A month has gone by since the last earnings report for Box (BOX Quick QuoteBOX - Free Report) . Shares have added about 2.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Box due for a pullback? 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 catalysts.

Box Q2 Earnings & Revenues Surpass Estimates, Increase Y/Y

Box reported second-quarter fiscal 2025 non-GAAP earnings per share of 44 cents, which beat the Zacks Consensus Estimate by 10%. The figure jumped 22.3% year over year.

Total revenues of $270.04 million surpassed the consensus mark by 0.3%. The top line increased 3% year over year (6% growth on a constant-currency basis).

Solid momentum in the Content Cloud platform and the growing adoption of Enterprise Plus due to strength in Box AI drove top-line growth.

Box provided better-than-expected guidance for revenues and earnings for the third quarter and fiscal 2025. The upward revision in the fiscal 2025 guidance is another positive.

BOX’s Q2 Metrics in Detail

Billings were $256.4 million for the reported quarter, increasing 10% year over year (9% growth on a constant-currency basis).

Deferred revenues were $502 million in the fiscal second quarter, increasing 5% from the prior-year quarter (7% growth on a constant-currency basis).

BOX saw an 87% attach rate for its Suites, significantly up from 78% in the year-ago quarter. The company generated 57% of its revenues from Enterprise Plus Suites in the reported quarter.

Box’s net retention rate was 102% at the end of the fiscal second quarter, down 100 bps year over year due to macroeconomic challenges.

The remaining performance obligations as of Apr 30, 2024, were $1.272 billion, up 12% on a year-over-year basis (14% growth on a constant-currency basis).

BOX’s Operating Results

The non-GAAP gross margin was 81.6%, expanding 470 bps from the prior-year quarter.

Box’s operating expenses of $194.2 million increased 5.2% year over year. As a percentage of revenues, the figure expanded 130 bps from the year-ago quarter to 71.9%.

On a non-GAAP basis, the company recorded an operating margin of 28.4%, which expanded 360 bps from the prior-year quarter.

BOX’s Balance Sheet & Cash Flow

As of Jul 31, 2024, cash and cash equivalents were $406.6 million, down from $449.5 million as of Apr 30, 2024.

BOX’s short-term investments amounted to $75.6 million, down from $116.6 million in the previous fiscal quarter.

Accounts receivables amounted to $177.5 million at the end of the fiscal second quarter, which increased from $143.05 million at the end of the prior quarter.

Non-current debt was pegged at $371.8 million at the reported quarter’s end compared with $371.3 million at the previous quarter’s end.

Box generated $36.3 million in cash from operations in the fiscal second quarter, down from $131.2 million in the previous quarter.

The company generated a free cash flow of $32.7 million in the reported quarter.

BOX offers Strong Guidance

For third-quarter fiscal 2025, Box expects revenues between $274 million and $276 million, suggesting a 5% rise 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 41-42 cents. The guidance includes an expected foreign exchange headwind of 2 cents. 

Box expects the fiscal third-quarter billings growth rate to be in the mid-single-digit range.

The non-GAAP operating margin for the fiscal third quarter is expected to be 28%.

For fiscal 2025, the company revised its revenue guidance upward from $1.075-$1.08 billion to $1.086-$1.09 billion, indicating an increase of 5% from the prior year’s actual. The constant-currency growth rate is pegged at 7%. This guidance includes 170 bps of foreign exchange headwind, which is 80 bps lower than the previous expectation. 

BOX raised its guidance for non-GAAP earnings per share from $1.54-$1.58 to $1.64-$1.66. The guidance includes an expected foreign exchange headwind of 12 cents. 

Box expects the fiscal 2025 billings growth rate to be in the mid-single-digit range.

The non-GAAP operating margin for the fiscal year is expected to be 27.5%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 37.5% due to these changes.

VGM Scores

Currently, Box has a nice Growth Score of B, a grade with the same score on the momentum front. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Box has a Zacks Rank #2 (Buy). We expect an above average 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, Sea Limited Sponsored ADR (SE Quick QuoteSE - Free Report) , has gained 15.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Sea Limited reported revenues of $3.91 billion in the last reported quarter, representing a year-over-year change of +29.9%. EPS of $0.46 for the same period compares with $0.83 a year ago.

Sea Limited is expected to post earnings of $0.59 per share for the current quarter, representing a year-over-year change of +883.3%. 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 Sea Limited. Also, the stock has a VGM Score of B.