(Reuters) - Box Inc (BOX.N) is finally bringing in more money than it is spending, the cloud software company said on Wednesday, a milestone investors have been waiting for since its initial public offering more than two years ago.
Box promised investors then that it would become free cash-flow positive during the fourth quarter of its 2017 fiscal year. The company said in its quarterly earnings on Wednesday it had made good on that promise.
“A few years ago we were telling investors that at scale you were going to see Box get more and more efficient,” Box Chief Executive and Co-founder Aaron Levie said in an interview.
The achievement suggests Silicon Valley-based Box’s turnaround strategy since its troubled IPO, which was waylaid for months as investors pressured Box to stem its losses, is working. Box has focused its sales on large corporations such as General Electric Co (GE.N) and government agencies to bring in larger checks. It has also evolved its cloud storage product to include a range of more lucrative tools such as content management, collaboration and security.
Still, shares of Box tumbled about 2 percent after the closing bell. The company provided lighter guidance for the current quarter than in previous quarters - revenue growth of about 4 percent - and some investors reined in their expectations.
Box stock had been climbing since the start of the year, up 30 percent as of the close of Wall Street on Wednesday.
Stocks that are “hot” often “pull back a bit for no other reason than someone was too optimistic about who knows what,” said Richard Davis, an analyst with Canaccord Genuity Inc.
But Box beat Wall Street expectations in quarterly revenue by more than $1 million. The company reported a 29 percent rise to $110 million for the fourth quarter of its 2017 fiscal year, which ended on Jan. 31.
For the most recent fiscal year, the company said revenue jumped 32 percent from a year earlier to $399 million.
But the company remains unprofitable. Box managed to reduce its losses to $36 million in the latest quarter from nearly $50 million a year earlier.
“We are at a scale where we are still reinvesting in growth because of the market opportunity that we see,” Levie said. “We would not want to trade off that growth rate to achieve profitability.”
Box said it now has 71,000 paying customers, 14,000 of whom were added in the last fiscal year.
Reporting by Heather Somerville in San Francisco and Laharee Chatterjee in Bengaluru; Editing by David Gregorio and James Dalgleish