Cloud content storage and management platform Box (NYSE:BOX) reported results in line with analysts' expectations in Q3 FY2024, with revenue up 4.6% year on year to $261.5 million. The company expects next quarter's revenue to be around $263 million, slightly below analysts' estimates. It made a non-GAAP profit of $0.36 per share, improving from its profit of $0.31 per share in the same quarter last year.
Is now the time to buy Box? Find out by reading the original article on StockStory.
Box (BOX) Q3 FY2024 Highlights:
- Revenue: $261.5 million vs analyst estimates of $262 million (small miss)
- EPS (non-GAAP): $0.36 vs analyst expectations of $0.38 (5.4% miss)
- Revenue Guidance for Q4 2024 is $263 million at the midpoint, below analyst estimates of $267.2 million
- Free Cash Flow of $58.32 million, up 184% from the previous quarter
- Gross Margin (GAAP): 73.5%, in line with the same quarter last year
Document ManagementThe catch phrase "digital transformation" originally referred to the digitization of documents within enterprises. The growth of digital documents has spurred an explosion of collaboration within and between businesses, which in turn is driving the demand for e-signature and content management platforms.
Sales GrowthAs you can see below, Box's revenue growth has been unremarkable over the last two years, growing from $224 million in Q3 FY2022 to $261.5 million this quarter.
Box's quarterly revenue was only up 4.6% year on year, which might disappoint some shareholders. Additionally, its growth did slow down compared to last quarter as the company's revenue increased by just $109,000 in Q3 compared to $9.53 million in Q2 2024. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter, Box is guiding for a 2.5% year-on-year revenue decline to $263 million, a further deceleration from the 9.9% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 5.9% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Box's free cash flow came in at $58.32 million in Q3, up 6.1% year on year.
Box has generated $261.8 million in free cash flow over the last 12 months, an impressive 25.6% of revenue. This high FCF margin stems from its asset-lite business model and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a cash cushion.
Key Takeaways from Box's Q3 Results Sporting a market capitalization of $3.82 billion, Box is among smaller companies, but its more than $439.7 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
We struggled to find many strong positives in these results. Although its revenue was close to analysts' estimates, the company missed Wall Street's remaining performance obligations ("RPO"), billings, adjusted operating income, and EPS expectations. Its revenue guidance for next quarter and the full year also underwhelmed. Overall, this was a mediocre quarter for Box. The company is down 8.5% on the results and currently trades at $24.41 per share.
