Box, Inc. (BOX - Snapshot Report) reported first-quarter fiscal 2016 loss of 39 cents per share, wider than the Zacks Consensus Estimate of 37 cents per share loss. Adjusted loss per share excludes one-time items but includes stock-based compensation expense.
Nevertheless, share price surged nearly 10% in after-hours trading driven by strong growth in billings and solid guidance.
Revenues
Box’s revenues of $65.6 million increased 44.8% year over year. Reported revenues were above management’s guided range of $63–$64 million and beat the Zacks Consensus Estimate of $64 million.
Billings in the reported quarter were $69.8 million, surging 58% from the year-ago quarter. The company added above 2,000 customers, bringing the total to more than 47,000 globally.
Margins
Reported gross margin was 73.9%, down 570 basis points from 79.6% in the comparable year-ago quarter.
Box incurred operating expenses of $95.1 million, up 28.7% from the year-ago quarter figure of $73.9 million. As a percentage of sales, general & administrative as well as sales & marketing expenses decreased from the year-ago quarter, while research & development expenses increased. As a result, reported operating loss was 71.1% versus 83.3% a year ago.
Net Income
On a GAAP basis, Box recorded net loss of $47.3 million (or loss of 40 cents per share) compared with loss of $38.6 million (or $2.81 a share) in the year-ago quarter.
On a pro-forma basis, Box generated net loss of $46.0 million compared with $37.5 million in the year-ago quarter. Pro-forma loss came in at 38 cents compared with $2.70 per share in the year-ago period.
Balance Sheet
Box ended the quarter with cash and investments balance of $284.0 million versus $330.4 million in the previous quarter. Accounts receivables were $38.6 million versus $54.2 million in the prior quarter.
Deferred revenues were $111.5 million versus $107.9 million in the last quarter.
In the first quarter, cash generated from operations was ($32.2) million and capital expenditure was $9.9 million.
Guidance
For fiscal second quarter, management expects revenues in the range of $69 million to $70 million. Analysts polled by Zacks expect revenues to be $66 million, below the guided range. Non-GAAP operating margin is expected in the range of (49%) to (51%), while share count is likely to be nearly 120 million.
Also, for fiscal 2016, management expects revenues in the range of $286–$290 million, up from $281–$285 million. Non-GAAP operating margin is expected in the range of (49%) to (51%) versus the (50%) to (52%) range, while share count is expected to be roughly 122 million.
Our Recommendation
Box reported decent fiscal first-quarter results with the top line exceeding the Zacks Consensus Estimate.
We remain positive about Box’s market position, strong billings growth, new product launches, continued innovation and strong balance sheet.
Box is a cloud-storage company which went public earlier this year. The company has been continuously investing in security, compliance and administrative technology, and plans to hire more sales personnel. These investments will enable Box to gain from the increasing adoption of cloud computing technologies across enterprises and the need for secure collaboration.
In addition, in the reported quarter, the company acquired data security startup, Subspace, to offer content securely to all devices. The deal will help the company to expand its reach in bigger enterprises where data security is a top priority.
However, continuous investments made on research and development activities could take a toll on the company’s margins and profits, going ahead.
Currently, Box has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Attunity, Ltd. (ATTU - Snapshot Report), Synchronoss Technologies, Inc. (SNCR - Snapshot Report) and TeleCommunication Systems Inc. (TSYS - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).
Comments
Log in or sign up to join the conversation.