##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
   þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended
    July 31, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.For the transition period
    from          to   Commission file number:
    001-33347
 Aruba Networks, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

02-0579097(I.R.S. Employer
    Identification No.)   1322
    Crossman Ave.
    Sunnyvale, California
    94089-1113(408) 227-4500 (Address,
    including zip code, and telephone number,
    including area code, of registrants principal executive
    offices)
  Securities registered pursuant to Section 12(b) of the
    Act:
 Common Stock, par value $0.0001
 Securities registered pursuant to 12(g) of the Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




---



##### 



TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


4Item 1A.

Risk Factors


11Item 1B.

Unresolved Staff Comments


24Item 2.

Properties


25Item 3.

Legal Proceedings


25Item 4.

Submission of Matters to a Vote of Security
    Holders


25PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


26Item 6.

Selected Consolidated Financial Data


28Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


29Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


46Item 8.

Consolidated Financial Statements and
    Supplementary Data


47Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


78Item 9A.

Controls and Procedures


78Item 9B.

Other Information


78PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


78Item 11.

Executive Compensation


78Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


79Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


79Item 14.

Principal Accountant Fees and Services


79PART IVItem 15.

Exhibits and Financial Statement Schedule


79Signatures


80Index to Exhibits


81EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1   2




---



##### Table of Contents



PART I
  In addition to historical information, this report contains
    forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933 and
    Section 21E of the Securities Exchange Act of 1934. These
    statements include, among other things, statements concerning
    our expectations:
  
    that we will continue to expand our product offerings and
    solution capabilities and plan to dedicate significant resources
    to these continued research and development efforts;
    that revenues from our indirect channels will continue to
    constitute a majority of our future revenues and may represent
    an increasing proportion of our future product revenues;
    that international revenues may increase in absolute dollars
    and as a percentage of total revenues in future periods as we
    expand into international locations and introduce our products
    in new markets;
    that, as our customer base grows, we expect the proportion of
    our revenues represented by services revenues to increase;
    that we expect a modest impact on our gross margins if our
    product mix continues to change and product revenues from our
    indirect channel increases and represents a greater proportion
    of our future product revenues;
    that we will hire a significant number of new employees in
    future periods;
    that we will continue to invest significantly in research and
    development, sales and marketing, and general and
    administrative, and incur expenses relating thereto,
    that we will continue to invest significantly in our research
    and development efforts, which we believe are essential to
    maintaining our competitive position;
    that we will continue to invest significantly in our sales
    and marketing efforts, which we believe will generate future
    business;
    that we will incur significant additional accounting and
    legal costs related to compliance with SEC rules and
    regulations, in addition to other public company costs;
    regarding the amounts of the remaining deferred revenue
    associated with ratable product and professional services and
    support revenues that we expect to amortize over future
    periods;
    regarding the sufficiency of our existing cash, cash
    equivalents, marketable securities and cash generated from
    operations; and
    regarding the potential benefits to be obtained from
    integrating acquired products into our existing product line.  as well as other statements regarding our future operations,
    financial condition and prospects and business strategies. These
    forward-looking statements are subject to certain risks and
    uncertainties that could cause our actual results to differ
    materially from those reflected in the forward-looking
    statements. Factors that could cause or contribute to such
    differences include, but are not limited to, those discussed in
    this report, and in particular, the risks discussed under the
    heading Risk Factors in Part I, Item 1A of
    this report, and those discussed in other documents we file with
    the Securities and Exchange Commission. We undertake no
    obligation to revise or publicly release the results of any
    revision to these forward-looking statements. Given these risks
    and uncertainties, readers are cautioned not to place undue
    reliance on such forward-looking statements.
 3




---



##### Table of Contents



ITEM 1.
    BUSINESS  Overview
          Industry
    Background
      
    Integrating security and
    mobility Security remains one of the
    largest hurdles to be solved before an enterprise accepts the
    widespread deployment of mobility solutions. Radio airwaves
    cannot be confined within a buildings walls, and this
    presents a challenge to traditional physical security models
    that were designed for wired networks. Network access privileges
    and permissions must be clearly defined on a per-user basis to
    enable secure access and application delivery policies for
    mobile users using an open medium. Finally, unauthorized rogue
    access points deployed by employees can circumvent network
    security and must be detected and prevented;
    Delivering applications in a mobile
    environment  Many applications are designed
    for delivery over a fixed network and may perform sub-optimally
    in a mobile environment. Enterprise mobility solutions must
    ensure application persistence for mission-critical data, as
    well as for latency-sensitive voice and video applications.
    Enabling a network to recognize and adapt to an
    application  so-called application
    awareness  allows more effective delivery of data,
    voice and video by prioritizing traffic on a per-user basis; 4




---



##### Table of Contents




    System integration  Enterprise mobility
    solutions require more than basic wireless access. Security,
    application, network, and radio frequency (RF) management
    services are required for comprehensive enterprise mobility and
    are implemented in separate elements in most existing networks.
    This increases the complexity of deployment and integration,
    limits scalability, and requires expensive upgrades to the
    existing infrastructure;
    Scalability and management  Enterprise
    mobility solutions need to cost-effectively scale to support
    large numbers of concurrent users. Centralized management and
    control enables enterprise IT departments to reduce personnel
    and other support costs associated with enterprise mobility
    solutions; and
    Support for emerging mobile
    applications  Enterprise mobility solutions
    need to be highly flexible and adaptable to support emerging
    mobile applications, such as enterprise FMC and location-based
    services, without degrading the performance of, or causing
    significant disruption to, existing operations.  Our
    User-Centric Networks
      
    Follow-Me Connectivity Our adaptive WLANsensure that users always have high performance wireless
    connections even in dense deployments, and noisy RF
    environments. Our adaptive WLANs support 802.11n and
    802.11a/b/g, scale for campus applications while remaining
    cost-effective for branch deployments, can be used both indoors
    and outdoors, and support secure enterprise mesh for completely
    wireless networking;
    Follow-Me Security  Our identity-based
    security integrates user-based security and mobility in a single
    solution, enabling users to securely roam across an extended
    enterprise network including the headquarters or main campus,
    remote office locations, hotels, and home offices. End-users at
    any of these locations experience the same login procedure and
    network access rights, while IT departments are assured that
    security and application delivery policies are consistently
    applied to all users. Our networks provide these benefits
    without requiring IT departments to deploy additional services
    such as VPNs or access control firewalls;
    Follow-Me Applications Our application
    continuity ensures a consistent user experience wherever a user
    connects or roams within the extended enterprise network. Most
    existing enterprise applications are designed for delivery in a
    fixed port-centric network in which dedicated bandwidth is
    typically provided to each user. The performance of these
    applications often degrades in most mobile environments in which
    bandwidth is shared among a group of users. Our user-centric
    network is application-aware, and the network dynamically
    adjusts to improve the performance of applications delivered in
    a mobile enterprise environment. IT managers can use our
    architecture to implement policies that prioritize and optimize
    data, voice and video services based on the specific user
    and/or the
    application being delivered;
    Ease of deployment and
    integration  Traditional approaches to
    enterprise mobility require a number of changes to the
    underlying network infrastructure. We have designed our
    architecture as a non-disruptive overlay to existing enterprise
    networks, allowing quick deployment and preserving existing
    infrastructure 5




---



##### Table of Contents



investments. In addition, we have integrated all of the
    disparate elements of enterprise mobility  security,
    application, network and RF management services  into
    a single architecture, making it easy for IT departments to
    deploy our solution together with existing networks and security
    infrastructure;  
    Cost-effective scalability  We believe
    our architecture provides industry leading scalability, designed
    to support up to 100,000 concurrent users from a single
    centralized point of control. In addition, our integrated
    solution reduces the amount and type of equipment required to
    enable mobility within a given location. As a result, our
    architecture enhances management efficiency and reduces
    equipment and personnel costs, allowing enterprise IT managers
    to scale enterprise mobility solutions in a cost-effective
    manner; and
    Flexible platform for emerging mobile
    applications  Our mobility solution
    architecture combines the flexibility of modular software with
    high performance, programmable hardware. This combination
    enables us to rapidly introduce new applications, such as
    integrating wireless LANs and enterprise FMC, and location-based
    services to track users and assets.  Our
    Strategy
    
