Box down 7% despite “strong quarter”

Enterprise cloud storage company Box posted its first-quarter earnings after the bell on Wednesday. Despite beating analyst expectations on revenue and earnings per share, the stock dropped 12.89 percent then recovered to an 8 percent loss in after-hours trading after investors were disappointed with the billings numbers.

CEO Aaron Levie told TechCrunch that the reason the $75.9 million in billings missed the mark is because of the seasonality of its business. “Larger customer transactions are happening in Q2 and beyond,” said Levie. Wall Street was expecting the billings to come in closer to $84.1 million.

The rest of Box saw improvement. Revenue was up 37 percent year-over-year and beat expectations at $90.2 million, instead of the $88.7 million expected. Losses also narrowed, with an adjusted loss per share of 18 cents, a 10-cent improvement from last year. Wall Street expected Box to be down 24 cents.

User growth for box was relatively high for Q1 2017 and just barely stands out. The company added Airbnb and GEICO along with 5,000 other clients this quarter and 3,000 and 4,000 customers in the third and fourth quarters of last year, respectively. In addition, Box launched new products in the first quarter, including Box Zones, to improve its international adoption. According to Box, its Fortune 500 user base remains at 59 percent for the second consecutive quarter.

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Levie also told TechCrunch that he’s excited that the team “got a key certification win in the federal government, which allows us to go sell to large government agencies.”

Though Box has recovered slightly in after-hours trading, the market is still searching for a long-term profitability strategy for the company. Wednesday, one of Box’s top engineering leaders and former Google Docs creator, Sam Schillace, announced that he would return to Google.

It has been a difficult run for Box in the public markets, since it went public early last year. While many tech stocks have struggled, the company is currently trading beneath its IPO price from last year.

Box expects $94 million to $95 million in revenue for Q2 2017 with FY 2017 predicted to fall between $391 million and $395 million.

John Mannes contributed to this report.