Box: Fiscal 1Q17 Financial Results

“First quarter revenue was strong at $90 million, representing 37% growth year-over-year. We also continued to drive operational efficiency, with GAAP and non-GAAP EPS improving by 9 and 10 cents, respectively, year-over-year,” said Aaron Levie, co-founder and CEO. “We won more than 5,000 new customers and added or expanded deployments with leading enterprises like Airbnb, Brooks Brothers and The Whirlpool Corporation. We also introduced Box Zones, achieved FedRAMP certification and launched strategic partnerships with Adobe, Cognizant and others, continuing to expand our addressable market.”

“In the first quarter, we achieved a marked improvement in cash flow from operations of negative $4.2 million and, excluding a payment related to a litigation settlement, would have achieved near breakeven cash flow from operations of negative $500,000,” said Dylan Smith, co-founder and CFO. “We are confident in our growth opportunity, driven by our product differentiation and expanding market, and we remain committed to achieving positive free cash flow in the fourth quarter of this fiscal year.”

Fiscal First Quarter Financial Highlights

• Revenue was a record $90.2 million, an increase of 37% from the first quarter of fiscal 2016.
• Deferred revenue ended at $172.2 million, an increase of 39% from the first quarter of fiscal 2016.
• Billings were $75.9 million, an increase of 9% from the first quarter of fiscal 2016. As previously announced, billings were impacted by increasing seasonality in the business and the focus on annual payment durations from multi-year prepayments, beginning this fiscal year.
• GAAP operating loss was $38.6 million, or 43% of revenue. This compares to GAAP operating loss of $46.6 million, or 71% of revenue, in the first quarter of fiscal 2016. Non-GAAP operating loss in the first quarter of fiscal 2017 was $22.7 million, or 25% of revenue. This compares to non-GAAP operating loss of $32.6 million, or 50% of revenue, in the first quarter of fiscal 2016.
• GAAP net loss per share, basic and diluted, was $0.31 on 124.9 million shares outstanding, compared to $0.40 in the first quarter of fiscal 2016 on 119.4 million shares outstanding. Non-GAAP net loss per share, basic and diluted was $0.18, compared to $0.28 in the first quarter of fiscal 2016.
• Net cash used in operating activities totaled $4.2 million, and excluding the $3.8 million payment related to the settlement of the previously announced Open Text litigation, net cash used in operating activities would have been $0.5 million. In the first quarter of fiscal 2016, net cash used in operating activities was $32.2 million, and excluding $25.0 million in restricted cash used to secure a line of credit for the newly leased Redwood City HQs, net cash used in operating activities would have been $7.2 million.
• Free cash flow was negative $16.2 million, and includes the $3.8 million payment related to the settlement of the previously announced Open Text litigation. In the first quarter of 2016, free cash flow was negative $17.3 million, and excludes $25.0 million in restricted cash used to secure a line of credit for the newly leased Redwood City HQs.
• Cash, cash equivalents, marketable securities, and restricted cash were $211.4 million as of April 30, 2016, of which $28.0 million was restricted.

Business Highlights Since Last Earnings Release

• Added over 5,000 new paying customers, and added or expanded deployments with enterprises like Airbnb, Brooks Brothers, Daniel J. Edelman, Los Angeles International Airport and The Whirlpool Corporation.
• Grew paying customer base to 62,000 businesses, including 59% of the Fortune 500.
• Announced that Box was named a Leader in The Forrester Wave: Enterprise File Sync and Share Platforms, Cloud Solutions, Q1 2016 report by Forrester Research.
• Launched Box Zones to enable businesses around the globe to adopt Box, while providing the choice to store data in Europe or Asia.
• Announced that Box achieved FedRAMP certification for all government agencies, sponsored by the Department of Defense as part of Box’s new Box for Government initiative.
• Announced that document watermarking and device trust are now available as part of Box Governance.
• Announced availability of Box KeySafe with AWS Key Management Service, which enables all businesses ranging from the largest enterprise to the smallest IT shops to take advantage of the benefits of Box KeySafe.
• Announced availability of private network integration with Japan’s NTT Communications for Japanese customers.
• Deepened the IBM partnership by extending it to Box Platform with the announcement of IBM’s new MobileFirst for iOS application, Expert Seller, built on Box Platform. This new app improves productivity of salespeople on the go.
• Expanded alliance with Adobe to make it easier for businesses to work with digital documents in the cloud by allowing them to access and edit PDFs and execute workflows with Adobe Document cloud and Adobe Sign directly in Box on both desktop and mobile.
• Announced a collaboration with Cognizant, a preferred systems integrator for Box Platform, to deliver custom solutions for vertical industries to go digital, drive productivity and replace legacy infrastructure by moving enterprises to the cloud.

Outlook

• Q2 FY17 Guidance: Revenue is expected to be in the range of $94 million to $95 million. GAAP and non-GAAP earnings per share is expected to be in the range of ($0.37) to ($0.36) and ($0.20) to ($0.19), respectively. Weighted average diluted shares outstanding is expected to be approximately 127 million.
• Full Year FY17 Guidance: Revenue is expected to be in the range of $391 million to $395 million. GAAP and non-GAAP earnings per share is expected to be in the range of ($1.43) to ($1.40) and ($0.78) to ($0.75), respectively. Weighted average diluted shares outstanding is expected to be approximately 128 million.