    Drive adoption across the
    enterprise  Most enterprises initially
    deploy our solutions at corporate headquarters or main campus
    locations. Our strategy is to drive further penetration and
    deployment of our solutions to extended enterprise locations,
    across corporate, government or educational campuses, as well as
    branch and home offices. We intend to do so by emphasizing the
    scalability and cost-efficiency of our approach. We also expect
    to achieve greater penetration into enterprises by deploying
    business-continuity solutions that provide network access from
    remote locations, and by supporting new mobile devices, such as
    dual-mode handsets, as these devices are increasingly being
    adopted by enterprise users.
    Maintain and extend our software
    offerings  We believe that our software
    technology is a key competitive differentiator. We intend to
    continue enhancing our ArubaOS operating system and centralized
    mobility management system to maintain our position as a
    technology innovator. We are also developing additional software
    modules to extend the functionality and performance of our
    ArubaOS operating system. These new modules include Mobile VoIP
    and location-based services, as well as additional security
    modules.
    Utilize channel partners to expand our global market
    penetration  We intend to increase our
    market penetration and extend our geographic reach through our
    network of channel partners. In late 2007 we partnered with
    three leading value-added distributors as part of a program to
    increase our reach into value-added resellers. We plan to expand
    our growing channel footprint and will tailor training and
    support programs to help drive this expansion.
    Realize increased operating
    efficiencies  We currently outsource our
    hardware manufacturing to Flextronics, an overseas contract
    manufacturer, and have established our own offshore research and
    development and customer support capabilities. We plan to
    continue to realize increased operating efficiencies by growing
    these offshore operations and by establishing additional
    offshore capabilities for certain general and administrative
    functions; and
    Expand our base of technology
    partners  The enterprise mobility market is
    a complex value chain that includes security solutions,
    management tools, connectivity devices, and mobility
    applications. We will continue to work with technology companies
    that are developing leading-edge solutions in these areas to
    enhance the functionality and drive adoption of our user-centric
    networks within the markets we serve.  Products
   6




---



##### Table of Contents



ArubaOS
    Additional
    Software Modules for ArubaOS
    
    Policy enforcement firewall  delivers
    user and group policy enforcement. Policies can be centrally
    defined and enforced on a per-user or per-group basis, following
    users as they move throughout the enterprise network;
    Wireless intrusion protection  identifies
    and protects against malicious attacks on wireless networks, as
    well as vulnerabilities caused by unauthorized access points and
    client devices;
    Remote AP  extends the enterprise network
    to small branch offices and home offices that have a wired
    Internet connection. Remote AP software, coupled with any Aruba
    access point, allows seamless connectivity at home or other
    remote locations;
    VPN server  extends the mobile enterprise
    network to large branch offices and individual users over the
    public Internet, eliminating the need for separate external VPN
    equipment;
    External services interface  delivers a
    set of control and management interfaces to seamlessly integrate
    third-party network devices, incremental software modules, and
    services into user-centric networks;
    Wireless Mesh lets any Aruba access point
    connect wirelessly to other Aruba access points to provide
    LAN-to-LAN bridging, outdoor coverage without wires, or wireless
    offices or workspaces, and
    xSec  provides wired and wireless Federal
    Information Processing Standard (FIPS)
    140-2
    validated encryption technology designed for high-security
    networks.  Aruba
    Mobility Management System
    Aruba
    Mobility Controllers
   7




---



##### Table of Contents



Wireless
    Access Points and Wired Access Concentrators
        Customers
    United States

EMEA

Asia PacificMicrosoft

SAP

NTT Data CorporationThe Ohio State University

Saudi Aramco

Queensland RailwayUnited States Air Force

BAA

Pu Dong International Airport (Shanghai)California State UniversityGoogleYale     Sales and
    Marketing
    
    Our sales force  We have a sales force in the
    Americas, Europe, Middle East and Africa (EMEA) and the Asia
    Pacific (APAC) region who are responsible for managing all
    direct as well as channel business within a geographic territory.
    VARs, distributors and OEMs  As of July
    31 2007, we had over 200 channel partners worldwide. Our VARs,
    distributors and OEMs market and sell our products to a broad
    array of organizations. Some of these VARs also purchase our
    solutions and offer them to their end customers as a managed
    service.   8




---



##### Table of Contents



Customer
    Service, Support and Training
  when-and-if on-site
  Research
    and Development
    Manufacturing
           9




---



##### Table of Contents



Competition
      Intellectual
    Property
          Corporate
    Information
  94089-1113, (408) 227-4500. www.arubanetworks.com
  Employees
   10




---



##### Table of Contents



Website
    Posting of SEC Filings
  Form 10-K, Form 10-Q, Form 8-K Form 10-K 1-800-SEC-0330. www.sec.gov.
  ITEM 1A.
    RISK
    FACTORS  Risks
    Related to Our Business and Industry
  We
    compete in new and rapidly evolving markets and have a limited
    operating history, which makes it difficult to predict our
    future operating results.
      Our
    operating results may fluctuate significantly, which makes our
    future results difficult to predict and could cause our
    operating results to fall below expectations.
     11




---



##### Table of Contents




    fluctuations in demand, sales cycles and prices for our products
    and services;
    reductions in customers budgets for information technology
    purchases and delays in their purchasing cycles;
    the sale of our products in the timeframes we anticipate,
    including the number and size of orders in each quarter;
    our ability to develop, introduce and ship in a timely manner,
    new products and product enhancements that meet customer
    requirements;
    the timing of product releases or upgrades by us or by our
    competitors;
    any significant changes in the competitive dynamics of our
    markets, including new entrants, or further consolidation;
    our ability to control costs, including our operating expenses,
    and the costs of the components we purchase;
    product mix and average selling prices, as well as increased
    discounting of products by us and our competitors;
    the proportion of our products that are sold through direct
    versus indirect channels;
    our ability to attain volume manufacturing pricing from
    Flextronics Sales and Marketing North Asia (L) Ltd. and our
    component suppliers;
    growth in our headcount and other related costs incurred in our
    customer support organization;
    the timing of revenue recognition in any given quarter as a
    result of revenue recognition rules;
    the regulatory environment for the certification and sale of our
    products;
    seasonal demand for our products, some of which may not be
    currently evident due to our revenue growth; and
    general economic conditions in our domestic and international
    markets.    We
    have a history of losses and may not achieve profitability in
    the future.
    Our
    sales cycles can be long and unpredictable, and our sales
    efforts require considerable time and expense. As a result, our
    sales are difficult to predict and may vary substantially from
    quarter to quarter, which may cause our operating results to
    fluctuate significantly.
   12




---



##### Table of Contents



The
    market in which we compete is highly competitive, and
    competitive pressures from existing and new companies may have a
    material adverse effect on our business, revenues, growth rates
    and market share.
    
    comprehensiveness of the solution;
    total cost of ownership;
    performance of software and hardware products;
    ability to deploy easily into existing networks;
    interoperability with other devices;
    scalability of solution;
    ability to provide secure mobile access to the network;
    speed of mobile connectivity offering;
    ability to allow centralized management of products; and
    ability to obtain regulatory and other industry certifications.       13




---



##### Table of Contents



We
    depend upon the development of new products and enhancements to
    our existing products. If we fail to predict and respond to
    emerging technological trends and our customers changing
    needs, we may not be able to remain competitive.
          Our
    business, operating results and growth rates may be adversely
    affected by unfavorable economic and market conditions, as well
    as the volatile geopolitical environment.
   14




---



##### Table of Contents



As a
    result of the fact that we outsource the manufacturing of our
    products to Flextronics, we do not have the ability to ensure
    quality control over the manufacturing process. Furthermore, if
    there are significant changes in the financial or business
    condition of Flextronics, our ability to supply quality products
    to our customers may be disrupted.
        Our
    contract manufacturer, Flextronics, purchases some components,
    subassemblies and products from a single supplier or a limited
    number of suppliers, and with respect to some of these
    suppliers, we have entered into license agreements that allow us
    to use their components in our products. The loss of any of
    these suppliers or the termination of any of these license
    agreements may cause us to incur additional
    set-up
    costs, result in delays in manufacturing and delivering our
    products, or cause us to carry excess or obsolete
    inventory.
     15




---



##### Table of Contents



We
    sell a majority of our products through VARs, distributors and
    OEMs. If the third-party distribution sources on which we rely
    do not perform their services adequately or efficiently or if
    they exit the industry, and we are not able to quickly find
    adequate replacements, there could be a material adverse effect
    on our revenues.
       16




---



##### Table of Contents



Our
    international sales and operations subject us to additional
    risks that may adversely affect our operating
    results.
    
    the difficulty of managing and staffing international offices
    and the increased travel, infrastructure and legal compliance
    costs associated with multiple international locations;
    difficulties in enforcing contracts and collecting accounts
    receivable, and longer payment cycles, especially in emerging
    markets;
    the need to localize our products for international customers;
    tariffs and trade barriers, export regulations and other
    regulatory or contractual limitations on our ability to sell or
    develop our products in certain foreign markets;
    increased exposure to foreign currency exchange rate
    risk; and
    reduced protection for intellectual property rights in some
    countries.    If we
    are unable to protect our intellectual property rights, our
    competitive position could be harmed or we could be required to
    incur significant expenses to enforce our rights.
  and/or
  Claims
    by others that we infringe their proprietary technology could
    harm our business.
   17




---



##### Table of Contents



We are
    currently subject to a lawsuit involving intellectual property
    claims brought by Symbol Technologies, Inc. and Wireless Valley
    Communications, Inc., both Motorola subsidiaries, in the Federal
    District Court of Delaware which could cause us to incur
    significant additional costs or prevent us from selling our
    product which could adversely affect our results of operations
    and financial condition.
    and/or
    We may
    engage in future acquisitions that could disrupt our business,
    cause dilution to our stockholders and harm our business,
    operating results and financial condition.
   18




