BLOX is a network management software company founded in 1999 that has grown through acquisitions. It provides network automation and security products including Trinzic DDI and NetMRI. While revenue has grown 33% annually, the company has a history of net losses and operates in a competitive market. BLOX has over 600 employees and 1/3 of Fortune 500 companies use its products.

1. By Witisada Wattananimitgul
March 30, 2013

2.  Founded in 1999 in Chicago by Stuart Bailey
 2003 – Moved to Santa Clara
 2010 – Acquired Netcordia to broaden its range
of network infrastructure automation products
 Jan 2011 – Acquired Patents from Avaya
 April 2011 – Acquired SolSoft from LogLogic
 April 2012 – IPO
 Service 6,000 customers in 25 countries
 1/3 Fortune 500 companies use products and
services from BLOX

3.  Partnership with Cisco Systems, F5 Networks,
Microsoft, Riverbed Technology, VMware,
FireEye for joint product development
 Rely on intellectual property (patent,
trademark and copyright laws, license
agreements, etc)
 28 patents issued in the U.S. and 7 in foreign
jurisdictions (duration of patents ~17 years)
 603 employees, 140 in R&D
 33% revenue growth
 Positive operating cash flows of $209.3 million
 Gross profit margin of 78.6%

4. “We offer a solution that combines real-time IP address management with the
automation of key network control and network change and configuration
management processes through a range of purpose-built physical and
virtual appliances that are integrated with our proprietary software and
provide varying levels of performance targeted to meet specific end
customer needs.”
DNS, DHCP, and IP Address Management
2 Family of Products
 Trinzic DDI
 NetMRI

5. Trinzic DDI
 Automates key network
control processes and is
augmented with
optional functionality
to protect against
security vulnerabilities
related to these
network control
processes, such as DNS-
based malware attacks
NETMRI
 Automatically comparing each
change against policies, NetMRI
proactively identifies violations
and streamlines the audit
process with less time and
manual effort
 Helps users control and maintain
consistent networks for both
internal best practices/gold
standards and external
compliance mandates including
PCI, NSA, SANS, DISA and others

6.  Undervalued
 Much room for growth in the company and in the
market
 Unique products and services

7.  $19.56 as of Friday, March 29, 2014
 Market Cap: 1.05B
 52 week Range: $17.10 – $48.97
Operating Multiples Average
EV/Revenue 5.08030874 0.592548398 2.298673698 3.462695227 2.117972
EV/EBIT
-
364.3381134 -0.842976044 5.543212861 419.795039 141.4984
EV/EBITDA 44.66686201 -0.901335573 4.914482286 15.9992011 6.670783
EV/ Unlevered FCF 20.08633368 -0.760138394 6.071127043 11.66700983 5.659333
P/E
-
247.3899228 7.804477046 12.32178608 -250.4429055 -76.7722
In Thousands BLOX HPQ IBM RVBD

8.  Network Management has become
increasingly crucial
 DNS servers vulnerable to hacking attacks
 Rapid Growth in Numbers and Types of
Connected Devices
 Rapid Growth in Number of Connected
Software Applications
 Proliferation of Virtualization and Cloud
Computing
 Adoption of IPv6

10.  Dynamic Network
Services
 BlueCat Networks
 SolarWinds
 EMC
 BMC
 HP
 IBM

11. Consolidated Statements of Operations
Data:
Year Ended July 31,
2013 2012 2011
(In thousands)
Net revenue:
Products and licenses $ 128,203 95,012 80,274
Services 96,841 74,234 52,561
Total net revenue 225,044 169,246 132,835
Cost of revenue (1):
Products and licenses (1) 29,228 21,778 16,652
Services 19,025 15,342 12,187
Total cost of revenue 48,253 37,120 28,839
Gross profit 176,791 132,126 103,996
Operating expenses:
Research and development (1) 43,056 36,624 29,605
Sales and marketing (1)(2) 112,385 86,474 67,390
General and administrative (1) 24,488 15,548 10,831
Total operating expenses 179,929 138,646 107,826
Loss from operations (3,138) (6,520) (3,830)
Other expense, net (618) (946) (690)
Loss before provision for income taxes (3,756) (7,466) (4,520
Provision for income taxes 650 744 802
Net loss $ (4,406) (8,210) (5,322)

12.  History of losses, may not be profitable
 Compete in a highly competitive markets
 Significant majority of products and license
revenue from sales of Trinzic DDI family…but
what if sales slows?