Box Shares Fall as First Quarter Earnings Beat Estimates

Box shares fell during after-hours trading on Wednesday after the company reported first quarter earnings that beat Wall Street estimates.

Shares of the cloud storage company plunged nearly 6% before pulling back to 3.5% in the red during the extended session. However, its shares closed up 1.94% to $27.78 during the regular session.

The drop in shares came after the company forecasted a slow second quarter for this year.

“I think investors are always … looking for us to continue to raise guidance … We think that makes sense but obviously we want to guide numbers we feel very comfortable and confident,” Aaron Levie, Chief Executive Officer, told Reuters.

Competing with Dropbox, Microsoft’s OneDrive, and Google’s Drive, Box’s revenue grew 20% to $140.5 million in the quarter ended April 30. Additionally, the company’s billing revenue totaled $116.7, higher than the FactSet estimate of $113.1 million.

Further, Box’s software had 59.9 million registered users, with 10.4 million of them were paying, according to Chief Financial Officer Dylan Smith.

Box signed 3,000 paying business customers, totaling 85,000 for this quarter. It also spent 9% more from last year to attract them.

Net loss to Box’s shareholders was at $36.6 million, or 26 cents per share, from $40.1 million, or 30 cents per share. Stripping out items, the company lost 7 cents per share.

Box shares dropped after reporting weak outlook

The California-based company forecasted a loss for the year of 16 to 19 cents per share, excluding certain items, on $603 to $608 million in revenue. However, analysts expected a loss of 19 cents per share on $605.7 million in revenue, according to Thomson Reuters.

The company said it has been investing in cyber security, compliance, and administrative technology and plans. It was a move to increase more sales personnel as it expands in markets such as Germany, Australia, and Canada.

Moreover, Levie said the company has moved to a multi-product model and is adding more capabilities. That includes governance features, more security, and artificial intelligence to its offerings.

“We drove strong attach rates for new products, expanded our international customer base, and delivered product innovation and security for some of the largest and most regulated enterprises in the world,” Levie said.

“Our focus on security and collaboration, as well as our vision for artificial intelligence, continue to resonate.”

The company is working to boost higher product “attach rates,” and expand its penetration among large corporations, said Box’s Smith.

Furthermore, Box said Sue Barsamian, former Hewlett Packard Enterprise sales and marketing executive, is joining its board. Last quarter, Levie said the company plans to change its sales compensation system. That move is to focus more on getting customers to adopt their multiple products.