Summary
Box closed fiscal 2023 with its most profitable quarter yet. Fourth-quarter revenue was $256.5 million, up 9.9% from $233.4 million a year earlier, and growth was 15% on a constant currency basis. GAAP gross profit rose 15.9% to $195.5 million, lifting gross margin to 76.2% from 72.3%. GAAP operating income swung to $19.7 million from a $0.2 million operating loss, and operating margin moved to 7.7% from negative 0.1%. GAAP net income reached $20.5 million against a $4.3 million net loss in the prior-year quarter. Non-GAAP operating margin was 26.0% in the quarter and 23.1% for the year, and non-GAAP diluted net income per share was $0.37, up from $0.24.
The full year echoed that pattern. Revenue for the twelve months ended January 31, 2023 was $990.9 million, up 13.3% from $874.3 million. GAAP gross profit rose 18.2% to $738.3 million and gross margin was 74.5% versus 71.5%. GAAP operating income was $36.8 million against a $27.6 million operating loss, with operating margin of 3.7% versus negative 3.2%. GAAP net income was $26.8 million compared with a $41.5 million net loss, and diluted earnings per share were $0.06 versus a loss of $0.35, or $1.20 on a non-GAAP diluted basis against $0.85.
Cash generation carried the quarter. Operating cash flow was $92.2 million, up 87.5% from $49.2 million, and $298.0 million for the full year, up 26.9%. Non-GAAP free cash flow, a separate measure, was $74.7 million for the quarter and $238.4 million for the year, or 24% of full-year revenue. Capital expenditures for the year were $5.0 million.
Backlog and bookings grew more slowly than revenue. Remaining performance obligations were $1.20 billion as of January 31, 2023, up 9.1% from $1.10 billion a year earlier, and deferred revenue was $566.6 million, up 6.1%. Billings of $357.1 million in the quarter grew 6%. The net retention rate slipped to 108% as of January 31, 2023 from 111% a year earlier, while the Suites attach rate in deals over $100,000 climbed to 72% from 64%.
Guidance points to slower reported growth and steady margins. For the first quarter of fiscal 2024, Box guided revenue to $248 million to $250 million, up 5% year over year at the high end of the range, with a GAAP operating margin of about 0.5% and a non-GAAP operating margin of about 21%. GAAP net loss per share is guided to $0.04 to $0.03, which includes an expected $0.06 hit from foreign exchange. For the full fiscal year 2024, revenue is guided to $1.050 billion to $1.060 billion, up 7% year over year at the high end of the range, with a GAAP operating margin of about 4.5% and a non-GAAP operating margin of about 25%. Full-year GAAP net income per share is guided to $0.17 to $0.23, including a negative $0.14 foreign exchange impact.
The risks sit in the macro backdrop and the data center migration. Management cited inflation, higher interest rates, a stronger dollar (especially against the Japanese Yen) and the Russia-Ukraine conflict, and noted that larger deals faced more customer scrutiny in the second half of fiscal 2023. Foreign currency reduced the full-year revenue growth rate by 390 basis points. Cost of revenue should rise temporarily in the first half of fiscal 2024 as redundant public cloud and data center expenses run during the migration off collocated facilities, though Box expects that cost to fall as a percentage of revenue over time.
