UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 1, 2017
Box, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36805 | 20-2714444 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
900 Jefferson Ave.
Redwood City, California 94063
(Address of principal executive offices, including zip code)
(877) 729-4269
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01 | Entry into a Material Definitive Agreement |
On February 28, 2017, Box, Inc. (“Box”) entered into Amendment No. 2 to the Credit Agreement dated as of December 4, 2015 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Box and HSBC Bank USA, National Association. Pursuant to the terms of the amendment, (a) the maturity date of borrowings under the Credit Agreement was extended from December 4, 2017 to December 4, 2018, and (b) the covenant in the Credit Agreement that limits the amount of Debt (as such term is defined in the Credit Agreement) that Box can incur with respect to capital leases and to finance the acquisition, construction or improvement of any equipment or capital assets was increased from $25,000,000 to $65,000,000 in aggregate principal amount at any time outstanding.
| Item 2.02 | Results of Operations and Financial Condition |
On March 1, 2017, Box issued a press release announcing its financial results for the fiscal quarter and year ended January 31, 2017. In the press release, Box also announced that it would be holding a conference call on March 1, 2017, to discuss its financial results for the fiscal quarter and year ended January 31, 2017. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
This information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit |
Description | |
| 10.1 | Amendment No. 2 to the Credit Agreement, dated February 28. 2017, between Box, Inc. and HSBC Bank USA National Association. | |
| 99.1 | Press release issued by Box, Inc. dated March 1, 2017. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BOX, INC. | ||
| By: | /s/ Dylan Smith | |
| Dylan Smith | ||
| Chief Financial Officer | ||
Date: March 1, 2017
EXHIBIT INDEX
| Exhibit |
Description | |
| 10.1 | Amendment No. 2 to the Credit Agreement, dated February 28. 2017, between Box, Inc. and HSBC Bank USA National Association. | |
| 99.1 | Press release issued by Box, Inc. dated March 1, 2017. | |
Exhibit 10.1
EXECUTION COPY
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “Amendment”) dated as of February 28, 2017 to the Credit Agreement dated as of December 4, 2015 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), between Box, Inc., a Delaware corporation (“Borrower”), and HSBC Bank USA, National Association, a national banking association (the “Lender”).
W I T N E S S E T H:
WHEREAS, Section 8.01 of the Credit Agreement permits the Credit Agreement to be amended from time to time by Borrower and Lender; and
WHEREAS, Borrower and Lender have agreed to amend certain provisions of the Credit Agreement, subject to the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.
SECTION 2. Amendments.
(a) Section 1.01 (Defined Terms).
(i) Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and substituting the following therefor:
“‘Maturity Date’: December 4, 2018.”
(b) Section 6.02 (Negative Covenants).
(i) Section 6.02(b)(ii) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting the following therefor:
“(ii) Capital Leases and Debt incurred to finance the acquisition, construction or improvement of any equipment or capital assets in an aggregate principal amount not to exceed $65,000,000 at any time outstanding.”
SECTION 3. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its choice of law principles which would result in the application of the law of another jurisdiction.
SECTION 4. Effectiveness. This Amendment shall become effective on the date when each of Borrower and Lender shall have duly executed this Amendment.
SECTION 5. Borrower’s Representations and Warranties. In order to induce Lender to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, Borrower represents and warrants to Lender that the following statements are true, correct and complete:
(a) Corporate Power and Authority. Borrower has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”).
(b) Authorization. The execution, delivery and performance by Borrower of the Amended Agreement are within Borrower’s corporate powers, and have been duly authorized by all necessary corporate action.
(c) No Conflict. The execution and delivery by Borrower of this Amendment and the performance by Borrower of the Amended Agreement do not and will not (i) violate Borrower’s charter, by-laws or other organizational document, (ii) violate any law or regulation (including Regulations T, U and X) applicable to Borrower or any order, judgment or decree of any court or governmental agency body binding on Borrower, (iii) result in a breach of or a default under, or result in or require the imposition of a Lien pursuant to any contract binding on Borrower, except to the extent the foregoing could not reasonably be expected to have a Material Adverse Effect, or (iv) violate any material agreement as to which Borrower is a party, except to the extent such violation could not reasonably be expected to result in the termination of such material agreement or otherwise have a Material Adverse Effect.
