Box Maintains Aggressive Revenue Growth in Q1; Reveals Loyal Customers Continue to Drive Sales

Box, Inc., a leader in cloud content management, announced financial results for the first quarter of fiscal year 2020, which ended April 30, 2019.

Box Reports Revenue of $163.0 Million for Fiscal First Quarter 2020, Up 16 Percent Year-Over-Year

“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 of Box. “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 of Box. “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.”

Adoption of the New Lease Standard – ASC Topic 842

Box adopted the new lease standard, Accounting Standards Codification Topic 842 (“ASC 842”), on a modified retrospective basis, effective February 1, 2019. Financial results for reporting periods in Box’s fiscal year ending January 31, 2020 are presented in compliance with the new lease standard. Historical financial results for reporting periods prior to fiscal year 2020 are presented in conformity with amounts previously disclosed under the prior lease standard, Accounting Standards Codification Topic 840 (“ASC 840”). The adoption of ASC 842 did not have a material effect on our condensed consolidated statements of operations and cash flows, however, did materially increase our assets and liabilities on the condensed consolidated balance sheet.

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Fiscal First Quarter Financial Highlights

• Revenue for the first quarter of fiscal year 2020 was $163.0 million, an increase of 16% from the first quarter of fiscal year 2019.
• Remaining performance obligations as of April 30, 2019 were $637.4 million, an increase of 16% from the first quarter of fiscal year 2019.
• Deferred revenue as of April 30, 2019 was $330.4 million, an increase of 15% from the first quarter of fiscal year 2019.
• Billings for the first quarter of fiscal year 2020 were $118.4 million, an increase of 1% from the first quarter of fiscal year 2019.
• GAAP operating loss in the first quarter of fiscal year 2020 was $35.4 million, or 22% of revenue. This compares to a GAAP operating loss of $35.9 million, or 26% of revenue, in the first quarter of fiscal year 2019.
• Non-GAAP operating loss in the first quarter of fiscal year 2020 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 the first quarter of fiscal year 2019.
• GAAP net loss per share, basic and diluted, in the first quarter of fiscal year 2020 was $0.25 on 145.3 million weighted average shares outstanding. This compares to a GAAP net loss per share of $0.26 in the first quarter of fiscal year 2019 on 138.5 million weighted average shares outstanding.
• Non-GAAP net loss per share, basic and diluted, in the first quarter of fiscal year 2020 was $0.03. This compares to a non-GAAP net loss per share of $0.07 in the first quarter of fiscal year 2019.
• Net cash provided by operating activities in the first quarter of fiscal year 2020 totaled $25.5 million. This compares to net cash provided by operating activities of $18.4 million in the first quarter of fiscal year 2019.
• Free cash flow in the first quarter of fiscal year 2020 was positive $13.4 million. This compares to positive $7.3 million in the first quarter of fiscal year 2019.

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.

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Business Highlights since Last Earnings Release

• Delivered wins and expansions with leading enterprises such as Blackboard, BT Group, ChargePoint, Dignity Health, Fanatics, and Rémy Cointreau Group.
• Announced an all new Box Relay, a powerful workflow engine, to simplify and accelerate business processes across any organization’s extended enterprise of employees, partners and customers.
• Launched new product integrations with best-of-breed 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

• Q2 FY20 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.
• Full Year 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.

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 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: 3887679
+ 1-647-689-4084 (international), conference ID: 3887679

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: 3887679
+ 1-416-621-4642 (international), conference ID: 3887679

Box has used, and intends to continue to use, its Investor Relations, 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 the cloud content management market, the demand for its products, its ability to scale its business and drive operating efficiencies, its ability to achieve revenue targets, expectations regarding its ability to achieve profitability on a quarterly or ongoing basis, its expectations regarding free cash flow, its ability to continue to grow unrecognized revenue and remaining performance obligations, 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, non-GAAP operating margins for future periods, the related components of GAAP and non-GAAP net income (loss) per share, and weighted average outstanding share count expectations for Box’s fiscal second 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 on a timely basis, or at all; (6) Box’s ability to provide timely and successful enhancements, new features 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 Annual Report on Form 10-K filed for the fiscal year ended January 31, 2019. These documents are available on the SEC Filings section of Box’s Investor Relations. 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.

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