Box shares sink as forecast indicates slower revenue growth

Box Inc. saw its shares tumble Wednesday as investors got more nervous about its slowing revenue growth.

Earlier, Box reported fiscal first-quarter results, with revenue and a net loss that were within Wall Street’s expectations, but its outlook indicated continued slower revenue growth for the rest of the year. Box’s full-year outlook called for revenue in the range of $603 million to $608 million, or growth of 20% at the high end of that range, up from fiscal 2018 revenue of $506 million.

While 20% growth is nothing to sneeze at for most companies, last year the cloud-storage company had revenue growth of 27%. Shares of Box , which have had a big run-up in recent weeks, fell 4.6% in after-hours trading, while the S&P 500   closed up 1.27% on Wednesday.

In a brief interview, Box Chief Executive Aaron Levie said the company has moved to a multi-product model and is adding more capabilities, including governance features, more security and artificial intelligence to its offerings. “It will show up in much more into the next fiscal year,” he said.

Some questions on the company’s call with analysts were about the pace of getting new customers and whether its new products would contribute much to revenue going forward.

“By now there’s a good five, six, seven [new products], not any of them are broadly adopted or priced in a way that can drive massive revenue growth, correct me if I’m wrong,” one analyst said. Box executives cited new deals that had added “many new logos,” including adding the Defense Department’s DARPA as a new customer.

Levie urged patience, telling analysts that, as the company had discussed in its fiscal fourth-quarter call, over time a greater percentage of overall sales will be coming from those newer products.

But whether or not Box can get back to its higher growth rates is a big question that investors will keep asking, until they see evidence otherwise.