Box Spikes 9% On Strong FQ1 Revenue Growth, Improving Margins

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Today following the bell, Box reported its fiscal first-quarter financial performance, including revenue of $65.6 million and adjusted earnings per share of negative $0.28. The street had expected Box to lose an adjusted $0.31 per share on revenue of $63.7 million.

The company had forecasted between $63 million and $64 million in revenue. The company’s shares, up sharply in regular trading, are sharply up again following its earnings beat. Roughly, this quarter is the other side of its last.

Box’s revenue grew 45 percent, compared to the year-ago quarter. The company also raised its forward guidance, potentially bolstering investor confidence in its model, and shedding, in part, criticism that the company’s current-year growth rates were lackluster.

The company’s non-GAAP operating loss during the quarter totaled $32.6 million. That figure is up slightly compared to the company’s year-ago non-GAAP operating loss of $31.3 million. However, the firm’s non-GAAP operating margin improved to -50 percent from -68 percent on a year-over-year basis.

Using normal accounting techniques, Box saw its net loss total $0.40 per share during the period.

Critically, Box burned only $7.2 million in cash during its quarter on operational costs. That figure is down sharply from $15.6 million in its sequentially preceding quarter. The company has more than $280 million in cash, down from a recent high of $330 million. The company has publicly stated that it doesn’t anticipate the need to raise new capital prior to reaching cashflow-breakeven status in its own fiscal 2017.

All told, Box showed a slowing cash burn, improving margins, and better-than-expected revenue growth. Not bad, Aaron. The company’s both non-GAAP and GAAP net losses expanded, however, during period. On a GAAP basis, a strong increase in the company’s share-based compensation costs were stiff, growing around $7 million compared to the year-ago quarter.

Looking ahead, observe the following:

Full Year FY16 Guidance: Revenue is expected to be in the range of $286 to $290 million, compared to previous guidance of $281 to $285 million. Non-GAAP operating margin is expected to be in the range of (49%) to (51%), compared to previous guidance of (50%) to (52%). Weighted average diluted shares outstanding is expected to be approximately 122 million.

The bump to revenue growth gets Box a better-looking, implied forward-PEG ratio. That and the margin improvement imply that the company can accelerate growth without sacrificing margin improvement. Given that Box’s margins in the past quarter are precisely in line with its full-year guidance, the company is not anticipating much in the way of better results in that department this year. Unless, of course, it is being conservative.

Box expects revenue of $69 million to $70 million in its current quarter.