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Box: Fiscal 3Q17 Financial Results

First $100 million quarter
This is a Press Release edited by StorageNewsletter.com on 2016.12.02

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(in $ million) 3Q16 3Q17 9 mo. 16 9 mo. 17
Revenues 78.7 102.8 217.7 288.7
Growth   31%   33%
Net income (loss) (55.1) (38.2) (152.6) (114.9)

Box, Inc. announced financial results for the third quarter of fiscal 2017, which ended October 31, 2016.

"In the third quarter, we delivered record revenue of $102.8 million, up 31% year-over-year, and continued to improve operational efficiencies throughout the business," said Aaron Levie, co-founder and CEO. "We reached a significant milestone with our first $100 million quarter. We also hosted our most successful BoxWorks to date and announced a new strategic partnership with Google. With our track record of product innovation and continued momentum with new and existing customers, Box is uniquely positioned to help businesses modernize how they manage information and transform how they work."

"Our results this quarter were driven by our best-in-class retention rate, strong sales execution, and increased adoption of our newer products," said Dylan Smith, co-founder and CFO. "We also demonstrated significant progress in cash flow from operations, driving a year-over-year improvement of more than $10 million, and bringing us closer to achieving positive free cash flow in the current quarter."

3FQ17 Highlights
    •    Revenue for was a record $102.8 million, an increase of 31% from the third quarter of fiscal 2016.
    •    Deferred revenue ended at $192.6 million, an increase of 36% from the third quarter of fiscal 2016.
    •    Billings were $112.4 million, an increase of 26% from the third quarter of fiscal 2016.
    •    GAAP operating loss was $37.8 million, or 37% of revenue. This compares to GAAP operating loss of $55.0 million, or 70% of revenue, in the third quarter of fiscal 2016. in the third quarter of fiscal 2017 was $17.3 million, or 17% of revenue. This compares to non-GAAP operating loss of $37.9 million, or 48% of revenue, in the third quarter of fiscal 2016.
    •    GAAP net loss per share, basic and diluted was $0.30 on 128.3 million shares outstanding, compared to $0.45 in the third quarter of fiscal 2016 on 121.8 million shares outstanding.
    •    Non-GAAP net loss per share, basic and diluted was $0.14, compared to $0.31 in the third quarter of fiscal 2016.
    •    Net cash used in operating activities totaled $6.8 million. This was a $10.5 million, or 61%, improvement compared to net cash used in operating activities of $17.3 million in the third quarter of fiscal 2016.
    •    Free cash flow was negative $10.9 million, compared to negative $37.8 million, in the third quarter of fiscal 2016.
    •    Cash, cash equivalents, and restricted cash were $194.9 million as of October 31, 2016, of which $27.1 million was restricted.

Business highlights since last earnings release
    •    Grew paying customer base to over 69,000 businesses including new or expanded deployments with enterprises such as Alexion Pharmaceuticals, the Consumer Financial Protection Bureau, Hertz, Hulu, Konica Minolta Japan, Inc., Southwest Airlines, and the U.S. Department of the Treasury.
    •    Announced a new strategic partnership with Google, including integrations with G-Suite (formerly Google Docs) and Google Springboard (enterprise search) to bring together Box's secure content management with Google's productivity applications and search capabilities.
    •    Secured approval of European Union Binding Corporate Rules, making Box one of  few companies to meet the global gold standard for processing and transferring sensitive information outside of the EU.
    •    Revealed an all new Box, which includes Box Relay, enhancements to the core product, and a new version of Box Notes. This first Box product co-developed with IBM, will make it simple for businesses to build, track and manage their workflows, drive productivity and standardize processes across the extended enterprise.
    •    Enhanced Box Governance with security classification functionality, allowing users to automatically identify sensitive content in Box and enforce security policies based on a predetermined confidentiality level.
    •    Hosted the most successful BoxWorks to date, which attracted over 170 CIOs representing Fortune 1000 companies and featured partners like Amazon, Google, IBM, and Microsoft.

Outlook
    •    Issued Q4 FY17 guidance: Revenue is expected to be in the range of $108 million to $109 million. GAAP and non-GAAP basic and diluted earnings per share is expected to be in the range of ($0.33) to ($0.32) and ($0.14) to ($0.13), respectively. Weighted average basic and diluted shares outstanding is expected to be approximately 130 million.
    •    Raised full year FY17 guidance: Revenue is expected to be in the range of $397 million to $398 million, raised from previous guidance of $394 million to $396 million. GAAP basic and diluted earnings per share is expected to be in the range of ($1.24) to ($1.23), raised from previous guidance of ($1.30) to ($1.28). Non-GAAP basic and diluted earnings per share is expected to be in the range of ($0.60) to ($0.59), raised from previous guidance of ($0.69) to ($0.67). Weighted average basic and diluted shares outstanding is expected to be approximately 127 million.

Our Comments

Revenue in $ million
box 3FQ17

Abstracts of the earnings call transcript:

Dylan Smith, CFO:
"Third quarter billings came in at $112.4 million, representing 26% calculated billings growth and 30% adjusted billings growth year-over-year. We continue to expect calculated billings growth to trend below revenue growth in Q4 due to the shift in customer payment durations that we have discussed in previous quarters.
"We continue to win large enterprise deals including 38 deals over $100,000 versus 26 a year ago and seven deals over $500,000 versus three year ago."

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