Infoblox (NYSE:BLOX), today reported its financial results for its fourth fiscal quarter and fiscal year ended July 31, 2012. Total net revenue for the fourth quarter of fiscal 2012 was a record $45.1 million, an increase of 14% on a year-over-year basis. Total net revenue for fiscal 2012 was a record $169.2 million, an increase of 27% compared with net revenue of $132.8 million in fiscal 2011.

On a GAAP basis, the Company reported a net loss of $4.3 million, or $0.10 loss per fully diluted share, for the fourth quarter of fiscal 2012, compared with a net loss of $2.1 million, or $0.20 loss per fully diluted share, in the fourth quarter of fiscal 2011. For fiscal 2012, the Company reported a GAAP basis net loss of $8.2 million, or $0.40 loss per fully diluted share, compared with a net loss of $5.3 million, or $0.54 loss per fully diluted share, in fiscal 2011.

The Company reported non-GAAP net income of $0.7 million, or $0.01 earnings per share on a non-GAAP weighted average share basis, for the fourth quarter of fiscal 2012, compared with non-GAAP net income of $0.2 million, or $0.00 earnings per share on a non-GAAP weighted average share basis, in the fourth quarter of fiscal 2011.

For fiscal 2012, the Company reported non-GAAP net income of $5.3 million, or $0.12 earnings per share on a non-GAAP weighted average share basis, compared with non-GAAP net income of $3.1 million, or $0.07 earnings per share on a non-GAAP weighted average share basis, in fiscal 2011. The GAAP to non-GAAP reconciling items, for the fourth quarters and fiscal years 2012 and 2011 can be found in “The Reconciliation of GAAP to Non-GAAP Financial Measures” attached to this press release.

“We are very pleased with our fourth quarter and fiscal year 2012 financial results,” said Robert Thomas, President and Chief Executive Officer at Infoblox. “Our success in the market is testament to our highly-differentiated product portfolio, our strong competitive position and the business-critical need for network automation solutions. As market acceptance and understanding of our automation capabilities grows, more organizations are embracing our solutions to overcome network challenges associated with BYOD, virtualization, cloud computing, and data center consolidation. Infoblox solutions offer customers a simple, reliable and secure way to connect any device with an IP address to the network, and accelerates the time-to-value of these next-generation IT initiatives.”

“We executed well and exceeded our financial objectives in the July quarter,” said Remo Canessa, Chief Financial Officer at Infoblox. “Strong sales in the North America and EMEA led Infoblox to another quarter of record revenue. Our non-GAAP operating margin was better than expected as a result of strong revenue and gross margin performance. In addition, Infoblox's balance sheet was strong exiting the July quarter. Total net deferred revenue, principally from support contracts, was $76.7 million, an increase of 24% over the July 2011 quarter. Net cash provided by operating activities was $21.4 million for fiscal 2012. As of July 31, 2012, our cash and cash equivalents balance stood at $157 million.”

Financial Outlook

Infoblox is providing an outlook of anticipated results for the first quarter ending October 31, 2012 and for the year ending July 31, 2013. This outlook is based on a number of assumptions that we believe 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 first fiscal quarter ending October 31, 2012, the Company currently expects:
  • Total net revenue in the range of $45 million to $46.5 million;
  • Non-GAAP gross margin to be approximately 76%;
  • Non-GAAP operating margin in the range of break-even to slightly profitable; and
  • Non-GAAP EPS to be break-even, assuming approximately 53.5 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 $195 million to $202 million;
  • Non-GAAP operating margin in the range of 1% to 3%; and
  • Non-GAAP EPS in the range of $0.04 to $0.07, assuming approximately 54.5 million shares on a non-GAAP diluted weighted average basis.

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 EPS and non-GAAP weighted average shares outstanding. We also provide first fiscal quarter 2013 and fiscal year 2013 guidance for non-GAAP gross margin, non-GAAP operating expenses, 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 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 initial public offering on April 20, 2012, as if conversion or exercise had occurred at the beginning of the period.

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, September 6, 2012, at 1:30 p.m. PDT/4:30 p.m. EDT to discuss its fiscal fourth quarter 2012 results. To access the call, investors may dial 800-230-1059 (domestic) or 612-234-9960 (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 256066.

