Summary
Box entered fiscal 2024 with a sharper profit profile. Revenue for FY2024 Q1 was $251.9 million, up 5.6% from the prior-year quarter. GAAP gross profit rose 8.0% to $190.2 million, and gross margin reached 75.5%, up 1.6 points. GAAP operating income was $8.3 million, up from the prior-year quarter, and operating margin was 3.3%, up 3.0 points. GAAP net income was $8.35 million, and diluted EPS was $0.02. Both of those figures swung to a profit from the prior-year quarter.
Cash generation held up well. Operating cash flow for the quarter was $124.9 million, up 16% from the prior-year quarter. Non-GAAP free cash flow was $108.2 million, up 19% from $90.9 million in the prior-year quarter. On a non-GAAP basis, gross profit was $196.2 million, or 77.9% of revenue, and operating income was $57.4 million, or 22.8% of revenue. Non-GAAP diluted EPS was $0.32. Deferred revenue was $507.4 million, up 8.3%, and remaining performance obligations were $1.20 billion, up 20%. Billings were $191.9 million, up 11%, or 15% on a constant currency basis. Net retention rate was 106% as of April 30, 2023, and 111% as of April 30, 2022. Management pointed to seat growth, multi-product Suite adoption and renewal timing, while foreign exchange and customer churn worked against the top line.
Product activity was heavy. Box unveiled Box AI, which aims to bring advanced AI models into the Content Cloud with enterprise-grade security, compliance and privacy. It also announced plans to integrate OpenAI models and a Google Cloud partnership around generative AI. Box Canvas became generally available. The next generation of Box Shuttle launched, and Box Sign picked up updates plus integrations with Asana, Cloudflare, MalwareBytes and Notion. Customer wins and expansions included Cruise, Live Nation Entertainment, Naval Air Systems Command, Seymourpowell, The University of Texas Southwestern Medical Center at Dallas, and Vanderbilt University Medical Center. The Box Content Cloud Summit drew 25 percent more attendance than in 2022. Box said its platform serves 69% of the Fortune 500 and was recognized as number 27 on the Fortune 100 Best Companies to Work For in 2023.
Guidance points to steady profitability rather than faster growth. For Q2 FY24, the next quarter, Box guided non-GAAP operating margin to approximately 24% and non-GAAP diluted EPS to $0.34 to $0.35. For the full fiscal year FY24, it guided non-GAAP operating margin to 25.5% and non-GAAP EPS to $1.44 to $1.50, an increase from the $1.42 to $1.48 range given on March 1, 2023. The full-year non-GAAP EPS outlook includes an expected negative impact of $0.20 from unfavorable exchange rates. Management reiterated its target of revenue growth plus free cash flow margin of 35% in FY24. About one third of Box revenue is generated outside the US, primarily in Japanese Yen.
