Box Reports Record Revenue of $608.4 Million for Fiscal Year 2019, Up 20% Year-Over-Year, and Delivers Positive Cash Flow from Operations and Free Cash Flow for Fiscal Year 2019

  • Fourth Quarter Revenue of $163.7 Million, Up 20 Percent Year-Over-Year
  • Fourth Quarter Billings of $237.7 Million, Up 16 Percent Year-Over-Year
  • Fourth Quarter GAAP Net Loss Per Share was $0.14
  • Fourth Quarter Non-GAAP Net Income Per Share of $0.06; First Ever
    Quarter of Positive Non-GAAP Net Income Per Share
  • Fourth Quarter Cash Flow from Operations of $31.3 Million, Up $8.8
    Million Year-Over-Year
  • Fourth Quarter Free Cash Flow of $21.0 Million, Up $8.8 Million
    Year-Over-Year

REDWOOD CITY, Calif.–(BUSINESS WIRE)–Box, Inc. (NYSE:BOX), a leader in cloud content management, today
announced financial results for the fiscal fourth quarter and full
fiscal year 2019, which ended January 31, 2019.

“In fiscal 2019, we made progress in our transition to solution selling
as demonstrated by strong add-on product attach rates and solid growth
in six-figure deals throughout the year,” said Aaron Levie, co-founder
and CEO of Box. “While our Q4 billings results were below our
expectations — driven by underperformance in EMEA and longer sales
cycles for some seven-figure deals — we are encouraged by overall
customer momentum and demand for cloud content management. Looking to
FY20, we are confident that our leadership position enables us to
disrupt the legacy content management market and help our customers
accelerate their digital transformation.”

“In the fourth quarter, we continued to drive operational efficiencies,
including achieving our first quarter of non-GAAP profitability,” said
Dylan Smith, co-founder and CFO of Box. “We remain focused on long-term
growth on our path to a billion dollars in revenue and beyond, while
driving continued leverage in our business model and targeting our first
full year of non-GAAP profitability in FY20.”

Adoption of the New Revenue Recognition Standard – ASC Topic 606

Box adopted the new revenue recognition accounting standard Accounting
Standards Codification Topic 606 (“ASC 606”) on a modified retrospective
basis, effective February 1, 2018. Financial results for reporting
periods in Box’s fiscal year ending January 31, 2019 are presented in
compliance with the new revenue recognition standard. Historical
financial results for reporting periods prior to fiscal year 2019 are
presented in conformity with amounts previously disclosed under the
prior revenue recognition standard Accounting Standards Codification
Topic 605 (“ASC 605”). This press release includes additional
information regarding Box’s financial results for the quarter and fiscal
year ended January 31, 2019 under ASC 605 for comparison to the prior
year.

Fiscal Fourth Quarter 2019 Financial Highlights

  • Revenue for the fourth quarter of fiscal year 2019 was a record $163.7
    million, an increase of 20% (ASC 606 in fiscal year 2019 compared to
    ASC 605 in fiscal year 2018) and 21% (ASC 605 in fiscal year 2019
    compared to ASC 605 in fiscal year 2018) from the fourth quarter of
    fiscal year 2018.
  • Deferred revenue as of January 31, 2019 was $375.0 million, an
    increase of 17% (ASC 606 to ASC 605 and ASC 605 to ASC 605) from the
    fourth quarter of fiscal year 2018.
  • Billings for the fourth quarter of fiscal year 2019 were $237.7
    million, an increase of 16% (ASC 606 to ASC 605 and ASC 605 to ASC
    605) from the fourth quarter of fiscal year 2018.
  • GAAP operating loss in the fourth quarter of fiscal year 2019 was
    $21.7 million, or 13% of revenue (ASC 606), and $26.4 million, or 16%
    of revenue (ASC 605). This compares to GAAP operating loss of $32.5
    million, or 24% of revenue, in the fourth quarter of fiscal year 2018.
  • Non-GAAP operating income in the fourth quarter of fiscal year 2019
    was $8.5 million, or 5% of revenue (ASC 606), and $3.8 million, or 2%
    of revenue (ASC 605). This compares to a non-GAAP operating loss of
    $7.5 million, or 5% of revenue, in the fourth quarter of fiscal year
    2018.
  • GAAP net loss per share, basic and diluted, in the fourth quarter of
    fiscal year 2019 was $0.14 (ASC 606) and $0.17 (ASC 605) on 144
    million weighted average shares outstanding. This compares to a GAAP
    net loss per share of $0.24 in the fourth quarter of fiscal year 2018
    on 137 million weighted average shares outstanding.
  • Non-GAAP net income per share, diluted, in the fourth quarter of
    fiscal year 2019 was $0.06 (ASC 606) and $0.03 (ASC 605) on 150
    million weighted average diluted shares outstanding. This compares to
    non-GAAP net loss per share of $0.06 in the fourth quarter of fiscal
    year 2018.
  • Net cash provided by operating activities in the fourth quarter of
    fiscal year 2019 totaled $31.3 million. This compares to net cash
    provided by operating activities of $22.5 million in the fourth
    quarter of fiscal year 2018.
  • Free cash flow in the fourth quarter of fiscal year 2019 was positive
    $21.0 million. This compares to positive $12.1 million in the fourth
    quarter of fiscal year 2018.

