Why Box Stock Fell despite Sharp Increase in Revenue



Box revenues rose 28% YoY

Box (BOX), a cloud storage company, reported its fiscal 2Q18 earnings on Wednesday, August 30. While both its earnings and revenues beat Wall Street estimates, the stock fell nearly 4% on Wednesday in after-hours trading.

The company generated $122.9 million in revenue in the quarter compared to $121.7 million that analysts had projected. The company continues on its growth trajectory, as the graph below shows. Revenue rose 28% from the corresponding quarter last year. The company’s stock has risen 42% YTD.

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Reported billings impress but free cash flow turns negative

Net losses came in at $0.11 per share compared to the $0.13 that analysts expected. The company recorded a net loss of $0.14 in the corresponding quarter last year. The company posted reported billings of nearly $140 million, higher than Wall Street estimates of slightly over $134 million. Reported billings are an important figure as they mirror the amount of contracts inked for future business.

However, one of the reasons why the stock fell was that its free cash flow for the quarter came in -$14.7 million. Box estimates its fiscal 2018 revenue to be in the range of $503 million and $506 million.

In June, Microsoft (MSFT) signed a deal with Box to work together in cloud computing technology. The two companies will join hands to integrate their products.


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