About Infoblox

Infoblox (NYSE:BLOX) delivers Automated Network Control solutions, the fundamental technology that connects end users, devices and networks. These solutions enable more than 5,900 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, Calif. and has additional operations in 30 countries.

Cautionary Statement

The statements in this release regarding the impact of market awareness and acceptance of our automated network control solutions as well as 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 September 6, 2012, 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 September 6, 2012 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 Year Ended July 31
July 31, 2012   April 30, 2012   July 31, 2011 2012   2011
Net revenue:
Products and licenses $ 24,216 $ 24,558 $ 24,077 $ 95,012 $ 80,274
Services 20,864   18,866   15,316   74,234   52,561  
Total net revenue 45,080   43,424   39,393   169,246   132,835  
Cost of revenue:
Products and licenses 6,050 6,004 4,983 21,778 16,652
Services 4,254   3,781   3,568   15,342   12,187  
Total cost of revenue 10,304   9,785   8,551   37,120   28,839  
Gross profit 34,776   33,639   30,842   132,126   103,996  
Operating expenses:
Research and development 9,752 8,987 9,463 36,624 29,605
Sales and marketing 24,505 21,691 19,799 86,474 67,390
General and administrative 4,398   3,757   3,245   15,548   10,831  
Total operating expenses 38,655   34,435   32,507   138,646   107,826  
Loss from operations (3,879 ) (796 ) (1,665 ) (6,520 ) (3,830 )
Other expense, net: (158 ) (449 ) (150 ) (946 ) (690 )
Loss before provision (benefit) for income taxes (4,037 ) (1,245 ) (1,815 ) (7,466 ) (4,520 )
Provision (benefit) for income taxes 309   (226 ) 301   744   802  
Net loss $ (4,346 ) $ (1,019 ) $ (2,116 ) $ (8,210 ) $ (5,322 )
Net loss per share - basic and diluted $ (0.10 ) $ (0.07 ) $ (0.20 ) $ (0.40 ) $ (0.54 )
Weighted average shares used in computing basic and diluted net loss per share 45,645   14,266   10,706   20,563   9,933  
 
   
INFOBLOX INC.
 
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended Year Ended July 31
July 31, 2012   April 30, 2012

 
July 31, 2011 2012   2011

Gross Profit Reconciliation:
GAAP gross profit $ 34,776 $ 33,639 $ 30,842 $ 132,126 $ 103,996
Stock based compensation expense

359
138 85 700 283
Amortization of intangible assets 322   325   329   1,302   1,059
Non-GAAP gross profit $

35,457
  $ 34,102   $ 31,256   $ 134,128   $ 105,338

Gross Margin Reconciliation:
GAAP gross margin 77.1 % 77.5 % 78.3 % 78.1 % 78.3 %
Stock based compensation expense 0.8 % 0.3 % 0.2 % 0.4 % 0.2 %
Amortization of intangible assets 0.7 % 0.7 % 0.8 % 0.8 % 0.8 %
Non-GAAP gross margin 78.6 % 78.5

%
79.3 % 79.3 % 79.3 %

Operating Income (Loss) Reconciliation:
GAAP operating loss $ (3,879 ) $ (796 ) $ (1,665 ) $ (6,520 ) $ (3,830 )
Stock based compensation expense 4,372 2,543 1,408 10,652 5,133
Amortization of intangible assets 649   652   908   2,862   3,302  
Non-GAAP operating income $ 1,142   $ 2,399   $ 651   $ 6,994   $ 4,605  

Operating Margin Reconciliation:
GAAP operating margin (8.6 %) (1.8 %) (4.2 %) (3.9 %) (2.9 %)
Stock based compensation expense 9.7 % 5.8 % 3.6 % 6.3 % 3.9 %
Amortization of intangible assets 1.4 % 1.5 % 2.3 % 1.7 % 2.5 %
Non-GAAP operating margin 2.5 % 5.5 %

1.7
% 4.1 % 3.5 %

Net Income (Loss) Reconciliation:
GAAP net loss $ (4,346 ) $ (1,019 ) $ (2,116 ) $ (8,210 ) $ (5,322 )
Stock based compensation expense 4,372 2,543 1,408 10,652 5,133

Amortization of intangible assets
649   652   908   2,862   3,302  
Non-GAAP net income $ 675   $ 2,176   $ 200   $ 5,304   $ 3,113  