(d) Governmental Consents. The execution and delivery by Borrower of this Amendment and the performance by Borrower of the Amended Agreement do not and will not require any authorization or approval or other action by, nor notice to or filing with, any governmental authority or regulatory body.
(e) Binding Obligation. This Amendment has been duly executed and delivered by Borrower and this Amendment and the Amended Agreement constitute the binding obligations of Borrower, enforceable in accordance with its terms, except in each case as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.
(f) Absence of Default. No event or condition has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Potential Event of Default.
SECTION 6 Miscellaneous. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto
2
and hereto were upon the same instrument. This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement. Except as expressly set forth herein, this Amendment shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances.
SECTION 7 Fees and Expenses. Borrower acknowledges that all costs, fees and expenses as described in Section 8.05 of the Credit Agreement incurred by Lender and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of Borrower.
[Remainder of this page intentionally left blank.]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
| BOX, INC. | ||
| By: | /s/ Dylan Smith | |
| Name: | Dylan Smith | |
| Title: | Chief Financial Officer | |
| HSBC BANK USA, NATIONAL ASSOCIATION | ||
| By: | /s/ Vanessa Printz | |
| Name: | Vanessa Printz | |
| Title: | Vice President | |
[Signature Page to Amendment No. 2 to Credit Agreement]
Exhibit 99.1
Box Reports Record Revenue for Fiscal Year 2017, Up 32% Year-Over-Year, and
Record Cash Flow from Operations
| • | Fourth Quarter Revenue of $110 Million, Up 29% Year-Over-Year |
| • | Record Cash Flow from Operations of $15 Million for the Fourth Quarter, Up $10 Million Year-Over-Year |
| • | First Ever Quarter of Positive Free Cash Flow at $10 Million |
REDWOOD CITY, Calif. – March 1, 2017 – Box, Inc. (NYSE:BOX), a leader in cloud content management, today announced financial results for the fiscal fourth quarter and full fiscal year 2017, which ended January 31, 2017.
“Fiscal 2017 was a milestone year for Box as we achieved record revenue with growth of 32% year-over-year and delivered on our commitment to generate positive free cash flow for the first time in the fourth quarter,” said Aaron Levie, co-founder and CEO of Box. “Box is raising the bar in cloud content management. We’ve consistently delivered innovative new products, set the standard for security and compliance, and helped customers in every industry move to the cloud with confidence. We are driving towards a $1 billion long-term revenue target, and this year we plan to invest for scale while continuing to drive operating leverage.”
“We generated free cash flow of $10 million, improving more than $30 million year-over-year, and delivered the promise we made two years ago to achieve positive free cash flow by Q4 of our 2017 fiscal year.” said Dylan Smith, co-founder and CFO of Box. “These results demonstrate the strength of our business model and our operating discipline as we work towards the goal of achieving positive free cash flow for the full year of fiscal 2018.”
Fiscal Fourth Quarter Financial Highlights
| • | Revenue for the fourth quarter of fiscal 2017 was a record $109.9 million, an increase of 29% from the fourth quarter of fiscal 2016. |
| • | Billings for the fourth quarter of fiscal 2017 were $159.3 million, an increase of 22% from the fourth quarter of fiscal 2016. |
| • | GAAP operating loss in the fourth quarter of fiscal 2017 was $36.4 million, or 33% of revenue. This compares to GAAP operating loss of $49.6 million, or 58% of revenue, in the fourth quarter of fiscal 2016. |
| • | Non-GAAP operating loss in the fourth quarter of fiscal 2017 was $12.7 million, or 12% of revenue. This compares to a non-GAAP operating loss of $31.1 million, or 37% of revenue, in the fourth quarter of fiscal 2016. |
| • | GAAP net loss per share, basic and diluted, in the fourth quarter of fiscal 2017 was $0.28 on 129.8 million shares outstanding, compared to a GAAP net loss per share of $0.41 in the fourth quarter of fiscal 2016 on 123.3 million shares outstanding. |
| • | Non-GAAP net loss per share, basic and diluted, in the fourth quarter of fiscal 2017 was $0.10, compared to non-GAAP net loss per share of $0.26 in the fourth quarter of fiscal 2016. |
