Oppenheimer inspired by Box Inc (NYSE:BOX)’s F3Q2016 performance

 

Box Inc (NYSE:BOX)’s above-expectation topline and bottom-line results have firmed the confidence of Oppenheimer in the long-term prospects of the company. Continued customer win and large deals with the likes of the International Business Machines Corp. (NYSE:IBM) are other factors that make Oppenheimer more hopeful of the company’s future.

 

Box Inc (NYSE:BOX) didn’t hesitate to beat the consensus expectations in its F3Q2016. Additionally, the management has kept hope alive by reiterating the earlier target of ending fiscal 2017 with at least $150 million in cash.

 

3Q highlight

Box Inc (NYSE:BOX) generated revenue of $78.7 million in the quarter, cashing the consensus estimate of $76.8 million. The EPS loss of $0.31 for the quarter was in-line with the consensus target of the same figure.

 

In the current quarter, the management is modeling continued topline growth with revenue expected in the vicinity of $81-$82 million. The Street is looking for revenue of $80.8 million for the quarter.

 

As for fiscal 2016, Box targets revenue in the band of $299 to $300 million compared to the consensus estimate of $296.7 million.

 

Customer acquisition

 

Oppenheimer is impressed that Box continues to win over new customers at a decent rate. The company added more than 4,000 new customers, taking its total customer numbers to about 54,000.

 

Joint deals

Box’s association with big names such as IBM bodes well for the company, according to Oppenheimer.

 

The growing interest in Box’s Platform service also positions the company for more topline growth in the future, a development that should have positive impact on the bottom-line figures.

 

Positive free cash flow

 

The management of Box Inc (NYSE:BOX) remains confident that achieving positive free cash flow of $150 million at the end of fiscal 2017 is within view. With free cash flow, Box is able to sidestep cash shortage problem that can lead to diluting of the stock.

 

Areas of concern

As much as Oppenheimer is constructive on the prospects of Box, the firm notes that there exist volatilities in the business, which heightens performance uncertainties, primarily because of the business is in the early stage of development.

 

Oppenheimer has Outperform rating on Box Inc (NYSE:BOX) with a 12-month price target of $21.

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