HomeMost PopularInvestingBox, Inc. Earnings Stumble Keeps Investors on Their Toes

Box, Inc. Earnings Stumble Keeps Investors on Their Toes

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Box, Inc. BOX didn’t quite hit the mark with its third-quarter fiscal 2024 earnings, falling 5.3% short of Zacks Consensus Estimate. However, the company did manage to see a 16.2% year-over-year boost.

The earnings per share landed at 36 cents, while total revenues of $261.54 million slightly missed the consensus mark of $262.03 million, despite a 5% year-over-year increase (7% growth on a constant currency basis).

What’s the skinny? Well, the Content Cloud platform certainly held its own, as did the Enterprise Plus Suites, helping drive top-line growth. And, let’s not forget about Box AI, which managed to strut its stuff in the spotlight with growing momentum.

But, oh crumbs! Those pesky macroeconomic concerns seem to be crashing the party, negatively impacting IT spending and making life difficult for Box.

The company’s shares have seen better days, down 14.2% year to date against the industry’s staggering 57.5% gain. So, what’s next for Box?

Mixed Bag of Numbers

Billing for the reported quarter was $254 million, down 2% year over year (2% growth on a constant currency basis). Meanwhile, deferred revenues clocked in at a $472 million, showing 1% growth from the previous fiscal year’s quarter reading (2% growth on a constant currency basis).

Looking elsewhere, Box managed a 79% attach rate for its Suites, up 600 basis points (bps) year over year, with 51% of revenues coming from Suites, expanding 900 bps year over year. On the flip side, Box’s net retention rate took a hit, landing at 102% at the end of the fiscal third quarter, down 800 bps year over year due to those macroeconomic challenges.

And in terms of performance obligations, they stood at $1.13 billion for the reported quarter, marking a 7% increase on a year-over-year basis (8% growth on a constant currency basis).

Contrasting Operating Results

Non-GAAP gross margin contracted to 76.3% by 20 bps from the same-quarter level in the previous year. But, the operating margin expanded by 70 bps year over year, reaching 24.7%. Quite the rollercoaster, huh?

Non-GAAP operating expenses for Box increased by 5.1% year over year, and operating margin expanded by 70 bps from the previous year’s level. Numbers are definitely zig-zagging all over the place!

On the Financial Front

As of Oct 31, 2023, cash and cash equivalents were $377.9 million. However, Box’s short-term investments rose to $61.8 million, with accounts receivables hitting $166.9 million. On the flip side, non-current debt reached $370.3 million at the reported quarter’s end

Box generated a free cash flow of $58.3 million, down from $71.8 million in the previous fiscal quarter. Box is clearly maneuvering through interesting financial twists and turns this quarter.

Gazing into the Crystal Ball

For the fourth quarter of fiscal 2024, Box forecasts revenues between $262 million and $264 million, with an expected foreign exchange headwind of 3 cents. The company also anticipates a non-GAAP operating margin of 25.5%. But, for fiscal 2024, the company trimmed its revenue guidance. It’s now expected that Box will see an uptick by 5% from the last fiscal year’s reading at the high end of the range, suggesting some interesting times ahead for the company.

Currently, Box carries a Zacks Rank #3 (Hold). The broader technology sector does offer some better-ranked stocks such as Badger Meter, Arista Networks, and Snowflake – each showing promising numbers and strong growth potential. It’s definitely something worth chewing on.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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