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Box Revenue Surges 28% - Exceeds Expectations

September 1, 2017

Box reported financial results for the second quarter of fiscal 2018, which ended July 31, 2017. Excluding certain items, Box noted a loss of 11 cents per share with investors looking for a loss of 13 cents per share. Revenue came in at $122.9 million vs. the Street expectation of $121.7 million.

“In the past few months, we have driven significant accomplishments for Box. We hired a new Chief Operating Officer with 25 years of enterprise go-to-market experience, we expanded our partnership with Microsoft to co-sell Box with Azure, and we took an important step in reinventing content management with advanced machine learning technology,” said Aaron Levie, co-founder and CEO of Box. “We are building the only platform capable of moving the $40 billion market for content management and enterprise storage infrastructure to the cloud.”

“Enterprises around the world are recognizing the value of Box’s cloud content management solution, as evidenced by our large deal traction and rapid revenue, billings and deferred revenue growth,” said Dylan Smith, co-founder and CFO of Box. “With our large global market opportunity and best-in-class customer economics, we are well-positioned to achieve our $1 billion revenue target.”

Fiscal Second Quarter 2018 Financial Highlights

• Revenue for the second quarter of fiscal 2018 was a record $122.9 million, an increase of 28% from the second quarter of fiscal 2017.

• Deferred revenue as of July 31, 2017, was $240.8 million, an increase of 32% from July 31, 2016.

• Billings for the second quarter of fiscal 2018 were $139.5 million, an increase of 31% from the second quarter of fiscal 2017.

• GAAP operating loss in the second quarter of fiscal 2018 was $39.0 million, or 32% of revenue. This compares to GAAP operating loss of $37.9 million, or 40% of revenue, in the second quarter of fiscal 2017.

• Non-GAAP operating loss in the second quarter of fiscal 2018 was $14.9 million, or 12% of revenue. This compares to a non-GAAP operating loss of $18.0 million, or 19% of revenue, in the second quarter of fiscal 2017.


• GAAP net loss per share, basic and diluted, in the second quarter of fiscal 2018 was $0.30 on 133 million shares outstanding, compared to a GAAP net loss per share of $0.30 in the second quarter of fiscal 2017 on 127 million shares outstanding.

• Non-GAAP net loss per share, basic and diluted, in the second quarter of fiscal 2018 was $0.11, compared to non-GAAP net loss per share of $0.14 in the second quarter of fiscal 2017.

• Net cash used in operating activities in the second quarter of fiscal 2018 totaled $9.5 million. This compares to net cash used in operating activities of $4.9 million in the second quarter of fiscal 2017.

• Free cash flow in the second quarter of fiscal 2018 was negative $14.7 million. This compares to negative $8.0 million in the second quarter of fiscal 2017.

Business Highlights since Last Earnings Release

• Grew paying customer base to more than 76,000 businesses, including new or expanded deployments with leading organizations such as Cabot Energy PLC, Credit Karma, Delta Global Services, Freedom Financial Network, the Metropolitan Police Service of London, next47, a global venture capital firm backed by Siemens, ScotiaBank, and United Talent Agency.

• Announced that Box was positioned as a leader in the Content Collaboration Platforms Magic Quadrant report by Gartner.

• Strengthened the company’s position globally with the announcement of a new Chief Operating Officer, Stephanie Carullo. Ms. Carullo brings more than 25 years of experience leading and growing multi-billion dollar businesses spanning multiple markets and industries around the world.

• Announced an expanded partnership with Microsoft to jointly offer Box with Azure to enterprise customers. Box will use Azure as a strategic public cloud platform and the companies commit to shared go-to-market investments, including initiatives to co-sell Box offerings that leverage Azure. The partnership will also enable future integration between Azure’s AI and machine learning capabilities with Box’s cloud content management platform.

• Introduced Box Elements, a new set of tools for businesses of all sizes to bring the Box content experience into any application built with Box Platform.

• Launched Box Drive, the only unlimited cloud drive built for the enterprise, to power seamless collaboration streamed directly from the desktop to further simplify businesses’ shift to the cloud.

• Unveiled Box's integration with Apple's new Files app on stage at the Apple Worldwide Developers Conference.

• Announced new advanced image recognition capabilities through an integration with Google Cloud Vision. The integration represents one of Box’s first use cases of advanced machine learning to help enterprises improve workflows and drive efficiencies through more accurate discovery and deeper insights into unstructured content stored in Box.

Outlook

• Q3 FY18 Guidance: Revenue is expected to be in the range of $128 million to $129 million. GAAP and non-GAAP basic and diluted earnings per share are expected to be in the range of ($0.34) to ($0.33) and ($0.14) to ($0.13), respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 135 million.

• Full Year FY18 Guidance: Revenue is expected to be in the range of $503 million to $506 million. GAAP and non-GAAP basic and diluted earnings per share are expected to be in the range of ($1.23) to ($1.21) and ($0.46) to ($0.44), respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 134 million.

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