---



##### Table of Contents



If we
    fail to effectively integrate our new officers into our
    organization, our business could be harmed.
    If we
    lose members of our senior management or are unable to recruit
    and retain key employees on a cost-effective basis, we may not
    be able to successfully grow our business.
    If we
    fail to manage future growth effectively, our business would be
    harmed.
    Our
    ability to sell our products is highly dependent on the quality
    of our support and services offerings, and our failure to offer
    high quality support and services would have a material adverse
    effect on our sales and results of operations.
   19




---



##### Table of Contents



Enterprises
    are increasingly concerned with the security of their data, and
    to the extent they elect to encrypt data between the end-user
    and the server, our products will become less
    effective.
    Enterprises
    may have slow WAN connections between some of their locations
    that may cause our products to become less
    effective.
  dial-up.
  Our
    products are highly technical and may contain undetected
    hardware errors or software bugs, which could cause harm to our
    reputation and adversely affect our business.
    Our
    use of open source software could impose limitations on our
    ability to commercialize our products.
    We
    rely on the availability of third-party licenses.
   20




---



##### Table of Contents



New
    safety regulations or changes in existing safety regulations
    related to our products may result in unanticipated costs or
    liabilities, which could have a material adverse effect on our
    business, results of operations and future sales, and could
    place additional burdens on the operations of our
    business.
        Compliance
    with environmental matters and worker health and safety laws
    could be costly, and noncompliance with these laws could have a
    material adverse effect on our results of operations, expenses
    and financial condition.
  and/or
  and/or and/or and/or
 21




---



##### Table of Contents



We are
    subject to governmental export and import controls that could
    subject us to liability or impair our ability to compete in
    international markets.
    Our
    business is subject to the risks of earthquakes, fire, floods
    and other natural catastrophic events, and to interruption by
    manmade problems such as computer viruses or
    terrorism.
    Risks
    Related to Ownership of our Common Stock
  Our
    stock price may be volatile.
    
    variations in our operating results;
    announcements of technological innovations, new products or
    product enhancements, strategic alliances or significant
    agreements by us or by our competitors;
    the gain or loss of significant customers;
    recruitment or departure of key personnel;
    changes in estimates of our operating results or changes in
    recommendations by any securities analysts who follow our common
    stock;
    significant sales, or announcement of significant sales, of our
    common stock by us or our stockholders; and
    adoption or modification of regulations, policies, procedures or
    programs applicable to our business.   22




---



##### Table of Contents



If
    securities or industry analysts do not publish research or
    reports about our business, or if they issue an adverse or
    misleading opinion regarding our stock, our stock price and
    trading volume could decline.
    Insiders
    have substantial control over us and will be able to influence
    corporate matters.
    We may
    choose to raise additional capital, which may not be available,
    which would adversely affect our ability to operate our
    business.
    Provisions
    in our charter documents, Delaware law and our OEM supply
    agreement with Alcatel-Lucent could discourage a takeover that
    stockholders may consider favorable.
    
    our board of directors has the right to elect directors to fill
    a vacancy created by the expansion of the board of directors or
    the resignation, death or removal of a director, which prevents
    stockholders from being able to fill vacancies on our board of
    directors;
    our stockholders may not act by written consent or call special
    stockholders meetings; as a result, a holder, or holders,
    controlling a majority of our capital stock would not be able to
    take certain actions other than at annual stockholders
    meetings or special stockholders meetings called by the
    board of directors, the chairman of the board, the chief
    executive officer or the president;
    our certificate of incorporation prohibits cumulative voting in
    the election of directors, which limits the ability of minority
    stockholders to elect director candidates;
    stockholders must provide advance notice to nominate individuals
    for election to the board of directors or to propose matters
    that can be acted upon at a stockholders meeting, which
    may discourage or deter a potential acquiror from conducting a
    solicitation of proxies to elect the acquirors own slate
    of directors or otherwise attempting to obtain control of our
    company; and
    our board of directors may issue, without stockholder approval,
    shares of undesignated preferred stock; the ability to issue
    undesignated preferred stock makes it possible for our board of
    directors to issue preferred stock with voting or other rights
    or preferences that could impede the success of any attempt to
    acquire us. 23




---



##### Table of Contents



We
    have incurred and will continue to incur significant increased
    costs as a result of operating as a public company, and our
    management will be required to devote substantial time to new
    compliance initiatives.
      ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   24




---



##### Table of Contents



ITEM 2.
    PROPERTIES      ITEM 3.
    LEGAL
    PROCEEDINGS      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   25




---



##### Table of Contents



PART II
  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER REPURCHASES OF EQUITY SECURITIES  intra-day
  High


Low2007Third Quarter (beginning March 27, 2007)

$
14.67


$
13.50Fourth Quarter

$
23.78


$
13.47       Sales of
    Unregistered Securities
    
    In September 2006, we sold an aggregate of 1,619,725 shares
    of our Series D preferred stock to a total of 31 accredited
    investors at $6.5443 per share, for aggregate proceeds of
    $10,599,985. We believe the issuance of the Series D
    preferred stock was deemed to be exempt from registration under
    the Securities Act of 1933 in reliance on Section 4(2) of
    the Securities Act of 1933 as transactions by an issuer not
    involving any public offering. The recipients of Series D
    preferred stock represented their intention to acquire the
    securities for investment only and not with a view to or for
    sale in connection with any distribution thereof and appropriate
    legends were affixed to the share certificates and other
    instruments issued in such transactions. The sales of these
    securities were made without general solicitation or
    advertising. Each share of Series D preferred stock was
    convertible, at the option of the holder, at any time after the
    date of issuance of such share, to common stock using an initial
    conversion rate of 1:1, subject to adjustments for future
    dilution and each share and was automatically convertible into
    shares of common stock at the conversion rate then in effect
    immediately upon the sale of our common stock in a firmly
    committed underwritten public offering with gross offering
    proceeds of at least $20,000,000. In addition, each share of
    Series D redeemable convertible preferred stock was
    automatically convertible into shares of common stock at the
    conversion rate then in effect for the Series D redeemable
    convertible preferred stock upon the date specified by written
    consent or agreement of the holders of at least
    662/3%
    of the then outstanding shares of Series D redeemable
    convertible preferred stock (voting as a separate class).
    In May 2007, we issued 113,770 shares of our common stock
    in connection with a cashless exercise of warrants to purchase
    120,814 shares of our common stock at an exercise price
    ranging from $0.67 to $1.20 per share. We believe this
    transaction was exempt from the registration requirements of the
    Securities Act of 1933, as amended, in reliance on
    Section 4(2) thereof or Regulation D promulgated
    thereunder, as a transaction by an issuer not involving a public
    offering.
    On March 27, 2007, we contributed 100,000 shares of
    our common stock to a charitable foundation. Other than the
    payment of the par value of the shares by the charitable
    foundation, which was $10, we received no cash consideration at
    the time such shares were issued. We believe the issuance was
    exempt from the registration requirements of the Securities Act
    in reliance on Section 4(2) thereof, as transactions by an
    issuer not involving a public offering. The charitable
    foundation agreed that the shares would be subject to the
    standard restrictions applicable to a private placement of
    securities under applicable state and federal 26




---



##### Table of Contents



securities laws, and appropriate legends were affixed to the
    share certificate issued to the charitable foundation.  
    Upon the closing of our initial public offering on
    March 30, 2007, we issued 318,181 shares of our common
    stock to Microsoft Corporation in consummation of a stock
    issuance agreement that we entered into with Microsoft in June
    2005. We received no cash consideration at the time such shares
    were issued. We believe the issuance was exempt from the
    registration requirements of the Securities Act in reliance on
    Section 4(2) thereof, as transactions by an issuer not
    involving a public offering. Microsoft Corporation agreed that
    the shares would be subject to the standard restrictions
    applicable to a private placement of securities under applicable
    state and federal securities laws, and appropriate legends were
    affixed to the share certificate issued to Microsoft
    Corporation. We believe that Microsoft received adequate
    information about us or had access, through its relationship
    with us, to such information.  Use of
    Proceeds from Public Offering of Common Stock
  333-139419 333-141592) Form S-1
    Dividend
    Policy
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
  Total Number of


Maximum NumberShares Purchased as


of Shares That MayPart of Publicly


Yet be PurchasedTotal Number of


Average Price


Announced Plans or


Under the Plans orShares Purchased(1)


Paid per Share


Programs


ProgramsMay 1 - May 31, 2007





$








June 1 - June 30, 2007


650


$
2.33







July 1 - July 31, 2007


14,062


$
1.25







Total


14,712


$
1.30







     (1)
    
    Represents unvested shares of common stock repurchased by us
    upon the termination of employment or service pursuant to the
    provisions of our 2002 Stock Plan. 27




---



##### Table of Contents



ITEM 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA  Form 10-K. Form 10-K.
  Years Ended July 31,2007


2006


2005


2004


2003(In thousands)Consolidated Statements of Operations Data:Revenues:Product

$
107,939


$
43,171


$



$



$
Professional services and support


12,847



2,985











Ratable product and related professional services and support


6,713



26,347



12,043



1,147



3Total Revenues


127,499



72,503



12,043



1,147



3Cost of revenues(1):Product


36,035



16,904











Professional services and support


4,863



2,409











Ratable product and related professional services and support


2,470



10,572



9,077



2,696



126Total cost of revenues


43,368



29,885



9,077



2,696



126Gross profit (loss)


