BOX Stock: Poised to Become Profitable and Disruptive
Box Inc (NYSE:BOX) is not yet profitable, but it is achieving high growth on a significant scale. The cloud software company continues to improve its products and enter into meaningful partnerships to strengthen Box stock in the growing market for enterprise content management and collaboration.
In its second quarter of fiscal 2017, Box Inc reported that its billings increased 34% to $106.0 million and that its revenue rose 30% to $95.7 million year-over-year. Its non-generally accepted accounting principles (GAAP) operating loss improved from $32.7 million, or 45% of revenue, to $17.9 million, or 19% of revenue. Its adjusted net loss per share declined from $0.28 to $0.14.
The cloud software company added 4,000 new customers, including some large clients, bringing its total operating business clients to 66,000. Some of its major client wins include The Western Union Company (NYSE:WU), Uber Technologies Inc., and Electronic Arts Inc. (NASDAQ:EA). (Source: “Box Reports Record Second Quarter Revenue of $95.7 Million, Up 30% Year-Over-Year,” BusinessWire, August 31, 2016.)
Box’s rapid growth shows that it is poised to disrupt the enterprise content management sector and become profitable soon. There is a big chance for BOX stock to trade higher from its current trading price of $15.68 per share. The cloud software company went public on January 23, 2015, and offered its stock at $14.00 per share.
Box Offers a Modern Content Platform
Some Wall Street analysts believe that Box poses a serious threat to existing players in the enterprise content management market, based on the fact that it provides user-friendly solutions to consumers and its cloud platform addresses the needs and requirements of businesses.
Box co-founder and CEO Aaron Levie previously stated that management has focused on solidifying the company’s position as the world’s only modern content platform in the enterprise sector by expanding its product portfolio to differentiate itself and drive top-line growth.
The company acquired Wagon Analytics, Inc. to accelerate its development of an analytics platform for customers and give them intelligent insights about their content management and collaboration. Box is also building a world-class partner ecosystem to ensure that its customers have the ability to access their content wherever they are.
Last month, management launched a new Box platform to allow enterprises to become more connected, collaborative, and faster. Enterprises will now be able to centralize their critical business content in a single platform and eliminate costly, hard-to-use legacy systems and limited file-sync and share-point solutions. (Source: “Box Introduces an All New Box to Power the Future of Work,” BusinessWire, September 7, 2016.)
Box Growth Drivers: Partnerships with Tech Giants
As part of its initiative to create a world-class partner ecosystem, Box has collaborated with tech giants including Microsoft Corporation (NASDAQ:MSFT), International Business Machines Corp. (NYSE:IBM), and Google, otherwise known as Alphabet Inc (NASDAQ:GOOG).
Earlier this year, Box Inc expanded its collaboration with Microsoft with integrations for “Office Online” with real-time co-authoring, “Office for IOS,” and “Outlook.com.”
Levie noted that Box’s partnership with Microsoft convinced multi-national technology companies to use its platform and “Officer 365” to manage their global marketing activities. The adoption of Office 365 serves as a primary driving force for new customers to invest in Box and existing clients to increase their usage of its platform.
Box and IBM agreed to integrate their products and services and develop innovative solutions targeted across industries and professions. The partnership combines Box’s industry-leading content collaboration platform with “IBM Analytics and Social Solutions,” “IBM Security,” and “IBM Cloud’s” global footprint. The partnership also enables IBM builders and developers to integrate Box application program interfaces (APIs) into enterprise apps and web services.
Enterprise customers are inclined to purchase Box’s products through IBM because they are aware of the long-term benefits of using and integrating the products and services offered by both companies.
Last month, Box announced its partnership with Google on several initiatives. The companies agreed to integrate Box with “Google Docs” and “Google Springboard” to deliver a seamless experience for clients working and collaborating on content in the cloud. (Source: “Box and Google Partner to Transform Work in the Cloud,” BusinessWire, September 7, 2016.)
Thousands of organizations currently depend on Box Inc for secure content management and Google Docs for productivity and collaboration. The partnership allows enterprises to work faster and smarter while ensuring the security of their content in one central platform.
Box Inc shows that its products and services are relevant, making it a critical partner for big technology companies such as IBM, Google, and Microsoft. Its partnership with the tech giants is a significant contributor to its rapid growth and could help BOX stock gain double digits.
It is expanding its business internationally and recently opened its offices in Amsterdam and Stockholm. It is now focused on Germany as part of its effort to widen its presence in Europe. The company is currently providing services to multinational firms in all major industries, including construction, entertainment, healthcare, finance, life sciences, media, technology, retail, and others.
Box Inc has already completed the approval process for its global Binding Corporate Rules (BCRs) as a data processor and controller from the U.K. Information Commissioner’s Office (ICO) and the Spanish and Polish Dara Protection Authorities (DPAs). Box is among the first companies that holds APEC Cross Border Privacy Rules and approved BCRs. (Source: “Box Extends Global Cloud with Milestone BCR Approval,” Box Inc, September 19, 2016.)
The Bottom Line for BOX Stock
Box Inc is obviously experiencing a tremendous positive momentum and winning large customers. I believe the company is on the right track to generate profits over the long term. Take note that its financial situation is improving every quarter. Its adjusted net loss declined from $0.31 per share to $0.14 per share over the past four quarters, which is an improvement of more than 14%. On an annual basis, the company improved more than 65% as its net loss dropped from $14.89 per share in its fiscal 2014 to $1.14 per share in its fiscal 2016.
BOX stock’s revenue growth rate was nearly seven percent over the past four quarters, up from $78.65 million in 3Q16 to $95.71 million in 2Q17. On an annual basis from its fiscal 2015 to 2016, the company’s revenue growth rate was almost 40%.
Wall Street analysts are optimistic that Box Inc could outperform the market. They forecasted that its stock price could surge as much as $25.00 per share, which is an upside of almost 59% from its current trading price. Their median price target for BOX stock is $18.00 a share, an increase of more than 14%.