Fiscal Year 2019 Financial Highlights

  • Revenue in fiscal year 2019 was a record $608.4 million, an increase
    of 20% (ASC 606 in fiscal year 2019 compared to ASC 605 in fiscal year
    2018) and 22% (ASC 605 in fiscal year 2019 compared to ASC 605 in
    fiscal year 2018) from fiscal year 2018.
  • Billings for fiscal year 2019 were $672.9 million, an increase of 15%
    (ASC 606 to ASC 605 and ASC 605 to ASC 605) from fiscal year 2018.
  • GAAP operating loss in fiscal year 2019 was $134.2 million, or 22% of
    revenue (ASC 606), and $146.1 million, or 24% of revenue (ASC 605).
    This compares to GAAP operating loss of $154.0 million, or 30% of
    revenue, in fiscal year 2018.
  • Non-GAAP operating loss in fiscal year 2019 was $14.9 million, or 2%
    of revenue (ASC 606), and $26.8 million, or 4% of revenue (ASC 605).
    This compares to a non-GAAP operating loss of $56.0 million, or 11% of
    revenue, in fiscal year 2018.
  • GAAP net loss per share, basic and diluted, in fiscal year 2019 was
    $0.95 (ASC 606) and $1.04 (ASC 605) on 141 million weighted average
    shares outstanding. This compares to a GAAP net loss per share of
    $1.16 in fiscal year 2018 on 134 million weighted average shares
    outstanding.
  • Non-GAAP net loss per share, diluted, in fiscal year 2019 was $0.12
    (ASC 606) and $0.21 (ASC 605). This compares to non-GAAP net loss per
    share of $0.43 in fiscal year 2018.
  • Net cash provided by operating activities in fiscal year 2019 totaled
    $55.3 million. This compares to net cash provided by operating
    activities of $35.4 million in fiscal year 2018.
  • Free cash flow in fiscal year 2019 was positive $13.8 million. This
    compares to positive $7.5 million in fiscal year 2018.

For more information on the non-GAAP financial measures and key metrics
discussed in this press release, please see the section titled, “About
Non-GAAP Financial Measures and Other Key Metrics,” and the
reconciliations of non-GAAP financial measures and certain key metrics
to their nearest comparable GAAP financial measures at the end of this
press release.

Business Highlights since Last Earnings Release

Outlook

  • Q1 FY20 Guidance: Revenue is expected to be in the range of
    $161 million to $162 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
    $0.06 to $0.05, respectively. Weighted average basic and diluted
    shares outstanding are expected to be approximately 145 million.
  • Full Year FY20 Guidance: Revenue is expected to be in the range
    of $700 million to $704 million. GAAP basic and diluted net loss per
    share are expected to be in the range of $1.06 to $1.02. Non-GAAP
    basic and diluted net (loss) income per share are expected to be in
    the range of $(0.03) to $0.01. The weighted average basic and diluted
    shares outstanding are expected to be approximately 148 million and
    156 million, respectively.