| • | Net cash provided by operating activities in the fourth quarter of fiscal 2017 totaled $14.7 million. This was a $9.9 million improvement compared to net cash provided by operating activities of $4.9 million in the fourth quarter of fiscal 2016. |
| • | Free cash flow in the fourth quarter of fiscal 2017 was $10.2 million, a $31.5 million improvement compared to negative $21.3 million, in the fourth quarter of fiscal 2016. |
Fiscal Year 2017 Financial Highlights
| • | Revenue in fiscal year 2017 was a record $398.6 million, an increase of 32% from fiscal year 2016. |
| • | Deferred revenue for fiscal year 2017 ended at $242.0 million, an increase of 30% from fiscal year 2016. |
| • | Billings for fiscal year 2017 were $454.2 million, an increase of 23% from fiscal year 2016. |
| • | GAAP operating loss in fiscal year 2017 was $150.7 million, or 38% of revenue. This compares to GAAP operating loss of $201.0 million, or 66% of revenue, in fiscal year 2016. |
| • | Non-GAAP operating loss in fiscal year 2017 was $70.6 million, or 18% of revenue. This compares to non-GAAP operating loss of $134.3 million, or 44% of revenue, in fiscal year 2016. |
| • | GAAP net loss per share, basic and diluted, in fiscal year 2017 was $1.19 on 127.5 million shares outstanding, compared to GAAP net loss per share of $1.67 in fiscal year 2016 on 121.2 million shares outstanding. |
| • | Non-GAAP net loss per share, basic and diluted, in fiscal year 2017 was $0.56 compared to non-GAAP net loss per share of $1.12 in fiscal year 2016. |
| • | Net cash used in operating activities in fiscal year 2017 totaled $1.2 million. This was a $65.1 million improvement compared to net cash used in operating activities of $66.3 million in fiscal year 2016. |
| • | Free cash flow in fiscal year 2017 was negative $24.8 million, compared to negative $116.3 million, in fiscal year 2016. |
| • | Cash, cash equivalents, and restricted cash were $204.2 million as of January 31, 2017, of which $26.8 million was restricted. |
For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the section titled, “About Non-GAAP Financial Measures and Other Key Metrics,” and the reconciliations of non-GAAP measures and certain key metrics to their nearest comparable GAAP measures at the end of this press release.
Business Highlights since Last Earnings Release
| • | Grew paying customer base to over 71,000 businesses, including new or expanded deployments with leading enterprises such as Volkswagen Group of America, Discovery Communications, John Muir Health, and Spotify. |
| • | Launched the new Box Notes web and desktop apps, driving real-time collaboration across teams with the security, governance and compliance required by large enterprises. |
| • | Added Australia and Canada to Box’s robust data residency offering, Box Zones. Customers are now able to store data locally in seven countries across North America, Europe, Asia, and Australia. |
| • | Expanded integrations with Microsoft, including Office 365 supported on Android, round trip editing across the entire Office product suite, and improved Excel preview capabilities, making the Box and Office user experience even more seamless. |
| • | Expanded Box and IBM integrations with the availability of Box + IBM Cloud Connections, which enables users to store, share, access, and update their Box content within the IBM Connections environment. |
| • | Enhanced the Box Platform developer experience to make it easier for developers to collaborate and manage their content in one place while tapping into the expertise of Box’s growing community. |
| • | Launched a new Partner Portal, giving partners the ability to engage with Box directly and conduct day-to-day operations more effectively. |
Outlook
| • | Q1 FY18 Guidance: Revenue is expected to be in the range of $114 million to $115 million. GAAP and non-GAAP basic and diluted earnings per share are expected to be in the range of ($0.33) to ($0.32) and ($0.15) to ($0.14), respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 131 million. |
| • | Full Year FY18 Guidance: Revenue is expected to be in the range of $500 million to $504 million. GAAP and non-GAAP basic and diluted earnings per share are expected to be in the range of ($1.27) to ($1.23) and ($0.49) to ($0.45), respectively. Weighted average basic and diluted shares outstanding are expected to be approximately 134 million. |
All forward-looking non-GAAP financial measures contained in this section titled “Outlook” exclude estimates for stock-based compensation expense, intangible assets amortization and certain legal settlement and related costs. Box has provided a reconciliation of GAAP to non-GAAP earnings per share guidance at the end of this press release.
