U.S. Markets

Cloud storage firm Box's loss widens in third quarter, shares fall

(Reuters) - Box Inc BOX.N posted a bigger loss in the third quarter compared with a year earlier, as the cloud storage provider spent heavily on marketing to sign up more businesses to its service amid stiff competition.

Redwood City, California-based Box’s shares, which have climbed 58 percent since the start of the year, fell 8.5 percent to $20.85 in after-market trading on Wednesday.

Net loss attributable to Box shareholders widened to $42.9 million in the quarter ended Oct. 31, from $38.2 million, a year ago. Excluding one-time items, the company lost 13 cents per share, matching analysts’ average estimate, according to Thomson Reuters I/B/E/S.

Box, which competes with privately held Dropbox, as well as better-capitalized tech heavyweights including Microsoft MSFT.O and Google, has invested heavily to expand its sales teams to close more six-figure and higher contracts.

Box spent nearly $82 million on sales and marketing in the third quarter, up 22 percent from a year ago.

The higher spending comes amid soaring demand for cloud-based services from businesses seeking to take advantage of the lower costs and higher degree of flexibility associated with the cloud.

“We are seeing more and more adoption, in particular from the Fortune 500 companies,” Box Chief Executive Aaron Levie said in an interview.

Heightened concerns over cyber-security in recent months have played into Box’s strategy of giving customers more control over securing their data and protecting their corporate assets.

“That’s really Box’s core differentiator and that’s what’s driving this growth over time,” Levie said.

Box had 80,000 businesses as customers in the quarter, up from 76,000 in the previous quarter.

Still, Box said on a call with analysts it closed fewer large deals in the quarter compared to a year earlier, as some contracts slipped into the next quarter.

Box’s revenue rose nearly 26 percent to $129.3 million, edging past analysts’ expectations of $128.6 million.

The company forecast an adjusted loss of 8 to 7 cents per share and revenue of between $136 million and $137 million for the quarter ending January 2018. Analysts on average were expecting a loss of 8 cents per share and revenue of $136.8 million.

Reporting by Arjun Panchadar in Bengaluru; editing by Sai Sachin Ravikumar