Summary
Box posted revenue of $238.4 million for its fiscal first quarter ended April 30, 2022, up 17.8% from $202.4 million a year earlier. GAAP gross profit rose to $176.2 million from $141.5 million, and gross margin improved to 73.9% from 69.9%. The company swung to a GAAP operating income of $0.6 million from a loss in the prior-year quarter, and operating margin came in at 0.3% against negative 5.1%. GAAP net loss narrowed to $4.7 million from $14.6 million, and diluted net loss per share improved to $0.06 from $0.09. Currency movements cut into the numbers. Revenue growth carried a 2 percentage point drag from foreign exchange, and the GAAP loss per share included a 3 cent FX hit.
Cash generation held up well. Operating cash flow was $107.7 million, up 13.7% from $94.8 million, and free cash flow, a non-GAAP measure, reached $90.9 million, up 20% from $75.9 million. Remaining performance obligations stood at $1.0 billion on April 30, 2022, up 15.6% from $864.8 million a year earlier, though RPO growth included a 6 percentage point drag from FX. Deferred revenue rose to $468.4 million from $423.2 million, and billings totaled $172.2 million, an 8% increase from $159.4 million, with a 9 percentage point FX headwind. Net retention rate climbed to 111% from 103%. Management tied the gain to seat growth in existing customers and strong attach rates for add-on products and the bundled Enterprise Plus plan.
Box announced Box Canvas during the quarter, a native real-time visual collaboration and whiteboarding tool that the company expects to release later this year in all Box plans. Updates to Box Sign let customers send a single document to hundreds of recipients and added new dedicated fields and formatting options. Box Relay gained a deeper integration with Box Sign, including workflow triggers tied to documents being completed, canceled, expired or declined. Box Shield added malware deep scan for Microsoft Office files and automatic watermarking for classified documents. The company also launched a Box app for Zoom Chat Channels and refreshed the Box App Center, which points users to more than 1,500 integrated applications.
Guidance for the next quarter, Q2 FY23, points to revenue growth of 15% year over year at the high end of the range. Non-GAAP operating margin is expected to be approximately 22%, and non-GAAP diluted net income per share is expected in the range of $0.27 to $0.28. For the full fiscal year 2023, Box guided to revenue growth of 14% year over year at the high end, which it described as an acceleration from last year's growth rate of 13%. Non-GAAP operating margin is expected at approximately 22.5%, up from the prior guidance of 22%, and non-GAAP diluted net income per share is guided to $1.11 to $1.15, up from $1.10 to $1.14. The company noted that foreign exchange is expected to be a 3 percentage point headwind to FY23 revenue growth.
Risks remain. Box said COVID-19 has hurt some customers and prospects, driving higher churn and delayed sales cycles, even as the shift to hybrid work supports demand. The company also cited the Russian invasion of Ukraine, inflation and foreign currency swings as factors that could change results. Competition in cloud content management stays intense, with pricing pressure, industry consolidation and new entrants. Renewals and expansion are not assured, and Box faces execution risk on product enhancements, integrations and security. During the quarter, the company used $117.2 million to repurchase common stock, leaving $147.7 million available under its authorization as of April 30, 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $238.4M | $233.4M | +2.2% | $202.4M | +17.8% |
| Gross profit | $176.2M | $168.7M | +4.5% | $141.5M | +24.5% |
| Gross margin | 73.9% | 72.3% | +1.6 pp | 69.9% | +4.0 pp |
| Research & development | $61.7M | $59.1M | +4.4% | $50.9M | +21.4% |
| Sales & marketing | $83.1M | $79.7M | +4.3% | $69.8M | +19.0% |
| General & administrative | $30.8M | $30.1M | +2.4% | $31.1M | -0.9% |
| Total operating expenses | $175.6M | $168.8M | +4.0% | $151.8M | +15.7% |
| Operating income (loss) | $624.0K | -$166.0K | +475.9% | -$10.3M | +106.1% |
| Operating margin | 0.3% | -0.1% | +0.3 pp | -5.1% | +5.3 pp |
| Net income (loss) | -$4.7M | -$4.3M | -8.6% | -$14.6M | +67.8% |
| Net margin | -2.0% | -1.9% | -0.1 pp | -7.2% | +5.2 pp |
| Diluted EPS | -$0.06 | — | — | — | — |
| Net retention rate | 111.0% | 111.0% | ±0.0 pp | 103.0% | +8.0 pp |
Risks
The filing cites adverse economic conditions, COVID-19 impacts, and the Russian invasion of Ukraine as factors that could delay or reduce customers' IT spending, lengthen sales cycles, and increase price competition. It also says the Japanese yen, British pound, and euro recently declined against the U.S. dollar and adversely affected results of operations during the quarter ended April 30, 2022.
As Box targets enterprise and highly regulated customers, it faces longer and more expensive sales cycles, greater pricing pressure, and implementation and customization challenges that could delay revenue recognition. MD&A notes revenue growth was driven by large deals and multi-product Suites, while paying organizations increased only 2% from April 30, 2021 to April 30, 2022.
The business depends on customers renewing and expanding subscriptions; net retention rate was 111% as of April 30, 2022, up from 103% as of April 30, 2021. The filing warns it has decreased in past periods and may decline again if customers do not renew, renew on less favorable terms, or reduce seats.
The cloud content management market is intensely competitive, with primary competitors including Microsoft and OpenText, and additional competition from Microsoft, Google, and Dropbox in enterprise file sync and share. Some competitors offer products at lower prices or for free, placing pricing pressure on Box and potentially reducing sales and margins.
Billings for the three months ended April 30, 2022 were $172.2 million, an increase of 8% year over year, compared with a 24% billings growth rate in the prior-year period. RPO was $1.00 billion, up 15.6% from $864.80 million at April 30, 2021, and the company expects quarterly billings to increasingly concentrate in the back half of the fiscal year, especially the fourth quarter.
The Series A Convertible Preferred Stock has a 3.0% cumulative dividend, redemption rights after the seventh anniversary, and change-of-control make-whole payments that could impact liquidity and reduce cash available for working capital. KKR also has a board designation right and consent rights over certain actions.
Box has $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026 and has elected to settle principal in cash upon conversion. Holders can require repurchase upon a fundamental change, and failure to make required payments could cause a default under the notes or the senior credit facility.
The company recently engaged in a costly proxy contest with an activist shareholder that diverted significant board and management time. Future activism could create perceived uncertainty, disrupt operations, cause lost sales, and make it more difficult to attract and retain personnel and business partners.
SaaS KPIs
All quarters →Billings
Net Retention Rate
Non-GAAP Operating Margin
Free Cash Flow
Billings Growth Rate
Non-GAAP Gross Margin
Remaining Performance Obligations
Remaining Performance Obligations Growth Rate
Summary, forecast, risks and KPIs are extracted from BOX INC's SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.