Box: Fiscal 2Q19 Financial Results

Box, Inc. announced financial results for the second quarter of fiscal 2019, which ended July 31, 2018.

“Driving deeper relationships with customers such as JLL, Nationwide and Societe Generale, as well as focusing on strategic solution sales, led to another quarter of strong attach rates for add-on products like Box Governance, Zones and Platform,” said Aaron Levie, co-founder and CEO. “Our approach to providing a single, neutral platform for cloud content management with enterprise-grade security and powerful workflow capabilities positions us to help the world’s largest and most regulated enterprises digitize their workplace and business processes.”

“In the second quarter, we delivered solid top line growth and improved cash flow from operations by over $8 million year-over-year,” said Dylan Smith, co-founder and CFO. “Our proven ability to further capture our market opportunity while driving operational leverage positions us for long-term growth on our path to $1 billion and beyond.”

Fiscal Second Quarter Financial Highlights
• Revenue was a record $148.2 million, an increase of 21% (ASC 606 in fiscal 2019 compared to ASC 605 in fiscal 2018) and 23% (ASC 605 in fiscal 2019 compared to ASC 605 fiscal 2018) from the second quarter of fiscal 2018.
• Deferred revenue as of July 31, 2018 was $301.5 million, an increase of 25% (ASC 606 to ASC 605) and 27% (ASC 605 to ASC 605) from July 31, 2017.
• Billings were $162.8 million, an increase of 17% (ASC 606 to ASC 605 and ASC 605 to ASC 605) from the second quarter of fiscal 2018.
• GAAP operating loss was $37.2 million, or 25% of revenue, under ASC 606, and $40.1 million, or 27% of revenue, under ASC 605. This compares to GAAP operating loss of $39.0 million, or 32% of revenue, in the second quarter of fiscal 2018.
• Non-GAAP operating loss was $6.5 million, or 4% of revenue (ASC 606), and $9.4 million, or 6% of revenue (ASC 605). This compares to a non-GAAP operating loss of $14.9 million, or 12% of revenue, in the second quarter of fiscal 2018.
• GAAP net loss per share, basic and diluted was $0.27 (ASC 606) and $0.29 (ASC 605) on 140.7 million shares outstanding. This compares to a GAAP net loss per share of $0.30 in the second quarter of fiscal 2018 on 133.0 million shares outstanding.
• Non-GAAP net loss per share, basic and diluted, was $0.05 (ASC 606) and $0.07 (ASC 605). This compares to non-GAAP net loss per share of $0.11 in the second quarter of fiscal 2018.
• Net cash used in operating activities totaled negative $1.3 million. This compares to net cash used in operating activities of negative $9.8 million in the second quarter of fiscal 2018.
• Free cash flow was negative $10.3 million. This compares to negative $15.0 million in the second quarter of fiscal 2018.

Business Highlights since Last Earnings Release
• Grew paying customer base to more than 87,000 businesses, including new or expanded deployments with organizations such as Canon U.S.A., City of Atlanta, JLL, Lionsgate, Nationwide, The Philadelphia Phillies, Rodan & Fields, Sacramento Kings, Societe Generale U.S. and World Fuel Services.
• Announced an expanded private beta for Box Skills, the availability of a new service from IBM to apply Watson AI technologies for building custom Box Skills, and support for new machine learning capabilities from Microsoft Azure.
• Announced new integrations with cloud services, including ServiceNow and Quip, to make collaboration on enterprises’ most critical content seamless, simple and secure.
• Unveiled the Box for Gmail add-on, which allows customers to access Box files and download email attachments to Box without leaving the Gmail interface.
• Welcomed the addition of employee teams from both Progressly and Butter.ai to Box to help execute on the company’s vision of enabling enterprises to get the most value out of their content with Box.
• Announced that Box was positioned as a leader in Gartner’s 2018 Content Collaboration Platforms Magic Quadrant report for the fifth consecutive year.
• Moved to a new office in Tokyo, demonstrating commitment to continued growth in the Japanese market and helping Japanese enterprises make the shift to the cloud for content management.

Q3 FY19 Guidance
Revenue is expected to be in the range of $154 million to $155 million. GAAP and non-GAAP basic and diluted loss per share are expected to be in the range of ($0.30) to ($0.29) and ($0.08) to ($0.07), respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 142 million.

Full Year FY19 Guidance
Revenue is expected to be in the range of $606 million to $608 million. GAAP and non-GAAP basic and diluted loss per share are expected to be in the range of ($1.02) to ($1.00) and ($0.18) to ($0.16), respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 142 million.

Revenue growth in $ million