Core Insights - Zacks Premium offers various tools to help investors make informed decisions and enhance their confidence in the stock market [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum characteristics, aiding investors in selecting securities with high potential for market outperformance [2][3] Zacks Style Scores Overview - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [2][3] - Value Score identifies attractive stocks using financial ratios like P/E and Price/Sales [2] - Growth Score assesses a company's financial health and future outlook based on earnings and sales projections [3] - Momentum Score evaluates trends in stock prices and earnings estimates to identify favorable investment opportunities [3] - VGM Score combines all three styles to highlight stocks with the best overall potential [3] Zacks Rank and Style Scores Interaction - The Zacks Rank utilizes earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988 [4] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [5] - Stocks with lower ranks, even if they have good Style Scores, may still face declining earnings forecasts, increasing the risk of price drops [5] Company Spotlight: Box, Inc. - Box, Inc. is a cloud content management platform provider, incorporated in 2015 and headquartered in Redwood City, CA [6] - The company holds a Zacks Rank of 2 (Buy) and has a VGM Score of B, indicating strong potential [6] - Box's shares have increased by 17.9% over the past four weeks, and three analysts have raised their earnings estimates for fiscal 2025 [6] - The Zacks Consensus Estimate for Box's earnings has risen by $0.06 to $1.63 per share, with an average earnings surprise of 5.9% [6][7]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to capitalize on established price movements for profitable trades. Box (BOX) currently holds a Momentum Style Score of A, indicating strong potential for momentum-based investment strategies [1][3]. Company Performance - Box's shares have increased by 14.51% over the past week, significantly outperforming the Zacks Internet - Software industry, which saw a decline of 0.23% during the same period. Over the past month, Box's price change is 20.19%, compared to the industry's 1.42% [3]. - In the last quarter, Box's shares rose by 26.51%, and over the past year, they increased by 26.21%. In contrast, the S&P 500 index only moved 3.12% and 23.92% respectively during these periods [4]. Trading Volume - Box's average 20-day trading volume is 2,399,009 shares, which serves as a bullish indicator when combined with rising stock prices. A stock that rises with above-average volume is generally seen as a positive sign [4]. Earnings Estimates - Over the past two months, three earnings estimates for Box have been revised upwards, while none have been lowered. This has led to an increase in the consensus earnings estimate from $1.57 to $1.63 for the full year. For the next fiscal year, three estimates have also moved upwards without any downward revisions [5]. Investment Recommendation - Given the strong performance metrics and positive earnings outlook, Box is rated as a 2 (Buy) stock with a Momentum Score of A, making it a compelling option for investors seeking short-term gains [6][7].

Core Insights - Zacks Premium offers various tools to help investors make informed decisions and improve their investment confidence [1] - The Zacks Style Scores are designed to assist investors in selecting stocks with the highest potential to outperform the market over a 30-day period [2] Zacks Style Scores Overview - The Style Scores categorize stocks based on value, growth, and momentum characteristics, assigning ratings from A to F [2] - Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [2] - Growth Score evaluates a company's future prospects through projected earnings and sales growth [3] - Momentum Score identifies trends in stock prices and earnings estimates to optimize entry points for investments [3] - VGM Score combines the three Style Scores to highlight stocks with attractive value, growth, and momentum [4] Zacks Rank and Style Scores Interaction - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in portfolio creation [5] - Stocks rated 1 (Strong Buy) have historically achieved an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [5] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [6] Company Spotlight: Box, Inc. - Box, Inc. is a cloud content management platform provider, incorporated in 2015 and headquartered in Redwood City, CA [7] - The company holds a Zacks Rank of 2 (Buy) and has a VGM Score of B, indicating strong growth potential [7] - Box is projected to achieve year-over-year earnings growth of 11.6% for the current fiscal year, supported by positive earnings estimate revisions [7] - The Zacks Consensus Estimate for Box's earnings has increased by $0.06 to $1.63 per share, with an average earnings surprise of 5.9% [7][8]

