Cloud technology firm Box, Inc. (NYSE:BOX) has announced its second-quarter fiscal 2024 financial results, reporting non-GAAP earnings per share of 36 cents. This figure surpassed the Zacks Consensus Estimate by 2.9% and marked a notable 28.6% increase from the previous year.
The company’s total revenues for the quarter stood at $261.43 million, surpassing the consensus projection of $261.03 million. This represents a 6% year-over-year rise (9% growth when accounting for constant-currency factors). The solid performance was attributed to the continued traction of the Content Cloud platform and the increasing adoption of Enterprise Plus Suites.
The momentum was further bolstered by ongoing product enhancements and the growing prominence of Box AI. However, the company did acknowledge that macroeconomic concerns were negatively impacting customers’ IT spending.
A Closer Look at the Quarter
The quarter’s billings totaled $232.5 million, reflecting a 1% decline year over year (or 1% growth adjusting for constant currency effects). Deferred revenues for the fiscal second quarter reached $479 million, marking a 5% increase from the same period in the prior fiscal year (or 8% growth on a constant-currency basis).
Box observed a 78% attach rate for its Suites, a substantial improvement of 600 basis points compared to the previous year. However, the net retention rate for the company dropped to 103% at the close of the fiscal second quarter, showing a decline of 900 basis points compared to the same period the previous year.
The remaining performance obligations for the quarter totaled $1.14 billion, reflecting an 8% increase compared to the previous year (or 11% growth on a constant-currency basis).
Financial Performance and Outlook
Box’s non-GAAP gross margin expanded to 76.9%, growing by 70 basis points from the same period in the previous year. The company’s operating expenses for the quarter amounted to $184.5 million, a year-over-year increase of 3.7%. As a percentage of revenues, operating expenses contracted to 70.6% from the prior year’s level of 180 basis points.
On a non-GAAP basis, the company achieved an operating margin of 24.8%, signifying a growth of 310 basis points from the previous year’s quarter.
Financial Position and Projections
As of July 31, 2023, Box held cash and cash equivalents of $395.97 million, a decrease from the $481.4 million reported as of April 30, 2023. The company’s short-term investments amounted to $49.4 million, indicating an increase from the $35.6 million recorded in the previous fiscal quarter.
Accounts receivables also showed growth, amounting to $165.4 million at the end of the fiscal second quarter, up from $132.7 million in the prior fiscal quarter.
Looking forward, Box anticipates third-quarter fiscal 2024 revenues ranging from $261 million to $263 million, implying a 5% increase at the upper end of the spectrum compared to the previous fiscal year. The company’s non-GAAP earnings per share guidance for the same period is projected to range between 37 cents and 38 cents.
For the full fiscal year 2024, Box has revised its revenue guidance to $1.040-$1.044 billion, marking a 5% increase from the previous fiscal year. Non-GAAP earnings per share for the year are projected to be in the range of $1.46 to $1.50.
Box also provided insights into its expected non-GAAP operating margin, targeting 25.5% for both the fiscal third quarter and the full fiscal year 2024.
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