Non-GAAP Diluted Net Income per share
$ 0.01 $ 0.05 $ $ 0.12 $ 0.07

Shares used in Computing non-GAAP Net Income per Share Reconciliation:
Diluted shares:
Weighted-average shares outstanding used in calculating GAAP diluted net loss per share 45,645 14,266 10,706 20,563 9,933
Additional dilutive securities for non-GAAP income 6,963 5,435 4,402 5,176 4,431
Conversion of convertible preferred stock and other upon IPO   25,060   27,201   19,837   27,201  
Weighted-average shares outstanding used in calculating non-GAAP diluted net income per share 52,608   44,761   42,309   45,576   41,565  
 
 
INFOBLOX INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
 
As of July 31
2012     2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 156,613 $ 42,207

Accounts receivable, net of allowances of $544 at July 31, 2012 and $539at July 31, 2011
26,819 20,683
Inventory 2,560 1,506
Deferred tax assets 1,577 1,606
Prepaid expenses and other current assets 4,159   3,832  
Total current assets 191,728 69,834
Property and equipment, net 6,498 5,087
Intangible assets, net 7,817 10,679
Goodwill 32,726 32,726
Restricted cash 3,803 732
Other assets 411   959  
TOTAL ASSETS $ 242,983   $ 120,017  
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 11,607 $ 9,499
Accrued compensation 10,295 6,985
Deferred revenue, net 56,184   44,094  
Total current liabilities 78,086 60,578
Deferred revenue, net 20,483 17,905

Deferred tax liability
1,494 1,537
Convertible preferred stock warrant liability 398
Other liabilities 845   1,125  

TOTAL LIABILITIES
100,908   81,543  

Convertible preferred stock, $0.0001 par value per share—no sharesauthorized as of July 31, 2012, 85,128,977 shares authorized as of July 31,2011; none and 80,512,394 shares issued and outstanding as of July 31, 2012and 2011
  107,506  
STOCKHOLDERS’ EQUITY (DEFICIT):

Convertible preferred stock, $0.0001 par value per share—5,000,000 sharesauthorized as of July 31, 2012; no shares authorized as of July 31, 2011; noshares issued or outstanding as of July 31, 2012 and July 31, 2011

Common stock, $0.0001 par value per share—150,000,000 shares authorized;45,737,770 and 11,038,704 shares issued and outstanding as of July 31, 2012and 2011
5 1
Additional paid-in capital 250,206 30,893
Accumulated deficit (108,136 ) (99,926 )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 142,075   (69,032 )
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 242,983   $ 120,017  
 
 
INFOBLOX INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Year Ended July 31
2012     2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,210 ) $ (5,322 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation 10,652 5,133
Depreciation and amortization 5,700 5,094
Change in fair value of convertible preferred stock warrant liability 391 133
Excess tax benefits from employee stock plans (47 ) (84 )
Deferred income taxes (14 )
Changes in operating assets and liabilities:
Accounts receivable, net (6,136 ) (7,513 )
Inventory (1,054 ) 77
Prepaid expenses, other current assets and other assets 550 (2,257 )
Accounts payable and accrued liabilities 1,854 4,370
Accrued compensation 3,310 2,096
Deferred revenue, net 14,668 18,924
Other liabilities (280 ) 851  
Net cash provided by operating activities 21,384   21,502  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,962 ) (4,786 )
Increase in restricted cash (3,400 ) (31 )
Business acquisitions, net of cash acquired (1,972 )
Purchase of intangible assets   (1,000 )
Net cash used in investing activities (7,362 ) (7,789 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net of offering costs 98,425
Proceeds from issuance of common stock under the employee stock plans 1,912 1,020
Excess tax benefits from employee stock plans 47   84  
Net cash provided by financing activities 100,384   1,104  
NET INCREASE IN CASH AND CASH EQUIVALENTS 114,406 14,817
CASH AND CASH EQUIVALENTS—Beginning of year 42,207   27,390  
CASH AND CASH EQUIVALENTS—End of year $ 156,613   $ 42,207  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Purchases of property and equipment not yet paid $ 287   $  
Initial public offering costs not yet paid $ 235   $  
Change in liability due to vesting of early exercised stock options, net $ 221   $ 52  
Cash paid for income taxes, net $ 120   $ 1,018  
Cash purchase consideration for SolSoft acquisition held in escrow as restricted cash $   $ 230  

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