A month has gone by since the last earnings report for Box (BOX Quick QuoteBOX - Free Report) . Shares have added about 3.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Box due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Box Q1 Earnings Top Estimates

Box reported first-quarter fiscal 2024 non-GAAP earnings per share of 32 cents, which surpassed the Zacks Consensus Estimate by 18.5%. The figure jumped 39.1% year over year.

Total revenues of $251.9 million beat the consensus mark of $249.3 million. The top line increased 6% year over year (10% growth on a constant currency basis).

Solid momentum in the Content Cloud platform and growing adoption of Enterprise Plus Suites drove top-line growth.

Moreover, strong deal wins with Enterprise Plus were a positive.

Quarter in Detail

Billings were $191.9 million for the reported quarter, improving 11% year over year (15% growth on a constant currency basis).

Deferred revenues were $507 million in the fiscal first quarter, increasing 8% from the prior fiscal-year quarter’s reading.

BOX saw a 69% attach rate for its Suites, down 400 basis points (bps) year over year.

Further, Box’s net retention rate was 106% at the end of the fiscal first quarter.

The remaining performance obligations for the reported quarter were $1.2 billion, up 17% on a year-over-year basis (19% growth on a constant currency basis).

Operating Results

Non-GAAP gross margin was 77.9%, expanding 160 bps from the same-quarter level in the previous year.

Box’s operating expenses of $181.9 million increased 3.6% year over year. As a percentage of revenues, the figure contracted 140 bps from the year-ago quarter’s level to 72.2%.

On a non-GAAP basis, BOX recorded an operating margin of 22.8%, which expanded 220 bps from the prior-year quarter’s level.

Balance Sheet & Cash Flow

As of Apr 30, 2023, cash and cash equivalents were $481.4 million, up from $428.5 million as of Jan 31, 2023. BOX’s short-term investments amounted to $35.6 million, up from $32.8 million in the previous fiscal quarter.

Accounts receivables amounted to $132.7 million at the end of the fiscal first quarter, which decreased from $264.5 million at the end of the prior fiscal quarter.

Non-current debt stood at $369.82 million at the reported quarter’s end compared with $369.35 million at the prior quarter’s end.

Box generated $124.9 million in cash from operations in the fiscal first quarter, up from $92.2 million in the previous fiscal quarter.

Additionally, BOX generated a free cash flow of $108.2 million in the fiscal first quarter.

Guidance

For second-quarter fiscal 2024, Box expects revenues between $260 million and $262 million, suggesting a 7% 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 11%.

On a non-GAAP basis, BOX projects earnings per share of 34 to 35 cents. The guidance includes an expected foreign exchange headwind of 5 cents.

The non-GAAP operating margin for the fiscal second quarter is expected to be 24%.

For fiscal 2024, Box anticipates revenues between $1.045 billion and $1.055 billion, indicating an increase of 6% from the last fiscal year’s reading at the high end of the range. Further, the constant currency growth rate is pegged at 10%.

On a non-GAAP basis, BOX expects earnings per share in the band of $1.44-$1.50, including an expected foreign exchange headwind of 20 cents.

The non-GAAP operating margin for the full fiscal year is expected to be 25.5%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted -150% due to these changes.

VGM Scores

At this time, Box has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Box has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Box belongs to the Zacks Internet - Software industry. Another stock from the same industry, Palo Alto Networks (PANW Quick QuotePANW - Free Report) , has gained 18.8% over the past month. More than a month has passed since the company reported results for the quarter ended April 2023.

Palo Alto reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of +24.1%. EPS of $1.10 for the same period compares with $0.60 a year ago.

Palo Alto is expected to post earnings of $1.28 per share for the current quarter, representing a year-over-year change of +60%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Palo Alto. Also, the stock has a VGM Score of C.