Box (BOX) Q3 Loss Narrower Than Expected, Revenues Beat

Box, Inc.’s (NYSE:BOX) fiscal third-quarter 2019 adjusted loss was 6 cents per share, narrower than the Zacks Consensus Estimate of 7 cents per share.

Revenues came in at $155.9 million, surpassing the consensus mark of $155 million. Revenues were also ahead of the guided range, increasing 21% year over year.

During the fiscal third quarter, the company expanded its paying customer base to more than 90,000 organizations, up from 87,000 in the fiscal second quarter.

The company’s top-line improvement was driven by growth in paid customers, growing add-on products and positive contribution from its strategic partnerships.

Box is currently working on enriching cloud content management and AI platforms. It has made some notable partnerships with Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) .

The company’s rich technology partner ecosystem will continue to be a strong driving force behind its growth.

Following third-quarter results, Box’s share price increased 7.04% in after-hour trading on the back of better-than-expected results. Also, the cloud storage firm raised its full-year revenue guidance. However, on a year-to-date basis, the stock has lost 9.2% compared with the industry’s decline of 0.3%.

Let’s delve deeper into the numbers.

Billings and Deferred Revenues

Billings were $155.6 million, up 10% year over year. Deferred revenues were $301.2 million, up 19% from the year-ago quarter.

Operating Results

Box’s operating expenses (general & administrative, sales & marketing, as well as research & development) of $150.7 million increased 9.7% year over year.

On a non-GAAP basis, the company recorded an operating loss of $7.7 million compared with $17 million a year ago. Operating margin was (5%) compared with (13%) in the year-ago quarter.

Balance Sheet and Cash Flow

At the end of fiscal third quarter, cash and cash equivalents, and accounts receivables balance were $200.1 million and $105.7 million, respectively, compared with $203.7 million and $114.8 million at the end of the fiscal second quarter.

During the quarter, cash provided by operations was $6.8 million and free cash flow amounted to negative $4.1 million.

Outlook

For the fourth quarter of fiscal 2019, Box expects revenues between $163.5 million and $164.5 million. The Zacks Consensus Estimate for the same is pegged at $164.2 million. On a non-GAAP basis, the company projects earnings per share in the range of 2-3 cents. The corresponding Zacks Consensus Estimate is pegged at 2 cents per share. GAAP loss per share is expected within 21-20 cents.

For fiscal 2019, the company expects revenues between $608.2 million and $609.2 million. The Zacks Consensus Estimate for the metric is pegged at $607.5 million. On a non-GAAP basis, the company projects loss per share in the range of 16-15 cents. The consensus mark for the same is pegged at a loss of 18 cents per share. GAAP loss per share is expected within $1.02-$1.00.

Zacks Rank and A Stock to Consider

Currently, Box has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Alteryx, Inc. (NYSE:AYX) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alteryx has a long-term earnings per share growth rate of 8%.

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