Box (BOX 20.19, -4.69, -18.85%) is getting crushed after missing on the top line and guiding first quarter and fiscal 2020 below consensus last night.
The cloud storage company reported a smaller than expected net loss but revenue came in toward the lower half of its narrow guidance range. Revenue grew just under 20%, the slowest rate on record. Billings, which represent revenue plus the change in deferred revenue, grew only 16%, also missing estimates.
Box had two primary reasons for the soft report. A few seven figure deals got delayed. Meanwhile, the company is seeing weakness in Europe, the Middle East, and Africa (EMEA).
Paying customers grew ~2% sequentially to over 92,000 organization. "In the fourth quarter, we continued to drive operational efficiencies, including achieving our first quarter of non-GAAP profitability," said Dylan Smith, co-founder and CFO of Box. "We remain focused on long-term growth on our path to a billion dollars in revenue and beyond, while driving continued leverage in our business model and targeting our first full year of non-GAAP profitability in FY20."
Box guided for the potential of non-GAAP profitability this year, but investors are more focused on top line growth. Guidance for first quarter revenue was 5% below consensus and guidance for fiscal 2020 was 4% below consensus. Box had guided revenue in line with consensus seven quarters in a row.
Revenue is excepted to grow just over 15% this year. Revenue grew 20% in 2018 (fiscal 2019), down from 27% in 2017, 32% in 2016 and 40% in 2015. Slowing growth is weighing on the multiple investors are willing to pay for the stock.
With a ~$300 million valuation, the stock trades at just over 4x sales. Larger peer Dropbox (DBX -2%) trades at ~6x sales, growing at a slightly higher pace. Both cloud storage companies trade at a discount to higher quality software-as-a-service stocks that trade with a high single digit sales multiple on average.
The stock is attempting to reclaim support near the $20 level this morning.