84,131



42,618



2,966



(1,549
)


(123
)Operating expenses:Research and development(1)


25,654



14,130



9,353



6,982



5,743Sales and marketing(1)


60,115



33,765



22,369



11,277



1,449General and administrative(1)


14,600



5,963



3,576



2,531



1,488In-process research and development


632















Total operating expenses


101,001



53,858



35,298



20,790



8,680Operating loss


(16,870
)


(11,240
)


(32,332
)


(22,339
)


(8,803
)Other income (expense), net


(7,137
)


(529
)


(147
)


(129
)


8Loss before provision for income taxes and cumulative effect of
    change in accounting principle


(24,007
)


(11,769
)


(32,479
)


(22,468
)


(8,795
)Provision for income taxes


375



306



156



34



Loss before cumulative effect of change in accounting principle


(24,382
)


(12,075
)


(32,635
)


(22,502
)


(8,795
)Cumulative effect of change in accounting principle






66







Net loss

$
(24,382
)

$
(12,009
)

$
(32,635
)

$
(22,502
)

$
(8,795
)Net loss per common share; basic and diluted

$
(0.70
)

$
(1.07
)

$
(4.66
)

$
(6.35
)

$
(7.96
)     (1)
    
    Includes stock-based compensation as follows:  28




---



##### Table of Contents



Years Ended July 31,2007


2006


2005


2004


2003(In thousands)Cost of revenues

$
327


$
34


$
23


$
5


$
Research and development


2,925



259



179



42



Sales and marketing


4,362



749



678



272



9General and administrative


5,103



213



194



71



4Total stock-based compensation

$
12,717


$
1,255


$
1,074


$
390


$
13   As of July 31,2007


2006


2005


2004


2003(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
42,570


$
9,263


$
4,293


$
27,390


$
915Working capital (deficit)


109,496



(10,472
)


(884
)


26,749



265Total assets


152,133



38,017



30,337



38,273



2,762Equipment loans payable






613



1,867



2,885



1,550Deposit for Series D redeemable convertible preferred stock






19,329











Redeemable convertible preferred stock






58,009



58,009



56,310



9,450Common stock and additional
    paid-in-capital


213,553



6,077



4,831



2,241



146Total stockholders equity (deficit)

$
112,487


$
(73,000
)

$
(62,459
)

$
(31,137
)

$
(9,420
)   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Overview
     29




---



##### Table of Contents



paid-in-capital,
    Revenues,
    Cost of Revenues and Operating Expenses
  Revenues
           30




---



##### Table of Contents



Cost
    of Revenues
    Gross
    Margin
    
    the proportion of our products that are sold through direct
    versus indirect channels;
    new product introductions and enhancements both by us and by our
    competitors;
    product mix and average selling prices;
    demand for our products and services;
    our ability to attain volume manufacturing pricing from
    Flextronics and our component suppliers; and
    growth in our headcount and other related costs incurred in our
    customer support organization.    Operating
    Expenses
       31




---



##### Table of Contents



Stock-Based
    Expense
  Share Based Payment
  Other
    Income (Expense), net
  non-U.S. dollar
  Our
    Relationship with Microsoft
   32




---



##### Table of Contents



Critical
    Accounting Policies
    Revenue
    Recognition
    No. 97-2, SOP 97-2, and/or SOP 97-2
     33




---



##### Table of Contents



Stock-Based
    Compensation
  Share-Based Payment ,
      Years Ended July 31,2006


2005(In thousands, except per share amounts)Net loss, as reported

$
(12,009
)

$
(32,635
)Add: Employee stock-based compensation expense included in
    reported net loss


1,028



644Less: Total employee stock-based compensation expense determined
    under the fair value method


(2,642
)


(984
)Pro forma, net loss

$
(13,623
)

$
(32,975
)Basic and diluted net loss per shareAs reported

$
(1.07
)

$
(4.66
)Pro forma

$
(1.22
)

$
(4.71
)  34




---



##### Table of Contents



Years Ended July 31,2006


2005AssumptionsRisk-free interest rate


4.6
%


3.6
%Expected term (in years)


4.0



4.0Dividend yield






Volatility


70
%


100
%Weighted average fair value of options granted

$
1.20


$
0.80   No. 96-18, Accounting for Equity Instruments That are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services
  Fair
    Value of Warrants to Purchase Redeemable Convertible Preferred
    Stock
  150-5, Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares That Are Redeemable FSP 150-5. FSP 150-5 No. 96-18, Accounting for Equity Instruments that are Issued to Other
    than Employees for Acquiring, or in Conjunction with Selling,
    Good or Services EITF 96-18.
  FSP 150-5 FSP 150-5.
  Inventory
    Valuation
  first-in,
 35




---



##### Table of Contents



Allowances
    for Doubtful Accounts
    Income
    Taxes
  Accounting for Income Taxes
    Recent
    Accounting Pronouncements
   36




---



##### Table of Contents



Results
    of Operations
    Years Ended July 31,2007


2006


2005Revenues:Product


84.6
%


59.6
%


Professional services and support


10.1
%


4.1
%


Ratable product and related professional services and support


5.3
%


36.3
%


100.0
%Cost of revenues:Product


28.3
%


23.3
%


Professional services and support


3.8
%


3.3
%


Ratable product and related professional services and support


1.9
%


14.6
%


75.4
%Gross margin


66.0
%


58.8
%


24.6
%Operating expenses:Research and development


20.1
%


19.5
%


77.7
%Sales and marketing


47.1
%


46.6
%


185.7
%General and administrative


11.5
%


8.2
%


29.7
%In-process research and development


0.5
%






Operating margin


(13.2
)%


(15.5
)%


(268.5
)%Other expense, net


(5.6
)%


(0.7
)%


(1.2
)%Loss before income taxes and cumulative effect of change in
    accounting principle


(18.8
)%


(16.2
)%


(269.7
)%Provision for income taxes


0.3
%


0.4
%


1.3
%Loss before cumulative effect of change in accounting principle


(19.1
)%


(16.6
)%


(271.0
)%Cumulative effect of change in accounting principle






0.1
%


Net loss


(19.1
)%


(16.5
)%


(271.0
%)  37




---



##### Table of Contents



Revenues
    Years Ended July 31,2007


2006


2005(In thousands)Total revenues

$
127,499


$
72,503


$
12,043Type of revenues:Product


107,939



43,171



Professional services and support revenues


12,847



2,985



Ratable product and related professional services and support


6,713



26,347



12,043Total revenues

$
127,499


$
72,503


$
12,043Revenues by geography:United States


84,878



53,132



8,791Europe, the Middle East and Africa


20,710



7,711



1,325Asia Pacific


13,301



7,232



1,566Rest of World (including Japan)


8,610



4,428



361Total revenues

$
127,499


$
72,503


$
12,043              38




---



##### Table of Contents



Cost
    of Revenues and Gross Margin
    Years Ended July 31,2007


2006


2005(In thousands)Total revenues

$
127,499


$
72,503


$
12,043Cost of product


36,035



16,904



Cost of professional services and support


4,863



2,409



Cost of ratable product and related professional services and
    support


2,470



10,572



9,077Total cost of revenues


43,368



29,885



9,077Gross profit

$
84,131


$
42,618


$
2,966Gross margin


66.0
%


58.8
%


24.6
%            39




---



##### Table of Contents



Research
    and Development Expenses
  Years Ended July 31,2007

2006

2005(In thousands)Research and development expenses

$
25,654


$
14,130


$
9,353Percent of total revenue


20.1
%


19.5
%


77.7
%       Sales
    and Marketing Expenses
  Years Ended July 31,2007

2006

2005(In thousands)Sales and marketing expenses

$
60,115


$
33,765


$
22,369Percent of total revenue


47.1
%


46.6
%


185.7
%       General
    and Administrative Expenses
  Years Ended July 31,2007

2006

2005(In thousands)General and administrative expenses

$
14,600


$
5,963


$
3,576Percent of total revenue


11.5
%


8.2
%


29.7
%       In-Process
    Research and Development
   40




---



##### Table of Contents



and/or
  Other
    Expense, Net
    Years Ended July 31,2007


2006


2005(In thousands)Interest income

$
2,221


$
551


$
350Interest expense


(88
)


(315
)


(443
)Other


(9,270
)


(765
)


(54
)Total other expense, net

$
(7,137
)

$
(529
)

$
(147
)   FSP 150-5,
  FSP 150-5
  Provision
    for Income Taxes
   41




---



##### Table of Contents



Quarterly
    Fluctuations in Operating Results
    For the Three Months Ended2007

