Infoblox Sees Rising Demand For Lineup Of IT Solutions

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In the 21st century version of the Wild West, the villain is not a gunslinger with a black hat, but a tech wizard sitting behind a keyboard trying to wreak havoc on computer systems.

You don't hail the sheriff and his posse to combat cybervillains. You contact companies that specialize in solutions that help clients secure their systems and networks.

One such company,Infoblox ( BLOX ), has seen a steady rise in business thanks to increasing demand for its automated network control solutions.


Infoblox provides a range of information technology products and services, from communications network appliances that manage Internet addresses to solutions that help network administrators identify and control different types of devices on the network.

The company's appliances are designed to help IT departments manage complex, related group of technologies that fall under the umbrella of "DDI." That stands for DNS, or domain name system; DHCP, or dynamic host configuration protocol; and IPAM, or Internet protocol address management.

Managed Networks

Customers call on Infoblox to help them better manage connected devices and online traffic and to battle the increasingly sophisticated nature of security attacks.

These tools are becoming more important as companies look to get a better handle on large and complex systems. Infoblox has established itself as a leader in helping them do so.

"The company has built a strong technical lead in the IP Address Management (IPAM) market, along with a diverse business model," Alex Kurtz, analyst at Sterne Agee, noted in a recent report initiating coverage on Infoblox.

IT departments have traditionally managed their Internet addresses with their own tools or by using softwareMicrosoft ( MSFT ) provides for database servers. Infoblox also competes against network appliance sellers BlueCat Networks,BT Group ( BT ) andAlcatel-Lucent ( ALU ).

Infoblox has responded to increasing demand by continuing to roll out new solutions designed to help customers protect themselves from security threats.

In June, the company introduced solutions that help IT teams gain better visibility and control over their network security. One offering, the Infoblox DNS Firewall, is a malware protection solution now available on its carrier-grade 4030 DNS Caching Appliance.

In addition, Infoblox introduced new DHCP Fingerprinting technology designed to help network administrators identify and control the device types that are on the network without the need for network discovery or on-device agents.

The Infoblox DHCP Fingerprinting technology lets network administrators see device type information, such as iOS or Android devices or a Linksys router, for all DHCP connected devices on their networks. They can then take action or create policies based on the device type.

These kinds of products play into the desire on the part of network administrators and others to exert more control over their systems.

"Customers are increasingly recognizing the mission-critical importance of DNS/DCHP, and are recognizing the need for a bulletproof management and security system for these assets," Needham & Co. analyst Alex Henderson noted following Infoblox's fiscal third quarter earnings report.

Rising demand for Infoblox's technology and solutions is evident in its recent financial growth. During the first three quarters of fiscal 2013, which ended in July, the company grew quarterly sales at least 26%. It also rang up strong earnings each quarter.

During its fiscal third quarter ended in April, Infoblox posted earnings of 11 cents a share, up from 5 cents the prior year and a nickel above consensus analyst views. Revenue gained 34% to $58 million, topping estimates for $56 million.

Product revenue in the quarter was $33.6 million, up 37% from a year earlier and 58% of total revenue. Service and support revenue came in at $24.4 million, up 30% from the prior year and 42% of total revenue.

Infoblox gets about two-thirds of its revenue from the Americas. Another 23% comes from Europe, the Middle East and Africa. The rest comes from the Asia-Pacific region.

The company's strong recent financial performance comes despite concerns that weakness in China will slow overall IT spending.

Economic Fallout

Infoblox officials addressed those concerns in a fiscal Q3 conference call with analysts, though they also sounded upbeat about the company's prospects.

"We're clearly aware of the concerns on the economy and its impact on overall IT spending," Chief Financial Officer Remo Canessa said. "While we're not taking these concerns lightly, we believe that the compelling value proposition from our automated network control solution places Infoblox in a position where it can deliver continued growth."

One thing working in Infoblox's favor is that the company is still in the early stages of adoption for its core DDI products.

"As the market matures and DDI solutions become a key part of IT budgets, and Infoblox's security products resonate in the market, we should start to see greater demand-pull and potential revenue acceleration," UBS analyst Amitabh PassiPassi noted.

Wall Street seems pretty upbeat about Infoblox's growth prospects. The company's stock price touched a record high of 33.23 on July 30. Shares have more than doubled since debuting at 16 in April 2012.

Infoblox is due to report fiscal Q4 results in early September. Analysts polled by Thomson Reuters expect earnings of 9 cents a share, up from 1 cent the previous year.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Investing Ideas

Referenced Stocks: ALU , BLOX , BT , MSFT

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