All forward-looking non-GAAP financial measures contained in this
section titled “Outlook” exclude estimates for stock-based compensation
expense, intangible assets amortization, and as applicable, certain
legal settlement and related costs. Box has provided a reconciliation of
GAAP to non-GAAP net income (loss) per share guidance at the end of this
press release.

Webcast and Conference Call Information

Box’s management team will host a conference call today beginning at
2:00 PM (PT) / 5:00 PM (ET) to discuss Box’s financial results, business
highlights and future outlook. A live audio webcast of this call will be
available through Box’s Investor Relations website at www.box.com/investors
for a period of 90 days after the date of the call.

The access details for the live conference call are:
+
1-833-231-7240 (U.S. and Canada), conference ID: 7075752
+
1-647-689-4084 (international), conference ID: 7075752

A telephonic replay of the call will be available approximately two
hours after the call and will run for one week. The replay can be
accessed by dialing:
+ 1-800-585-8367 (U.S. and Canada), conference
ID: 7075752
+ 1-416-621-4642 (international), conference ID: 7075752

Box has used, and intends to continue to use, its Investor Relations
website (www.box.com/investors),
as well as certain Twitter accounts (@box, @levie and @boxincir), as a
means of disclosing material non-public information and for complying
with its disclosure obligations under Regulation FD. Information on or
that can be accessed through Box’s Investor Relations website, these
Twitter accounts, or that is contained in any website to which a
hyperlink is provided herein is not part of this press release, and the
inclusion of Box’s Investor Relations website address, these Twitter
accounts, and any hyperlinks are only inactive textual references.

This press release, the financial tables, as well as other supplemental
information including the reconciliations of non-GAAP financial measures
and certain key metrics to their nearest comparable GAAP financial
measures, are also available on Box’s Investor Relations website. Box
also provides investor information, including news and commentary about
Box’s business and financial performance, Box’s filings with the
Securities and Exchange Commission, notices of investor events and Box’s
press and earnings releases, on Box’s Investor Relations website.

Forward-Looking Statements

This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding Box’s
expectations regarding the size of its market opportunity, expectations
regarding its leadership position in cloud content management market,
the demand for its products, its ability to scale its business and drive
operating efficiencies, its ability to achieve its revenue target of $1
billion, expectations regarding its ability to achieve profitability on
a quarterly or ongoing basis, its expectations regarding free cash flow,
the timing of recent and planned product introductions and enhancements,
the short- and long-term success, market adoption and retention,
capabilities, and benefits of such product introductions and
enhancements, and the success of strategic partnerships, as well as
expectations regarding its revenue, gross margin, GAAP and non-GAAP net
income (loss) per share, the related components of GAAP and non-GAAP net
income (loss) per share, and weighted average outstanding share count
expectations for Box’s fiscal first quarter and full fiscal year 2020 in
the section titled “Outlook” above. There are a significant number of
factors that could cause actual results to differ materially from
statements made in this press release, including: (1) adverse changes in
general economic or market conditions; (2) delays or reductions in
information technology spending; (3) factors related to Box’s highly
competitive market, including but not limited to pricing pressures,
industry consolidation, entry of new competitors and new applications
and marketing initiatives by Box’s current or future competitors; (4)
the development of the cloud content management market; (5) the risk
that Box’s customers do not renew their subscriptions, expand their use
of Box’s services, or adopt new products offered by Box; (6) Box’s
ability to provide timely and successful enhancements, new features,
integrations and modifications to its platform and services; (7) actual
or perceived security vulnerabilities in Box’s services or any breaches
of Box’s security controls; and (8) Box’s ability to realize the
expected benefits of its third-party partnerships.

Additional information on potential factors that could affect Box’s
financial results is included in the reports on Forms 10-K, 10-Q and 8-K
and in other filings Box makes with the Securities and Exchange
Commission from time to time, including the Quarterly Report on Form
10-Q filed for the fiscal quarter ended October 31, 2018. These
documents are available on the SEC Filings section of Box’s Investor
Relations website located at www.box.com/investors.
Box does not assume any obligation to update the forward-looking
statements contained in this press release to reflect events that occur
or circumstances that exist after the date on which they were made.

