from investing activities
Purchases of short-term investments		(81,511	)		(79,766	)
Proceeds from sales of short-term investments		19,876			3,001
Proceeds from maturities of short-term investments		51,030			42,965
Purchases of property and equipment		(5,776	)		(3,378	)
Proceeds from sales of property and equipment		14			23
Cash paid in purchase acquisitions, net of cash acquired		(4,303	)		—
Net cash used in investing activities		(20,670	)		(37,155	)
Cash flows from financing activities
Proceeds from issuance of common stock		31,856			9,957
Repurchases of unvested common stock		—			(36	)
Excess tax benefit associated with stock-based compensation		15			—
Net cash provided by financing activities		31,871			9,921
Effect of exchange rate changes on cash and cash equivalents		(1	)		(1	)
Net increase (decrease) in cash and cash equivalents		45,991			(11,788	)
Cash and cash equivalents, beginning of period		31,254			41,298
Cash and cash equivalents, end of period	$	77,245		$	29,510
Supplemental disclosure of cash flow information
Income taxes paid	$	781		$	768
Supplemental disclosure of non-cash investing and financing activities
Common stock issued in purchase acquisitions	$	30,691		$	—
Contingent rights issued in purchase acquisition	$	9,486		$	—