SOURCE: Infoblox

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May 25, 2016 16:10 ET

Infoblox Reports Fiscal Third Quarter 2016 Results

Increases Share Repurchase Authorization by $150 Million

SANTA CLARA, CA--(Marketwired - May 25, 2016) -  Infoblox (NYSE: BLOX), the network control company, today reported its financial results for its third fiscal quarter ended April 30, 2016. Total net revenue for the third quarter of fiscal 2016 was $82 million, an increase of 5% on a year-over-year basis.

On a GAAP basis, the Company reported net loss of $6 million, or $0.10 net loss per diluted share, for the third quarter of fiscal 2016, compared with a net loss of $5 million, or $0.09 net loss per diluted share, for the third quarter of fiscal 2015.

On a non-GAAP basis, the Company reported net income of $3 million, or $0.06 net income per diluted share for the third quarter of fiscal 2016, compared with net income of $7 million, or $0.12 net income per diluted share for the third quarter of fiscal 2015.

"Revenue for the third quarter was $82 million, in line with our May 9 preliminary announcement," said Jesper Andersen, president and chief executive officer. "While we continue to make good progress in product development, delivering products and services that support our customers' needs in core DDI, extending DDI to cloud environments, and securing their DNS infrastructure, our revenue results were weaker than we anticipated in what was a weaker than expected spending environment combined with a more rapid tapering down of our product upgrade cycle than we anticipated," continued Andersen. "Looking forward, a key priority is driving top line growth more profitably. We are taking actions to drive improved efficiency across the company and significantly higher operating margins in fiscal 2017. Importantly, we believe our competitive position continues to be strong, our addressable market is growing, and we are optimistic about the opportunities before us."

Recent Business Highlights

  • Acquired IID, a leader in global threat intelligence, making Infoblox the first enterprise-grade DDI vendor that combines contextual network data with federated threat intelligence and a dedicated threat research team, to provide context-aware security using tier 1 network infrastructure that customers already have in place
  • Hosted Bloxfest, Infoblox's first customer focused conference, with nearly 250 customers and partners in attendance
  • Announced Infoblox DNS Firewall as a service, extending the company's industry-leading DNS protection to roaming devices off premise making Infoblox the first enterprise-grade DDI vendor to offer a DNS function as a service
  • Belgium-based Colruyt Group deployed Infoblox DNS appliances and NetMRI to centralize and automate its network processes supporting 30,000 employees in more than 800 locations worldwide
  • Council Rock School District of Pennsylvania upgraded to Infoblox enterprise grade DDI, deployed external DNS security, and DNS Firewall to modernize and secure network operations and meet the growing needs of 13,500 staff and students
  • Everi Holdings chose Infoblox secure DNS to help protect $20 billion in transactions each year, spanning 1,100 gaming locations in 36 countries, for the gaming industry
  • Netskope deployed Infoblox solutions to achieve its mission of delivering secure cloud-based services to its customers. Infoblox provides an essential component for Netskope's popular service where its customers' end users, on average, access over 750 applications and cannot afford disruptions to their business processes.

$150 Million Increase to Share Repurchase Authorization

The Company also announced that its board of directors approved a $150 million increase to the Company's share repurchase program. The share purchases may be made from time to time on the open market in compliance with applicable state and federal securities laws. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice. The program has no expiration date.

Financial Outlook

Infoblox announced its outlook of anticipated results for the fourth fiscal quarter and fiscal year ending July 31, 2016. This outlook is based on a number of assumptions that it believes are reasonable at the time of this earnings release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Infoblox's filings with the Securities and Exchange Commission.

For the fourth fiscal quarter ending July 31, 2016, the Company currently expects:

  • Total net revenue in the range of $82 million to $86 million;
  • Non-GAAP gross margin in the range of 79% to 80%;
  • Non-GAAP operating margin in the range of 5.5% to 7.5%; and
  • Non-GAAP net income per diluted share ("non-GAAP EPS") to be in the range of $0.05 to $0.07, assuming approximately 57 million to 58 million shares, on a non-GAAP diluted weighted-average share basis.

For the fiscal year ending July 31, 2016, the Company currently expects:

  • Total net revenue in the range of $354 million to $358 million; and
  • Non-GAAP gross margin in the range of 80.3% to 80.5%;
  • Non-GAAP operating margin to be approximately 11%;
  • Non-GAAP EPS to be in the range of $0.41 to $0.43, assuming approximately 59 million shares, on a non-GAAP diluted weighted-average share basis.

