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BOX's Q3 Earnings and Revenues Lag Estimates, Increase Y/Y
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Box, Inc. (BOX - Free Report) reported third-quarter fiscal 2024 non-GAAP earnings per share of 36 cents, which missed the Zacks Consensus Estimate by 5.3%. The figure jumped 16.2% year over year.
Total revenues of $261.54 million lagged the consensus mark of $262.03 million. The top line increased 5% year over year (7% 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.
Continuous product enhancements and the growing momentum of Box AI were a positive.
However, macroeconomic concerns continue to impact IT spending negatively.
Box has lost 14.2% year to date against the industry’s gain of 57.5%.
Billings were $254 million for the reported quarter, decreasing 2% year over year (2% growth on a constant currency basis).
Deferred revenues were $472 million in the fiscal third quarter, increasing 1% from the prior fiscal-year quarter’s reading (2% growth on a constant currency basis).
BOX saw a 79% attach rate for its Suites, up 600 basis points (bps) year over year. Moreover, 51% of revenues came from Suites, expanding 900 bps year over year.
Box’s net retention rate was 102% at the end of the fiscal third quarter, down 800 bps year over year due to macroeconomic challenges.
The remaining performance obligations for the reported quarter were $1.13 billion, up 7% on a year-over-year basis (8% growth on a constant currency basis).
Operating Results
Non-GAAP gross margin was 76.3%, contracting 20 bps from the same-quarter level in the previous year.
Box’s operating expenses of $180.9 million increased by 5.1% year over year. As a percentage of revenues, the figure expanded 30 bps from the year-ago quarter’s level to 69.2%.
On a non-GAAP basis, the company recorded an operating margin of 24.7%, which expanded by 70 bps from the prior-year quarter’s level.
Balance Sheet & Cash Flow
As of Oct 31, 2023, cash and cash equivalents were $377.9 million, down from $395.9 million as of Jul 31, 2023.
BOX’s short-term investments amounted to $61.8 million, up from $49.4 million in the previous fiscal quarter.
Accounts receivables amounted to $166.9 million at the end of the fiscal third quarter, which increased from $165.4 million at the end of the prior fiscal quarter.
Non-current debt was pegged at $370.3 million at the reported quarter’s end compared with $369.82 million at the previous quarter’s end.
Box generated $71.8 million in cash from operations in the fiscal third quarter, down from $32.7 million in the previous fiscal quarter.
BOX generated a free cash flow of $58.3 million in the fiscal third quarter.
Guidance
For fourth-quarter fiscal 2024, Box expects revenues between $262 million and $264 million, suggesting a 3% rise at the high end of the range from the prior fiscal year’s reported figure. The constant currency growth rate is pegged at 5%. The Zacks Consensus Estimate for the same is pinned at $266.99 million.
On a non-GAAP basis, BOX projects earnings per share in the range of 38-39 cents. The guidance includes an expected foreign exchange headwind of 3 cents. The Zacks Consensus Estimate for the same is pegged at 43 cents.
The non-GAAP operating margin for the fiscal fourth quarter is expected to be 25.5%.
For fiscal 2024, the company trimmed its revenue guidance from $1.040-$1.044 billion to $1.037-$1.039 billion, indicating an increase of 5% from the last fiscal year’s reading at the high end of the range. The constant currency growth rate is pegged at 8%. The Zacks Consensus Estimate for the stock is pinned at $1.04 billion.
BOX also updated its guidance for non-GAAP earnings per share, which is now expected in the band of $1.42-$1.43, including an expected foreign exchange headwind of 17 cents. Previous guidance for the same was $1.46-$1.50. The consensus mark for the same is pegged at $1.49 per share.
The non-GAAP operating margin for the full fiscal year is expected to be 24.5%.
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BOX's Q3 Earnings and Revenues Lag Estimates, Increase Y/Y
Box, Inc. (BOX - Free Report) reported third-quarter fiscal 2024 non-GAAP earnings per share of 36 cents, which missed the Zacks Consensus Estimate by 5.3%. The figure jumped 16.2% year over year.
