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BOX Q2 Earnings Match Estimates and Revenues Increase Y/Y
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Box, Inc. (BOX - Free Report) reported second-quarter fiscal 2023 earnings per share of 28 cents, in line with the Zacks Consensus Estimate. The figure jumped 33.3% year over year and 21.7% sequentially.
Total revenues were $246 million, beating the consensus mark by 0.5%. Also, the top line increased 14.7% year over year and 3.2% from the prior quarter’s level.
The growing adoption of Box’s Content Cloud drove the top line. However, unfavorable foreign exchange remained a headwind.
Nevertheless, Box closed 86 deals in the fiscal second quarter. BOX saw a 72% attach rate of its suites owing to increasing demand for multi-product suite offerings. Nearly 40% of revenues were generated from suite sales compared with 28% in the year-ago period.
Strength in customer acquisition and retention drove the results. Box’s net retention rate was 112% at the end of the fiscal second quarter, expanding 600 basis points (bps) from the prior-year fiscal quarter’s end-level.
The remaining performance obligations for the reported quarter were $1.05 billion, up 14% on a year-over-year basis.
Billings were $235 million for the reported quarter, improving 10% year over year.
Deferred revenues were $458 million in the fiscal second quarter, increasing 9% from the prior fiscal-year quarter’s reading.
Quarter in Detail
Box witnessed several wins and expansions with companies like Apellis Pharmaceuticals, ByteDance, Marriott International, New York Genome Center, Playbill Incorporated and Reddit in the reported quarter.
BOX introduced security enhancements in its core platform to help admins and security teams protect the flow of content inside and outside the organization and across multiple devices.
Box made enhancements for the Salesforce integration so that customers can use it for signature-based processes and workflows in Salesforce.
Box expanded its global network of Box zones with the addition of the France zone, which includes a primary data center in Paris and a secondary in Marseille. With the introduction of the France zone, BOX aims to help French companies and multinational organizations operate in France store their content with maximum security and governance.
The abovementioned initiatives were key takeaways from the fiscal second quarter.
Operating Results
Non-GAAP gross margin was 76.2%, expanding 170 bps from the same-quarter level in the previous year.
Box’s operating expenses of $178 million increased 11.4% year over year. As a percentage of revenues, the figure contracted 214 bps from the year-ago quarter’s level to 72.4%.
On a non-GAAP basis, BOX recorded an operating margin of 21.7%, which expanded 110 bps from the prior-year quarter’s level.
Balance Sheet and Cash Flow
As of Jul 31, 2022, cash and cash equivalents were $348.9 million compared with $391.4 million as of Apr 30, 2022. BOX’s short-term investments amounted to $44.7 million compared with $127.9 million in the previous fiscal quarter.
Accounts receivables amounted to $166.6 million at the end of the fiscal second quarter, which increased from $117.1 million at the prior fiscal-quarter end.
Box generated $28.3 million of cash from operations in the reported quarter, down from $107.7 million in the previous fiscal quarter. Additionally, BOX generated a free cash flow of $18 million in the fiscal second quarter.
In the reported quarter, Box repurchased 4.6 million shares for approximately $118 million.
Guidance
For third-quarter fiscal 2023, Box expects revenues between $250 million and $252 million, suggesting a 13% rise at the high-end of the range from the prior fiscal year’s reported figure. The Zacks Consensus Estimate for the same is pegged at $250.9 million.
On a non-GAAP basis, BOX projects earnings per share of 29-30 cents. The Zacks Consensus Estimate for the same is pegged at 30 cents.
Non-GAAP operating margin for the fiscal third quarter is expected to be 23%.
For fiscal 2023, Box anticipates revenues between $992 million and $996 million, indicating an increase of 14% from the last fiscal year’s reading at the high-end of the range. The Zacks Consensus Estimate for the same is pegged at $993.97 million.
On a non-GAAP basis, BOX raised its guidance for earnings per share from $1.11-$1.15 to $1.13-$1.16. The consensus mark for the same is pegged at $1.13 per share.
Non-GAAP operating margin for the full fiscal is expected to be 22.5%.
Zacks Rank & Stocks to Consider
Box currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader technology sector can consider some better-ranked stocks like Arista Networks (ANET - Free Report) , Monolithic Power Systems (MPWR - Free Report) and ASE Technology (ASX - Free Report) . While Arista Networks sports a Zacks Rank #1 (Strong Buy), Monolithic Power Systems and ASE Technology carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks has lost 12.6% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.9%.
Monolithic Power Systems has gained 0.8% in the past year. The long-term earnings growth rate for MPWR is currently projected at 25%.
ASE Technology has lost 24.8% in the year-to-date period. The long-term earnings growth rate for ASX is currently projected at 23.1%.