Financial Performance - Revenue for the three months ended July 31, 2024, was $270,039,000, representing an increase of 3% compared to $261,428,000 for the same period in 2023[16]. - Gross profit for the six months ended July 31, 2024, was $420,932,000, up from $384,662,000 in the same period of 2023, reflecting a growth of 9.4%[16]. - Net income for the three months ended July 31, 2024, was $20,496,000, compared to $10,791,000 for the same period in 2023, indicating an increase of 90.5%[19]. - For the six months ended July 31, 2024, net income was $37,718,000, compared to $19,141,000 for the same period in 2023, representing a 97% increase[29]. - The company reported a net income of $20.5 million for the three months ended July 31, 2024, compared to $10.8 million in the same period of 2023[124]. - The company reported a net income of $37.7 million for the six months ended July 31, 2024, with stock-based compensation of $106.3 million and depreciation and amortization expenses of $10.0 million[148]. Assets and Liabilities - Total current assets decreased to $733,659,000 as of July 31, 2024, down from $842,180,000 as of January 31, 2024, a decline of 12.9%[13]. - Total liabilities decreased to $1,066,992,000 as of July 31, 2024, from $1,180,130,000 as of January 31, 2024, a reduction of 9.6%[13]. - Cash and cash equivalents increased to $406,620,000 as of July 31, 2024, from $383,742,000 as of January 31, 2024, an increase of 5.4%[13]. - The company’s accumulated deficit as of July 31, 2024, was $(1,169,046,000), a slight improvement from $(1,206,764,000) as of January 31, 2024[14]. - The company’s total stockholders' deficit as of July 31, 2024, was $(439,399,000), compared to $(431,062,000) as of January 31, 2024[14]. - Total stockholders' deficit as of July 31, 2024, was $439,399,000, a decrease from $536,964,000 as of July 31, 2023[26]. Cash Flow and Investments - Cash provided by operating activities for the six months ended July 31, 2024, was $167,502,000, compared to $157,606,000 for the same period in 2023, indicating a 6% increase[29]. - The company reported a net cash increase of $23,459,000 for the six months ended July 31, 2024, compared to a decrease of $32,346,000 in the same period of 2023[29]. - Cash provided by investing activities was $15.6 million, primarily from $79.5 million in maturities and sales of short-term investments, offset by $56.5 million in purchases of short-term investments[151]. - Cash used in financing activities totaled $157.1 million, mainly due to $138.7 million in stock repurchases and $37.8 million in employee payroll taxes related to stock awards[152]. Stock and Share Repurchase - The company repurchased common stock totaling $138,686,000 during the six months ended July 31, 2024, compared to $104,906,000 in the same period of 2023[29]. - The company repurchased 3.9 million shares at an average price of $26.25 per share for a total of $101.9 million during the three months ended July 31, 2024[70]. - The company repurchased 5.3 million shares at a weighted average price of $26.48 per share for a total of $139.1 million during the six months ended July 31, 2024, with an additional $100 million authorized for repurchase through August 25, 2025[156]. Revenue Recognition and Performance Obligations - Revenue recognized from deferred revenue for the three months ended July 31, 2024, was $222.5 million, compared to $219.1 million for the same period in 2023[44]. - Remaining performance obligations from contracts with customers totaled $1.3 billion as of July 31, 2024, with 57% expected to be recognized as revenue within the next 12 months[45]. - Remaining performance obligations (RPO) as of July 31, 2024, were $1.272 billion, a 12% increase from $1.138 billion as of July 31, 2023[102]. Operating Expenses - Operating expenses for the three months ended July 31, 2024, were $194,246,000, an increase of 5.5% from $184,540,000 in the same period of 2023[16]. - Total operating expenses for the three months ended July 31, 2024, were $194.2 million, an increase from $184.5 million in the same period of 2023[124]. - Research and development expenses for the three months ended July 31, 2024, were $65.4 million, compared to $63.3 million in the same period of 2023[124]. - Sales and marketing expenses for the three months ended July 31, 2024, were $95.2 million, an increase from $88.6 million in the same period of 2023[124]. - General and administrative expenses for the three months ended July 31, 2024, increased by $0.9 million, or 3%, to $33.6 million, remaining at 12% of revenue[138]. Market and Competitive Environment - The market for cloud content management services is fragmented and highly competitive, with primary competitors including Microsoft and Google[176]. - The company’s growth is contingent on the widespread adoption of cloud computing and cloud-based content management services[181]. - The introduction of new technologies and market entrants is expected to intensify competition in the future[176]. - The company faces challenges in selling to government entities, including changes in certification requirements and budgetary cycles affecting demand[190]. Risks and Challenges - Adverse economic conditions may lead to reduced sales, longer sales cycles, and increased price competition, negatively impacting the business[185]. - The company faces risks related to customer satisfaction, pricing pressures, and the effectiveness of customer support services[179]. - The company must effectively manage its technical operations infrastructure to avoid service delivery issues that could harm business[176]. - The company has encountered issues with service disruptions and outages, which could lead to service credits and negatively impact revenue[192]. - The company faces increasing cybersecurity threats, including ransomware and phishing attacks, which could compromise sensitive data[200]. Compliance and Regulatory Environment - Compliance with evolving privacy laws, such as the GDPR and CCPA, may impose additional burdens and costs on the company[206]. - Legislative changes, such as the California Privacy Rights Act, may require modifications to data processing practices and incur substantial compliance costs[209]. - The company must adapt to new data localization laws in various regions, which could limit service offerings and lead to fines[210]. - Ongoing changes in global privacy regulations may delay product development and increase operational costs[211].

