Expand / Collapse search
Watch TV
Menu

Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset. Powered and implemented by FactSet Digital Solutions.  Legal Statement.

This material may not be published, broadcast, rewritten, or redistributed. ©2024 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Markets
Published | Updated

Box Inc.'s Growth Accelerates

Though shares of cloud storage provider Box (NYSE: BOX) tumbled after the company's second-quarter earnings release due to a slight miss on management's third-quarter guidance, there were actually some notable trends in Box's second-quarter results. The record quarter featured an accelerating revenue growth rate, improvements in free cash outflow and operating margin, and more.

Here's a close look at some of the most important insights from the quarter.

The raw numbers

Box's first-quarter revenue increased 21% year over year to $148 million. This growth was fueled by a 14.5% year-over-year increase in paying customers and strong attach rates for add-on products. Notably, Box's 21% revenue growth was an acceleration from its 20% revenue growth in Q1.

For some context, this growth is still slower than Dropbox's (NASDAQ: DBX) 27% year-over-year growth in its most recently reported quarter, despite Dropbox's much higher quarterly revenue of $339.2 million.

Demonstrating how increased scale is helping Box's fundamentals improve, the company's net loss narrowed from $39.3 million in the year-ago quarter to $38.3 million. Box's non-GAAP net loss improved from $15.2 million to $7.4 million, translating to a third-quarter non-GAAP loss per share of $0.05.

Highlights

  • Box's customer churn during the period remained low, at 4.5%, highlighting the company's resilience amid rising competition from Dropbox and other competitors.
  • Box's customer retention rate, which is equal to the percentage of total account value retained from existing customers and includes customer value expansion, was a "best-in-class" 108%, the company said.
  • Customers who had $5,000 or more in total account value 12 months ago saw an average increase in total account value of 12% year over year.
  • Box's non-GAAP operating margin improved to negative 4% when measured by Box's recently adopted ASC Topic 606 revenue recognition standards, or negative 6% based on last year's standards. This is up from negative 12% in the year-ago quarter.
  • Free cash flow was negative $10.3 million, up from negative $15 million in the year-ago quarter.

What now

While Box's second-quarter results were solid, management's weaker-than-expected outlook for Q3 seems to have worried some investors. Guidance for $154 million to $155 million in revenue implies 19.1% to 19.9% year-over-year growth, signaling a deceleration in revenue growth. In addition, management's guidance for a non-GAAP loss per share between ($0.08) and ($0.07) represents a wider loss sequentially.

Despite the Street's negative response to the quarter, Box CEO Aaron Levie is optimistic about the company's future, saying:

10 stocks we like better than BoxWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Box wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.