Conference Call & Webcast

Management will host a conference call today, May 25, 2016 at 1:30 p.m. PDT/4:30 p.m. EDT to discuss its fiscal third quarter 2016 financial results. To access the call, dial 800-230-1059 (domestic) or 612-288-0337 (international) at least 10 minutes prior to the scheduled start of the call. A live webcast of the call will also be available on the corporate website at: http://ir.infoblox.com. An archive of the webcast will be available on the company's website and a taped replay will be available for one week at 800-475-6701 (domestic) or 320-365-3844 (international), passcode 393091.

About Non-GAAP Financial Measures

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP net income, non-GAAP EPS and non-GAAP diluted shares outstanding. We also provide fourth fiscal quarter 2016 and fiscal 2016 estimates for net revenue, non-GAAP gross margin, non-GAAP operating margin, non-GAAP EPS and non-GAAP diluted weighted-average shares outstanding. We believe these non-GAAP financial measures are helpful in understanding our past financial performance and future results. Our non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. Our non-GAAP financial measures include adjustments based on the following items:

Stock-based compensation expenses: We have excluded the effect of stock-based compensation from our non-GAAP operating results. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating results. Amortization of intangible assets is a non-cash expense, and it is not part of our core operations. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Acquisition related expenses: We have excluded acquisition transaction costs from our non-GAAP operating results. We believe that to the extent we incur significant expenses in connection with our acquisitions, it is useful for investors to understand the effects of these items on our total operating expenses.

Our non-GAAP Financial Measures are described as follows:

Non-GAAP gross profit and gross margin. Non-GAAP gross profit is gross profit as reported on our consolidated statements of operations, excluding the impact of stock-based compensation and intangible asset amortization expense. Non-GAAP gross margin is non-GAAP gross profit divided by net revenue.

Non-GAAP operating income and operating margin. Non-GAAP operating income is income (loss) from operations as reported on our consolidated statements of operations, excluding the impact of stock-based compensation, intangible asset amortization expense and acquisition related expenses. Non-GAAP operating margin is non-GAAP operating income divided by net revenue.

Non-GAAP net income and non-GAAP EPS. Non-GAAP net income is net income (loss) as reported on our consolidated statements of operations, excluding the impact of stock-based compensation, intangible asset amortization expense and acquisition related expenses with income taxes adjusted to reflect our estimated long-term effective tax rate on a non-GAAP basis. Non-GAAP EPS is non-GAAP net income divided by non-GAAP diluted weighted-average shares outstanding.

For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "Reconciliation of GAAP to Non-GAAP Financial Measures." No reconciliation of the forecasted ranges for non-GAAP gross margin, non-GAAP operating margin or non-GAAP EPS for the fourth fiscal quarter 2016 and fiscal 2016 is included in this release because the charges for our expected cost reduction activities that may impact the GAAP measure are not yet known and subject to change, and the variability of these charges could have a significant, and potentially unpredictable, impact on our future GAAP financial results.

About Infoblox

Infoblox (NYSE: BLOX) delivers critical network services that protect Domain Name System (DNS) infrastructure, automate cloud deployments, and increase the reliability of enterprise and service provider networks around the world. As the industry leader in DNS, DHCP, and IP address management, the category known as DDI, Infoblox (www.infoblox.com) reduces the risk and complexity of networking.

Cautionary Statement

All statements in this release that are not statements of historical fact, including but not limited to the quotation attributable to Mr. Andersen, the statements under "Financial Outlook" and our share repurchase authorization are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: unexpected delays in the delivery of our solutions, particularly at the end of the quarter; changes in demand for network control solutions; the market acceptance of our products; the fluctuations in our gross margins; the concentration of our customer base; competitive developments including pricing pressures; our ability to manage operating expenses effectively; and the general economic, industry or political conditions in the United States or internationally. Such risk factors also include those related to whether or not we will complete our share repurchase program during any particular time frame or at all and whether our cash and short term investments may be insufficient to fund our share repurchase program.

For a detailed discussion of these and other risk factors, please refer to our filings with the Securities and Exchange Commission, which are available on our investor relations Web site (http://ir.infoblox.com/) and on the SEC's Web site (www.sec.gov).

All information provided in this release and in the attachments is as of May 25, 2016, and stockholders of Infoblox are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Infoblox does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this May 25, 2016, press release, or to reflect the occurrence of unanticipated events.