July 31,


April 30,


January 31,


October 31,(In thousands, except per share data)RevenuesProduct

$
36,394


$
29,777


$
22,662


$
19,106Professional services and support


4,254



3,816



2,656



2,121Ratable product and related professional services and support


1,038



1,068



1,329



3,278Total revenues


41,686



34,661



26,647



24,505Cost of revenuesProduct


11,251



8,921



8,562



7,301Professional services and support


1,420



1,138



1,131



1,174Ratable product and related professional services and support


382



397



505



1,186Total cost of revenues


13,053



10,456



10,198



9,661Gross profit


28,633



24,205



16,449



14,844Operating expensesResearch and development


7,902



6,890



5,771



5,091Sales and marketing


20,921



16,240



12,146



10,808General and administrative


3,703



4,889



3,395



2,613In-process research and development


632











Total operating expenses


33,158



28,019



21,312



18,512Operating loss


(4,525
)


(3,814
)


(4,863
)


(3,668
)Other income (expense), net


1,257



(5,390
)


(2,250
)


(754
)Loss before provision for income taxes


(3,268
)


(9,204
)


(7,113
)


(4,422
)Provision for income taxes


82



82



123



88Net loss

$
(3,350
)

$
(9,286
)

$
(7,236
)

$
(4,510
)Net loss per common share, basic and diluted

$
(0.04
)

$
(0.26
)

$
(0.52
)

$
(0.34
)   42




---



##### Table of Contents



For the Three Months Ended2006

July 31,


April 30,


January 31,


October 31,(In thousands, except per share data)RevenuesProduct

$
16,819


$
13,308


$
13,044


$
Professional services and support


1,576



969



440



Ratable product and related professional services and support


5,503



6,673



7,396



6,775Total revenues


23,898



20,950



20,880



6,775Cost of revenuesProduct


6,476



5,278



5,150



Professional services and support


825



779



805



Ratable product and related professional services and support


1,904



2,288



2,586



3,794Total cost of revenues


9,205



8,345



8,541



3,794Gross profit


14,693



12,605



12,339



2,981Operating expensesResearch and development


3,753



3,760



3,344



3,273Sales and marketing


10,180



8,664



7,772



7,149General and administrative


1,934



1,639



1,274



1,116Total operating expenses


15,867



14,063



12,390



11,538Operating loss


(1,174
)


(1,458
)


(51
)


(8,557
)Other income (expense), net


(53
)


15



(447
)


(45
)Loss before provision for income taxes and cumulative effect of
    change in accounting principle


(1,227
)


(1,443
)


(498
)


(8,602
)Provision for income taxes


218



82



8



(3
)Loss before cumulative effect of change in accounting principle


(1,445
)


(1,525
)


(506
)


(8,599
)Cumulative effect of change in accounting principle














66Net loss

$
(1,445
)

$
(1,525
)

$
(506
)

$
(8,533
)Net loss per common share, basic and diluted

$
(0.11
)

$
(0.13
)

$
(0.05
)

$
(0.88
)        43




---



##### Table of Contents



FSP 150-5, paid-in-capital,
  Liquidity
    and Capital Resources
  As of July 31,2007


2006(In thousands)Working capital (deficit)

$
109,496


$
(10,472
)Cash and cash equivalents

$
42,570


$
9,263Short-term investments

$
62,430


$
   Years Ended July 31,2007


2006


2005(In thousands)Cash used in operating activities

$
(4,348
)

$
(13,519
)

$
(22,803
)Cash used in investing activities


(70,350
)


(1,192
)


(1,194
)Cash provided by financing activities


107,920



19,678



910         Cash
    Flows from Operating Activities
   44




---



##### Table of Contents



Cash
    Flows from Investing Activities
      Cash
    Flows from Financing Activities
        Contractual
    Obligations
    MoreThanTotal


2008


2009


2010


2011


2012


5 Years(In thousands)Operating leases

$
3,558


$
1,153


$
1,064


$
1,044


$
284


$
13


$
Non-cancellable inventory purchase commitments(1)


8,259



8,259



















Total contractual obligations

$
11,817


$
9,412


$
1,064


$
1,044


$
284


$
13


$
     (1)
    
    We outsource the production of our hardware to third-party
    manufacturing suppliers. We enter into various inventory related
    purchase agreements with these suppliers. Generally, under these
    agreements, 40% of the orders are cancelable by giving notice
    60 days prior to the expected shipment date, and 20% of
    orders are 45




---



##### Table of Contents



cancelable by giving notice 30 days prior to the expected
    shipment date. Orders are not cancelable within 30 days
    prior to the expected shipment date.  Off-Balance
    Sheet Arrangements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Currency Risk
    Interest
    Rate Sensitivity
   46




---



##### Table of Contents



ITEM 8.
    CONSOLIDATED
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  Index to
    Consolidated Financial Statements
  PageReport of Independent Registered Public
    Accounting Firm


48Consolidated Balance Sheets


49Consolidated Statements of Operations


50Consolidated Statements of Redeemable Convertible
    Preferred Stock and Stockholders Equity (Deficit)


51Consolidated Statements of Cash Flows


52Notes to Consolidated Financial Statements


53  47




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       Share-Based
    Payment
  
    48




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  CONSOLIDATED BALANCE SHEETS
  As of July 31,2007


2006(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
42,570


$
9,263Short-term investments


62,430



Accounts receivable, net


23,722



13,296Inventory


8,991



6,093Deferred costs


3,217



3,360Prepaids and other


2,432



1,758Total current assets


143,362



33,770Property and equipment, net


3,709



1,971Intangible assets, net


3,912



Deferred costs


722



1,960Other assets


428



316Total assets

$
152,133


$
38,017LIABILITIES, REDEEMABLE CONVERTIBLE
    PREFERRED STOCK AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesAccounts payable

$
2,201


$
4,385Accrued liabilities


15,317



8,062Income taxes payable


281



216Equipment loans payable






613Deposit for Series D redeemable convertible preferred stock






19,329Deferred revenue


16,067



11,637Total current liabilities


33,866



44,242Deferred revenue


5,780



6,803Other long-term liabilities






1,963Total liabilities


39,646



53,008Commitments and contingencies (Note 14)Redeemable convertible preferred stock: $0.0001 par value;
    0 and 46,445 shares authorized at July 31, 2007 and
    2006; 0 and 45,108 shares issued and outstanding at
    July 31, 2007 and 2006 ; liquidation preference: $0 and
    $58,213 at July 31, 2007 and 2006






58,009Stockholders equity (deficit)Preferred stock: $0.0001 par value; 10,000 and
    0 shares authorized at July 31, 2007 and 2006, no
    shares issued and outstanding at July 31, 2007 and 2006






Common stock: $0.0001 par value; 350,000 and
    95,440 shares authorized at July 31, 2007 and 2006;
    76,927 and 15,257 shares issued and outstanding at
    July 31, 2007 and 2006;


8



2Additional paid-in capital


213,545



6,075Deferred stock-based compensation






(2,364
)Accumulated other comprehensive income


29



Accumulated deficit


(101,095
)


(76,713
)Total stockholders equity (deficit)


112,487



(73,000
)Total liabilities, redeemable convertible preferred stock and
    stockholders equity (deficit)

$
152,133


$
38,017    49




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Years Ended July 31,2007


2006


2005(In thousands, except per share data)RevenuesProduct

$
107,939


$
43,171


$
Professional services and support


12,847



2,985



Ratable product and related professional services and support


6,713



26,347



12,043Total revenues


127,499



72,503



12,043Cost of revenuesProduct


36,035



16,904



Professional services and support


4,863



2,409



Ratable product and related professional services and support


2,470



10,572



9,077Total cost of revenues


43,368



29,885



9,077Gross profit


84,131



42,618



2,966Operating expensesResearch and development


25,654



14,130



9,353Sales and marketing


60,115



33,765



22,369General and administrative


14,600



5,963



3,576In-process research and development


632







Total operating expenses


101,001



53,858



35,298Operating loss


(16,870
)


(11,240
)


(32,332
)Other income (expense), netInterest income


2,221



551



350Interest expense


(88
)


(315
)


(443
)Other income (expense), net


(9,270
)


(765
)


(54
)Total other expense, net


(7,137
)


(529
)


(147
)Loss before provision for income taxes and cumulative effect of
    change in accounting principle


(24,007
)


(11,769
)


(32,479
)Provision for income taxes


375



306



156Loss before cumulative effect of change in accounting principle


(24,382
)


(12,075
)


(32,635
)Cumulative effect of change in accounting principle






66



Net loss

$
(24,382
)

$
(12,009
)

$
(32,635
)Net loss per common share, basic and diluted

$
(0.70
)

$
(1.07
)

$
(4.66
)Shares used in computing basic and diluted net loss per common
    share


34,808



11,211



6,999Stock-based compensation expense included in above:Cost of revenues

$
327


$
34


$
23Research and development


2,925



259



179Sales and marketing


4,362



749



678General and administrative


5,103



213



194    50




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED
    STOCK AND
 STOCKHOLDERS
    EQUITY (DEFICIT)
  AccumulatedReedemable















Additional


Deferred


OtherConvertible Preferred Stock



Preferred Stock


Common Stock


Paid-in


Stock-Based


Comprehensive


AccumulatedShares


Amount



Shares


Amount


Shares


Amount


Capital


Compensation


Income


Deficit


Total(In thousands)Balance at July 31, 2004


44,297


$
56,310







$




14,586


$
2


$
2,239


$
(1,309
)

