Infoblox Reports Third Quarter of Fiscal 2013 Results

Infoblox (BLOX), the automated network control company, today reported its financial results for its third fiscal quarter ended April 30, 2013. Total net revenue for the third quarter of fiscal 2013 was a record $58.0 million, an increase of 34% on a year-over-year basis.

On a GAAP basis, the Company reported a net loss of $0.3 million, or $0.01 loss per fully diluted share, for the third quarter of fiscal 2013, compared with a net loss of $1.0 million, or $0.07 loss per fully diluted share, for the third quarter of fiscal 2012.

The Company reported non-GAAP net income of $6.0 million, or $0.11 diluted earnings per share on a non-GAAP weighted average share basis, for the third quarter of fiscal 2013, compared with non-GAAP net income of $2.2 million, or $0.05 diluted earnings per share on a non-GAAP weighted average share basis, for the third quarter of fiscal 2012. The GAAP to non-GAAP reconciling items for the third quarters of fiscal 2013 and 2012 can be found in the "Reconciliation of GAAP to non-GAAP Financial Measures" attached to this press release.

“We are very pleased with the strong financial results we are reporting for the third quarter,” said Robert Thomas, president and chief executive officer. “We executed well, achieving revenue growth of 34% year-over-year, despite a challenging global economy. We believe the outperformance in the quarter was driven by the compelling value proposition that our solutions deliver, which help networks become more available, automated and secure. Going forward, we are very encouraged by our growth prospects. Our competitive position remains strong, our pipeline is healthy, and we have a large and growing customer base.”

“Infoblox continued to deliver strong product revenue growth, which increased 37% year-over-year,” said Remo Canessa, chief financial officer. “In the quarter, we saw strong demand across all geographic regions, with no major concentration in any particular verticals. We also had a strong quarter from a profitability perspective, with non-GAAP gross margin, operating margin and earnings per share all exceeding our previous targets. Infoblox's balance sheet was further strengthened, as we exited the third quarter with $192 million in cash, cash equivalents and short-term investments.”

Financial Outlook

Infoblox is providing an outlook of anticipated results for the fourth quarter ending July 31, 2013 and updating its outlook for the year ending July 31, 2013. 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, 2013, the Company currently expects:

• Total net revenue in the range of $58 million to $59 million;
• Non-GAAP gross margin to be approximately 78%;
• Non-GAAP operating margin in the range of 8% to 9%; and
• Non-GAAP diluted net income per share ("non-GAAP EPS") to be in the range of $0.08 to $0.09, assuming approximately 55.3 million shares on a non-GAAP diluted weighted average basis.

For the fiscal year ending July 31, 2013, the Company currently expects total net revenue in the range of $220 million to $221 million.

All forward-looking non-GAAP measures exclude estimates for stock-based compensation expenses and amortization of intangible assets. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

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 weighted average shares outstanding. We also provide fourth fiscal quarter 2013 and fiscal year 2013 guidance for non-GAAP gross margin, non-GAAP operating margin, non-GAAP EPS and non-GAAP 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 and related payroll tax expenses 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.

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 and intangible asset amortization expense. 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 and intangible asset amortization expense. Non-GAAP EPS is non-GAAP net income divided by non-GAAP diluted weighted average shares outstanding. Non-GAAP diluted weighted average shares outstanding was computed to give effect to the conversion of all outstanding convertible preferred stock including the exercise of related preferred stock warrants and the exercise of certain common stock warrants which occurred upon the closing of our IPO on April 25, 2012, as if conversion or exercise had occurred at the beginning of the period of issuance.

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.”

Conference Call & Webcast

Management will host a conference call today, May 23, 2013, at 1:30 p.m. PDT/4:30 p.m. EDT to discuss its fiscal third quarter 2013 financial results. To access the call, investors may dial 800-230-1096 (domestic) or 612-288-0329 (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 our website and a taped replay will be available for one week at 800-475-6701 (domestic) or 320-365-3844 (international), passcode 292385.

About Infoblox

Infoblox (BLOX) delivers Automated Network Control solutions, the fundamental technology that connects end users, devices and networks. These solutions enable more than 6,500 enterprises and service providers to transform and scale complex networks. Infoblox helps take the burden of complex network control out of human hands, reduce costs, and increase accuracy and uptime. Infoblox is headquartered in Santa Clara, California and has operations in 25 countries.

Cautionary Statement

The statements in this release regarding our competitive position, the market's growing adoption of our automated network control solutions as well as the statements regarding our growth prospects contained in the quotes of our chief executive officer and all statements under “Financial Outlook” 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 automated 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.

For a detailed discussion of these and other risk factors, please refer to our filings with the Securities and Exchange Commission, including the final prospectus related to our initial public offering, 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 23, 2013, 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 23, 2013 press release, or to reflect the occurrence of unanticipated events.