Webcast and Conference Call Information
Box’s management team will host a conference call today beginning at 2:00 PM (PT) / 5:00 PM (ET) to discuss Box’s financial results, business highlights and future outlook. A live audio webcast of this call will be available through Box’s Investor Relations website at www.box.com/investors for a period of 90 days after the date of the call.
The access details for the live conference call are:
+ 1-877-201-0168, (U.S. and Canada), conference ID: 51055301
+ 1-647-788-4901 (international), conference ID: 51055301
A telephonic replay of the call will be available approximately two hours after the call and will run for one week. The replay can be accessed by dialing:
+ 1-855-859-2056 (U.S. and Canada), conference ID: 51055301
+ 1-404-537-3406 (international), conference ID: 51055301
Box has used, and intends to continue to use, its Investor Relations website (www.box.com/investors), as well as certain Twitter accounts (@boxhq, @levie and @boxincir), as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Information on or that can be accessed through Box’s Investor Relations website, these Twitter accounts, or that is contained in any website to which a hyperlink is provided herein is not part of this press release, and the inclusion of Box’s Investor Relations website address, these Twitter accounts, and any hyperlinks are only inactive textual references.
This press release, the financial tables, as well as other supplemental information including the reconciliations of non-GAAP measures and certain key metrics to their nearest comparable GAAP measures, are also available on Box’s Investor Relations website. Box also provides investor information, including news and commentary about Box’s business and financial performance, Box’s filings with the Securities and Exchange Commission, notices of investor events and Box’s press and earnings releases, on Box’s Investor Relations website.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Box’s expectations regarding the size of its market opportunity, the demand for its products, its ability to scale its business and drive operating leverage, its long-term revenue target expectations, its ability to maintain positive free cash flow for the full fiscal year ending January 31, 2018, profitability, recent and planned product introductions and enhancements, benefits of such product introductions and enhancements, and success of strategic partnerships, as well as expectations regarding its revenue, GAAP and non-GAAP earnings per share, the related components of GAAP and non-GAAP earnings per share, and weighted average basic and diluted outstanding share count expectations for Box’s fiscal first quarter and full fiscal year 2018 in the section titled “Outlook” above. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: (1) adverse changes in general economic or market conditions; (2) delays or reductions in information technology spending; (3) factors related to Box’s intensely competitive market, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by Box’s current or future competitors; (4) the development of the Cloud Content Management market; (5) risks associated with Box’s ability to manage its rapid growth effectively; (6) Box’s limited operating history, which makes it difficult to predict future results; (7) the risk that Box’s customers do not renew their subscriptions, expand their use of Box’s services, or adopt new products offered by Box; (8) Box’s ability to provide timely and successful enhancements, new features and modifications to its platform and services; (9) actual or perceived security vulnerabilities in Box’s services or any breaches of Box’s security controls; and (10) Box’s ability to realize the expected benefits of its third-party partnerships.
Additional information on potential factors that could affect Box’s financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings Box makes with the Securities and Exchange Commission from time to time, including the Quarterly Report on Form 10-Q filed for the fiscal quarter ended October 31, 2016. These documents are available on the SEC Filings section of Box’s Investor Relations website located at www.box.com/investors. Box does not assume any obligation to update the forward-looking statements contained in this press release to reflect events that occur or circumstances that exist after the date on which they were made.
About Non-GAAP Financial Measures and Other Key Metrics
To supplement Box’s consolidated financial statements, which are prepared and presented in accordance with GAAP, Box provides investors with certain non-GAAP financial measures and other key metrics, including non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, billings and free cash flow. The presentation of these non-GAAP financial measures and key metrics is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures and key metrics, please see the reconciliation of these non-GAAP measure and certain key metrics to their nearest comparable GAAP measures at the end of this press release.
Box uses these non-GAAP financial measures and key metrics for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Box’s management believes that these non-GAAP financial measures and key metrics provide meaningful supplemental information regarding Box’s performance by excluding certain expenses that may not be indicative of Box’s recurring core business operating results. Box believes that both management and investors benefit from referring to these non-GAAP financial measures and key metrics in assessing Box’s performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures and key metrics also facilitate management’s internal comparisons to Box’s historical performance as well as comparisons to Box’s competitors’ operating results. Box believes these non-GAAP financial measures and key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by Box’s institutional investors and the analyst community to help them analyze the health of Box’s business.
