Box: Fiscal 2Q16 Financial Results

Box, Inc. announced financial results for the second quarter of fiscal 2016, which ended July 31, 2015.

During the quarter, the company surpassed 50,000 customers globally, adding or expanding deployments with thousands of companies, including Airbnb, Alcoa, Cushman & Wakefield, Lionsgate, Limited Brands, Uber, and IBM.

“We delivered another strong quarter with year over year revenue growth of 43% and billings growth of 45% driven by new and expanding customer deployments,” said Aaron Levie, co-founder and CEO. “We continue to invest in our core platform while adding new products like Enterprise Key Management and Governance that augment our ability to capture demand in the broader enterprise content management market. Later this month at BoxWorks, we’ll announce several more innovations and showcase how our customers are leveraging Box to transform their businesses.”

“We continued to execute on our path to profitability by delivering improved non-GAAP operating margin,” said Dylan Smith, co-founder and CFO. “While we continue to invest in our large market opportunity and solidify our leadership position, our business model allows us to drive gains in operational efficiency as we scale.“

Fiscal Second Quarter Financial Highlights

• Revenue was $73.5 million, an increase of 43% from the second quarter of fiscal 2015.
• Billings were $79.6 million, an increase of 45% from the second quarter of fiscal 2015.
• Non-GAAP operating loss was $32.7 million, or 45% of revenue. This compares to non-GAAP operating loss of $29.4 million, or 57% of revenue, in the second quarter of fiscal 2015. GAAP operating loss in the second quarter of fiscal 2016 was $49.8 million, or 68% of revenue. This compares to GAAP operating loss of $38.3 million, or 74% of revenue, in the second quarter of fiscal 2015.
• Non-GAAP net loss per share attributable to common stockholders, basic and diluted was $0.28 on 120.4 million shares outstanding, compared to $2.01 in the second quarter of fiscal 2015 on 14.5 million shares outstanding. GAAP net loss per share attributable to common stockholders, basic and diluted, in the second quarter of fiscal 2016 was $0.42 on 120.4 million shares outstanding, compared to $2.71 in the second quarter of fiscal 2015 on 14.5 million shares outstanding.
• Net cash used in operating activities totaled $21.7 million. This compares to net cash used in operating activities of $26.3 million in the second quarter of fiscal 2015.
• Cash, cash equivalents and marketable securities were $242.2 million as of July 31, 2015. In addition, we have restricted cash of $28.4 million primarily related to our leased facilities.

Business Highlights (through July 31, 2015, unless otherwise noted)

 Growth:

• Added IBM to the list of leading global organizations such as GE, the Department of Justice, Schneider Electric and Procter & Gamble that have deployed Box.
• Added or expanded deployments with thousands of companies, surpassing 50,000 paying customers globally, including more than 52% of the Fortune 500 and 28% of the Global 2000.
• Surpassed 39 million registered users.

Partner Momentum:
Announced a global partnership with IBM. Under the agreement, Box and IBM will:

• Integrate Box with IBM’s industry-leading enterprise content management, analytics, social collaboration, and security products, and jointly deliver solutions to market internationally.
• Incorporate Box technology into select IBM MobileFirst for iOS apps.
• Leverage IBM’s salesforce and Global Business Services professionals to help clients deploy and integrate Box capabilities with existing data and systems.

• Introduced Microsoft Office Online partnership to extend the reach of Box’s powerful integrations with Office 365 for the desktop, Office on iOS and Outlook.

Technology and Market Leadership

• Announced on August 31, 2015 that Box was named a leader in The Forrester Wave: ECM Business Content Services, Q3 ’15 report.
• Of the 11 vendors that were evaluated by Forrester Research, Inc., Box received the highest score for its enterprise content management (ECM) strategy, with a 4.7 on a scale of 5.
• Named a leader in the Gartner Magic Quadrant for Enterprise File Synchronization and Sharing 2015. Box was also named a leader in the inaugural 2014 Magic Quadrant for Enterprise File Synchronization and Sharing.

New Executive Leadership

• Announced in August 2015 that former CEO and GM of EMC’s Syncplicity business unit, Jeetu Patel, joined Box as SVP of platform and chief strategy officer to expand Box’s platform business.
• Welcomed Paul Chapman, previously CIO of HP software, as CIO to drive the company’s global IT strategy and initiatives to further support the company’s growing workforce and customer base.

Product Innovation:

• Introduced the availability of Box Governance to offer customers a new approach to seamlessly manage the entire lifecycle of business documents, from creation to retention and disposition.
• Announced in August 2015 the availability of three new enhancements to Box’s metadata service, including metadata templates in the admin console, metadata APIs, and syncing metadata from third party systems.

Continued Execution in Box for Industries:

• Marked the one-year anniversary of Box for Industries, which has driven new customers in all three initial industries, including Dignity Health, MD Anderson Cancer Center, and Mount Sinai Health System in Box for Healthcare; Viacom, Discovery Communications, and Legendary Pictures in Box for Media & Entertainment; and Barneys New York, Neiman Marcus, and Sephora in Box for Retail.
• Hired Adam Ross, previously of Nasdaq, as Box’s new financial services lead in August 2015 and launched FINRA and SEC compliance capabilities for Box for the financial services vertical.
• Announced that Box.org now powers over 3,000 nonprofits, sustaining strong partnerships with TechSoup Global, MemberPlanet and Exponent Partners.
• Launched Box for Education in August 2015 to deliver tailored solutions globally to the education industry.

Q3 FY16 Guidance:

• Revenue is expected to be in the range of $76 to $77 million, and non-GAAP operating margin is expected to be in the range of (49%) to (50%).
• Weighted average diluted shares outstanding is expected to be approximately 122 million.

Full Year FY16 Guidance

• Revenue is expected to be in the range of $295 to $297 million, compared to previous guidance of $286 to $290 million.
• Non-GAAP operating margin is expected to be in the range of (47%) to (49%), compared to previous guidance of (49%) to (51%). Weighted average diluted shares outstanding is expected to be approximately 122 million.