 
 
 
INFOBLOX INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP BASIS
(In thousands, except per share data)
(Unaudited)
           
  Three Months Ended     Nine Months Ended  
  April 30,
 2016
    January 31,
 2016
    April 30,
 2015
    April 30,
 2016
    April 30,
 2015
 
Net revenue:                                      
  Products and licenses $ 37,771     $ 51,516     $ 40,737     $ 140,144     $ 110,162  
  Services   44,191       44,483       37,366       131,839       108,964  
    Total net revenue   81,962       95,999       78,103       271,983       219,126  
Cost of revenue:                                      
  Products and licenses   9,046       9,856       9,069       29,252       25,323  
  Services   10,176       9,065       8,257       27,993       23,215  
    Total cost of revenue   19,222       18,921       17,326       57,245       48,538  
Gross profit   62,740       77,078       60,777       214,738       170,588  
Operating expenses:                                      
  Research and development   17,300       17,461       16,709       52,594       46,783  
  Sales and marketing   42,506       45,996       39,536       135,788       117,779  
  General and administrative   10,956       11,149       9,740       32,562       27,055  
    Total operating expenses   70,762       74,606       65,985       220,944       191,617  
Income (loss) from operations   (8,022 )     2,472       (5,208 )     (6,206 )     (21,029 )
Other income (expense), net   309       167       206       571       (574 )
Income (loss) before provision for (benefit from) income taxes   (7,713 )     2,639       (5,002 )     (5,635 )     (21,603 )
Provision for (benefit from) income taxes   (2,037 )     (1,139 )     134       (2,226 )     754  
Net income (loss) $ (5,676 )   $ 3,778     $ (5,136 )   $ (3,409 )   $ (22,357 )
Net income (loss) per share - basic and diluted $ (0.10 )   $ 0.06     $ (0.09 )   $ (0.06 )   $ (0.40 )
Weighted-average shares used in computing basic net income (loss) per share   57,420       58,926       56,928       58,548       56,120  
Weighted-average shares used in computing diluted net income (loss) per share   57,420       60,138       56,928       58,548       56,120  
                                       
                                       
 
INFOBLOX INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited) 
           
    Three Months Ended   Nine Months Ended  
    April 30,
 2016
  January 31,
 2016
  April 30,
 2015
  April 30,
 2016
  April 30,
 2015
 
Gross Profit Reconciliation:                                
GAAP gross profit   $ 62,740   $ 77,078   $ 60,777   $ 214,738   $ 170,588  
  Stock-based compensation expense     1,014     1,221     1,001     3,363     3,405  
  Amortization of intangible assets     768     290     290     1,348     870  
Non-GAAP gross profit   $ 64,522   $ 78,589   $ 62,068   $ 219,449   $ 174,863  
Gross Margin Reconciliation:                                
GAAP gross margin     76.5 %   80.3 %   77.8 %   79.0 %   77.8 %
  Stock-based compensation expense     1.3     1.3     1.3     1.2     1.6  
  Amortization of intangible assets     0.9     0.3     0.4     0.5     0.4  
Non-GAAP gross margin     78.7 %   81.9 %   79.5 %   80.7 %   79.8 %
Operating Income (Loss) Reconciliation:                                
GAAP operating income (loss)   $ (8,022 ) $ 2,472   $ (5,208 ) $ (6,206 ) $ (21,029 )
  Stock-based compensation expense     11,795     12,965     11,759     37,588     36,098  
  Amortization of intangible assets     1,091     322     617     1,735     1,851  
  Acquisition related expenses     236     382     -     618     -  
Non-GAAP operating income   $ 5,100   $ 16,141   $ 7,168   $ 33,735   $ 16,920  
Operating Margin Reconciliation:                                
GAAP operating margin     (9.8 %)   2.6 %   (6.7 %)   (2.3 %)   (9.6 %)
  Stock-based compensation expense     14.4     13.5     15.1     13.8     16.5  
  Amortization of intangible assets     1.3     0.3     0.8     0.7     0.8  
  Acquisition related expenses     0.3     0.4     -     0.2     -  
Non-GAAP operating margin     6.2 %   16.8 %   9.2 %   12.4 %   7.7 %
Net Income (Loss) Reconciliation:                                
GAAP net income (loss)   $ (5,676 ) $ 3,778   $ (5,136 ) $ (3,409 ) $ (22,357 )
  Stock-based compensation expense     11,795     12,965     11,759     37,588     36,098  
  Amortization of intangible assets     1,091     322     617     1,735     1,851  
  Acquisition related expenses     236     382     -     618     -  
  Income tax adjustment     (4,091 )   (7,336 )   (45 )   (15,261 )   (167 )
Non-GAAP net income   $ 3,355   $ 10,111   $ 7,195   $ 21,271   $ 15,425  
                                 
