Billings, Box Inc's Key Metric, Were Up 31% In An Impressive Q1

Analysts at JMP maintain a bullish stance on Box Inc BOX after the company reported its first-quarter results, in which revenue and earnings per share came in better than Wall Street expected.

JMP's Greg McDowell commented in a research report that Box's billings in the quarter rose 31 percent year over year to $99.6 million and came in above the $97.2 million Wall Street expected. The earnings report also marked the company's second consecutive and second-ever free cash flow positive quarter, and also showed strength in its major business drivers of cross-sell and partner momentum.

Box signed 25 deals in the quarter worth over $100,000, which marks a 47-percent improvement from a year ago, the analyst noted. In fact, one-third of the deals consisted of partners like International Business Machines Corp. IBM that teamed up for two of the largest international deals in the quarter.

Stepping Back

Box's stock remains attractive to McDowell for three core reasons:

1. A long runway of growth of at least 25 percent as the company has plenty of room to expand its platform business, cross-sell additional products and gain traction with large partners.
2. There exists significant leverage in the company's model, especially in sales and marketing.
3. The competitive environment is weakening at a time when Box is seeing momentum.

McDowell concluded that at $19 per share, "Box's valuation implies a 4.5x EV/CY 2018E multiple while a $22 price target implies a 5x multiple, which is still a discount to the peer group median of 6.5x."

At last check, Box shares were up 6.63 percent at $19.93.

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