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Infoblox Inc. (BLOX)

F2Q13 Earnings Call

February 21, 2013 4:30 pm ET


Jane Underwood – Senior Director-Investor Relations

Robert Thomas – President and Chief Executive Officer

Remo Canessa – Chief Financial Officer


Sanjit Singh – Wedbush Securities, Inc.

Jonathan Ruykhaver – Stephens Inc.

Justin Jordan – Goldman Sachs

Kimberly A. Watkins – Morgan Stanley & Co. LLC

Amitabh Passi – UBS Securities LLC

Erik Suppiger – JMP Securities



Ladies and gentlemen, thank you for standing by. Welcome to the Infoblox Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to our host, Ms. Jane Underwood. Please go ahead.

Jane Underwood

Good afternoon, and thank you for joining us to discuss Infoblox’s financial results for the second quarter of fiscal 2013. With me on today’s call are Robert Thomas, our President and Chief Executive Officer; and Remo Canessa, our Chief Financial Officer.

By now, everyone should have access to our earnings announcements, which we released this afternoon. This announcement may also be found on our website at www.infoblox.com in the investor relations section.

Before I turn the call over to Robert, let me remind you that the presentation we’ll be making today includes forward looking statements. These statements and other comments are not guarantees of future performance, but rather are subject to risks and uncertainties. Our actual results may differ significantly from those projected or suggested in any forward looking statements.

For a more complete discussion of the risks and uncertainties that could impact our future operating results and financial condition, please see our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on December 4, 2012.

For the sake of clarity, unless otherwise noted, all numbers we will talk about today will be on an adjusted non-GAAP basis. Please refer to the tables in our press release in the investor relations portion of our website for a reconciliation of GAAP to the non-GAAP numbers we will be discussing.

Now, I’d like to turn the call over to Robert.

Robert Thomas

Thank you, Jane. Good afternoon. Infoblox delivered an outstanding second quarter, achieving record top line results. Revenue drew to $54.4 million, up 32% year-over-year and 10% sequentially. Product revenue increased 31% year-over-year and our services and support revenue was up 32% year-over-year.

All major geographic regions performed at or above the expectations and we continued a high rate of new customer acquisition. In the quarter we saw healthy growth from NetMRI appliances, which increased 24% year-over-year. We also reported solid profitability in the quarter. The total gross margin was at 80%, operating margin at 7% and earnings per share at $0.06. From a products perspective, we introduced two new security solutions, Trinzic 100 Network Edge appliance. These three new products expand our total addressable market and to create more sales opportunities within our existing customer base. These products also deliver on our strategy to create a central control point within our customer’s networks for greater efficiency and security.

I will further discuss these new products a little later on the call. We also noticed analysts and investors about the size and penetration of the DDI market. We believe the market is significantly underpenetrated and the need for commercial grade DDI solutions is gaining strong momentum. We are very confident that there is tremendous growth ahead for us in this market. Our leadership position and customers deployments and our pipeline support these beliefs.

Now, I’d like to turn the call over to Remo to further discuss our financial results.

Remo Canessa

Thank you, Robert. I would like to remind everyone that the results I will be discussing are non-GAAP financial results, and exclude stock based compensation expenses, amortization of intangibles, and the tax impact of these adjustments. All share counts that I’ll be providing will be on a fully diluted weighted average share basis.

We are very pleased to report another strong quarter. Revenue in the quarter grew to $54.4 million which represents a 32% increase over the January quarter last year and a 10% increase over the October quarter. Product revenue in the quarter was $30.8 million or 57% of total revenue, which increased 31% from the January quarter last year and was up 14% from the October quarter.

Service and support revenue was $23.6 million or 43% of total revenue, an increase of 32% over the January quarter last year and 5% over the October quarter. The increase in our service support revenue is primarily due to our growing install base of customers with prepaid support contracts that amortize over the service period.

From a geographic perspective, in the quarter Americas grew 36% over the January quarter last year and 5% over the October quarter, representing approximately 63% of total revenue. EMEA revenue increased 35% over the January quarter of last year and 27% over the October quarter representing approximately 27% of revenue.

APAC revenue increased 2% from the January quarter last year and 1% over the October quarter, representing approximately 10% of revenue. Product gross margin was 78% in the January quarter compared with 80% in the January quarter last year and 80% in the October quarter. As we have discussed in the past, virtually all of our DDI appliances are in the new platform which carry a lower gross margin.

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