Summary
Box closed its fiscal 2024 second quarter with revenue of $261.4 million, up 6.3% from the prior-year quarter. Gross profit reached $194.4 million, up 7.3%, and gross margin improved to 74.4% from 73.6%. Operating income was $9.9 million, up 214.5%, lifting operating margin to 3.8% from 1.3%. Net income came in at $10.8 million, up 932.6%, and diluted EPS was $0.04, swinging from a loss of $0.02. Revenue growth was 9% on a constant currency basis, and the company reported its fourth consecutive quarter of GAAP profitability.
Cash generation held steady. Operating cash flow was $32.7 million for the quarter, up 15.3% from the prior-year quarter. Non-GAAP free cash flow was $20.6 million, up 15% from $18.0 million. Deferred revenue ended the quarter at $479.3 million, up 4.6% from the prior-year quarter. Remaining performance obligations were $1.10 billion, flat compared with the prior-year quarter. On a year-to-date basis, operating cash flow was $157.6 million, up 15.8% from the year-earlier period.
Operational metrics showed pressure on expansion. Billings were $232.5 million, a 1% decrease from $235.0 million. Net retention rate was 103% as of July 31, 2023, down from 112% a year earlier. Management attributed the decline to heightened budget scrutiny that put pressure on seat expansion within existing customers. The company also noted customers scrutinizing larger deals and lower seat expansion rates due to the challenging macroeconomic environment. On a non-GAAP basis, gross profit was $201.1 million, or 76.9% of revenue, up 7% from $187.4 million, or 76.2% of revenue. Non-GAAP operating income was $64.7 million, or 24.8% of revenue, up 21% from $53.3 million, or 21.7% of revenue. Non-GAAP diluted EPS was $0.36, up from $0.28. Box expanded its stock repurchase program by $100 million after repurchasing 2.2 million shares for $62 million during the quarter.
Guidance reflects ongoing caution. For the third quarter of fiscal 2024, Box expects revenue growth of 5% year over year at the high end of the range, or 7% on a constant currency basis. Non-GAAP operating margin is expected to be approximately 25.5%, and non-GAAP EPS is guided to $0.37 to $0.38. For the full fiscal year 2024, revenue growth is expected to be 5% at the high end, or 8% on a constant currency basis. Full-year non-GAAP operating margin is expected to be 25.5%, and non-GAAP EPS is guided to $1.46 to $1.50. Management flagged risks including foreign exchange headwinds, particularly the Japanese Yen, as roughly one third of revenue comes from outside the U.S. Other risks include customer churn, delayed sales cycles, and increased competition.
The quarter showed Box can expand margins even as growth slows. Revenue growth of 6.3% was reduced by a 300 basis point negative impact from foreign currency exchange rates, according to the MD&A. The company repurchased 2.2 million shares at an average price of $28.55. The stock repurchase expansion signals confidence in cash generation. Box also delivered wins with customers such as Block, Sony Music Entertainment, and the U.S. Department of Energy. It announced Box AI and an integration with Microsoft 365 Copilot, released updates to Box Sign for Salesforce and Box for NetSuite, and achieved HDS certification for health data hosting in France.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $261.4M | $251.9M | +3.8% | $246.0M | +6.3% |
| Gross profit | $194.4M | $190.2M | +2.2% | $181.2M | +7.3% |
| Gross margin | 74.4% | 75.5% | -1.2 pp | 73.6% | +0.7 pp |
| Research & development | $63.3M | $62.5M | +1.3% | $62.0M | +2.2% |
| Sales & marketing | $88.6M | $86.2M | +2.8% | $83.4M | +6.2% |
| General & administrative | $32.6M | $33.2M | -1.7% | $32.6M | -0.0% |
| Total operating expenses | $184.5M | $181.9M | +1.4% | $178.0M | +3.7% |
| Operating income (loss) | $9.9M | $8.3M | +18.5% | $3.1M | +214.5% |
| Operating margin | 3.8% | 3.3% | +0.5 pp | 1.3% | +2.5 pp |
| Net income (loss) | $10.8M | $8.3M | +29.2% | $1.0M | +932.6% |
| Net margin | 4.1% | 3.3% | +0.8 pp | 0.4% | +3.7 pp |
| Diluted EPS | $0.04 | $0.02 | +$0.02 | -$0.02 | +$0.06 |
| Net retention rate | 103.0% | 106.0% | -3.0 pp | 112.0% | -9.0 pp |
Risks
Challenging macroeconomic conditions have led to additional customer scrutiny on larger deals, lower seat expansion rates, increased customer churn and delayed sales cycles during the three months ended July 31, 2023. The MD&A states the company may continue to experience these impacts, which could reduce sales and renewals.
Net retention rate was approximately 103% as of July 31, 2023 compared with 112% as of July 31, 2022, which the MD&A attributes to heightened budget scrutiny putting pressure on seat expansion within existing customers. A continued decline could harm future revenue growth.
Generative AI is cited as a disruptive technology that may fundamentally alter the cloud content management market and reduce customer demand. Box is integrating advanced AI models through Box AI, but faces risks of brand harm, legal liability, regulatory scrutiny, slower customer adoption and increased compute costs.
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. These customers may demand more customization, integration and support, increasing costs and pricing pressure.
Fluctuations in the Japanese Yen, British pound and Euro have negatively affected results, including during the six months ended July 31, 2023. The MD&A states foreign currency weakened revenue growth by 300 basis points for the three months ended July 31, 2023 and 350 basis points for the six months ended July 31, 2023.
Billings for the three months ended July 31, 2023 decreased 1%, driven by a particularly high volume of early renewals in the first quarter of fiscal year 2024 and a negative impact from foreign currency exchange rates. The MD&A also expects quarterly billings to increasingly concentrate in the back half of the fiscal year, especially the fourth quarter.
Box is executing a long-term transition to third-party cloud computing and hosting providers and decommissioning on-premise data centers. Unsuccessful data transfers, greater than expected investment, or disruptions during migration could impair service delivery and increase costs.
SaaS KPIs
All quarters →Net Retention Rate
Summary, forecast, risks and KPIs are extracted from BOX INC's SEC filings for Q2 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.