Box CEO Aaron Levie. Image source: Box.

What: Shares of enterprise cloud storage provider Box (BOX -1.58%) dropped 17.7% in June, according to data provided by S&P Global Market Intelligence. While the company beat analyst estimates when it reported its first-quarter results on June 1, billings came in well short of expectations.

So what: Box reported first-quarter revenue of $90 million, up 37% year over year and about $1.5 million higher than the average analyst estimate. Earnings were better than expected as well, with non-GAAP EPS of ($0.18) ahead of analyst expectations by $0.06. The company added more than 5,000 new customers during the quarter, and it was nearly break-even on an adjusted operating cash flow basis.

Despite handily beating analyst estimates, shares of Box tumbled following the earnings announcement. Billings, which Box calculates by adding changes in deferred revenue to revenue, grew by just 9% year over year to $75.9 million. Deferred revenue declined during the quarter, reducing billings growth.

Box blamed the drop in deferred revenue on increasing seasonality and the company's shift from multiyear prepayments to annual payments. Deferred revenue is booked when Box receives payment for services it has yet to deliver, so moving to an annual payment schedule from a multiyear payment schedule would have the effect of reducing deferred revenue.

Now what: Billings growth is generally viewed as a proxy for future revenue growth, and investors took the slow-down during the first quarter as a bad sign. Given the various factors affecting billings growth during the quarter, it's not a very useful number for predicting future revenue. Box expects its revenue to grow by 29% to 30% year over year during the second quarter, a slowdown compared to the first quarter, but still a healthy pace.

BOX Chart

BOX data by YCharts.

Shares of Box have been beaten down since the company went public early last year, and June's woes only add to investors' misery. Including June's decline, Box stock has lost 55% of its value since its IPO, with concerns about both growth and the company's substantial losses keeping investors away. Going forward, Box will need to prove that the slowdown in billings is nothing to worry about.