Non-GAAP EPS   $ 0.06   $ 0.17   $ 0.12   $ 0.35   $ 0.26  
Shares used in Computing non-GAAP EPS Reconciliation:                                
Diluted shares:                                
Weighted-average shares used in calculating GAAP diluted net income (loss) per share     57,420     60,138     56,928     58,548     56,120  
Additional dilutive securities for non-GAAP income     888     -     3,295     1,535     2,357  
Weighted-average shares used in calculating non-GAAP diluted net income per share     58,308     60,138     60,223     60,083     58,477  
                                 
                                 
 
INFOBLOX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
           
  April 30, 2016     July 31, 2015  
  (Unaudited)     (a)  
ASSETS              
CURRENT ASSETS:              
  Cash and cash equivalents $ 110,827     $ 103,124  
  Short-term investments   166,346       227,712  
  Accounts receivable, net   50,582       45,881  
  Inventory   6,498       8,588  
  Prepaid expenses and other current assets   14,628       10,459  
    Total current assets   348,881       395,764  
Property and equipment, net   23,731       23,225  
Restricted cash   10,019       3,515  
Intangible assets, net   21,088       1,923  
Goodwill   58,965       33,293  
Other assets   1,517       1,547  
TOTAL ASSETS $ 464,201     $ 459,267  
LIABILITIES AND STOCKHOLDERS' EQUITY              
CURRENT LIABILITIES:              
  Accounts payable and accrued liabilities $ 23,327     $ 19,136  
  Accrued compensation   19,042       22,931  
  Deferred revenue, net   114,724       95,130  
    Total current liabilities   157,093       137,197  
Deferred revenue, net   51,906       41,717  
Other liabilities   10,591       5,201  
TOTAL LIABILITIES   219,590       184,115  
STOCKHOLDERS' EQUITY:              
  Convertible preferred stock, $0.0001 par value per share-5,000 shares authorized; no shares issued or outstanding   -       -  
  Common stock, $0.0001 par value per share-100,000 shares authorized; 56,855 shares and 58,836 shares issued and outstanding as of April 30, 2016 and July 31, 2015   6       6  
  Additional paid-in capital   454,676       438,725  
  Accumulated other comprehensive loss   (38 )     (37 )
  Accumulated deficit   (210,033 )     (163,542 )
TOTAL STOCKHOLDERS' EQUITY   244,611       275,152  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 464,201     $ 459,267  
               

(a) Derived from the July 31, 2015 audited consolidated financial statements.

 
 
INFOBLOX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
       
    Nine Months Ended April 30,  
    2016     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (3,409 )   $ (22,357 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
  Stock-based compensation     37,588       36,098  
  Depreciation and amortization     8,379       6,712  
  Excess tax benefits from employee stock plans     (904 )     (247 )
  Deferred income taxes     (3,658 )     62  
  Other     405       1,603  
  Changes in operating assets and liabilities:                
    Accounts receivable, net     (4,455 )     (1,692 )
    Inventory     2,273       (2,608 )
    Prepaid expenses, other current assets and other assets     (498 )     (2,568 )
    Accounts payable and accrued liabilities     2,076       2,762  
    Accrued compensation     (3,889 )     6,912  
    Deferred revenue, net     26,801       19,552  
    Other liabilities     (740 )     (670 )
      Net cash provided by operating activities     59,969       43,559  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchases of short-term investments     (29,905 )     (114,484 )
  Proceeds from maturities of short-term investments     90,830       76,450  
  Business acquisition, net of cash acquired     (31,531 )     -  
  Change in restricted cash     (9,101 )     -  
  Purchases of property and equipment     (7,459 )     (5,552 )
  Proceeds from sales of short-term investments     -       1,001  
      Net cash provided by (used in) investing activities     12,834       (42,585 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Common stock repurchases     (75,104 )     -  
  Proceeds from issuance of common stock under the employee stock plans     8,997       12,318  
  Excess tax benefits from employee stock plans     904       247  
      Net cash provided by (used in) financing activities     (65,203 )     12,565  
                 
Effect of foreign exchange rate changes on cash and cash equivalents     103       (1,252 )
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS     7,703       12,287  
CASH AND CASH EQUIVALENTS-Beginning of period     103,124       78,535  
CASH AND CASH EQUIVALENTS-End of period   $ 110,827     $ 90,822  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                
Purchases of property and equipment not yet paid   $ 761     $ 2,960  
Cash paid for income taxes, net   $ 566     $ 425  

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