Risks are visible. Management flagged inflation, higher interest rates, slower growth and a stronger dollar, especially against the Japanese Yen. Larger deals are drawing more customer scrutiny, seat expansion is lower, and churn and delayed sales cycles have risen. Cost of revenue is expected to temporarily increase in the second quarter of fiscal year 2024 because of redundant public cloud and data center expenses during the migration away from collocated data centers. The filing also lists competition and pricing pressure, security vulnerabilities, reliance on partners, and the need to keep renewing and expanding subscriptions. Balance sheet items stay in focus: $30.0 million of debt outstanding under the November 2017 Facility, and 1.7 million shares repurchased during the quarter at a weighted average price of $26.43 for $43.9 million, leaving $96.8 million available for more buybacks. Box has better margins and cash flow, but growth still leans on a difficult macro backdrop.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $251.9M | $256.5M | -1.8% | $238.4M | +5.6% |
| Gross profit | $190.2M | $195.5M | -2.7% | $176.2M | +8.0% |
| Gross margin | 75.5% | 76.2% | -0.7 pp | 73.9% | +1.6 pp |
| Research & development | $62.5M | $60.7M | +3.0% | $61.7M | +1.3% |
| Sales & marketing | $86.2M | $83.3M | +3.5% | $83.1M | +3.8% |
| General & administrative | $33.2M | $31.7M | +4.7% | $30.8M | +7.7% |
| Total operating expenses | $181.9M | $175.8M | +3.5% | $175.6M | +3.6% |
| Operating income (loss) | $8.3M | $19.7M | -57.7% | $624.0K | +1235.7% |
| Operating margin | 3.3% | 7.7% | -4.4 pp | 0.3% | +3.0 pp |
| Net income (loss) | $8.3M | $20.5M | -59.3% | -$4.7M | +277.7% |
| Net margin | 3.3% | 8.0% | -4.7 pp | -2.0% | +5.3 pp |
| Diluted EPS | $0.02 | $0.10 | -$0.08 | -$0.06 | +$0.08 |
| Net retention rate | 106.0% | 108.0% | -2.0 pp | 111.0% | -5.0 pp |
Risks
The MD&A states that during the three months ended April 30, 2023 the company continued to see additional customer scrutiny on larger deals and lower seat expansion rates due to the challenging macroeconomic environment, and it experienced increased customer churn and delayed sales cycles. It also cites inflation, higher interest rates, a stronger dollar, and geopolitical conflict as pressures on IT spending.
Risk factors state that as sales efforts increasingly focus on cloud content management use cases and enterprise and highly-regulated customers, sales cycles may become longer and more expensive, with greater pricing pressure and implementation and customization challenges. The MD&A also notes that larger deals have required more scrutiny across verticals and geographies.
The filing says disruptive technologies such as generative AI may fundamentally alter the cloud content management market in unpredictable ways and reduce customer demand. It also warns that integrating AI like Box AI may cause brand or reputational harm, legal or regulatory scrutiny, and higher computing costs that could impact project margin.
The net retention rate was approximately 106% as of April 30, 2023 compared with 111% as of April 30, 2022, and the filing says it may decrease again if customers do not renew or reduce use. The MD&A attributes pressure to lower seat expansion rates and increased customer churn.
The company is transitioning to third-party cloud computing and hosting providers and decommissioning on-premise data centers. It expects cost of revenue to temporarily increase in absolute dollars and as a percentage of revenue in the second quarter of fiscal year 2024 due to redundant public cloud and data center expenses, and it warns of data transfer failures, unexpected costs, and contractual penalties.
The MD&A states that weakening foreign currency exchange rates negatively impacted revenue growth rate by 410 basis points for the three months ended April 30, 2023. Risk factors add that declines in the Japanese Yen, British pound, and Euro negatively affected results for the year ended January 31, 2023 and the three months ended April 30, 2023.
The filing highlights evolving privacy and data protection laws, including the CPRA substantive provisions effective January 1, 2023 and a July 2023 enforcement date, plus new state laws in Virginia, Colorado, Connecticut, Utah, Tennessee, Iowa, and Indiana. Compliance may require changes to data processing practices and additional costs.
The company states it has observed increased sophistication in malicious techniques and, due to Russia's invasion of Ukraine, faces heightened risk of cybersecurity and nation-state attacks. It also cites remote work as increasing risks such as phishing and unauthorized access to sensitive information.
The company has $345.0 million aggregate principal amount of convertible senior notes due January 15, 2026 and has elected to settle principal in cash, which may require significant cash. Its Series A Convertible Preferred Stock accrues cumulative dividends at 3.0% per annum and has redemption rights, which could reduce cash available for other uses.
SaaS KPIs
All quarters →Billings
Net Retention Rate
Non-GAAP Operating Margin
Remaining Performance Obligations (RPO)
Non-GAAP Free Cash Flow
Summary, forecast, risks and KPIs are extracted from BOX INC's SEC filings for Q1 FY2024 (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.