Total revenues of $261.54 million lagged the consensus mark of $262.03 million. The top line increased 5% year over year (7% 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.
Continuous product enhancements and the growing momentum of Box AI were a positive.
However, macroeconomic concerns continue to impact IT spending negatively.
Box has lost 14.2% year to date against the industry’s gain of 57.5%.
Box, Inc. Price, Consensus and EPS Surprise
Box, Inc. price-consensus-eps-surprise-chart | Box, Inc. Quote
Quarter in Detail
Billings were $254 million for the reported quarter, decreasing 2% year over year (2% growth on a constant currency basis).
Deferred revenues were $472 million in the fiscal third quarter, increasing 1% from the prior fiscal-year quarter’s reading (2% growth on a constant currency basis).
BOX saw a 79% attach rate for its Suites, up 600 basis points (bps) year over year. Moreover, 51% of revenues came from Suites, expanding 900 bps year over year.
Box’s net retention rate was 102% at the end of the fiscal third quarter, down 800 bps year over year due to macroeconomic challenges.
The remaining performance obligations for the reported quarter were $1.13 billion, up 7% on a year-over-year basis (8% growth on a constant currency basis).
Operating Results
Non-GAAP gross margin was 76.3%, contracting 20 bps from the same-quarter level in the previous year.
Box’s operating expenses of $180.9 million increased by 5.1% year over year. As a percentage of revenues, the figure expanded 30 bps from the year-ago quarter’s level to 69.2%.
On a non-GAAP basis, the company recorded an operating margin of 24.7%, which expanded by 70 bps from the prior-year quarter’s level.
Balance Sheet & Cash Flow
As of Oct 31, 2023, cash and cash equivalents were $377.9 million, down from $395.9 million as of Jul 31, 2023.
BOX’s short-term investments amounted to $61.8 million, up from $49.4 million in the previous fiscal quarter.
Accounts receivables amounted to $166.9 million at the end of the fiscal third quarter, which increased from $165.4 million at the end of the prior fiscal quarter.
Non-current debt was pegged at $370.3 million at the reported quarter’s end compared with $369.82 million at the previous quarter’s end.
Box generated $71.8 million in cash from operations in the fiscal third quarter, down from $32.7 million in the previous fiscal quarter.
BOX generated a free cash flow of $58.3 million in the fiscal third quarter.
Guidance
For fourth-quarter fiscal 2024, Box expects revenues between $262 million and $264 million, suggesting a 3% rise at the high end of the range from the prior fiscal year’s reported figure. The constant currency growth rate is pegged at 5%. The Zacks Consensus Estimate for the same is pinned at $266.99 million.
On a non-GAAP basis, BOX projects earnings per share in the range of 38-39 cents. The guidance includes an expected foreign exchange headwind of 3 cents. The Zacks Consensus Estimate for the same is pegged at 43 cents.
The non-GAAP operating margin for the fiscal fourth quarter is expected to be 25.5%.
For fiscal 2024, the company trimmed its revenue guidance from $1.040-$1.044 billion to $1.037-$1.039 billion, indicating an increase of 5% from the last fiscal year’s reading at the high end of the range. The constant currency growth rate is pegged at 8%. The Zacks Consensus Estimate for the stock is pinned at $1.04 billion.
BOX also updated its guidance for non-GAAP earnings per share, which is now expected in the band of $1.42-$1.43, including an expected foreign exchange headwind of 17 cents. Previous guidance for the same was $1.46-$1.50. The consensus mark for the same is pegged at $1.49 per share.
The non-GAAP operating margin for the full fiscal year is expected to be 24.5%.
Zacks Rank & Stocks to Consider
Currently, Box carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Badger Meter (BMI - Free Report) , Arista Networks (ANET - Free Report) and Snowflake (SNOW - Free Report) . While Badger Meter sports a Zacks Rank #1 (Strong Buy), Arista Networks and Salesforce each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Badger Meter have gained 37.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.
Shares of Arista Networks have surged 78.6% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 19.77%.
Shares of Snowflake have gained 18% in the year-to-date period. SNOW’s long-term earnings growth rate is currently projected at 64.74%.