Box Shares Drop After Weak Guidance

On Tuesday, shares of Box fell by up to 6% after the company posted second quarter earnings for its 2019 fiscal year while at the same time offering slightly weaker guidance for its current quarter.

Box posted 5 cents a share loss in earnings excluding special items, while analysts were expecting a loss of 6 cents a share. Revenue reached $148.2 million while analysts were expecting $146.5 million.

The company was able to narrow losses from 11 cents a share and its revenue grew 20.6%. Eleven deals that were worth over $500,000 took place during the three-month period, up from eight during the same quarter one year ago, said Aaron Levie the company CEO.

Executives have forecasted that during the third quarter Box will have a loss of 7 cents to 8 cents a share, excluding special items with revenue of between $154 million and $155 million.

That forecast was slightly lower than analyst expectations of a 6 cents a share loss and revenue of $155 million.

Box updated its full year guidance for fiscal year 2018 and is expecting between 16 cents a share and 18 cents a share loss, excluding special items on revenue of between $606 million and $608 million. That was in line with expectations of analysts of a loss of 18 cents a share and revenue of $606.5 million.

Over the last few quarters, Box has focused on increasing the revenue for each customer. Executives recently said they want to reach $1 billion in revenue by the second six months of its fiscal year 2021.

During a conference call, Box CFO Dylan Smith told analysts that executives do not want to mention a specific quarter when the company is going to pass the $1 billion threshold, but that executives remain committed to doing that for the complete 2022 fiscal year.

Following those remarks, Box shares dropped even further. CEO Levie spoke about targets during the call as well, emphasizing that Box would not say any longer when it expects to reach $1 billion in run rate.

Changes to compensation plans for salespeople that are set up to encourage bigger deals are having the desired effect said one analyst, citing more deals that involved more than one product in the pipeline of Box products.

Two thirds of Box’s deals of over $100,000 during the quarter included products that were new, said Levie.

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