Box shares drop slightly after modest earnings beat


Shares in Box Inc. dropped slightly in late trading despite the file-sharing company reporting a modest earnings beat in its fiscal second quarter.

For the quarter ended July 31, Box reported a profit before costs such as stock compensation of 28 cents per share, up from 21 cents per share in the second quarter of 2022. Revenue rose 15%, to $246 million. Analysts had expected an adjusted profit of 27 cents on revenue of $245.3 million.

Billings in the quarter rose 10% to $235 million, including a negative impact of six points because of foreign exchange. Net gross profit in the quarter was $181.2 million or 74% of revenue, up from $153.7 million or 72% a year ago. Remaining performance obligations as of the end of the quarter rose 14%, to $1.05 billion.

Net cash from operating activities in the quarter was $28.3 million, bringing the half-year total to $136.1 million. Free cash flow in the quarter was $18 million, down from $29.8 million in the same quarter last year.

Highlights in the quarter include Box landing new or expanded business from companies including Apellis Pharmaceuticals Inc., ByteDance Ltd., Marriott International Inc., New York Genome Center, Playbill Inc. and Reddit Inc. Box delivered new security enhancements to its core platform in June and enhancements to Box for Salesforce Integration in July.

In an interview with SiliconANGLE on the earnings report, Aaron Levie, co-founder and chief executive officer of Box, said the company had a very strong quarter despite the currency adjustment.

Regarding growth, Levie said that “there was healthy demand across the board from our products” and that “business momentum will remain healthy.” Box had not experienced much impact from the COVID-19 pandemic or its easing, noting that “our growth has steadily increased post-pandemic” as demand for services catering to hybrid work, security and compliance continues to grow.

On the broader macroeconomic outlook, including 40-year high inflation and two straight quarters of negative growth in the U.S., Levie said that Box had not been affected significantly and that “overall what we tried to do is set our platform up to be a lever for customers in this environment.”

Levie was somewhat shy when asked about potential future acquisitions, saying only that Box will be “very thoughtful and surgical on the acquisition front. There’s not a meaningful change in the environment.” On future offerings, he noted that “cybersecurity is a very hot topic for our customers” since “the business risk of having the content exposed to the wrong people is very material.”

Noting that the strengthening of the U.S. dollar has resulted in a larger FX headwind for both its third quarter and full fiscal 2023, Box said that it expected an adjusted profit of 29 to 30 cents on revenue of $250 million to $252 million. The revenue outlook was in line with analysts’ expectations of $251.3 million. For the full fiscal 2023, Box expects an adjusted profit of $1.13 to $1.16 on revenue of $992 million to $996 million.

Box shares were down 1.4% after the bell.

With reporting by Robert Hof

Photo: JD Lasica/Flickr

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