Core Viewpoint - Box has demonstrated strong financial performance with expanding margins and prudent stock repurchases, leading to a significant increase in share price [1][5]. Financial Performance - In Q2, Box achieved a revenue growth of 3% to $270 million, with adjusted earnings per share of $0.44, reflecting a 22.2% increase [2]. - The constant-currency revenue growth was 6%, indicating that the underlying performance is stronger than the reported figures due to the impact of the weakening Yen [2]. - Billings grew by 10%, and remaining performance obligations increased by 12%, showcasing positive future growth indicators [2]. Margin Expansion - Box's adjusted gross margins rose by 4.7 percentage points to 81.6%, while adjusted operating margins expanded by 3.6 percentage points to 28.4% [4]. - These significant margin improvements suggest that Box has either pricing power or operational leverage, contributing to increased profitability [4]. Strategic Developments - The company is enhancing its software capabilities by acquiring AI-related startups, such as Crooze and Alphamoon, to automate content handling and processing tasks [3]. - These acquisitions are part of Box's strategy to transition from a content storage provider to a more intelligent automation solution for enterprises [3]. Valuation and Outlook - Box is currently trading at approximately 20 times this year's adjusted earnings-per-share estimates, which is considered a reasonable valuation for an enterprise software company [5]. - With anticipated growth reacceleration, margin expansion, and share repurchases, Box presents a solid investment opportunity [5].

Core Viewpoint - Box, Inc. reported strong second-quarter fiscal 2025 results, exceeding earnings and revenue expectations, driven by growth in its Content Cloud platform and Enterprise Plus adoption [1][2] Financial Performance - Non-GAAP earnings per share for Q2 fiscal 2025 were 44 cents, beating the Zacks Consensus Estimate by 10% and reflecting a 22.3% year-over-year increase [1] - Total revenues reached $270.04 million, surpassing the consensus mark by 0.3% and increasing 3% year over year (6% growth on a constant-currency basis) [1] - Billings for the quarter were $256.4 million, marking a 10% year-over-year increase (9% growth on a constant-currency basis) [3] - Deferred revenues stood at $502 million, up 5% from the prior year (7% growth on a constant-currency basis) [3] Operational Metrics - The non-GAAP gross margin improved to 81.6%, expanding 470 basis points from the prior year [4] - Operating expenses were $194.2 million, a 5.2% increase year over year, with operating margin at 28.4%, up 360 basis points from the previous year [4] Cash Flow and Balance Sheet - Cash and cash equivalents decreased to $406.6 million from $449.5 million as of the previous quarter [5] - The company generated $36.3 million in cash from operations, down from $131.2 million in the previous quarter [6] - Free cash flow for the quarter was $32.7 million [6] Guidance - For Q3 fiscal 2025, Box expects revenues between $274 million and $276 million, indicating a 5% rise year over year [7] - The company revised its fiscal 2025 revenue guidance upward to $1.086-$1.09 billion, reflecting a 5% increase from the prior year [8] - Non-GAAP earnings per share guidance for fiscal 2025 was raised to $1.64-$1.66, including a foreign exchange headwind of 12 cents [8] Stock Performance - Box's stock has returned 27.7% year to date, outperforming the industry average of 13.6% [1] - Following the Q2 results release, Box's shares gained 10.8% [1]

Core Viewpoint - Box has shown strong performance in Q2, with a notable increase in billings and an optimistic outlook for FY25, indicating potential for further growth in the cloud-based storage market [1][2][12]. Financial Performance - Box's revenue grew 3.3% year-over-year to $270 million, while billings increased by 10% year-over-year, recovering from a -1% growth in Q1 [5][7]. - The company expects FY25 revenue between $1.066 billion and $1.090 billion, reflecting a 5% year-over-year growth [2][3]. - Pro forma EPS is projected to be between $1.64 and $1.66, marking a 6% increase at the midpoint [3]. Operational Metrics - Box's operating margin guidance has been raised by 50 basis points to 27.5%, with pro forma operating margins reaching 28.4%, up from 24% in FY24 [3][11]. - The net retention rate improved to 102%, indicating effective customer retention and upselling strategies [8]. Market Position and Strategy - Box operates in a $74 billion total addressable market (TAM) for storage, content collaboration, and data security, with only about 2% market penetration [3]. - The company has a multi-product strategy, with over two-thirds of new deal bookings coming from customers purchasing multiple Box products [3]. - Box remains founder-led, which is seen as a positive factor for its strategic direction and operational consistency [3]. Competitive Landscape - Box's growth rate of 10% in billings significantly outpaces its main competitor, Dropbox, which reported only 1.7% revenue growth in Q2 [5][6]. - The company maintains a stable churn rate of 3%, demonstrating strong customer loyalty and product stickiness [8].