About Non-GAAP Financial Measures and Other Key Metrics

To supplement Box’s consolidated financial statements, which are
prepared and presented in accordance with GAAP, Box provides investors
with certain non-GAAP financial measures and other key metrics,
including non-GAAP operating income (loss), non-GAAP operating margin,
non-GAAP net income (loss), non-GAAP net income (loss) per share,
billings and free cash flow. The presentation of these non-GAAP
financial measures and key metrics is not intended to be considered in
isolation or as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP. For more
information on these non-GAAP financial measures and key metrics, please
see the reconciliation of these non-GAAP financial measures and certain
key metrics to their nearest comparable GAAP financial measures at the
end of this press release.

Box uses these non-GAAP financial measures and key metrics for financial
and operational decision-making and as a means to evaluate
period-to-period comparisons. Box’s management believes that these
non-GAAP financial measures and key metrics provide meaningful
supplemental information regarding Box’s performance by excluding
certain expenses that may not be indicative of Box’s recurring core
business operating results. Box believes that both management and
investors benefit from referring to these non-GAAP financial measures
and key metrics in assessing Box’s performance and when planning,
forecasting, and analyzing future periods. These non-GAAP financial
measures and key metrics also facilitate management’s internal
comparisons to Box’s historical performance as well as comparisons to
Box’s competitors’ operating results. Box believes these non-GAAP
financial measures and key metrics are useful to investors both because
(1) they allow for greater transparency with respect to key metrics used
by management in its financial and operational decision-making and (2)
they are used by Box’s institutional investors and the analyst community
to help them analyze the health of Box’s business.

A limitation of non-GAAP financial measures and key metrics is that they
do not have uniform definitions. Further, Box’s definitions will likely
differ from the definitions used by other companies, including peer
companies, and therefore comparability may be limited. Thus, Box’s
non-GAAP financial measures and key metrics should be considered in
addition to, and not as a substitute for, or in isolation from, measures
prepared in accordance with GAAP. Additionally, in the case of
stock-based compensation expense, if Box did not pay a portion of
compensation in the form of stock-based compensation expense, the cash
salary expense included in cost of revenue and operating expenses would
be higher, which would affect Box’s cash position.

Non-GAAP operating income (loss) and non-GAAP operating margin.
Box defines non-GAAP operating income (loss) as operating loss excluding
expenses related to stock-based compensation (“SBC”), intangible assets
amortization, and as applicable, other special items. Non-GAAP operating
margin is defined as non-GAAP operating income (loss) divided by
revenue. Although SBC is an important aspect of the compensation of
Box’s employees and executives, determining the fair value of certain of
the stock-based instruments Box utilizes involves a high degree of
judgment and estimation and the expense recorded may bear little
resemblance to the actual value realized upon the vesting or future
exercise of the related stock-based awards. Furthermore, unlike cash
compensation, the value of stock options, which is an element of Box’s
ongoing stock-based compensation expense, is determined using a complex
formula that incorporates factors, such as market volatility, that are
beyond Box’s control. For restricted stock unit awards, the amount of
stock-based compensation expenses is not reflective of the value
ultimately received by the grant recipients. Management believes it is
useful to exclude SBC in order to better understand the long-term
performance of Box’s core business and to facilitate comparison of Box’s
results to those of peer companies. Management also views amortization
of acquisition-related intangible assets, such as the amortization of
the cost associated with an acquired company’s developed technology and
trade names, as items arising from pre-acquisition activities determined
at the time of an acquisition. While these intangible assets are
continually evaluated for impairment, amortization of the cost of
purchased intangibles is a static expense, one that is not typically
affected by operations during any particular period. Box further
excludes expenses related to certain litigation because they are
considered by management to be special items outside Box’s core
operating results.

Non-GAAP net income (loss) and non-GAAP net income (loss) per share. Box
defines non-GAAP net income (loss) as GAAP net income (loss) excluding
expenses related to SBC, intangible assets amortization, and as
applicable, other special items. Box defines non-GAAP net income (loss)
per share as non-GAAP net income (loss) divided by the weighted average
outstanding shares.