A limitation of non-GAAP financial measures and key metrics is that they do not have uniform definitions. Further, Box’s definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, Box’s non-GAAP measures and key metrics should be considered in addition to, and not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based compensation expense, if Box did not pay a portion of compensation in the form of stock-based compensation expense, the cash salary expense included in cost of revenue and operating expenses would be higher, which would affect Box’s cash position.
Non-GAAP operating loss and non-GAAP operating margin. Box defines non-GAAP operating loss as operating loss excluding expenses related to stock-based compensation (“SBC”), intangible assets amortization, and as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating loss divided by revenue. Although SBC is an important aspect of the compensation of Box’s employees and executives, determining the fair value of certain of the stock-based instruments Box utilizes involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of Box’s ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond Box’s control. For restricted stock unit awards, the amount of stock-based compensation expenses is not reflective of the value ultimately received by the grant recipients. Management believes it is useful to exclude SBC in order to better understand the long-term performance of Box’s core business and to facilitate comparison of Box’s results to those of peer companies. Management also views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s developed technology and trade names, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period. Box further excludes expenses related to certain litigation because they are considered by management to be special items outside Box’s core operating results.
Non-GAAP net loss and non-GAAP net loss per share. Box defines non-GAAP net loss as net loss excluding expenses related to SBC, intangible assets amortization, and as applicable, other special items. Box defines non-GAAP net loss per share as non-GAAP net loss divided by the weighted average outstanding shares. Box excludes expenses related to certain litigation because they are considered by management to be special items outside Box’s core operating results.
Billings. Billings reflect, in any particular period, (1) sales to new customers, plus (2) subscription renewals and (3) expansion within existing customers, and represent amounts invoiced for all products and professional services. Box calculates billings for a period by adding changes in deferred revenue in that period to revenue. Box believes that billings help investors better understand sales activity for a particular period, which is not necessarily reflected in revenue as a result of the fact that Box recognizes subscription revenue ratably over the subscription term. Box considers billings a significant performance measure and, after adjusting for any shifts in relative payment frequencies, a leading indicator of future revenue. Box monitors billings to manage the business, make planning decisions, evaluate performance and allocate resources. Box believes that billings offers valuable supplemental information regarding the performance of the business and will help investors better understand the sales volumes and performance of the business. Although Box considers billings to be a significant performance measure, Box does not consider it to be a non-GAAP financial measure given that it is calculated using exclusively revenue and deferred revenue, both of which are financial measures calculated in accordance with GAAP.
Free cash flow. Box defines free cash flow as cash (used in) provided by operating activities less purchases of property and equipment, principal payments of capital lease obligations, and other items that did not or are not expected to require cash settlement and that management considers to be outside of Box’s core business. Box specifically identifies adjusting
items in the reconciliation of GAAP to non-GAAP financial measures. Historically, these items have included restricted cash used to guarantee a significant letter of credit for Box’s Redwood City headquarters. Box considers free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in Box’s business and strengthening its balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
The accompanying tables have more details on the reconciliations of non-GAAP measures and certain key metrics to their nearest comparable GAAP measures.
About Box
Box (NYSE:BOX) is the cloud content management company that empowers enterprises to revolutionize how they work by securely connecting their people, information and applications. Founded in 2005, Box powers more than 71,000 businesses globally, including AstraZeneca, General Electric, P&G, and The GAP. Box is headquartered in Redwood City, CA, with offices across the United States, Europe and Asia. To learn more about Box, visit http://www.box.com/.
