Box: Fiscal 4Q18 Financial Results

Box, Inc. announced financial results for the fiscal fourth quarter and fiscal year 2018, which ended January 31, 2018.

“In fiscal 2018, we achieved year-over-year revenue growth of 27%, generating more than half a billion dollars and delivering our first full year of positive free cash flow. We also continued to pioneer the category of cloud content management by adding new innovations in workflow, security, compliance, and machine learning technology,” said Aaron Levie, co-founder and CEO. “With our scale, security, open platform, and culture of continuous product innovation, we are in a unique position to power the digital workplace of the future for the largest and most regulated enterprises in the world.”

“We drove a significant year-over-year improvement of $34 million in free cash flow in fiscal 2018 and drove operational efficiencies across the business,” said Dylan Smith, co-founder and CFO. “We remain committed to achieving a quarter of non-GAAP profitability in fiscal 2019 and are well-positioned to achieve our $1 billion revenue target in the coming years.”

Fiscal Fourth Quarter 2018 Financial Highlights
• Revenue was a record $136.7 million, an increase of 24% from the fourth quarter of fiscal 2017.
• Deferred revenue was $320.9 million, an increase of 33% from the fourth quarter of fiscal 2017.
• Billings were $204.6 million, an increase of 28% from the fourth quarter of fiscal 2017.
• GAAP operating loss was $32.5 million, or 24% of revenue. This compares to GAAP operating loss of $36.4 million, or 33% of revenue, in the fourth quarter of fiscal 2017.
• Non-GAAP operating loss was $7.5 million, or 5% of revenue. This compares to a non-GAAP operating loss of $12.7 million, or 12% of revenue, in the fourth quarter of fiscal 2017.
• GAAP net loss per share, basic and diluted, in the fourth quarter of fiscal 2018 was $0.24 on 137 million shares outstanding, compared to a GAAP net loss per share of $0.28 in the fourth quarter of fiscal 2017 on 130 million shares outstanding.
• Non-GAAP net loss per share, basic and diluted, was $0.06, compared to non-GAAP net loss per share of $0.10 in the fourth quarter of fiscal 2017.
• Net cash provided by operating activities totaled $48.7 million, which includes a $25.0 million release of restricted cash used to guarantee a letter of credit for our Redwood City HQs. This compares to net cash provided by operating activities of $14.7 million in the fourth quarter of fiscal 2017.
• Free cash flow was $13.3 million. This compares to $10.2 million in the fourth quarter of fiscal 2017.

Fiscal Year 2018 Financial Highlights
• Revenue was a record $506.1 million, an increase of 27% from fiscal year 2017.
• Deferred revenue for fiscal year 2018 ended at $320.9 million, an increase of 33% from the end of fiscal year 2017.
• Billings were $585.1 million, an increase of 29% from fiscal year 2017.
• GAAP operating loss in fiscal year 2018 was $154.0 million, or 30% of revenue. This compares to GAAP operating loss of $150.7 million, or 38% of revenue, in fiscal year 2017.
• Non-GAAP operating loss was $56.0 million, or 11% of revenue. This compares to a non-GAAP operating loss of $70.6 million, or 18% of revenue, in fiscal year 2017.
• GAAP net loss per share, basic and diluted, was $1.16 on 134 million shares outstanding, compared to a GAAP net loss per share of $1.19 in fiscal year 2017 on 127 million shares outstanding.
• Non-GAAP net loss per share, basic and diluted, was $0.43, compared to non-GAAP net loss per share of $0.56 in fiscal year 2017.
• Net cash provided by operating activities totaled $61.8 million, and includes a $25.0 million release of restricted cash used to guarantee a letter of credit for our Redwood City HQs. This compares to net cash used in operating activities of $1.2 million in fiscal 2017.
• Free cash flow was $8.9 million. This compares to negative $24.9 million in fiscal year 2017.

Business Highlights since Last Earnings Release
• Grew paying customer base to more than 82,000 businesses, including new or expanded deployments with organizations such as Apleona GmbH, Dubai Airports, Farmers Insurance Group, Inc., Genesys, Medtronic, and SunTrust Banks, Inc.
• Announced the availability of Box GxP Validation, a new approach for maintaining always-on GxP compliance in the cloud, enabling organizations subjected to FDA regulations to manage both unregulated and regulated content in one compliant platform.
• Introduced a self-serve solution for data privacy preparedness ahead of the effective date of the European Union’s General Data Protection Regulation (GDPR), as well as new services from Box Consulting to help enterprises understand and meet key data protection regulations.
• Launched Box Transform, a new white-glove program from Box Consulting that offers customers a dedicated, long-term Box consultant to drive implementation of advanced cloud content management use cases, reimagine critical business processes, and integrate Box with other key digital transformation initiatives across their organization.
• In partnership with IBM, added Toronto to Box’s data residency offering, Box Zones.
• Expanded an existing integration with Palo Alto Networks to automatically classify sensitive content and enforce policies to prevent users from accidentally or intentionally sharing confidential information.
• Announced that Centrify and Cisco Cloudlock joined the Box Trust initiative, a vetted ecosystem of technology partners that ensures customers have access to a comprehensive security solutions.
• Was named a leader in The Forrester Wave: Enterprise File Sync And Share Platforms – Cloud Solutions, Q4 2017 report by Forrester. The company received the highest score in the strategy category, scoring a 5 out of 5 in all criteria.
• Moved to a new European HQs in London’s Tech City. Since the company’s European debut in 2012, Box has established presence in London, Paris, Stockholm, Amsterdam, and Munich.

Outlook for the quarter ending April 30, 2018 under ACS 606:
• Under ACS 606 revenue in the range of $139 million to $140 million. Under ASC 605, the prior revenue recognition standard, revenue would be expected to be in the range of $142 million to $143 million.
• Under ASC 606, GAAP and non-GAAP basic and diluted earnings per share would be expected to be in the range of ($0.28) to ($0.27) and ($0.09) to ($0.08), respectively, based on the expected weighted average basic and diluted shares outstanding of approximately 139 million. Under ASC 605, GAAP and non-GAAP basic and diluted earnings per share would be expected to be in the range of ($0.28) to ($0.27) and ($0.09) to ($0.08), respectively, based on the expected weighted average basic and diluted shares outstanding of approximately 139 million.

Outlook for the year ending January 31, 2019 under ACS 606:
• Under ASC 606, revenue in the range of $602 million to $608 million. Under ASC 605, the prior revenue recognition standard, revenue would be expected to be in the range of $613 million to $619 million.
• Under ASC 606, GAAP and non-GAAP basic and diluted earnings per share would be expected to be in the range of ($1.02) to ($0.98) and ($0.20) to ($0.16), respectively, based on the expected weighted average basic and diluted shares outstanding of approximately 141 million. Under ASC 605, GAAP and non-GAAP basic and diluted earnings per share would be expected to be in the range of ($1.10) to ($1.06) and ($0.28) to ($0.24), respectively, based on the expected weighted average basic and diluted shares outstanding of approximately 141 million.