$



$
(32,069
)

$
(31,137
)Issuance of Series C redeemable convertible preferred
    stock, net of issuance costs of $31


811



1,699




































Fair value of shares issued to employees



















31







8















8Fair value of stock options issued to non-employees



























327















327Exercise of common stock options



















761







420















420Repurchase of common stock



















(655
)






(77
)














(77
)Deferred compensation related to issuance of common stock
    options, net



























1,912



(1,912
)










Amortization of deferred stock-based compensation































635











635Net loss







































(32,635
)


(32,635
)Balance at July 31, 2005


45,108



58,009












14,723



2



4,829



(2,586
)






(64,704
)


(62,459
)Fair value of shares issued to employees



















3







2















2Fair value of shares issued to non-employees



















16







24















24Fair value of stock options issued to non-employees



























306















306Exercise of common stock options



















1,896







612















612Repurchase of common stock



















(1,381
)






(162
)














(162
)Deferred compensation related to issuance of common stock
    options, net



























804



(804
)










Amortization of deferred stock-based compensation































1,026











1,026Reclassification of preferred stock warrants to liability



























(340
)














(340
)Cumulative effect of change in accounting principle related to
    preferred stock warrants







































66



66Net loss







































(12,075
)


(12,075
)Balance at July 31, 2006


45,108



58,009












15,257



2



6,075



(2,364
)






(76,713
)


(73,000
)Comprehensive loss:Unrealized gain on short-term investments



































29







29Net loss







































(24,382
)


(24,382
)Total comprehensive loss











































(24,353
)Issuance of Series D redeemable convertible preferred
    stock, net of issuance costs of $127


4,573



29,829




































Conversion of redeemable convertible preferred stock into common
    stock upon completion of initial public offering


(49,681
)


(87,838
)











49,681



5



87,833















87,838Proceeds from initial public offering of common stock, net of
    issuance costs of $2,307



















9,200



1



91,808















91,809Fair value of shares issued to employees



















44







245















245Fair value of shares issued to non-employees



















50







534















534Fair value of stock options issued to non-employees



























577















577Fair value of of shares issued to charitable foundation



















100







1,415















1,415Exercise of common stock options



















2,339







4,112















4,112Exercise of warrants



















114























Repurchase of common stock



















(176
)






(70
)














(70
)Reclassification of liability relating to preferred stock
    warrants upon conversion of such warrants to common stock
    warrants in connection with initial public offering



























9,933















9,933Issuance of common stock under stock issuance agreement with
    customer



















318







3,500















3,500Reclassification of unamortized stock-based compensation upon
    adoption of SFAS 123R



























(2,364
)


2,364











Stock-based compensation expense related to stock options issued
    to employees



























9,947















9,947Balance at July 31, 2007





$








$




76,927


$
8


$
213,545


$



$
29


$
(101,095
)

$
112,487    51




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended July 31,2007


2006


2005(In thousands)Cash flows from operating activitiesNet loss

$
(24,382
)

$
(12,009
)

$
(32,635
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation and amortization


2,008



1,549



1,156Provision for doubtful accounts


199



254



138Write downs for excess and obsolete inventory


1,110



939



1,238Compensation related to stock options and share awards


11,302



1,255



1,074Net realized gains on short-term investments






(1
)


(37
)Stock issued to charitable foundation


1,415







Non-cash interest expense


44



167



180Accretion of purchase discounts on short-term investments


(388
)






Change in carrying value of preferred stock warrant liability


8,992



601



Loss on disposal of fixed assets


5



6



In-process research and development


632







Changes in operating assets and liabilities, net of acquisitionAccounts receivable


(10,550
)


(4,737
)


(6,539
)Inventory


(3,955
)


(3,110
)


(2,159
)Prepaids and other


(774
)


(650
)


(352
)Deferred costs


1,381



4,479



(7,389
)Other assets


(112
)


(216
)


(96
)Accounts payable


(2,184
)


147



3,222Deferred revenue


3,322



(3,921
)


16,508Other current and noncurrent liabilities


7,522



1,528



2,893Income taxes payable


65



200



(5
)Net cash used in operating activities


(4,348
)


(13,519
)


(22,803
)Cash flows from investing activitiesPurchases of short-term investments


(67,757
)






(7,874
)Proceeds from sales and maturities of short-term investments


5,744



900



8,012Purchases of property and equipment


(3,737
)


(2,092
)


(1,332
)Cash paid in connection with business acquisition


(4,600
)






Net cash used in investing activities


(70,350
)


(1,192
)


(1,194
)Cash flows from financing activitiesRepayments on equipment loan obligations


(654
)


(1,358
)


(1,132
)Deposit for Series D redeemable convertible preferred
    stock, net (Note 10)






19,232



Cash received under stock issuance agreement (Note 11)


2,130



1,354



Proceeds from issuance of redeemable convertible preferred
    stock, net


10,597







1,699Proceeds from initial public offering, net


91,809







Proceeds from issuance of common stock


4,038



450



343Net cash provided by financing activities


107,920



19,678



910Effect of exchange rate changes on cash and cash equivalents


85



3



(10
)Net increase (decrease) in cash and cash equivalents


33,307



4,970



(23,097
)Cash and cash equivalents, beginning of period


9,263



4,293



27,390Cash and cash equivalents, end of period

$
42,570


$
9,263


$
4,293Supplemental disclosures of cash flow informationIncome taxes paid

$
294


$
161


$
96Interest paid


37



136



254Supplemental disclosure of non-cash investing and
    financing activitiesReclassification of warrant liability to equity upon initial
    public offering

$
9,933


$



$
Reclassification of non-current liability to equity upon initial
    public offering


3,500







    52




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    The
    Company and its Significant Accounting Policies  The
    Company
    Initial
    Public Offering
  paid-in-capital,
    Significant
    Accounting Policies
  Basis of
    Presentation
    Principles
    of Consolidation
    Use of
    Estimates
   53




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency Accounting
    Risks and
    Uncertainties
    Fair
    Value of Financial Instruments
    Cash and
    Cash Equivalents
    Short-Term
    Investments
  Accounting For Certain
    Investments in Debt and Equity Securities
 54




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Concentrations
    of Credit Risk
      Provision
    for Doubtful Accounts
      Inventory
  first-in,
  Deferred
    Costs
  SOP 97-2
  Property
    and Equipment, Net
   55




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Impairment
    of Long-lived Assets
    Revenue
    Recognition
  No. 97-2, Software Revenue Recognition (SOP 97-2).
    SOP 97-2
   56




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Evidence of an arrangement:  Contracts
    and/or
    customer purchase orders are used to determine the existence of
    an arrangement.
    Delivery:  Delivery is considered to occur when
    the ordered equipment and the media containing the licensed
    programs are provided to a common carrier and title has
    transferred or, in the case of electronic delivery of the
    licensed programs, the customer is given access to download the
    programs. The Company recognizes revenue from indirect sales
    channels upon persuasive evidence provided by the reseller of a
    sale to the end customer.
    Fixed or determinable fee:  The Company
    assesses whether fees are fixed or determinable at the time of
    sale. The Company only considers the fee to be fixed or
    determinable if the fee is not subject to refund or adjustment.
    The Companys payment terms may vary based on the country
    in which the agreement is executed and the credit standing of
    the individual customer, among other factors. If the arrangement
    fee is not fixed or determinable, revenue is recognized as
    amounts become due and payable. In instances where final
    acceptance of the product, system, or solution is specified by
    the customer, revenue is deferred until all acceptance criteria
    have been met.
    Collection is deemed probable:  Collection is
    deemed probable if the Company expects that the customer will be
    able to pay amounts under the arrangement as payments become
    due. If the Company determines that collection is not probable,
    it defers the revenue and recognizes the revenue upon cash
    collection.    Stock-Based
    Compensation
  Accounting for Stock Issued to Employees Accounting for Certain Transactions Involving Stock
    Compensation an Interpretation of APB Opinion
    No. 25 Accounting for Stock Appreciation Rights and Other Variable
    Stock Option or Award Plans Accounting for
    Stock-Based Compensation , Accounting for Stock-Based
    Compensation  Transition and Disclosure
  Share-Based Payment ,
 57




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 96-18, Accounting for Equity Instruments that are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services
  Capitalized
    Software Development Costs
  Accounting for
    Costs of Computer Software to be Sold, Leased, or Otherwise
    Marketed
  Advertising
    Income
    Taxes
  Accounting for Income Taxes.
  Comprehensive
    Income (Loss)
   58




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Recent
    Accounting Pronouncements
  Accounting for the
    Uncertainty in Income Taxes  an Interpretation of
    FASB Statement No. 109 FIN 48-1, FIN 48-1). FIN 48-1 FIN 48-1
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities, including an amendment of FASB Statement
    No. 115
  2.
    Change in
    Accounting Principle  150-5, Issuers Accounting under FASB Statement No. 150 for Freestanding Warrants and
    Other Similar Instruments on Shares That Are Redeemable (FSP 150-5). FSP 150-5 No. 96-18, Accounting for Equity Instruments that are Issued to Other
    than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services (EITF 96-18).
  FSP 150-5 paid-in-capital,
 59