Contacts
Investors:
Stephanie Wakefield
VP, Investor Relations
+1 650-209-3463
swakefield@box.com
Alice Kousoum Lopatto
Sr. Manager, Investor Relations
+1 650-209-3467
alopatto@box.com
Media:
Denis Roy, Box
+1 650-543-6926
press@box.com
BOX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
| January 31, 2017 |
January 31, 2016 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 177,391 | $ | 185,741 | ||||
| Marketable securities |
— | 7,379 | ||||||
| Accounts receivable, net |
120,113 | 99,542 | ||||||
| Prepaid expenses and other current assets |
10,826 | 14,729 | ||||||
| Deferred commissions |
13,771 | 12,603 | ||||||
|
|
|
|
|
|||||
| Total current assets |
322,101 | 319,994 | ||||||
| Property and equipment, net |
117,176 | 120,492 | ||||||
| Intangible assets, net |
543 | 3,895 | ||||||
| Goodwill |
16,293 | 14,301 | ||||||
| Restricted cash |
26,781 | 27,952 | ||||||
| Other long-term assets |
10,780 | 10,854 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 493,674 | $ | 497,488 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 6,658 | $ | 9,862 | ||||
| Accrued compensation and benefits |
30,415 | 35,631 | ||||||
| Accrued expenses and other current liabilities |
17,713 | 31,926 | ||||||
| Capital lease obligations |
13,748 | 4,698 | ||||||
| Deferred revenue |
228,656 | 168,051 | ||||||
| Deferred rent |
751 | 298 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
297,941 | 250,466 | ||||||
| Debt, non-current |
40,000 | 40,000 | ||||||
| Capital lease obligations, non-current |
21,697 | 7,316 | ||||||
| Deferred revenue, non-current |
13,328 | 18,362 | ||||||
| Deferred rent, non-current |
44,207 | 41,674 | ||||||
| Other long-term liabilities |
1,769 | 1,769 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
418,942 | 359,587 | ||||||
|
|
|
|
|
|||||
| Stockholders’ equity: |
||||||||
| Common stock |
13 | 12 | ||||||
| Additional paid-in capital |
960,144 | 871,491 | ||||||
| Treasury stock |
(1,177 | ) | (1,177 | ) | ||||
| Accumulated other comprehensive loss |
(120 | ) | (84 | ) | ||||
| Accumulated deficit |
(884,128 | ) | (732,341 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
74,732 | 137,901 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 493,674 | $ | 497,488 | ||||
|
|
|
|
|
|||||
BOX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited Except Fiscal Year Ended January 31, 2016)
| Three Months Ended January 31, |
Fiscal Year Ended January 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue |
$ | 109,926 | $ | 84,982 | $ | 398,605 | $ | 302,704 | ||||||||
| Cost of revenue(1)(2) |
29,554 | 25,681 | 112,130 | 87,100 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
80,372 | 59,301 | 286,475 | 215,604 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development(2) |
31,104 | 26,589 | 115,928 | 102,500 | ||||||||||||
| Sales and marketing(2) |
66,566 | 63,257 | 253,020 | 242,184 | ||||||||||||
| General and administrative(1)(2) |
19,095 | 19,019 | 68,182 | 71,923 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
116,765 | 108,865 | 437,130 | 416,607 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(36,393 | ) | (49,564 | ) | (150,655 | ) | (201,003 | ) | ||||||||
| Interest expense, net |
(309 | ) | (384 | ) | (896 | ) | (1,157 | ) | ||||||||
| Other income (expense), net |
69 | (155 | ) | 678 | (98 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss before provision for income taxes |
(36,633 | ) | (50,103 | ) | (150,873 | ) | (202,258 | ) | ||||||||
| Provision for income taxes |
244 | 270 | 914 | 690 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss |
(36,877 | ) | (50,373 | ) | (151,787 | ) | (202,948 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss per share, basic and diluted |
$ | (0.28 | ) | $ | (0.41 | ) | $ | (1.19 | ) | $ | (1.67 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average shares used to compute net loss per share, basic and diluted |
129,757 | 123,321 | 127,469 | 121,240 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
(1) Includes intangible assets amortization as follows: |
||||||||||||||||
| Cost of revenue |
$ | 393 | $ | 1,433 | $ | 3,197 | $ | 5,443 | ||||||||
| General and administrative |
39 | 37 | 155 | 154 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total intangible assets amortization |
