BOX Q2 Earnings and Revenues Surpass Estimates, Rise Y/Y
Box, Inc. BOX reported second-quarter fiscal 2024 non-GAAP earnings per share of 36 cents, which surpassed the Zacks Consensus Estimate by 2.9%. The figure jumped 28.6% year over year.
Total revenues of $261.43 million beat the consensus mark of $261.03 million. The top line increased 6% year over year (9% growth on a constant-currency basis).
Solid momentum in the Content Cloud platform and the growing adoption of Enterprise Plus Suites drove top-line growth.
Moreover, continuous product enhancements and the growing momentum of Box AI were positives.
However, macro concerns continue to impact the customers’ IT spending negatively.
Box, Inc. Price, Consensus and EPS Surprise
Box, Inc. price-consensus-eps-surprise-chart | Box, Inc. Quote
Quarter in Detail
Billings were $232.5 million for the reported quarter, decreasing 1% year over year (1% growth on a constant-currency basis).
Deferred revenues were $479 million in the fiscal second quarter, increasing 5% from the prior fiscal-year quarter’s reading (8% growth on a constant-currency basis).
BOX saw a 78% attach rate for its Suites, up 600 basis points (bps) year over year.
Further, Box’s net retention rate was 103% at the end of the fiscal second quarter, down 900 bps year over year.
The remaining performance obligations for the reported quarter were $1.14 billion, up 8% on a year-over-year basis (11% growth on a constant-currency basis).
Operating Results
Non-GAAP gross margin was 76.9%, expanding 70 bps from the same-quarter level in the previous year.
Box’s operating expenses of $184.5 million increased 3.7% year over year. As a percentage of revenues, the figure contracted 180 bps from the year-ago quarter’s level to 70.6%.
On a non-GAAP basis, the company recorded an operating margin of 24.8%, which expanded 310 bps from the prior-year quarter’s level.
Balance Sheet & Cash Flow
As of Jul 31, 2023, cash and cash equivalents were $395.97 million, down from $481.4 million as of Apr 30, 2023. BOX’s short-term investments amounted to $49.4 million, up from $35.6 million in the previous fiscal quarter.
Accounts receivables amounted to $165.4 million at the end of the fiscal second quarter, which increased from $132.7 million at the end of the prior fiscal quarter.
Non-current debt was pegged at $369.82 million at the reported quarter’s end, which remained flat in comparison with the previous quarter’s level.
Box generated $32.7 million in cash from operations in the fiscal second quarter, down from $124.9 million in the previous fiscal quarter.
Additionally, BOX generated a free cash flow of $20.6 million in the fiscal second quarter.
Guidance
For third-quarter fiscal 2024, Box expects revenues between $261 million and $263 million, suggesting a 5% rise at the high end of the range from the prior fiscal year’s reported figure. Further, the constant currency growth rate is pegged at 7%. The Zacks Consensus Estimate for the same is pegged at $264.3 million.
On a non-GAAP basis, BOX projects earnings per share in the range of 37 cents to 38 cents. The guidance includes an expected foreign exchange headwind of 4 cents. The Zacks Consensus Estimate for the same is pegged at 38 cents.
The non-GAAP operating margin for the fiscal third quarter is expected to be 25.5%.
For fiscal 2024, the company trimmed its revenue guidance from $1.045-$1.055 billion to $1.040-$1.044 billion, indicating an increase of 5% from the last fiscal year’s reading at the high end of the range. Further, the constant currency growth rate is pegged at 8%. The Zacks Consensus Estimate for the stock is pegged at $1.05 billion.
BOX also updated its guidance for non-GAAP earnings per share, which is now expected in the band of $1.46-$1.50, including an expected foreign exchange headwind of 17 cents. Previous guidance for the same was $1.44-$1.50. The consensus mark for the same is pegged at $1.47 per share.
The non-GAAP operating margin for the full fiscal year is expected to be 25.5%.
Zacks Rank & Stocks to Consider
Box currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Applied Materials AMAT, Arista Networks ANET and Salesforce CRM. Applied Materials sports a Zacks Rank #1 (Strong Buy), and Arista Networks and Salesforce carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials shares have gained 54% in the year-to-date period. AMAT’s long-term earnings growth rate is currently projected at 6.10%.
Arista Networks shares have gained 52.8% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.75%
Salesforce shares have gained 59.9% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 19.25%.
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