Box: Fiscal 1Q20 Financial Results

Box, Inc. announced financial results for the first quarter of fiscal year 2020, which ended April 30, 2019.

“In the first quarter, we drove record add-on product attach rates of more than 90% across our six-figure deals. Customers are increasingly adopting Box as a platform for secure content management, workflow, and collaboration,” said Aaron Levie, co-founder and CEO. “While we are encouraged by the demand for these larger, more strategic deployments, these deals often have longer sales cycles, which is reflected in our updated guidance. Our go-to-market initiatives, in combination with our expanded product portfolio, will enable us to improve sales productivity and meet the demand for Cloud Content Management.“

“We continued to drive operational efficiencies in the first quarter, with strong improvements in free cash flow and operating margin,” said Dylan Smith, co-founder and CFO. “We remain focused on driving long-term growth as enterprises adopt more robust implementations of our expanded product portfolio. In Q1, 89% of our total recurring revenue base came from customers paying at least $5,000 annually. Of this base, more than half of our recurring revenue came from customers who have purchased at least one add-on product. We will continue to focus on opportunities to drive further operating margin improvement in the future, with a non-GAAP operating margin target of 6-7% in FY21.“

1FQ20 Highlights
• Revenue was $163.0 million, an increase of 16% from 1FQ19.
• Remaining performance obligations as of April 30, 2019 were $637.4 million, an increase of 16% from 1FQ19.
• Deferred revenue as of April 30, 2019 was $330.4 million, an increase of 15% from 1FQ19.
• Billings were $118.4 million, an increase of 1% from 1FQ19.
• GAAP operating loss was $35.4 million, or 22% of revenue. This compares to a GAAP operating loss of $35.9 million, or 26% of revenue, in 1FQ19.
• Non-GAAP operating loss was $3.0 million, or 2% of revenue. This compares to a non-GAAP operating loss of $9.2 million, or 7% of revenue, in 1FQ19.
• GAAP net loss per share, basic and diluted, was $0.25 on 145.3 million weighted average shares outstanding. This compares to a GAAP net loss per share of $0.26 in 1FQ19 on 138.5 million weighted average shares outstanding.
• Non-GAAP net loss per share, basic and diluted, was $0.03. This compares to a non-GAAP net loss per share of $0.07 in 1FQ19.
• Net cash provided by operating activities totaled $25.5 million. This compares to net cash provided by operating activities of $18.4 million in 1FQ19.
• Free cash flow was positive $13.4 million. This compares to positive $7.3 million in 1FQ19.

Business Highlights since Last Earnings Release
• Delivered wins and expansions with enterprises such as Blackboard, BT Group, ChargePoint, Dignity Health, Fanatics, and Rémy Cointreau Group.
• Announced a new Box Relay, a workflow engine, to simplify and accelerate business processes across any organization’s extended enterprise of employees, partners and customers.
• Launched new product integrations with partners, including Autodesk AutoCAD, Google Calendar and Microsoft Outlook, allowing customers to leverage Box as a unified, secure content hub across all of their applications.
• Launched Box KeySafe support for AWS KMS Customer Key Store, providing control and protection of dedicated hardware devices without requiring customers to manage hardware to secure their encryption keys.
• Launched enhancements to Box’s core security features with two-factor authentication for external users, enabling a frictionless experience for admins to setup powerful controls to add and verify external collaborators.
• Received a top score of 100 on the 2019 Human Rights Campaign Corporate Equality Index (CEI).
• Recognized as one of LinkedIn’s Top 50 Companies: Where the U.S. Wants to Work Now for 2019.
• Welcomed Peter Leav, former president and CEO of BMC Software, to Box’s board of directors, effective as of the end of Box’s upcoming Annual Meeting of Stockholders.

Outlook
• 2FQ20 Guidance: Revenue is expected to be in the range of $169 million to $170 million. GAAP and non-GAAP basic and diluted net loss per share are expected to be in the range of $0.29 to $0.28 and $0.02 to $0.01, respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 147 million.
• FY20 Guidance: Revenue is expected to be in the range of $688 million to $692 million. GAAP basic and diluted net loss per share are expected to be in the range of $1.05 to $1.03. Non-GAAP basic and diluted net income per share are expected to be in the range of $0.00 to $0.02. The weighted average basic and diluted shares outstanding are expected to be approximately 148 million and 155 million, respectively.