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Network
    Chemistry, Inc. Acquisition        EstimatedAmount


Useful LivesTangible assets acquired

$
140In-process research and development


632Amortizable intangible assets:Developed technology and patents


3,401


4 yearsCustomer contracts


483


7 yearsSupport and non-compete agreements


29


2 to 6 yearsTotal assets acquired


4,685Liabilities assumed


(85
)Total consideration

$
4,600     and/or
   60




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    4.
    Net Loss
    Per Common Share    Years Ended July 31,2007


2006


2005(In thousands, except per share data)Net loss

$
(24,382
)

$
(12,009
)

$
(32,635
)Weighted-average common shares outstanding net of
    weighted-average common shares subject to repurchase


34,808



11,211



6,999Basic and diluted net loss per common share

$
(0.70
)

$
(1.07
)

$
(4.66
)     Years Ended July 31,2007


2006


2005Options to purchase common stock


21,917,611



14,992,764



4,500,883Common stock subject to repurchase


1,046,599



2,245,686



5,463,848Redeemable convertible preferred stock (as converted basis)






45,107,887



45,107,887Redeemable convertible preferred stock warrants (as converted
    basis)






677,106



677,106Common stock warrants


556,292







   5.
    Short-Term
    Investments    Gross


GrossCost


Unrealized


Unrealized


FairBasis


Gains


Losses


Value(In thousands)Balance at July 31, 2007Auction rate securities

$
5,209


$



$



$
5,209U.S. government agency securities


47,387



23







47,410Asset-backed securities


4,518



5







4,523Commercial paper


5,287



1







5,288Total short-term investments

$
62,401


$
29


$



$
62,430  61




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Cost


FairBasis


Value(In thousands)One year or less

$
48,722


$
48,737Over one year


13,679



13,693Total short-term investments

$
62,401


$
62,430         6.
    Balance
    Sheet Components    As of July 31,2007


2006(In thousands)Accounts Receivable, NetTrade accounts receivable

$
24,229


$
13,648Less: Allowance for doubtful accounts


(507
)


(352
)Total

$
23,722


$
13,296   As of July 31,2007


2006(In thousands)InventoryRaw materials

$
543


$
449Work in process


167



9Finished goods


8,281



5,635Total

$
8,991


$
6,093   62




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As of July 31,2007


2006(In thousands)Accrued LiabilitiesCompensation and benefits

$
7,017


$
2,427Inventory


3,444



755Preferred stock warrants






941Other


4,856



3,939Total

$
15,317


$
8,062   7.
    Property
    and Equipment, Net    Estimated


As of July 31,Useful Lives


2007


2006(In thousands)Property and Equipment, NetComputer equipment


2 years


$
3,846


$
2,093Computer software


2 years



1,587



830Machinery and equipment


2 years



3,454



2,562Furniture and fixtures


5 years



426



223Leasehold improvements


2-5 years



232



106Total property and equipment gross






9,545



5,814Less: Accumulated depreciation and amortization






(5,836
)


(3,843
)Total property and equipment net





$
3,709


$
1,971     8.
    Deferred
    Revenue    As of July 31,2007


2006(In thousands)Deferred RevenueProduct

$
2,587


$
1,108Professional services and support


10,021



3,674Ratable product and related services and support


3,459



6,855Total deferred revenue, current


16,067



11,637Professional services and support, long-term


3,618



1,175Ratable product and related services and support, long-term


2,162



5,628Total deferred revenue, long-term


5,780



6,803Total deferred revenue

$
21,847


$
18,440  63




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
    9.
    Income
    Taxes    Years Ended July 31,2007


2006


2005(In thousands)CurrentState

$
25


$
10


$
9Foreign


350



296



147Total provision for income taxes

$
375


$
306


$
156     As of July 31,2007


2006(In thousands)Deferred tax assetsNet operating loss carryforwards

$
20,255


$
19,683Research and development credits


5,267



2,471Accruals and reserves


9,509



6,193Depreciation and amortization


2,460



2,519Total deferred tax assets


37,491



30,866Valuation allowance


(37,491
)


(30,866
)Net deferred tax assets

$



$
    64




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Years Ended July 31,2007


2006


2005Federal income tax expense (benefit)


(34.0
)%


(34.0
)%


(34.0
)%Stock compensation and warrant expense


18.7
%



%



%State income tax (benefit), net of federal benefit


(3.9
)%


(6.2
)%


(4.5
)%Foreign taxes


1.3
%


0.6
%


0.0
%Non-deductible expenses


0.7
%


5.2
%


1.5
%Research and developments credits


28.4
%


(2.8
)%


(1.3
)%Change in valuation allowance


(9.6
)%


39.8
%


38.8
%Total provision for income taxes


1.6
%


2.6
%


0.5
%          65




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Redeemable
    Convertible Preferred Stock    SharesIssued and


Liquidation


Proceeds Net ofSeries

Authorized


Outstanding


Preference


Issuance Costs(In thousands)A


14,444,551



14,262,748


$
9,513


$
9,450B


19,000,000



18,333,333



22,000



21,957C


13,000,000



12,511,806



26,700



26,60246,444,551



45,107,887


$
58,213


$
58,009         Warrants
    for Redeemable Convertible Preferred Stock
     66




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Exercise


Number of SharesIssue Date

Term


Price


Underlying WarrantMarch 3, 2003


7 years


$
0.67



144,303May 18, 2004


7 years


$
1.20



263,889May 18, 2004


7 years


$
2.13



148,100   11.
    Capital
    Stock        Non-Vested Shares

SharesNon-vested as of July 31, 2006


2,245,686Early exercise of options


1,577,348Vested


(2,600,714
)Forfeited


(175,721
)Non-vested as of July 31, 2007


1,046,599    67




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    12.
    Stock
    Option and Other Benefit Plans  2002
    Stock Plan
      2007
    Equity Incentive Plan
      
    all shares of the Companys common stock reserved under the
    2002 Plan which have been reserved but are not issued or subject
    to outstanding grants, up to a maximum of
    7,000,000 shares; and
    any shares of common stock issued under the 2002 Plan that are
    returned to the 2002 Plan as a result of the termination of
    options or that are repurchased by the Company pursuant to the
    terms of the plan, up to a maximum of 10,000,000 shares.      
    5% of the outstanding shares of the Companys common stock
    on the last day of the immediately preceding fiscal year; or
    15,000,000 shares.     68




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Employee
    Stock Purchase Plan
  6-month
 69




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    Option Activity
    Options OutstandingWeighted





WeightedAverage


Weighted


AverageShares





Exercise


Average


Remaining


AggregateAvailable for


Number of


Price


Fair Value


Contractual


IntrinsicGrant


Shares


per Share


per Share


Term (Years)


ValueBalance at July 31, 2004


1,767,973



2,060,195


$
0.13Issuance of share awards


(31,250
)






Shares reserved for issuance


2,500,000







Options granted at less than fair value(2)


(3,668,479
)


3,668,479



0.35


$
0.80Options exercised






(761,124
)


0.24










$
83,187Options repurchased


655,468







0.12Options cancelled


466,667



(466,667
)


0.24Balance at July 31, 2005


1,690,379



4,500,883



0.28Issuance of share awards


(17,550
)






Shares reserved for issuance


12,347,261







Options grantedAt fair value(1)


(9,381,580
)


9,381,580



2.26



1.27At less than fair value(2)


(3,456,000
)


3,456,000



1.20



1.01In excess of fair value(3)


(252,800
)


252,800



2.65



1.09Options exercised






(1,896,082
)


0.73











1,446,903Options repurchased


1,381,480







0.12Options cancelled


702,417



(702,417
)


0.53Balance at July 31, 2006


3,013,607



14,992,764



1.70Shares reserved for issuance


9,800,000







RSU grants


(366,990
)






Options grantedAt fair value(1)


(10,303,200
)


10,303,200



5.98



2.85In excess of fair value(3)


(10,000
)


10,000



19.25



7.88Options exercised






(2,338,566
)


1.72










$
8,489,885Options repurchased


175,721







0.40Options cancelled


1,049,787



(1,049,787
)


2.90Balance at July 31, 2007


3,358,925



21,917,611


$
3.66Options vested as of July 31, 2007






4,141,400


$
1.44







7.93


$
77,217,683Options vested and expected to vest as of July 31, 2007(4)






19,568,744


$
3.60







8.77


$
322,517,110Options exercisable as of July 31, 2007






13,139,422


$
1.83







8.43


$
239,800,147  70




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (1)
    
    Options granted at fair value represent options whose exercise
    price equals the estimated fair value of the common stock on the
    date of the grant.(2)
    
    Options granted at less than fair value represent options whose
    exercise price is less than the estimated fair value of the
    common stock on the date of the grant.(3)
    
    Options granted in excess of fair value represent options whose
    exercise price is greater than the estimated fair value of the
    common stock on the date of the grant.(4)
    
    Options expected to vest are the result of applying the
    pre-vesting forfeiture rate assumption to total outstanding
    options.        Weighted AverageGrant DateShares


