Yahoo Finance Why Is Box (BOX) Down 5.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Box (BOX). Shares have lost about 5.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Box Q1 Earnings & Revenues Surpass Estimates, Increase Y/Y
Box reported first-quarter fiscal 2025 non-GAAP earnings per share of 39 cents, which beat the Zacks Consensus Estimate by 8.3%. The figure jumped 21.9% year over year.
Total revenues of $264.66 million surpassed the consensus mark by 1.15%. The top line increased 5% year over year (8% 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. The growing momentum of Box AI was also positive.
Q1 in Detail
Billings were $190.5 million for the reported quarter, decreasing 1% year over year (5% growth on a constant-currency basis).
Deferred revenues were $514 million in the fiscal first quarter, increasing 1% from the prior-year quarter (5% growth on a constant-currency basis).
BOX saw an 85% attach rate for its Suites, significantly up from 69% in the year-ago quarter.
Box’s net retention rate was 101% at the end of the fiscal first quarter, down 500 bps year over year due to macroeconomic challenges.
The remaining performance obligations as of Apr 30, 2024, were $1.212 billion, up 3% on a year-over-year basis (8% growth on a constant-currency basis).
Operating Results
The non-GAAP gross margin was 80.2%, expanding 230 bps from the prior-year quarter.
Box’s operating expenses of $188.4 million increased 3.6% year over year. As a percentage of revenues, the figure contracted 100 bps from the year-ago quarter to 71.2%.
On a non-GAAP basis, the company recorded an operating margin of 26.6%, which expanded 380 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Apr 30, 2024, cash and cash equivalents were $449.5 million, up from $383.7 million as of Jan 31, 2024.
BOX’s short-term investments amounted to $116.6 million, up from $96.9 million in the previous fiscal quarter.
Accounts receivables amounted to $143.05 million at the end of the fiscal first quarter, which decreased from $281.5 million at the end of the prior quarter.
Non-current debt was pegged at $371.3 million at the reported quarter’s end compared with $370.8 million at the previous quarter’s end.
Box generated $131.2 million in cash from operations in the fiscal first quarter, up from $89.3 million in the previous quarter.
BOX generated a free cash flow of $123.2 million in the reported quarter.
Guidance
For second-quarter fiscal 2025, Box expects revenues between $268 million and $270 million, suggesting a 3% rise at the high end of the range from the prior year’s reported figure. The constant-currency growth rate is pegged at 6%.
On a non-GAAP basis, BOX projects earnings per share of 40-41 cents. The guidance includes an expected foreign exchange headwind of 4 cents.
The non-GAAP operating margin for the fiscal second quarter is expected to be 27%.
For fiscal 2025, the company revised its revenue guidance downward from $1.08-$1.085 billion to $1.075-$1.08 billion, indicating an increase of 4% from the prior year’s actual at the high end of the range. The constant-currency growth rate is pegged at 7%.
BOX raised its guidance for non-GAAP earnings per share from $1.53-$1.57 to $1.54-$1.58. The guidance includes an expected foreign exchange headwind of 15 cents.
The non-GAAP operating margin for the full fiscal year is expected to be 27%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Box has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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), has gained 6% over the past month. More than a month has passed since the company reported results for the quarter ended April 2024.
Palo Alto reported revenues of $1.98 billion in the last reported quarter, representing a year-over-year change of +15.3%. EPS of $1.32 for the same period compares with $1.10 a year ago.
For the current quarter, Palo Alto is expected to post earnings of $1.41 per share, indicating a change of -2.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Palo Alto has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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