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $270 million, representing a 3% year-over-year increase and a 6% increase in constant currency [23][27] - Record gross margin of 81.6%, up 470 basis points year-over-year [26][27] - Operating margin improved to 28.4%, an increase of 360 basis points year-over-year [27] - Billings grew by 10% year-over-year, reaching $256 million [25][27] - Remaining performance obligations (RPO) increased by 12% year-over-year to $1.3 billion [25][27] Business Line Data and Key Metrics Changes - The Enterprise Plus suite accounted for 87% of deals over $100,000, up from 78% a year ago [17][24] - Revenue from suite customers increased to 58%, compared to 48% in the same quarter last year [24] - Customer demand for Box AI drove upgrades and new customer acquisitions, particularly in the Enterprise Plus segment [8][17] Market Data and Key Metrics Changes - Strong performance noted in Japan, with record attach rates and significant adoption of Box AI [17][76] - The public sector business showed strong bookings, attributed to modernization efforts and the need for cloud-based solutions [56][57] Company Strategy and Development Direction - The company is focused on expanding its Intelligent Content Management platform, integrating AI capabilities to enhance customer productivity [10][13] - Recent acquisition of Alphamoon aims to enhance document processing capabilities within Box AI [13][14] - Plans to host BoxWorks, a flagship customer conference, to unveil new product enhancements and partnerships [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the macro environment compared to previous quarters, with continued demand for Box AI and Enterprise Plus [38][39] - The company anticipates a net retention rate of approximately 102% by the end of FY '25, an improvement from previous expectations [26][34] - Future growth is expected to be driven by improved net retention rates and expansion into new markets [60][61] Other Important Information - The company generated free cash flow of $33 million, up 59% year-over-year [27][28] - A new stock repurchase plan of $100 million was authorized by the Board [28] - The company is on track to meet FedRAMP High Compliance, expanding its use cases in the federal government [16] Q&A Session Summary Question: What is the current macro and deal environment? - Management noted stable performance compared to Q1, with strong demand for Box AI and Enterprise Plus driving results [38] Question: What is the contribution of AI to revenue? - AI is seen as a key driver for upgrades to the Enterprise Plus plan, facilitating customer transitions and enhancing deal closures [41][42] Question: What are the trends in seat growth? - Seat growth remains stable, with pressure on expansion rates, but pricing improvements are contributing to net retention [47] Question: What is the reasoning behind unlimited AI queries in the Enterprise Plus plan? - The decision was made to lower friction for adoption and capitalize on decreasing costs of AI models [49][50] Question: How is the demand environment evolving? - Healthy linearity was observed in Q2, with expectations embedded in Q3 guidance [54] Question: What is driving the strength in the public sector? - The platform's modernization capabilities resonate well with government agencies transitioning from legacy systems [56][57] Question: What is the growth algorithm for returning to double-digit growth? - Expected improvements in net retention rates and a balanced contribution from seat growth and pricing are anticipated [60][61] Question: What impact do recent acquisitions have on revenue or EPS? - No immediate revenue impact from acquisitions, but they are incorporated into future guidance [64] Question: What is driving the uptick in bookings in Japan? - Continued strong performance in Japan attributed to early adoption of Box AI and significant market potential [76]

| --- | --- | |-------|-------| | | | | | | | | | Forward-looking statements & non-GAAP financial measures This presentation contains forward-looking statements that involve risks, uncertainties, and assumptions, including statements regarding Box's expectations regarding its growth and profitability, the size of its market opportunity, its investments in go-to-market programs, the demand for its products, the potential of AI and its impact on Box, the timing of recent and planned product introductions, enh ...

Company Performance - Box reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, and up from $0.36 per share a year ago, representing an earnings surprise of 10% [1] - The company achieved revenues of $270.04 million for the quarter ended July 2024, surpassing the Zacks Consensus Estimate by 0.32%, compared to $261.43 million in the same quarter last year [1] - Over the last four quarters, Box has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [1] Stock Performance and Outlook - Box shares have increased approximately 11.9% since the beginning of the year, while the S&P 500 has gained 17.8% [2] - The future performance of Box's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.39 on revenues of $271.09 million, and for the current fiscal year, it is $1.57 on revenues of $1.08 billion [4] Industry Context - The Internet - Software industry, to which Box belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [5] - Couchbase, Inc., another company in the same industry, is expected to report a quarterly loss of $0.08 per share, reflecting a year-over-year change of +52.9%, with revenues projected at $51.03 million, up 18.3% from the previous year [5]