Shares of Box (BOX) -6% are trading at a two-year low after the company guided revenue below estimates for the second consecutive quarter.
Box reported a slightly smaller than expected first quarter adjusted net loss on slightly higher than expected sales. Revenue grew 16%, the slowest on record. What's more, billings grew only 1%, missing estimates. This is quite disappointing for the cloud storage leader.
The company cited an elongated sales cycle for larger deals for the second quarter in a row.
The company guided second quarter revenue below consensus and lowered revenue guidance for fiscal 2020 by almost 2%. Box is projecting ~13% revenue growth for the year, which isn't all that attractive for growth investors.
Canaccord Genuity downgraded the stock to Hold this morning, noting that the company spends nearly half of its revenue on sales and marketing expense, which is way too much relative to the lack of sales growth. The analyst suggested activists could get involved given the low valuation and poor execution.
Box is seeing progress with margins. The company's operating margins are already close to breakeven. Box has guided for marginal profitability this year and a 6-7% non-GAAP operating margin in fiscal 2021, up from (2%) in fiscal 2019.
The stock opened at a two-year low before quickly reclaiming its December lows this morning. It trades at less than 4x sales, which is less than half of the revenue multiples seen with most cloud stocks that are growing in excess of 20%.