Box (BOX) Up 11.4% Since Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Box, Inc. BOX. Shares have added about 11.4% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is BOX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Box reported fiscal fourth-quarter 2018 adjusted loss was 6 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. Moreover, loss was 54% narrower on a sequential basis and 40% narrower than the year-ago quarter. The reported loss was also lower than the guided range.

Revenues came in at $136.7 million, in line with the consensus mark. Revenues were within the guided range, increasing 7% sequentially and 25% year over year. The company’s top-line growth was impacted by slowing growth in paid customers, partially offset by growing add-on products and positive contribution from its strategic partnerships.

During the fourth quarter, the company had 82K paid customers, up from 80K in the third quarter.

Box is currently working on enriching its cloud content management and AI platforms. It has made some notable partnerships with Apple and Microsoft. The company’s rich technology partner ecosystem will continue to be a strong driving force behind its growth and we expect this to continue going forward.

Let’s delve deeper into the numbers.

Billings and Deferred Revenues

Billings were $204.6 million, up 28% year over year. Deferred revenues were $320.9 million, up 33% from the year-ago quarter.

Operating Results

Box’s operating expenses (general and administrative, sales and marketing, research and development) of $133.9 million increased 15% year over year.

On a non-GAAP basis, the company recorded operating loss of $7.5 million compared with $12.7 million a year ago. Operating margin was (5%) compared with (12%) in the year-ago quarter.

On a GAAP basis, the company recorded net loss of $32.7 million or loss of 24 cents per share compared with net loss of $36.9 million or loss of 28 cents per share a year ago.

Balance Sheet and Cash Flow

As of Dec 31, 2017, cash and cash equivalents, and accounts receivables balance were $208.1 million and $162.1 million, respectively, compared with $172.9 million and $95.9 million as of Oct 31, 2017.

Long-term debt was $40 million, flat with the previous quarter. During the quarter, cash provided by operations was $48.7 million and free cash flow was $13.3 million.

Outlook

For the first quarter of fiscal 2019, Box expects revenues between $139 million and $140 million. On a non-GAAP basis, the company projects loss per share in the range of 9-8 cents. GAAP loss per share is expected within 28-27 cents per share.

For the fiscal year 2019, the company expects revenues of $605 million at its mid-point of guidance, well below expectations of $624 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

VGM Scores

At this time, BOX has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than momentum investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Interestingly, BOX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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