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Box (BOX) Down 11.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Box (BOX - Free Report) . Shares have lost about 11.1% 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 drivers.
Box Q4 Earnings Top Estimates
Box reported fourth-quarter fiscal 2023 non-GAAP earnings per share of 37 cents, which surpassed the Zacks Consensus Estimate by 8.8%. The figure jumped 54.2% year over year.
Total revenues of $256.5 million surpassed the consensus mark of $256.3 million. The top line increased 10% year over year (15% growth on a constant currency basis).
Strength in Content Cloud and growing adoption of Enterprise Plus Suites drove the top line despite macroeconomic headwinds.
Moreover, strong deal wins with Enterprise Plus were a positive.
Quarter in Detail
Billings were $357.1 million for the reported quarter, improving 6% year over year (9% growth on a constant currency basis).
Deferred revenues were $567 million in the fiscal fourth quarter, increasing 6% from the prior fiscal-year quarter’s reading.
BOX saw a 72% attach rate for its Enterprise Plus Suites, owing to increasing demand for multi-product suite offerings. Nearly 46% of revenues were generated from suite sales compared with 35% in the year-ago period.
Further, Box’s net retention rate was 106% at the end of the fiscal fourth quarter.
The remaining performance obligations for the reported quarter were $1.24 billion, up 16% on a year-over-year basis (21% growth on a constant currency basis).
Operating Results
Non-GAAP gross margin was 78.5%, expanding 340 bps from the same-quarter level in the previous year.
Box’s operating expenses of $175.8 million increased 4.1% year over year. As a percentage of revenues, the figure contracted 380 bps from the year-ago quarter’s level to 68.5%.
On a non-GAAP basis, BOX recorded an operating margin of 26%, which expanded 520 bps from the prior-year quarter’s level.
Balance Sheet & Cash Flow
As of Jan 31, 2023, cash and cash equivalents were $428.5 million, up from $358.1 million as of Oct 31, 2022. BOX’s short-term investments amounted to $32.8 million, down from $44.6 million in the previous fiscal quarter.
Accounts receivables amounted to $264.5 million at the end of the fiscal fourth quarter, which increased from $176.6 million at the end of the prior fiscal quarter.
Non-current debt stood at $369.35 million at the reported quarter-end compared with $368.9 million at the prior quarter-end.
Box generated $92.2 million in cash from operations in the fiscal fourth quarter, up from $69.7 million in the previous fiscal quarter.
Additionally, BOX generated a free cash flow of $74.7 million in the fiscal fourth quarter.
Guidance
For first-quarter fiscal 2024, Box expects revenues between $248 million and $250 million, suggesting a 5% 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 10%.
On a non-GAAP basis, BOX projects earnings per share of 26 to 27 cents. The guidance includes an expected foreign exchange headwind of 6 cents.
The non-GAAP operating margin for the fiscal first quarter is expected to be 21%.
For fiscal 2024, Box anticipates revenues between $1.05 billion and $1.06 billion, indicating an increase of 7% 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 $1.42-$1.48, which includes an expected foreign exchange headwind of 14 cents.
The non-GAAP operating margin for the full fiscal year is expected to be 25%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -236.36% due to these changes.
VGM Scores
At this time, 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 C. 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 belongs to the Zacks Internet - Software industry. Another stock from the same industry, Workday (WDAY - Free Report) , has gained 6.3% over the past month. More than a month has passed since the company reported results for the quarter ended January 2023.
Workday reported revenues of $1.65 billion in the last reported quarter, representing a year-over-year change of +19.6%. EPS of $0.99 for the same period compares with $0.78 a year ago.
Workday is expected to post earnings of $1.06 per share for the current quarter, representing a year-over-year change of +27.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +34.3%.
Workday has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Box (BOX) Down 11.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Box (BOX - Free Report) . Shares have lost about 11.1% 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 drivers.
Box Q4 Earnings Top Estimates
Box reported fourth-quarter fiscal 2023 non-GAAP earnings per share of 37 cents, which surpassed the Zacks Consensus Estimate by 8.8%. The figure jumped 54.2% year over year.
Total revenues of $256.5 million surpassed the consensus mark of $256.3 million. The top line increased 10% year over year (15% growth on a constant currency basis).
Strength in Content Cloud and growing adoption of Enterprise Plus Suites drove the top line despite macroeconomic headwinds.
Moreover, strong deal wins with Enterprise Plus were a positive.
Quarter in Detail
Billings were $357.1 million for the reported quarter, improving 6% year over year (9% growth on a constant currency basis).
Deferred revenues were $567 million in the fiscal fourth quarter, increasing 6% from the prior fiscal-year quarter’s reading.
BOX saw a 72% attach rate for its Enterprise Plus Suites, owing to increasing demand for multi-product suite offerings. Nearly 46% of revenues were generated from suite sales compared with 35% in the year-ago period.
Further, Box’s net retention rate was 106% at the end of the fiscal fourth quarter.
The remaining performance obligations for the reported quarter were $1.24 billion, up 16% on a year-over-year basis (21% growth on a constant currency basis).
Operating Results
Non-GAAP gross margin was 78.5%, expanding 340 bps from the same-quarter level in the previous year.
Box’s operating expenses of $175.8 million increased 4.1% year over year. As a percentage of revenues, the figure contracted 380 bps from the year-ago quarter’s level to 68.5%.
On a non-GAAP basis, BOX recorded an operating margin of 26%, which expanded 520 bps from the prior-year quarter’s level.
Balance Sheet & Cash Flow
As of Jan 31, 2023, cash and cash equivalents were $428.5 million, up from $358.1 million as of Oct 31, 2022. BOX’s short-term investments amounted to $32.8 million, down from $44.6 million in the previous fiscal quarter.
Accounts receivables amounted to $264.5 million at the end of the fiscal fourth quarter, which increased from $176.6 million at the end of the prior fiscal quarter.
Non-current debt stood at $369.35 million at the reported quarter-end compared with $368.9 million at the prior quarter-end.
Box generated $92.2 million in cash from operations in the fiscal fourth quarter, up from $69.7 million in the previous fiscal quarter.
Additionally, BOX generated a free cash flow of $74.7 million in the fiscal fourth quarter.
Guidance
For first-quarter fiscal 2024, Box expects revenues between $248 million and $250 million, suggesting a 5% 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 10%.
On a non-GAAP basis, BOX projects earnings per share of 26 to 27 cents. The guidance includes an expected foreign exchange headwind of 6 cents.
The non-GAAP operating margin for the fiscal first quarter is expected to be 21%.
For fiscal 2024, Box anticipates revenues between $1.05 billion and $1.06 billion, indicating an increase of 7% 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 $1.42-$1.48, which includes an expected foreign exchange headwind of 14 cents.
The non-GAAP operating margin for the full fiscal year is expected to be 25%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -236.36% due to these changes.
VGM Scores
At this time, 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 C. 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 belongs to the Zacks Internet - Software industry. Another stock from the same industry, Workday (WDAY - Free Report) , has gained 6.3% over the past month. More than a month has passed since the company reported results for the quarter ended January 2023.
Workday reported revenues of $1.65 billion in the last reported quarter, representing a year-over-year change of +19.6%. EPS of $0.99 for the same period compares with $0.78 a year ago.
Workday is expected to post earnings of $1.06 per share for the current quarter, representing a year-over-year change of +27.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +34.3%.
Workday has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.