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BOX Q2 Earnings Match Estimates and Revenues Increase Y/Y
Box, Inc. (BOX - Free Report) reported second-quarter fiscal 2023 earnings per share of 28 cents, in line with the Zacks Consensus Estimate. The figure jumped 33.3% year over year and 21.7% sequentially.
Total revenues were $246 million, beating the consensus mark by 0.5%. Also, the top line increased 14.7% year over year and 3.2% from the prior quarter’s level.
The growing adoption of Box’s Content Cloud drove the top line. However, unfavorable foreign exchange remained a headwind.
Nevertheless, Box closed 86 deals in the fiscal second quarter. BOX saw a 72% attach rate of its suites owing to increasing demand for multi-product suite offerings. Nearly 40% of revenues were generated from suite sales compared with 28% in the year-ago period.
Strength in customer acquisition and retention drove the results. Box’s net retention rate was 112% at the end of the fiscal second quarter, expanding 600 basis points (bps) from the prior-year fiscal quarter’s end-level.
The remaining performance obligations for the reported quarter were $1.05 billion, up 14% on a year-over-year basis.
Box, Inc. Price and Consensus
Box, Inc. price-consensus-chart | Box, Inc. Quote
Billings and Deferred Revenues
Billings were $235 million for the reported quarter, improving 10% year over year.
Deferred revenues were $458 million in the fiscal second quarter, increasing 9% from the prior fiscal-year quarter’s reading.
Quarter in Detail
Box witnessed several wins and expansions with companies like Apellis Pharmaceuticals, ByteDance, Marriott International, New York Genome Center, Playbill Incorporated and Reddit in the reported quarter.
BOX introduced security enhancements in its core platform to help admins and security teams protect the flow of content inside and outside the organization and across multiple devices.
Box made enhancements for the Salesforce integration so that customers can use it for signature-based processes and workflows in Salesforce.
Box expanded its global network of Box zones with the addition of the France zone, which includes a primary data center in Paris and a secondary in Marseille. With the introduction of the France zone, BOX aims to help French companies and multinational organizations operate in France store their content with maximum security and governance.
The abovementioned initiatives were key takeaways from the fiscal second quarter.
Operating Results
Non-GAAP gross margin was 76.2%, expanding 170 bps from the same-quarter level in the previous year.
Box’s operating expenses of $178 million increased 11.4% year over year. As a percentage of revenues, the figure contracted 214 bps from the year-ago quarter’s level to 72.4%.
On a non-GAAP basis, BOX recorded an operating margin of 21.7%, which expanded 110 bps from the prior-year quarter’s level.
Balance Sheet and Cash Flow
As of Jul 31, 2022, cash and cash equivalents were $348.9 million compared with $391.4 million as of Apr 30, 2022. BOX’s short-term investments amounted to $44.7 million compared with $127.9 million in the previous fiscal quarter.
Accounts receivables amounted to $166.6 million at the end of the fiscal second quarter, which increased from $117.1 million at the prior fiscal-quarter end.
Box generated $28.3 million of cash from operations in the reported quarter, down from $107.7 million in the previous fiscal quarter. Additionally, BOX generated a free cash flow of $18 million in the fiscal second quarter.
In the reported quarter, Box repurchased 4.6 million shares for approximately $118 million.
Guidance
For third-quarter fiscal 2023, Box expects revenues between $250 million and $252 million, suggesting a 13% rise at the high-end of the range from the prior fiscal year’s reported figure. The Zacks Consensus Estimate for the same is pegged at $250.9 million.
On a non-GAAP basis, BOX projects earnings per share of 29-30 cents. The Zacks Consensus Estimate for the same is pegged at 30 cents.
Non-GAAP operating margin for the fiscal third quarter is expected to be 23%.
For fiscal 2023, Box anticipates revenues between $992 million and $996 million, indicating an increase of 14% from the last fiscal year’s reading at the high-end of the range. The Zacks Consensus Estimate for the same is pegged at $993.97 million.
On a non-GAAP basis, BOX raised its guidance for earnings per share from $1.11-$1.15 to $1.13-$1.16. The consensus mark for the same is pegged at $1.13 per share.
Non-GAAP operating margin for the full fiscal is expected to be 22.5%.
Zacks Rank & Stocks to Consider
Box currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader technology sector can consider some better-ranked stocks like Arista Networks (ANET - Free Report) , Monolithic Power Systems (MPWR - Free Report) and ASE Technology (ASX - Free Report) . While Arista Networks sports a Zacks Rank #1 (Strong Buy), Monolithic Power Systems and ASE Technology carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks has lost 12.6% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.9%.
Monolithic Power Systems has gained 0.8% in the past year. The long-term earnings growth rate for MPWR is currently projected at 25%.
ASE Technology has lost 24.8% in the year-to-date period. The long-term earnings growth rate for ASX is currently projected at 23.1%.