Billings. Billings reflect, in any particular period, (1) sales
to new customers, plus (2) subscription renewals and (3) expansion
within existing customers, and represent amounts invoiced for all
products and professional services. Box calculates billings for a period
by adding changes in deferred revenue and contract assets in that period
to revenue. Box believes that billings help investors better understand
sales activity for a particular period, which is not necessarily
reflected in revenue as a result of the fact that Box recognizes
subscription revenue ratably over the subscription term. Box considers
billings a significant performance measure and, after adjusting for any
shifts in relative payment frequencies, a leading indicator of future
revenue. Box monitors billings to manage the business, make planning
decisions, evaluate performance and allocate resources. Box believes
that billings offers valuable supplemental information regarding the
performance of the business and will help investors better understand
the sales volumes and performance of the business. Although Box
considers billings to be a significant performance measure, Box does not
consider it to be a non-GAAP financial measure given that it is
calculated using exclusively revenue, deferred revenue, and contract
assets, all of which are financial measures calculated in accordance
with GAAP.

Free cash flow. Box defines free cash flow as cash flows from
operating activities less purchases of property and equipment, principal
payments of capital lease obligations, capitalized internal-use software
costs, and other items that did not or are not expected to require
cash settlement and that management considers to be outside of Box’s
core business. Box specifically identifies adjusting items in
the reconciliation of GAAP to non-GAAP financial measures. Prior to the
adoption of Accounting Standards Update 2016-18, Restricted Cash,
historically, these adjusting items include the use and release of
restricted cash to guarantee a significant letter of credit
for Box’s Redwood City headquarters. Box considers free cash flow to be
a profitability and liquidity measure that provides useful information
to management and investors about the amount of cash generated by the
business that can possibly be used for investing in Box’s business and
strengthening its balance sheet, but it is not intended to represent the
residual cash flow available for discretionary expenditures. The
presentation of non-GAAP free cash flow is also not meant to be
considered in isolation or as an alternative to cash flows from
operating activities as a measure of liquidity.

The accompanying tables have more details on the reconciliations of
non-GAAP financial measures and certain key metrics to their nearest
comparable GAAP financial measures.

About Box

Box (NYSE:BOX) is the cloud content management company that
empowers enterprises to revolutionize how they work by securely
connecting their people, information and applications. Founded in 2005,
Box powers more than 92,000 businesses globally, including AstraZeneca,
General Electric, P&G, and The GAP. Box is headquartered in Redwood
City, CA, with offices across the United States, Europe and Asia. To
learn more about Box, visit http://www.box.com.

     

BOX, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

 
January 31, January 31,
2019 * 2018 **
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 217,518 $ 208,076
Accounts receivable, net 175,130 162,133
Prepaid expenses and other current assets 14,223 11,391
Deferred commissions   21,683   17,589

Total current assets

428,554 399,189
Property and equipment, net 137,703 123,977
Intangible assets, net 24
Goodwill 18,740 16,293
Restricted cash 238 350
Deferred commissions, non-current 53,880 8,330
Other long-term assets   11,046   5,403
Total assets $ 650,161 $ 553,566
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 15,431 $ 17,036
Accrued compensation and benefits 34,484 37,707
Accrued expenses and other current liabilities 27,708 26,198
Capital lease obligations 28,317 18,844
Deferred revenue 353,590 291,902
Deferred rent   3,670   2,280
Total current liabilities 463,200 393,967
Debt, non-current 40,000 40,000
Capital lease obligations, non-current 44,597 26,980
Deferred revenue, non-current 21,451 29,021
Deferred rent, non-current 45,034 45,882
Other long-term liabilities   4,474   2,748
Total liabilities   618,756   538,598
Stockholders’ equity:
Common stock (1) 14 13
Additional paid-in capital 1,166,443 1,054,932
Treasury stock (1,177 ) (1,177 )
Accumulated other comprehensive income 23 288
Accumulated deficit   (1,133,898 )   (1,039,088 )
Total stockholders’ equity   31,405   14,968
Total liabilities and stockholders’ equity $ 650,161 $ 553,566
 

(1) As of January 31, 2019, there were 144,311 shares of Box’s
Class A common stock outstanding.

 

* As reported under ASC Topic 606

** As reported under ASC Topic 605

 

Contacts

Investors:
Alice Kousoum Lopatto and Elaine Gaudioso
+1
650-209-3467
[email protected]

Media:
Denis Roy and Rachel Levine
+1 650-543-6926
[email protected]

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