$ | 432 | $ | 1,470 | $ | 3,352 | $ | 5,597 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (2) Includes stock-based compensation expense as follows: |
||||||||||||||||
| Cost of revenue |
$ | 2,554 | $ | 1,500 | $ | 7,882 | $ | 4,664 | ||||||||
| Research and development |
9,194 | 6,675 | 30,796 | 24,696 | ||||||||||||
| Sales and marketing |
7,752 | 5,500 | 26,142 | 19,530 | ||||||||||||
| General and administrative |
3,802 | 2,982 | 13,552 | 10,614 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total stock-based compensation |
$ | 23,302 | $ | 16,657 | $ | 78,372 | $ | 59,504 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
BOX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited Except Fiscal Year Ended January 31, 2016)
| Three Months Ended January 31, |
Fiscal Year Ended January 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||||
| Net loss |
$ | (36,877 | ) | $ | (50,373 | ) | $ | (151,787 | ) | $ | (202,948 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||||||
| Depreciation and amortization |
8,639 | 11,427 | 40,154 | 40,394 | ||||||||||||
| Stock-based compensation expense |
23,302 | 16,657 | 78,372 | 59,504 | ||||||||||||
| Amortization of deferred commissions |
4,633 | 4,314 | 18,260 | 15,816 | ||||||||||||
| Other |
18 | 532 | 114 | 1,089 | ||||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: |
||||||||||||||||
| Accounts receivable |
(34,118 | ) | (35,174 | ) | (20,571 | ) | (45,368 | ) | ||||||||
| Deferred commissions |
(9,974 | ) | (9,829 | ) | (20,047 | ) | (21,725 | ) | ||||||||
| Prepaid expenses, restricted cash and other assets |
1,751 | (170 | ) | 5,858 | (25,717 | ) | ||||||||||
| Accounts payable |
(3,162 | ) | (5,901 | ) | (1,093 | ) | (4,022 | ) | ||||||||
| Accrued expenses and other liabilities |
11,215 | 17,317 | (9,035 | ) | 17,943 | |||||||||||
| Deferred rent |
(92 | ) | 10,799 | 2,986 | 32,357 | |||||||||||
| Deferred revenue |
49,386 | 45,266 | 55,571 | 66,356 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) operating activities |
14,721 | 4,865 | (1,218 | ) | (66,321 | ) | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||||
| Purchases of marketable securities |
— | — | — | (112,521 | ) | |||||||||||
| Sales of marketable securities |
— | 11,516 | 240 | 78,427 | ||||||||||||
| Maturities of marketable securities |
— | 6,225 | 7,057 | 26,370 | ||||||||||||
| Purchases of property and equipment |
(1,317 | ) | (25,097 | ) | (14,956 | ) | (72,939 | ) | ||||||||
| Proceeds from sale of property and equipment |
3 | 73 | 87 | 73 | ||||||||||||
| Acquisitions and purchases of intangible assets, net of cash acquired |
— | — | — | (271 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(1,314 | ) | (7,283 | ) | (7,572 | ) | (80,861 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||||
| Proceeds from initial public offering, net of offering costs |
— | — | — | (2,172 | ) | |||||||||||
| Proceeds from borrowings, net of borrowing costs |
(13 | ) | 39,860 | (106 | ) | 39,860 | ||||||||||
| Principal payments on borrowings |
— | (40,000 | ) | — | (40,000 | ) | ||||||||||
| Proceeds from exercise of stock options, net of repurchases of early exercised stock options |
3,483 | 1,867 | 11,086 | 7,015 | ||||||||||||
| Proceeds from issuances of common stock under employee stock purchase plan |
— | — | 15,726 | 10,282 | ||||||||||||
| Employee payroll taxes paid related to net share settlement of restricted stock units |
(3,958 | ) | (2,144 | ) | (17,552 | ) | (10,436 | ) | ||||||||
| Payments of capital lease obligations |
(3,236 | ) | (1,108 | ) | (8,675 | ) | (2,036 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash (used in) provided by financing activities |
(3,724 | ) | (1,525 | ) | 479 | 2,513 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents |
(92 | ) | (11 | ) | (39 | ) | (26 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in cash and cash equivalents |
9,591 | (3,954 | ) | (8,350 | ) | (144,695 | ) | |||||||||
| Cash and cash equivalents, beginning of period |
167,800 | 189,695 | 185,741 | 330,436 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash and cash equivalents, end of period |
$ | 177,391 | $ | 185,741 | $ | 177,391 | $ | 185,741 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
BOX, INC.
