February 27, 2019 / 9:09 PM / 22 days ago

Box shares tumble 24 percent as forecast hit by slowing billings growth

(Reuters) - Cloud content management platform Box Inc’s fourth-quarter revenue and current-quarter forecast missed Wall Street estimates, as the company was hurt by weaker-than-expected billings growth and sluggish customer additions, sending its shares down 24 percent.

Box’s fourth-quarter billings - revenue plus the change in deferred revenue - rose 16 percent to $237.7 million, below the “mid 20s” growth rate that it had forecast in the third-quarter and well short of analysts’ estimates of $255.5 million, according to IBES data from Refinitiv.

Chief Executive Aaron Levie blamed underperformance in EMEA and longer sales cycles for some seven-figure deals for its billings weakness.

Box said the U.S. government shutdown delayed one of the seven-figure deals for the company.

It expects current-quarter billings growth to be in the low single-digit range, before returning to more normalized growth rates for the remainder of 2020.

“It’s hard not to be disappointed by the results. Box is a company with good technology and impressive enterprise penetration, especially in the Fortune 500, but we appear to see extended sales execution issues” D.A. Davidson’s Rishi Jaluria said.

Jaluria said he is worried the turnaround in sales and reacceleration of growth may take “significantly longer than the company or investors expected”.

The company forecast current-quarter revenue in the range of $161 million to $162 million and adjusted loss of 6 cents to 5 cents per share. Analysts were expecting revenue of $169.7 million and a loss of 1 cent per share.

For the full-year 2020, it forecast revenue to be in the range of $700 to $704 million, which also fell below analysts’ expectations of $732.7 million.

Box said it will see an $8 million headwind in 2020 as one of its customers reduced its spend with the company.

The company, which competes with Microsoft Corp’s OneDrive and Google’s Drive, added 2,000 customers in the quarter, at a slower pace than the preceding quarter when it added 3,000 customers.

Earlier in February, Dropbox forecast a drop in current-quarter operating margins from a year earlier.

Shares of rival Dropbox fell 1 percent to $24.

Box’s net loss narrowed to $19.7 million, or 14 cents per share, in the quarter ended Jan. 31, from $32.7 million, or 24 cents per share, a year earlier.

Excluding items, Box reported its first ever profit of 6 cents per share, above the average analyst estimate of 2 cents.

Revenue rose to $163.7 million from $136.7 million, missing estimates of $164.2 million.

Shares of the company, that have risen around 44 percent this year, fell to $18.90 in extended trading.

Reporting by Arjun Panchadar in Bengaluru; Editing by Shinjini Ganguli

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