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Infoblox (BLOX) Surges on Q1 Revenue Beat, Loss Narrows

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Shares of Infoblox Inc.BLOX went up a whopping 22% after the company reported encouraging first quarter fiscal 2016 results on Nov 30, 2015.

The company reported adjusted loss (excluding amortization of intangibles but including stock-based compensation expenses) of 3 cents per share, which compared favorably with the Zacks Consensus Estimate of a loss of 12 cents. Moreover, the loss narrowed from 16 cents loss per share reported in the year-ago quarter.

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Quarter Details

Infoblox's first quarter revenues not only increased 40.9% year over year to $94 million but also came in ahead of the Zacks Consensus Estimate of $85 million. The year-over-year improvement was attributed to better-than-expected product revenue growth. Also, higher demand for DDI and DNS solutions drove quarterly revenues.

Based on segments, Products and licenses revenues were $50.9 million, up 61.4 % year over year. The year-over-year increase was led by product upgrades and security. Revenues from Services came in at $43.2 million, up 22.6% year over year, primarily due to a larger installed base of customers and an increase in subscription revenues.

Infoblox's adjusted gross margin was up 194 basis points from the year-ago quarter to 79.9%, primarily due to higher product and service gross margins coupled with a higher revenue base.

The company's operating expenses increased 23.9% from the year-ago quarter. The increase was primarily due to higher research and development, sales and marketing and general and administrative expenses. As a result, the company reported an adjusted loss of $334 million compared with $8.58 billion loss reported in the year-ago quarter.

Infoblox's adjusted net loss (excluding amortization of intangibles but including stock based compensation expenses) came in at $1.28 billion or 3 cents per share compared with a loss of $9.26 billion or 16 cents per share reported in the year-ago quarter.

Infoblox exited the first quarter with cash and cash equivalents and short-term investments of $350.1 million compared with $330.8 million in the previous quarter. Receivables were $47.2 million compared with $45.9 million in the prior quarter. The company had no long-term debt during the quarter.

Infoblox reported cash flow from operations of $19.7 million for the quarter. The company during the quarter authorized a $100 million share repurchase program (included in the figure $50 as accelerated share repurchase).

Outlook

For the second quarter of fiscal 2016, Infoblox expects total revenue in the range of $93 million to $95 million (mid-point $94 million). The Zacks Consensus Estimate is pegged at $94 million. Non-GAAP gross margin is expected to be in the range of 78% to 79%. Non-GAAP operating margin is expected to be in the range of 12% to 14%. The company expects non-GAAP earnings for the second quarter of fiscal 2016 in the range of $12 cents per share to $14 cents per share (excluding stock based compensation expenses).

For fiscal 2016, the company expects total revenue in the range of $370 million to $380 million (mid-point $375 million). The Zacks Consensus Estimate is pegged at $369 million. Non-GAAP operating margin is expected to be in the range of 10% to 12%.

Conclusion

Infoblox reported better-than-expected first quarter 2016 results. Year-over-year comparasions were favourable, primarily driven by product revenue growth. Also, the company provided an encouraging second quarter and fiscal 2016 guidance.

Furthermore, better-than-expected demand for DDI and DNS solutions, product upgrades and new customer additions during the reported quarter were the other positives.

However, competition from companies likes International Business Machines Corporation IBM and H-P Inc. HPQ remains a headwind.

Currently, Infoblox has a Zacks Rank #3 (Hold). A better-ranked stock worth considering is VASCO Data Security International Inc. VDSI , which has a Zacks Rank #1 (Strong Buy).

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


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

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