Box shares jump almost 11% on big earnings beat (BOX)

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Shares of file-sharing company Box rose as much as 12% after the company blew the door off earnings expectations for the last quarter of its fiscal 2016, which ended Jan. 31.

Here's where the results came in:

• Revenue: $85 million, up 36% from a year ago, vs $81.8 million expected on average
• EPS (non-GAAP): Loss of $0.26, versus $0.29 expected.
• Net loss (GAAP): $50.4 million.

Annual revenue came in at $302.7 million, up 40% from last year.

Despite the large losses, investors were cheered by the young company's revenue growth and narrowing sales and marketing spend.

Box is relatively small as enterprise software companies go, but remains interesting for two reasons.

First, it was one of the most heavily awaited IPOs of 2015. The company had originally planned to go public in early 2014, then delayed its IPO until January 2015 because of poor market conditions for cloud-based software companies.

At the time it went public, its sales and marketing expenditures alone regularly outstripped its total revenue, but the company appears to be getting past that roadblock: Q4 sales marketing spend was only $63.3 million, vs $85.0 million in revenue.

Second, Box competes against highly valued startup Dropbox, which was valued at more than $10 billion when it last raised money in 2014, but whose private investors have reportedly cut its valuation by more than 50% since then.

Dropbox recently boasted that it has more than 500 million users, and CEO Drew Houston has claimed that its "bottom up" model, where users adopt the product on their own without necessarily involving IT departments, would help it escape the huge sales and marketing costs that Box shows.

We don't know Dropbox's annual revenue, although reports place its annualized revenue run rate at the end of 2014 around $400 million. It's worth around $5 billion. By way of comparison, Box now has a market cap of around $1.5 billion. 

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