Fair ValueBalance at July 31, 2006


Awards granted


366,990


$
14.97Awards vested


(96,290
)

$
8.08Balance at July 31, 2007


270,700


$
17.43     Fair
    Value Disclosures
    Employee
    Stock Options
  Year EndedJuly 31,2007AssumptionsRisk-free interest rate


4.7
%Expected term (in years)


4.3Dividend yield


Volatility


53
%Weighted average fair value of options granted

$
2.86  71




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Employee
    Stock Purchase Plan
  Year EndedJuly 31,2007AssumptionsRisk-free interest rate


5.0
%Expected term (in years)


0.4Dividend yield


Volatility


47
%Weighted average fair value of options granted

$
3.11     Stock-based
    Expenses
           72




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Prior
    to the Adoption of SFAS 123R
  Accounting for Stock Issued to Employees Accounting for
    Certain Transactions Involving Stock Compensation an
    Interpretation of APB Opinion No. 25 Accounting for
    Stock Appreciation Rights and Other Variable Stock Option or
    Award Plans Accounting for Stock-Based
    Compensation , Accounting for Stock-Based
    Compensation  Transition and Disclosure
 73




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended July 31,2006


2005(In thousands, except per share amounts)Net loss, as reported

$
(12,009
)

$
(32,635
)Add: Employee stock-based compensation expense included in
    reported net loss


1,028



644Less: Total employee stock-based compensation expense determined
    under the fair value method


(2,642
)


(984
)Pro forma, net loss

$
(13,623
)

$
(32,975
)Basic and diluted net loss per shareAs reported

$
(1.07
)

$
(4.66
)Pro forma

$
(1.22
)

$
(4.71
)     Employee
    Stock Options
  Years Ended July 31,2006


2005AssumptionsRisk-free interest rate


4.6
%


3.6
%Expected term (in years)


4.0



4.0Dividend yield






Volatility


70
%


100
%Weighted average fair value of options granted

$
1.20


$
0.80   401(k)
    Defined Contribution Plan
    13.
    Segment
    Information    Disclosures about Segments of an
    Enterprise and Related Information
 74




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Years Ended July 31,2007


2006


2005(In thousands)United States

$
84,878


$
53,132


$
8,791Europe, Middle East and Africa


20,710



7,711



1,325Asia Pacific


13,301



7,232



1,566Rest of World (including Japan)


8,610



4,428



361Total

$
127,499


$
72,503


$
12,043   14.
    Commitments
    and Contingencies  Legal
    Matters
      Equipment
    Loans
           75




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Lease
    Obligations
      OperatingLeases(In thousands)Year Ending July 31,2008

$
1,1532009


1,0642010


1,0442011


2842012


13Thereafter


Total minimum payments

$
3,558   Employee
    Agreements
    Warranties
  12-15 months
     76




---



##### Table of Contents



ARUBA
    NETWORKS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WarrantyAmount(In thousands)Balance as of July 31, 2005

$
67Provision


15Changes in estimates for pre-existing warranties


(42
)Settlements made during the year


(5
)Balance as of July 31, 2006


35Provision


57Settlements made during the year


(7
)Balance as of July 31, 2007

$
85   Non-Cancelable
    Purchase Commitments
     77




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rule 13a-15
    Internal
    Control Over Financial Reporting
  Rule 12b-2 Form 10-K
  Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION    PART III
  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION   78




---



##### Table of Contents



ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    PART IV
  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Financial Statements
  Financial Schedules
  Balance at








Balance atBeginning








End ofAllowance for Doubtful Accounts

of Year


Additions


Deductions


Year(In thousands)Year ended July 31, 2005

$
26


$
138


$



$
164Year ended July 31, 2006

$
164


$
254


$

(66)

$
352Year ended July 31, 2007

$
352


$
199


$

(44)

$
507   Exhibits.
 79




---



##### Table of Contents



SIGNATURES
  th
  ARUBA NETWORKS, INC.
  
  Dominic P. Orr
 President and Chief Executive Officer
  POWER OF
    ATTORNEY
  Form 10-K
    Signature

Title

Date/s/  Dominic
    P. OrrDominic
    P. Orr

President, Chief Executive Officer, and Chairman of the Board of
    Directors (Principal Executive Officer)

October 12, 2007/s/  Steffan
    TomlinsonSteffan
    Tomlinson

Chief Financial Officer (Principal Accounting and Financial
    Officer)

October 12, 2007/s/  Keerti
    MelkoteKeerti
    Melkote

Co-Founder, Vice President, Products and Partnerships, Director

October 12, 2007/s/  Bernard
    GuidonBernard
    Guidon

Director

October 12, 2007/s/  Emmanuel
    HernandezEmmanuel
    Hernandez

Director

October 12, 2007/s/  Michael
    R. KoureyMichael
    R. Kourey

Director

October 12, 2007/s/  Doug
    LeoneDoug
    Leone

Director

October 12, 2007/s/  Shirish
    S. SathayeShirish
    S. Sathaye

Director

October 12, 2007/s/  Daniel
    WarmenhovenDaniel
    Warmenhoven

Director

October 12, 2007  80




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit



Incorporated by Reference HereinNumber

Description

Form

Date3
.1*

Restated Certificate of Incorporation of Registrant

Current Report on Form 8-K

April 5, 20073
.2*

Amended and Restated Bylaws of Registrant

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 7, 20074
.1*

Specimen common stock certificate

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 7, 20074
.2*

Amended and Restated Investors Rights Agreement, dated
    September 6, 2005

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 20064
.3*

Warrants to purchase preferred stock of Registrant, issued to
    Lighthouse Capital Partners

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 20064
.4*

Warrants to purchase preferred stock of Registrant, issued to
    Costella Kirsch Venture

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.1*

Form of Indemnification Agreement

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 7, 200710
.2A*

2002 Stock Plan of Registrant, as amended

Registration Statement on Form S-l, as amended (File No.
    333-139419)

January 24, 200710
.2B*

Forms of Stock Option Agreements under the 2002 Stock Plan

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200710
.3A*

2007 Equity Incentive Plan of Registrant

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 8, 200710
.3B*

Forms of Stock Option Agreements under the 2007 Equity Incentive
    Plan

Registration Statement on Form S-l, as amended (File No.
    333-139419)

January 24, 200710
.4A*

Employee Stock Purchase Plan

Registration Statement on Form S-l, as amended (File No.
    333-139419)

January 24, 200710
.4B*

Form of Subscription Agreement under the Employee Stock Purchase
    Plan

Registration Statement on Form S-l, as amended (File No.
    333-139419)

January 24, 200710
.5*

Executive Employment Agreement, dated April 4, 2006,
    between Registrant and Dominic P. Orr

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.6*

Employment offer letter, dated April 12, 2002, between
    Registrant and Keerti Melkote

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.7*

Employment offer letter, dated July 18, 2006, between
    Registrant and Sriram Ramachandran

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.8*

Employment offer letter, dated July 14, 2005, between
    Registrant and Steffan Tomlinson

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.9*

Employment offer letter, dated June 2, 2004, between
    Registrant and Richard Wilmer

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.10*

Separation Agreement, dated August 30, 2006, between
    Registrant and David Butler

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 2006 81




---



##### Table of Contents



Exhibit



Incorporated by Reference HereinNumber

Description

Form

Date10
.11*

Loan and Security Agreement, dated March 3, 2003, between
    Registrant and Lighthouse Capital Partners

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.12*

Master Loan and Security Agreement, dated July 31, 2003,
    between Registrant and Costella Kirsch Venture Partners

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.13*

Sublease Agreement, dated September 10, 2004, for 1322
    Crossman Ave., Sunnyvale, California

Registration Statement on Form S-l, as amended (File No.
    333-139419)

December 15, 200610
.14*

Flextronics Manufacturing Services Agreement, dated
    January 1, 2005

Registration Statement on Form S-l, as amended (File No.
    333-139419)

January 24, 200710
.15*

Technology License Agreement, dated October 20, 2005,
    between Registrant and Atheros Communications, Inc.

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 20, 200710
.16*

Software License Agreement, dated January 11, 2006, between
    Registrant and Broadcom Corporation

Registration Statement on Form S-l, as amended (File No.
    333-139419)

January 24, 200710
.17*

OEM Supply Agreement, dated March 18, 2005, between
    Registrant and Alcatel Internetworking, Inc.

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 26, 200710
.18*

Amendment No. 1 to OEM Supply Agreement, dated
    August 31, 2006, between Registrant and Alcatel
    Internetworking, Inc.

Registration Statement on Form S-l, as amended (File No.
    333-139419)

March 26, 200721
.1

List of subsidiaries of Registrant23
.1

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm24
.1

Power of Attorney (incorporated by reference to the signature
    page of this Annual Report on
    Form 10-K)31
.1

Certification of Chief Executive Officer pursuant to Exchange
    Act
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act31
.2

Certification of Chief Financial Officer pursuant to Exchange
    Act
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act32
.1

Certifications of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act     *
    
    Previously filed.
    
    Confidential treatment has been requested for portions of this
    exhibit. 82