It has been about a month since the last earnings report for Box (BOX Quick QuoteBOX - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.

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

Box Q4 Earnings Beat Estimates

Box reported fourth-quarter fiscal 2024 non-GAAP earnings per share of 42 cents, which beat the Zacks Consensus Estimate by 10.5%. The figure jumped 13.5% year over year.

Total revenues of $262.88 million lagged the consensus mark of $262.92 million. The top line increased 2% year over year (4% growth on a constant currency basis).

Strength in its go-to-market strategy and growing adoption of multi-product offerings contributed well.

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

Further, the growing momentum of Box AI was positive. Also, Box witnessed signs of stabilization in IT budgets during the reported quarter, which remained a plus.

However, macroeconomic challenges were major concerns.

Quarter in Detail

Billings were $379.3 million for the reported quarter, increasing 6% year over year (10% growth on a constant currency basis).

Deferred revenues were $586.9 million in the fiscal fourth quarter, increasing 4% from the prior fiscal-year quarter (7% growth on a constant currency basis).

BOX saw an 81% attach rate for its Suites, up 900 basis points (bps) year over year.

Box’s net retention rate was 101% at the end of the fiscal fourth quarter, down 700 bps year over year due to macroeconomic challenges.

The remaining performance obligations as of Jan 31, 2024, were $1.305 billion, up 5% on a year-over-year basis (9% growth on a constant currency basis).

Operating Results

Non-GAAP gross margin was 78.4%, contracting 10 bps from the same-quarter level in the previous year.

Box’s operating expenses of $178.99 million increased 1.8% year over year. As a percentage of revenues, the figure contracted 40 bps from the year-ago quarter’s level to 68.1%.

On a non-GAAP basis, the company recorded an operating margin of 26.7%, which expanded 70 bps from the prior-year quarter’s level.

Balance Sheet & Cash Flow

As of Jan 31, 2024, cash and cash equivalents were $383.7 million, up from $377.9 million as of Oct 31, 2023.

BOX’s short-term investments amounted to $96.9 million, up from $61.8 million in the previous fiscal quarter.

Accounts receivables amounted to $281.5 million at the end of the fiscal fourth quarter, which increased from $166.9 million at the end of the prior fiscal quarter.

Non-current debt was pegged at $370.8 million at the reported quarter’s end compared with $370.3 million at the previous quarter’s end.

Box generated $89.3 million in cash from operations in the fiscal fourth quarter, up from $71.8 million in the previous fiscal quarter.

BOX generated a free cash flow of $81.3 million in the reported quarter.

Guidance

For first-quarter fiscal 2025, Box expects revenues between $261 million and $263 million, suggesting a 4% rise at the high end of the range from the prior fiscal year’s reported figure. The constant currency growth rate is pegged at 7%.

On a non-GAAP basis, BOX projects earnings per share in the range of 35-36 cents. The guidance includes an expected foreign exchange headwind of 4 cents.

The non-GAAP operating margin for the fiscal first quarter is expected to be 25%.

For fiscal 2025, the company expects revenue in the band of $1.08-$1.085 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 6%.

BOX anticipates non-GAAP earnings per share in the band of $1.53-$1.57, including an expected foreign exchange headwind of 10 cents.

The non-GAAP operating margin for the full fiscal year is expected to be 27%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -31.82% due to these changes.

VGM Scores

Currently, Box has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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 is part of the Zacks Internet - Software industry. Over the past month, DoubleVerify Holdings (DV Quick QuoteDV - Free Report) , a stock from the same industry, has gained 12.9%. The company reported its results for the quarter ended December 2023 more than a month ago.

DoubleVerify reported revenues of $172.23 million in the last reported quarter, representing a year-over-year change of +28.9%. EPS of $0.19 for the same period compares with $0.10 a year ago.

DoubleVerify is expected to post earnings of $0.03 per share for the current quarter, representing a year-over-year change of -57.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for DoubleVerify. Also, the stock has a VGM Score of C.