Box beats Q4 expectations, hits new milestone

The enterprise cloud company achieved its first quarter of positive free cash flow.

Box published its fourth quarter financial results on Wednesday, beating market expectations. It also reported that it's achieved its first quarter of positive free cash flow at $10 million. Reaching that milestone helps the enterprise cloud company demonstrate the strength of its business model and could give it new investment opportunities.

While the company beat expectations and hit its stated goal of achieving its first positive free cash flow quarter by early 2017, shares were down slightly in after hours trading, potentially because of its outlook.

For Q4 2017, Box reported a non-GAAP net loss of 10 cents per share on revenue of $109.9 million, up 29 percent year over year.

Wall Street was expecting a loss of 14 cents a share on revenue of $108.9 million.

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Box's free cash flow in Q4 was $10.2 million, a $31.5 million improvement over Q4 2016, when it stood at negative $21.3 million.

For the full fiscal year 2017, revenue came to $398.6 million, an increase of 32 percent from fiscal year 2016.

Its non-GAAP operating loss was $70.6 million, or 18 percent of revenue. That compares to a non-GAAP operating loss of $134.3 million, or 44 percent of revenue, in fiscal year 2016. Its non-GAAP net loss per share for FY 2017 was 56 cents, compared to a non-GAAP net loss per share of $1.12 in fiscal year 2016.

CEO and co-founder Aaron Levie said in a statement that Box is "raising the bar in cloud content management."

Box now has more than 71,000 paying customers, Levie noted in a Wednesday conference call. In Q4, the company secured 64 deals worth more than $100,000, as well as a record 16 deals over $500,000.

"We've consistently delivered innovative new products, set the standard for security and compliance, and helped customers in every industry move to the cloud with confidence," Levie said in his statement. "We are driving towards a $1 billion long-term revenue target, and this year we plan to invest for scale while continuing to drive operating leverage."

The company is also aiming to achieve positive free cash flow for the full year of fiscal 2018, co-founder and CFO Dylan Smith said in a statement. Its free cash flow for FY 017 was negative $24.8 million, compared to negative $116.3 million in FY 2016.

As for the current quarter, Box said it expects Q1 2018 revenues in the range of $114 million to $115 million. It's expecting s non-GAAP loss in the range of 15 cents to 14 cents a share. For the full fiscal year 2018, it's expecting revenue in the range of $500 million to $504 million and non-GAAP losses of 49 cents to 45 cents.

Moving forward, Box plans to focus on two major objectives, Levie said on Wednesday's conference call: building additional products and platform capabilities that help enterprises move more of their work to the cloud, as well as its global go-to-market efforts.

"To support the needs of enterprises, security compliance and scale remain critical," Levie said, noting that the company gained more Box Governance customers in Q4 than it has in any previous quarter. It now has more than 700 Governance customers, up from 500 last quarter.

Meanwhile, its global go-to-market objectives will be reached in part with the help of partners like IBM, he noted. Box is now embedded in 10 IBM products, and IBM was part of 18 of the 64 deals Box landed in Q4 that were above $100,000.

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