RECONCILIATION OF GAAP TO NON-GAAP DATA
(In Thousands, Except Per Share Data and Percentages)
(Unaudited)
| Three Months Ended January 31, |
Fiscal Year Ended January 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| GAAP operating loss |
$ | (36,393 | ) | $ | (49,564 | ) | $ | (150,655 | ) | $ | (201,003 | ) | ||||
| Stock-based compensation |
23,302 | 16,657 | 78,372 | 59,504 | ||||||||||||
| Intangible assets amortization |
432 | 1,470 | 3,352 | 5,597 | ||||||||||||
| Expenses related to legal settlement (1) |
— | 309 | (1,664 | ) | 1,586 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP operating loss |
$ | (12,659 | ) | $ | (31,128 | ) | $ | (70,595 | ) | $ | (134,316 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| GAAP operating margin |
(33 | )% | (58 | )% | (38 | )% | (66 | )% | ||||||||
| Stock-based compensation |
21 | 20 | 19 | 20 | ||||||||||||
| Intangible assets amortization |
— | 1 | 1 | 1 | ||||||||||||
| Expenses related to legal settlement (1) |
— | — | — | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP operating margin |
(12 | )% | (37 | )% | (18 | )% | (44 | )% | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| GAAP net loss |
$ | (36,877 | ) | $ | (50,373 | ) | $ | (151,787 | ) | $ | (202,948 | ) | ||||
| Stock-based compensation |
23,302 | 16,657 | 78,372 | 59,504 | ||||||||||||
| Intangible assets amortization |
432 | 1,470 | 3,352 | 5,597 | ||||||||||||
| Expenses related to legal settlement (1) |
— | 309 | (1,664 | ) | 1,586 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP net loss |
$ | (13,143 | ) | $ | (31,937 | ) | $ | (71,727 | ) | $ | (136,261 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| GAAP net loss per share, basic and diluted |
$ | (0.28 | ) | $ | (0.41 | ) | $ | (1.19 | ) | $ | (1.67 | ) | ||||
| Stock-based compensation |
0.18 | 0.13 | 0.61 | 0.49 | ||||||||||||
| Intangible assets amortization |
— | 0.02 | 0.03 | 0.05 | ||||||||||||
| Expenses related to legal settlement (1) |
— | — | (0.01 | ) | 0.01 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP net loss per share, basic and diluted |
$ | (0.10 | ) | $ | (0.26 | ) | $ | (0.56 | ) | $ | (1.12 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average shares outstanding, basic and diluted |
129,757 | 123,321 | 127,469 | 121,240 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| GAAP net cash provided by (used in) operating activities |
$ | 14,721 | $ | 4,865 | $ | (1,218 | ) | $ | (66,321 | ) | ||||||
| Restricted cash used to guarantee a letter of credit for Redwood City HQ |
— | — | — | 25,000 | ||||||||||||
| Purchases of property and equipment |
(1,317 | ) | (25,097 | ) | (14,957 | ) | (72,939 | ) | ||||||||
| Payments of capital lease obligations |
(3,236 | ) | (1,108 | ) | (8,675 | ) | (2,036 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Free cash flow |
$ | 10,168 | $ | (21,340 | ) | $ | (24,850 | ) | $ | (116,296 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | Included in general and administrative expenses in the condensed consolidated statements of operations. |
BOX, INC.
RECONCILIATION OF GAAP REVENUE TO BILLINGS
(In Thousands)
(Unaudited)
| Three Months Ended January 31, |
Fiscal Year Ended January 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| GAAP revenue |
$ | 109,926 | $ | 84,982 | $ | 398,605 | $ | 302,704 | ||||||||
| Deferred revenue, end of period |
241,984 | 186,413 | 241,984 | 186,413 | ||||||||||||
| Less: deferred revenue, beginning of period |
(192,598 | ) | (141,147 | ) | (186,413 | ) | (120,057 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Billings |
$ | 159,312 | $ | 130,248 | $ | 454,176 | $ | 369,060 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS PER SHARE GUIDANCE
(In Thousands)
(Unaudited)
| For the Three Months Ended April 30, 2017 |
For the Year Ended January 31, 2018 |
|||||||
| GAAP net loss per share range, basic and diluted |
$ | (0.33-0.32 | ) | $ | (1.27-1.23 | ) | ||
| Stock-based compensation |
0.18 | 0.78 | ||||||
| Intangible assets amortization |
— | — | ||||||
|
|
|
|
|
|||||
| Non-GAAP net loss per share range, basic and diluted |
$ | (0.15-0.14 | ) | $ | (0.49-0.45 | ) | ||
|
|
|
|
|
|||||
| Weighted average shares outstanding, basic and diluted |
131,445 | 134,120 | ||||||
|
|
|
|
|
|||||