Hewlett Packard Enterprise (HPE) CFO Tarek Robbiat said in the latest earnings call that the vendor expects Aruba Networks to perform as a Rule of 40 company, and EVP and GM of Aruba/ HPE Intelligent Edge Phil Mottram called this goal “achievable” with the strong demand in an interview with SDxCentral.

HPE’s Aruba/Intelligent Edge business reported a 23% (adjusted to eliminate the effects of currency) year-over-year revenue growth to $965 million for the fourth fiscal quarter of 2022.

“We expect Aruba to perform as a Rule of 40 company moving forward. And that's the ambition that we have in the medium to long term, which is to maintain high-double-digit growth in Aruba and operating profit margins in the mid-20s range,” Robbiat said during the earnings call.

The Rule of 40 means a combination of revenue growth rate and profit margin equal to or greater than 40%, Mottram explained. Robbiat expects Aruba to reach 25% for operating margin and 15% for revenue growth.

“Providing there's no real slowdown in demand, we would expect that [goal] should be achievable,” he said, adding that the company already exceeded the number for revenue growth rate last quarter.

Mottram touted the strong demand that has been climbing for eight quarters and peaked in the third fiscal quarter. Due to economic downturn concerns, the customer demand went down slightly lower in the fourth quarter, but not to “any point where we were alarmed or worried about it.”

On the operating margins side, the logistics costs were higher than those Aruba experienced a year ago. Mottram hopes the future relief from the supply chain constraints can help Aruba improve its operating margins.

Aruba plans more investments in data center, private 5G & security

To make strides on the Rule of 40 goals, Aruba continues to broaden its Aruba Central cloud-based networking management platform and network-as-a-service (NaaS) portfolio, according to Mottram.

The company is investing more in the data center space, as “there's still a lot of data center build going on generally … and the ‘world is hybrid point’ is probably undisputed,” he said.

Aruba also looks to pivot more attention to private 5G, and security as part of its secure access service edge (SASE) solution, Mottram noted.

“I'm clear on my strategy: continue to add more products or services where appropriate, invest more in the platform or Aruba central … and AI capabilities, etc. And then, we're trying to scale the NaaS business into a broader part of the market,” he concluded.