Jun 11, 2015 · 3 minutes

For Box, the enterprise-storage company that went public in January, the second time may prove to be the charm. After its first earnings report saw the stock tumble 13 percent three months ago, the company's earnings unveiled Wednesday afternoon prompted a 10-percent rally in the stock in after-hours trading. And that's on top of a 5-percent gain Wednesday before the earnings.

In the three months through April, Box said revenue rose 45 percent to $65.6 million, while the company posted a net loss, excluding certain items, of 28 cents a share. Wall Street analysts had been expecting revenue of $63.7 million and a loss of 31 cents a share. While still bleeding red ink, Box's performance managed to exceed the mostly bearish expectations of investors.

More importantly, Box offered a forecast that was also above Wall Street's consensus estimate. In the current quarter, Box expects revenue between $69 million and $70 million, against the $67 million consensus figure, while revenue for the full year through January 2016 would come in between $286 million and $299 million, above the $283 million estimate.

As a publicly traded stock, Box is a work in progress. Like many companies that are going public, Box has a long history of steep losses but needed more capital to push itself into profitability. Investors will tolerate losses as long as a company can persuade them they will turn into profits within a reasonable amount of time.

The jury has been out on whether Box can deliver. Box offered its stock at $14 a share in January, saw it surge as high as $23.23 on its first day and then as low as $16.76 on Tuesday. The stock was trading near $19.55 in late Wednesday trading, roughly halfway between its offering price and its first-day high.

The rally doesn't mean Box has more work to do, only that investors are encouraged about its progress. Box has been branching out from the online-storage model, which faces intense competition, to fast, secure online-collaboration products, in which companies share sensitive materials with employees or other companies.

In addition, Box has focused products on specific industries, like health care, retail, and entertainment. It's also been trying to secure more customers among government agencies. Last quarter showed Box gaining ground in these areas, launching Box for Financial Services and signing deals with the US Department of Justice and the Government Digital Service in the UK.

There were also signs of financial strength in the quarter. Billings, a measure of future revenue, increase by 58 percent year over year. In the previous quarter, the growth rate of Billings was only 33 percent, an area of concern for some investors. Box added 2000 new customers last quarter – including larger clients such as Deloitte, HP and Chipotle — bringing the total to 47,000. More than 51 percent of paying customers are Fortune 500 firms.

At the same time, the company is slowly bringing down its expenses. A year ago, sales and marketing costs were equal to 100 percent of revenue. Now those costs are equal to 80 percent of revenue as Box has worked to increase leverage in its sales model and marketing costs. However, its gross margin declined to 76.8 percent from 81.6 percent a year ago because of data center investments and rents related to its new headquarters.

Box is still burning through cash but at a slower rate, which for growing startup can be an encouraging sign. Box's cash on hand fell to $284 million from $330 million three months ago, although $25 million of the company's cash is restricted to guarantee a letter of credit for new headquarters in Redwood City. Operating cash flow, a measure of how much money the core business is generating or burning, was -$7.2 million, compared with -$15.6 million in the previous quarter.

There's still much work to be done. The sooner Box can turn its cash flows positive, the more encouraged investors will feel. But today's reaction to its earnings report suggests that the case the company has been making all along – investing heavily early to build growth and profits in coming years – doesn't seem so crazy after all. It may just needs some more time to pull off.