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Why Box Stock Dropped Today

By Steve Symington – Updated Apr 15, 2019 at 3:56PM

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Forward guidance from the cloud content platform leader left the market wanting more.

What happened

Shares of Box (BOX -0.93%) were down 19.5% as of 1:00 p.m. EST Thursday after the cloud content management specialist announced mixed quarterly results and soft forward guidance relative to expectations. 

More specifically on the former, Box's fiscal fourth-quarter 2019 revenue climbed 19.8% year over year to $163.7 million, near the low end of Box's narrow guidance range provided in November calling for $163.5 million to $164.5 million. But that also translated to adjusted (non-GAAP) net income of $8.4 million, or $0.06 per share, compared to an adjusted loss of $0.06 per share in the same year-ago period and well above its outlook for per-share earnings of $0.02 to $0.03.

Stock market charts and data indicating losses.


So what

In fact, this marked Box's first-ever quarter of non-GAAP profitability -- an achievement CFO Dylan Smith credited to the improved operational efficiencies.

Still, Box co-founder and CEO Aaron Levie noted that fourth-quarter billings (up 16% to $237.7 million) arrived below expectations, due to weakness in the EMEA (Europe, Middle East, Africa) region and "longer sales cycles for some seven-figure deals."

"Looking to [fiscal year 2020], we are confident that our leadership position enables us to disrupt the legacy content management market and help our customers accelerate their digital transformation," Levie added.

Check out the latest Box earnings call transcript.

Now what

To that end, Box expects full fiscal-year 2020 revenue in the range of $700 million to $704 million, up 15.4% from fiscal 2019. On the bottom line, Box sees adjusted earnings arriving in the range of a $0.03-per-share loss to net income of $0.01 per share. Though we don't usually pay close attention to Wall Street's demands, even the high ends of both ranges were below consensus estimates for adjusted earnings of $0.03 per share on revenue closer to $734 million.

Of course, Box could be leaving room to overdeliver as it continues to drive operating efficiencies and closes the sales cycle on some of its larger deals. But in the meantime, with shares up more than 35% year to date as of yesterday's close, it's no surprise to see Box stock pulling back.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of Box. The Motley Fool has a disclosure policy.

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