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Box (BOX) Q2 Loss Narrower Than Expected, Revenues Beat

Zacks Equity Research
Updated

Box, Inc.’s BOX fiscal second-quarter 2019 adjusted loss was 5 cents per share, narrower than the Zacks Consensus Estimate of 6 cents per share.

Revenues came in at $148.2 million, surpassing the consensus mark of $147 million. Revenues were also ahead of the guided range, increasing 21% year over year.

Following second-quarter results, its share price declined 6.9% due to weaker-than-expected revenue guidance for fiscal third quarter. Over the past year, the stock has gained 32.9%, underperforming its industry’s growth of 41.1%.

 

 

During the second quarter, the company had 87,000 paid customers, up from 85,000 in the first quarter.

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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.

Let’s delve deeper into the numbers.

Billings and Deferred Revenues

Billings were $162.8 million, up 17% year over year. Deferred revenues were $301.5 million, up 25% from the year-ago quarter.

Operating Results

Box’s operating expenses (general &administrative, sales & marketing, and research & development) of $142.8 million increased 10.5% year over year.

On a non-GAAP basis, the company recorded an operating loss of $6.5 million compared with $14.9 million a year ago. Operating margin was (4%) compared with (12%) in the year-ago quarter.

Balance Sheet and Cash Flow

At the end of fiscal second quarter, cash and cash equivalents, and accounts receivables balance were $203.7 million and $114.8 million, respectively, compared with $217.1 million and $91million at the end of first quarter.

During the quarter, cash provided by operations was negative $1.3 million and free cash flow amounted to negative $10.3 million.

Outlook

For the third quarter of fiscal 2019, Box expects revenues between $154 million and $155 million. The Zacks Consensus Estimate is pegged at $154.8 million. On a non-GAAP basis, the company projects loss per share in the range of 8-7 cents. The Zacks Consensus Estimate is pegged at a loss of 6 cents per share. GAAP loss per share is expected within29-30 cents per share.

For fiscal 2019, the company expects revenues between $606 million and $608 million. The Zacks Consensus Estimate is pegged at $606.4 million. On a non-GAAP basis, the company projects loss per share in the range of 18-16 cents. The consensus mark is pegged at a loss of 17 cents per share. GAAP loss per share is expected within $1.02-$1.00 per share.

Box, Inc. Price, Consensus and EPS Surprise

 

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

Zacks Rank and A Stock to Consider

Currently, Box has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Paycom Software, Inc. PAYC, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Paycom Software has a long-term earnings per share growth rate of 24.8%.

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