Box looks to woo Wall Street with its positive cash flow story

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Facing exclusion with data

Like Box’s last quarterly check-in, the company once again touted that it had free cash flow in the first quarter this year as part of its Q1 earnings report today — a signal that Wall Street may be looking for as a barometer of its future health as a company.

Box in the last quarter said it would likely lose between 14 cents and 15 cents per share, though it looks like it came above its own expectations with a loss of 13 cents per share. The company also came in above revenue expectations by bringing in around $117 million, up 30 percent from the first quarter last year. Wall Street was expecting a loss of 14 cents per share on revenue of around $115 million.

For the second quarter, Box said it expects to lose between 13 cents and 12 cents per share, also roughly in line with analyst expectations. It said revenue should come in between around $121 million and $122 million, also in line with what Wall Street seeks. After tuning down its expectations last quarter, it looks like it’s back in what investors expect  going forward. For an enterprise company where reliable, predictable growth is valuable, that’s a good sign, and it showed in its after-hours performance as the stock rose 5 percent.

In Box’s last quarterly report, CEO Aaron Levie touted that the company had become “free cash flow positive,” a signal that Box may be en route to being a profitable and well-established enterprise collaboration service. In the face of companies like Dropbox also claiming that it’s cash flow positive, Box may be under more pressure than normal to deliver results to investors as a publicly traded company. Dropbox also said it hit a $1 billion revenue run rate earlier this year.

Inevitably the comparisons are going to be drawn between Dropbox and Box as the two companies increasingly clash in enterprise services and try to woo the largest corporations. Dropbox, which has traditionally taken a bottom-up approach beginning with a consumer, has found itself dealing with a comparable to Box — which has more or less always targeted the big whale enterprises.

Despite a potential looming threat, Box has enjoyed a nice run in the past year as its stock has risen around 65 percent — up around 35 percent this year alone as it looks to position itself as a more established and reliable enterprise offering, which should entice investors. As it heads toward being more profitable, that opens up the opportunity to either buy its way into new spaces or start returning that capital to investors in the form of dividends or buybacks (the latter of which gives them an obvious edge over Dropbox).

Update: This story previously stated Box expected Q2 revenue to be between $122 million and $123 million. Box expects Q2 revenue to be between $121 million and $122 million.