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01/10 16:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows a strong financial performance with revenue and EPS exceeding guidance, a 21% increase in RPO, and a positive net retention rate. The AI strategy and partnerships are gaining traction, and the share repurchase plan supports shareholder value. However, there is some conservatism in guidance and unclear responses in the Q&A, which slightly temper the positive sentiment. Given the market cap, the stock price is likely to react positively, but not strongly so, due to these mixed signals.
Revenue $276 million, up 4% year-over-year (5% in constant currency). Growth attributed to strong customer demand for Box AI and Enterprise Advanced.
Remaining Performance Obligations (RPO) $1.5 billion, up 21% year-over-year (17% in constant currency). Growth driven by lengthening customer contract durations.
Billings $242 million, up 27% year-over-year (17% in constant currency). Exceeded expectations due to strong bookings and early renewals.
Net Retention Rate 102%, up from 101% year-over-year. Indicates continued stickiness of the platform.
Gross Margin 80.5%, up 30 basis points year-over-year. Previous year benefited from data center equipment sales.
Gross Profit $222 million, up 5% year-over-year, slightly exceeding revenue growth rate.
Operating Income $70 million, with an operating margin of 25.3%, down from 26.6% year-over-year. Adjusted for data center sales, operating margin would have increased by 90 basis points.
Earnings Per Share (EPS) $0.30, $0.04 above guidance. Includes a positive impact of $0.01 from FX and a negative impact of $0.12 from non-cash deferred tax expenses.
Free Cash Flow $118 million. Strong cash generation supports ongoing investments.
Cash Flow from Operations $127 million. Indicates healthy operational performance.
Cash and Short-term Investments $792 million. Provides a strong liquidity position.
Share Repurchase 1.6 million shares repurchased for approximately $50 million. Remaining buyback capacity of $152 million.
New Product Launch: Box launched Enterprise Advanced, which saw strong customer adoption in Q1, helping enterprises transform their AI-driven workflows.
AI Capabilities: Box announced significant updates to AI Agents, enhancing capabilities for deep research, search, and data extraction.
Integration with ChatGPT: ChatGPT integrated Box as a secure connected data source for deep research AI Agents.
Market Expansion: Box received FedRAMP High Authorization, allowing U.S. government agencies to leverage Box’s platform for sensitive data.
Customer Growth: Box reported an 8% year-over-year increase in customers paying at least $100,000 annually, totaling approximately 1,940.
Revenue Growth: Q1 revenue was $276 million, up 4% year-over-year, with billings up 27% year-over-year.
Operating Margin: Operating margin for Q1 was 25.3%, slightly down from 26.6% year-over-year.
Go-to-Market Strategy: Box is expanding its partner ecosystem, particularly with global and regional systems integrators.
AI-First Culture: Box is driving an AI-first culture internally, leveraging AI to enhance productivity and decision-making.
Macroeconomic Uncertainty: The company is mindful of macroeconomic uncertainty and its potential impact on IT spending, although it has not yet had a material impact on the business.
Regulatory Challenges: Box has received FedRAMP High Authorization, which allows U.S. government agencies to use its platform, indicating a focus on compliance in regulated environments.
Competitive Pressures: The company is experiencing competitive pressures as it aims to expand its partner ecosystem and drive growth in its Enterprise Advanced segment.
Supply Chain Challenges: There are potential supply chain challenges related to the delivery of AI capabilities and the integration of various AI models.
Foreign Currency Exchange Rates: The company acknowledges the impact of foreign currency exchange rates on its financial performance, which can affect revenue and margins.
Deferred Tax Expenses: The company expects non-cash deferred tax expenses to be a headwind for non-GAAP EPS in FY26.
AI-Driven Workflows: Box is focusing on transforming AI-driven workflows around content, with strong customer adoption of Enterprise Advanced and Box AI capabilities.
Partnerships: Box is expanding its partner ecosystem, particularly with global and regional systems integrators, to drive growth and customer wins.
AI Agent Updates: Box announced significant updates to its AI Agent capabilities, enhancing how organizations work with their content.
FedRAMP High Authorization: Box received FedRAMP High Authorization, allowing U.S. government agencies to leverage its platform for sensitive data.
AI-First Culture: Box is building an AI-first company culture, leveraging AI to enhance productivity and decision-making internally.
Q2 Revenue Guidance: Expected Q2 revenue in the range of $290 million to $291 million, representing approximately 8% year-over-year growth.
FY26 Revenue Guidance: Expected FY26 revenue in the range of $1.165 billion to $1.17 billion, representing approximately 7% year-over-year growth.
Q2 Non-GAAP EPS Guidance: Expected Q2 non-GAAP EPS in the range of $0.30 to $0.31.
FY26 Non-GAAP EPS Guidance: Expected FY26 non-GAAP EPS in the range of $1.22 to $1.26.
FY26 Gross Margin Guidance: Expected FY26 gross margin to be approximately 81%.
FY26 Billings Growth Guidance: Expected FY26 billings growth to be approximately 9%.
Share Repurchase: In Q1, Box repurchased 1.6 million shares for approximately $50 million. As of April 30, 2025, there is approximately $152 million of remaining buyback capacity under the current share repurchase plan.
The earnings call reflects strong financial performance with growth in RPO, gross margin, and free cash flow. The Q&A session reveals positive sentiment from analysts, with management providing clear answers and highlighting growth in AI capabilities, government contracts, and sales efficiency. The company's strategic investments and raised full-year revenue guidance indicate optimism. Despite a slight decline in operating margin, the overall outlook is positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
The earnings call highlights strong financial performance, driven by AI-driven workflows and partnerships, with a positive outlook for revenue and EPS. Despite some vague management responses, the company's focus on AI, strong billings growth, and government sector opportunities are positive indicators. The market is likely to react positively, with a potential stock price increase of 2% to 8%.
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