Product work continued through the year: Box shipped the public beta of Box Canvas, added deep learning based malware scanning and Ethical Walls to Box Shield, and refreshed integrations with Salesforce and Google Workspace. New wins and expansions came from Ace Hardware, Bose, Sony Music Entertainment, Sunbelt Rentals and World Fuel Services. The customer base passed 100,000 paying organizations, with 69% of the Fortune 500 as customers and content available in 25 languages. Box ended the year with $461.8 million in cash, cash equivalents, restricted cash and short-term investments, $345.0 million of 0.00% convertible senior notes due 2026, and about $140.9 million remaining on its share repurchase authorization.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $256.5M | $250.0M | +2.6% | $233.4M | +9.9% |
| Gross profit | $195.5M | $185.5M | +5.4% | $168.7M | +15.9% |
| Gross margin | 76.2% | 74.2% | +2.0 pp | 72.3% | +3.9 pp |
| Research & development | $60.7M | $59.1M | +2.7% | $59.1M | +2.7% |
| Sales & marketing | $83.3M | $81.6M | +2.2% | $79.7M | +4.6% |
| General & administrative | $31.7M | $31.4M | +0.9% | $30.1M | +5.4% |
| Total operating expenses | $175.8M | $172.1M | +2.1% | $168.8M | +4.1% |
| Operating income (loss) | $19.7M | $13.4M | +47.5% | -$166.0K | +11973.5% |
| Operating margin | 7.7% | 5.3% | +2.3 pp | -0.1% | +7.8 pp |
| Net income (loss) | $20.5M | $9.9M | +107.2% | -$4.3M | +574.7% |
| Net margin | 8.0% | 4.0% | +4.0 pp | -1.9% | +9.8 pp |
| Diluted EPS | $0.10 | $0.03 | +$0.07 | — | — |
| Net retention rate | 108.0% | 110.0% | -2.0 pp | 111.0% | -3.0 pp |
Risks
Worsening economic conditions, inflation, higher interest rates, bank failures, potential U.S. sovereign default, supply chain disruptions, COVID-19 and Russia-Ukraine conflict may cause customers to delay or reduce IT spending. During the second half of fiscal year 2023, MD&A said Box began to see additional customer scrutiny on larger deals due to the worsening economic environment.
Increasing focus on cloud content management use cases and enterprise and highly regulated customers may lengthen sales cycles, raise costs, and delay revenue recognition. MD&A noted larger deals required more scrutiny and IT budgets tightened in the second half of fiscal year 2023.
New and evolving privacy laws, including CPRA substantive provisions effective January 1, 2023 with July 2023 enforcement, plus Virginia, Colorado, Connecticut and Utah laws, increase compliance costs. GDPR penalties can reach the greater of 20 million Euros or 4% of global revenue, and cross-border data transfer rules remain uncertain.
Security risk is heightened by nation-state and affiliated actors due to Russia's invasion of Ukraine, remote work, increasing sensitive data from regulated industries, and user misconfiguration. Customer contracts include indemnities for unauthorized access, and claims could exceed insurance coverage.
Net retention rate was approximately 108% as of January 31, 2023, down from 111% as of January 31, 2022. The company says net retention rate has fluctuated and may decrease if customers do not renew or expand their use of Box services.
Japanese Yen, British pound and Euro declines versus the U.S. dollar negatively affected fiscal year 2023 results and could continue. MD&A said foreign currency exchange rates negatively impacted fiscal year 2023 revenue growth rate by 390 basis points.
The cloud content management market is fragmented and intensely competitive with Microsoft SharePoint and OneDrive, Google Drive, OpenText Documentum and Dropbox. Competitors may offer lower prices or bundled free products, creating pricing pressure.
The 0.00% convertible senior notes due January 15, 2026 require cash settlement of principal upon conversion, and holders can require repurchase upon a fundamental change. Series A Convertible Preferred Stock accrues cumulative 3.0% dividends and has redemption rights, which could reduce liquidity.
A 2021 proxy contest with an activist shareholder was costly and diverted significant board and management time. Future activism could disrupt operations, create customer and employee uncertainty, and increase stock price volatility.
Delays in launching or gaining acceptance for new offerings such as Box Canvas, currently in public beta, and Box Sign could impair revenue growth. Hybrid workforce and hiring engineers in Poland and the Netherlands may disrupt product development.
Government sales face certification changes, public sector budget cycles, continuing resolutions, debt ceiling issues and potential shutdowns that can delay or reduce spending on Box solutions.
FY2023 net income was $26.8 million compared with a net loss of $41.5 million in FY2022. The company says it may not achieve or maintain profitability in future periods.
SaaS KPIs
All quarters →Net Retention Rate
Remaining Performance Obligations (RPO)
Paying Organizations
Summary, forecast, risks and KPIs are extracted from BOX INC's SEC filings for Q4 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.