Box: Fiscal 2Q23 Financial Results

Box, Inc. announced preliminary financial results for the second quarter of fiscal year 2023, which ended July 31, 2022.

“As enterprises look to reduce the cost and complexity of their IT environments, they are turning to Box’s Content Cloud to simplify their technology stack, lower their spend and keep their information secure,” said Aaron Levie, co-founder and CEO. “Our strong second quarter results and customer momentum show that enterprises are increasingly making strategic, long-term decisions on how to support a remote workforce and digital processes, while maintaining a high-level of security and compliance. We will continue to expand the capabilities of our Content Cloud, powering the full lifecycle of content and creating more value for our customers.“

“Our 2FQ23 revenue and non-GAAP EPS were at the high-end of our guidance, despite experiencing significant FX headwinds,” said Dylan Smith, co-founder and CFO. “As the value of our platform continues to resonate with customers and we continue to drive strong adoption of our multi-product offerings, we delivered a Net Retention Rate of 112%, up 600 basis points from the prior year. Our business momentum remains strong as we execute on our Content Cloud platform strategy to ensure that we will continue to drive further annual revenue acceleration and operating margin expansion in FY23.”

2FQ23 Highlights
• Revenue was $246.0 million, a 15% increase from revenue for 2FQ22 of $214.5 million. Revenue growth includes a negative impact of 3 % points from foreign exchange.
• Remaining performance obligations (RPO) as of July 31, 2022, were $1.05 billion, a 14% increase from remaining performance obligations as of July 31, 2021 of $922.4 million. RPO growth includes a negative impact of 7% percentage points from FX.
• Billings were $235.0 million, a 10% increase from billings for 2FQ22 of $213.1 million. Billings growth includes a negative impact of 6%age points from FX.
• GAAP gross profit was $181.2 million, or 73.6% of revenue. This compares to a GAAP gross profit of $153.7 million, or 71.7% of revenue, in 2FQ22.
• Non-GAAP gross profit was $187.4 million, or 76.2% of revenue. This compares to a non-GAAP gross profit of $159.8 million, or 74.5% of revenue, in 2FQ22.
• GAAP operating income was $3.1 million, or 1.3% of revenue. This compares to a GAAP operating loss of $6.1 million, or 2.8% of revenue, in 2FQ22. in the second quarter of fiscal year 2023 was $53.3 million, or 21.7% of revenue. This compares to a non-GAAP operating income of $44.2 million, or 20.6% of revenue, in 2FQ22.
• GAAP net loss per share attributable to common stockholders, basic and diluted, was $0.02 on 143.7 million weighted-average shares outstanding. This compares to a GAAP net loss per share attributable to common stockholders of $0.08 in 2FQ2 on 161.2 million weighted-average shares outstanding. GAAP net loss per share includes a negative impact of 3 cents from FX.
• Non-GAAP net income per share attributable to common stockholders, diluted, was $0.28. This compares to a non-GAAP net income per share attributable to common stockholders, diluted, of $0.21 in 2FQ22. Non-GAAP net income per share includes a negative impact of 3 cents from FX.
• Net cash provided by operating activities was $28.3 million and totaled $136.1 million for 1FQ23. This compares to net cash provided by operating activities of $44.8 million in 2FQ22 and totaled $139.6 million in 1FH22.
• Free cash flow was $18.0 million and totaled $108.8 million for 1FH23. This compares to free cash flow of $29.8 million in 2FQ22 and totaled $105.7 million in 1FH22.

Outlook
Since previous earnings call on May 25, 2022, the US dollar has strengthened resulting in a larger FX headwind in both 3FQ23 and FY23. The following guidance includes the impact of any expected FX headwinds, assuming present foreign currency exchange rates.

3FQ23 Guidance
• Revenue is expected to be in the range of $250 million to $252 million, up 13% Y/Y at the high-end of the range. Revenue growth expectations include a negative impact of 4 percentage points from FX.
• GAAP operating margin is expected to be approximately 4%, and non-GAAP operating margin is expected to be approximately 23%.
• GAAP net income per share attributable to common stockholders is expected to be in the range of $0.01 to $0.02.
• Non-GAAP diluted net income per share attributable to common stockholders is expected to be in the range of $0.29 to $0.30.
• Weighted-average basic and diluted shares outstanding are expected to be approximately 143 million and 151 million, respectively.

FY23 Guidance
• Revenue is expected to be in the range of $992 million to $996 million, up 14% Y/Y at the high-end of the range and represents an acceleration from last year’s growth rate of 13%. Revenue growth expectations include a negative impact of 4 percentage points from FX.
• GAAP operating margin is expected to be approximately 3%, and non-GAAP operating margin is expected to be approximately 22.5%.
• GAAP net loss per share attributable to common stockholders is expected to be in the range of $0.03 to zero cents. This represents an improvement from previous guidance provided on May 25, 2022, which was basic and diluted net loss per share of $0.05 to $0.01. FY23 GAAP EPS guidance includes an expected negative impact from FX of $0.19.
• Non-GAAP diluted net income per share attributable to common stockholders is expected to be in the range of $1.13 to $1.16. This represents an increase from previous guidance provided on May 25, 2022, which was $1.11 to $1.15. FY23 Non-GAAP EPS guidance includes an expected negative impact from FX of $0.19.
• Weighted-average basic and diluted shares outstanding are expected to be approximately 144.5 million and 151.5 million, respectively.