Box's (NYSE:BOX) Q1 Sales Top Estimates But Quarterly Guidance Underwhelms
Cloud content storage and management platform Box (NYSE:BOX) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 5.1% year on year to $264.7 million. On the other hand, the company expects next quarter's revenue to be around $269 million, slightly below analysts' estimates. It made a non-GAAP profit of $0.39 per share, improving from its profit of $0.32 per share in the same quarter last year.
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Box (BOX) Q1 CY2024 Highlights:
- Revenue: $264.7 million vs analyst estimates of $262 million (1% beat)
- EPS (non-GAAP): $0.39 vs analyst estimates of $0.36 (8.2% beat)
- Revenue Guidance for Q2 CY2024 is $269 million at the midpoint, below analyst estimates of $271.6 million
- The company slightly lowered its revenue guidance for the full year to $1.08 billion at the midpoint, BUT this is due to foreign exchange and constant-currency growth was actually raised to 7% year on year (from 6% prior)
- Gross Margin (GAAP): 78%, up from 75.5% in the same quarter last year
- Free Cash Flow of $123.2 million, up 50.6% from the previous quarter
- Billings: $190.5 million at quarter end, in line with the same quarter last year
- Market Capitalization: $3.66 billion
“With the power of AI, the role of unstructured data in enterprises has exploded and the Box Intelligent Content Cloud is in a prime position to help companies fully tap into the value of their content,” said Aaron Levie, co-founder and CEO of Box.
Founded in 2005 by Aaron Levie and Dylan Smith, Box (NYSE:BOX) provides organizations with software to securely store, share and collaborate around work documents in the cloud.
Document Management
The catch phrase "digital transformation" originally referred to the digitization of documents within enterprises. The growth of digital documents has spurred an explosion of collaboration within and between businesses, which in turn is driving the demand for e-signature and content management platforms.
Sales Growth
As you can see below, Box's revenue growth has been unremarkable over the last three years, growing from $202.4 million in Q1 2022 to $264.7 million this quarter.
Box's quarterly revenue was only up 5.1% year on year, which might disappoint some shareholders. However, we can see that the company's revenue grew by $1.78 million quarter on quarter, re-accelerating from $1.34 million in Q4 CY2023.
Next quarter's guidance suggests that Box is expecting revenue to grow 2.9% year on year to $269 million, slowing down from the 6.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 4.6% over the next 12 months before the earnings results announcement.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Box's free cash flow came in at $123.2 million in Q1, up 13.9% year on year.
Box has generated $284 million in free cash flow over the last 12 months, an eye-popping 27% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Box's Q1 Results
We like seeing that revenue narrowly outperformed Wall Street's estimates. On the other hand, its billings unfortunately missed analysts' expectations and its revenue guidance for next quarter missed Wall Street's estimates. While full year revenue guidance was lowered, it was due to foreign exchange. Constant currency revenue growth for the year was actually raised to 7% year on year growth from 6% growth prior. Overall, this was a mixed quarter for Box. The stock is flat after reporting and currently trades at $24.83 per share.
Box may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
