Wall St asks Box, what have you done for me lately? Punishes stock after first earnings report dissappoints
Remember the collective euphoria and high-fiving after Box emerged from its pre-IPO fog and delivered a massive pop on listing day? Well it didn’t last long. The company delivered its first quarterly earnings report as a public company today and the Street wasn’t impressed.
If you recall, Box got its first taste of public company scrutiny when the company first filed its IPO prospectus in March of last year. Sure the company had grown massively in its run up to its public debut, but in doing so it had burned through a massive amount of venture capital, all while leaving lingering doubts about a path to near-(or even long)-term profitability. Shortly thereafter, and thanks to some bad luck that saw the markets sour on high-burn SaaS businesses, the company returned to the private markets and raised an onerous late-stage round.
But all these transgressions seemed to be forgiven earlier this year, when Box closed its first day of Nasdaq trading up 66 percent, giving the company a day one market cap of more than $2 billion. Sure, it was still a modest figure given the earlier expectations set for Box. Nevertheless, it was the kind of champagne-filled Wall Street initiation that founders and VCs dream of. That was 47 days ago.
At the close of trading today, Box released its Q4 financials, besting revenue estimates $62.6 to $58 million. So far so good. But the company badly missed on net loss projections, bleeding $1.65 per share, well above the consensus $1.17 analysts predicted. It was a further signal that Box’s high spending ways are still very much part of the company’s identity. For a clue into how Wall Street views the news, consider that the company’s stock is down more than 13.5 percent in after hours trading.
Silicon Valley is quick to lambast Wall Street for its short-term focus. With this in mind, it pays to remember that the verdict on Box wasn’t written today, or in January during its IPO. The ultimate verdict will be written years or decades into the future, should the company survive that long.
Nevertheless, Box is learning a lesson that has confronted so many promising companies. In the private markets, the primary currencies are growth and potential. Once you enter the public markets, it’s cold, hard results that matter. And none of those stale, last quarter results. The Street only wants to know, what have you done for me lately?
Update, 3/11/15, 4:45pm – Shortly after publishing, Bloomberg revealed that Box's quarterly net loss was less than previously reported, due to an incorrect share count used in that caculation:
Bloomberg data has now confirmed what Box says. Using the correct share count, Box loss was indeed smaller than analysts forecast.
— Dina Bass (@dinabass) March 11, 2015