Box (BOX) Down 11.7% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Box, Inc. BOX. Shares have lost about 11.7% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is BOX due for a breakout? 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 drivers.

Recent Earnings

Box’s fiscal first-quarter 2019 adjusted loss was 7 cents per share, narrower than the Zacks Consensus Estimate. The reported loss was lower than the guided range.

Revenues came in at $140.5 million, surpassing the consensus mark of $140 million. Revenues were above the guided range, increasing 20% year over year.

During the first quarter, the company had 85,000 paid customers, up from 82,000 in the fourth quarter.

The company’s top-line improvement was driven by growth in paid customers, growing add-on products and positive contribution from its strategic partnerships.

Box is currently working on enriching its cloud content management and AI platforms. It has made some notable partnerships with Apple (AAPL) and Microsoft (MSFT).

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 $116.7 million, up 17% year over year. Deferred revenues were $286.9 million, up 31% from the year-ago quarter.

Operating Results

Box’s operating expenses (general &administrative, sales & marketing, and research & development) of $99.1 million increased 9% year over year.

On a non-GAAP basis, the company recorded an operating loss of $9.2 million compared with $16.7 million a year ago. Operating margin was (7%) compared with (14%) in the year-ago quarter.

On a GAAP basis, the company recorded a net loss of $10 million or loss of 7 cents per share compared with the net loss of $16.7 million or loss of 13 cents per share a year ago.

Balance Sheet and Cash Flow

At the end of the fiscal first quarter, cash and cash equivalents, and accounts receivables balance were $217.1 million and $91.0 million, respectively, compared with $208.1 million and $162.1 million at the end of the fourth quarter.

Long-term debt was $40 million, flat with the previous quarter. During the quarter, cash provided by operations was $18.4 million and free cash flow amounted to $7.3 million.

Outlook

For the second quarter of fiscal 2019, Box expects revenues between $146 million and $147 million. On a non-GAAP basis, the company projects loss per share in the range of 6-5 cents. GAAP loss per share is expected within 28-27 cents per share.

For fiscal 2019, the company expects revenues between $603 million and $608 million. On a non-GAAP basis, the company projects loss per share in the range of 19-16 cents. GAAP loss per share is expected within $1.07-$1.04 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter.

Box, Inc. Price and Consensus

 

Box, Inc. Price and Consensus | Box, Inc. Quote

VGM Scores

At this time, BOX has a strong Growth Score of A and a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest 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.

Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. 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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