Box, Inc. (NYSE:BOX), the leading Content Cloud, today announced preliminary financial results for the second quarter of fiscal year 2022, which ended July 31, 2021.
“As companies implement strategies to support a remote workforce and digital processes in this hybrid world, more customers are turning to Box to secure content management and collaboration in the cloud,” said Aaron Levie, co-founder and CEO of Box. “This momentum is reflected in our strong Q2 results and outlook for the full year. The strength of our platform strategy is resonating, as evidenced by a record attach rate of Suites in large deals. Increased customer satisfaction in the value we are adding to our Content Cloud platform can also be seen in our net retention rate of 106%, up from 103% in Q1. With the recent addition of Box Sign, our first native e-signature product offering, to the platform we continue to deliver on our vision for the Content Cloud by powering the complete content lifecycle.”
“Q2 showed continued acceleration in revenue growth, RPO, and operating margin,” said Dylan Smith, co-founder and CFO of Box. “In addition to our raised outlook for FY22 revenue, operating margin, and EPS, we are on track to deliver an FY22 revenue growth rate plus free cash flow margin of at least 32%, above our prior commitment of 30%. We remain confident in our ability to execute on our long-term financial targets for FY24.”
Fiscal Second Quarter Financial Highlights
- Revenue for the second quarter of fiscal year 2022 was $214.5 million, an increase of 12% from the second quarter of fiscal year 2021. For the second consecutive quarter, revenue growth accelerated on a year over year basis.
- Remaining performance obligations as of July 31, 2021 were $922.4 million, a 27% increase from the second quarter of fiscal year 2021.
- Deferred revenue as of July 31, 2021 was $422.0 million, a 16% increase from the second quarter of fiscal year 2021.
- Billings for the second quarter of fiscal year 2022 were $213.1 million, a 13% increase from the second quarter of fiscal year 2021. For the third consecutive quarter, billings growth was greater than revenue growth.
- GAAP gross profit for the second quarter of fiscal year 2022 was $153.7 million, or 72% of revenue. This compares to a GAAP gross profit of $137.0 million, or 71% of revenue, in the second quarter of fiscal year 2021.
- Non-GAAP gross profit for the second quarter of fiscal year 2022 was $159.8 million, or 75% of revenue. This compares to a non-GAAP gross profit of $141.4 million, or 74% of revenue, in the second quarter of fiscal year 2021.
- GAAP operating loss in the second quarter of fiscal year 2022 was $6.1 million, or 3% of revenue. This compares to a GAAP operating loss of $7.5 million, or 4% of revenue, in the second quarter of fiscal year 2021.
- Non-GAAP operating income in the second quarter of fiscal year 2022 was $44.2 million, or 21% of revenue. This compares to a non-GAAP operating income of $30.1 million, or 16% of revenue, in the second quarter of fiscal year 2021.
- GAAP net loss per share attributable to common stockholders, basic and diluted, in the second quarter of fiscal year 2022 was $0.08 on 161.2 million weighted-average shares outstanding. This compares to a GAAP net loss per share attributable to common stockholders of $0.05 in the second quarter of fiscal year 2021 on 154.7 million weighted-average shares outstanding.
- Non-GAAP net income per share attributable to common stockholders, diluted, in the second quarter of fiscal year 2022 was $0.21. This compares to a non-GAAP net income per share attributable to common stockholders, diluted, of $0.18 in the second quarter of fiscal year 2021.
- Net cash provided by operating activities in the second quarter of fiscal year 2022 was $44.8 million, an increase of 39% from net cash provided by operating activities of $32.3 million in the second quarter of fiscal year 2021.
- Free cash flow in the second quarter of fiscal year 2022 was positive $29.8 million. This compares to free cash flow of positive $13.3 million in the second quarter of fiscal year 2021.
- Suites attached to 73% of $100K+ deals, up from 49% in the first quarter of fiscal year 2022.
- Net retention increased to 106%, up from 103% in the first quarter of fiscal year 2022.
For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the section titled, “About Non-GAAP Financial Measures and Other Key Metrics,” and the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures at the end of this press release.
Update on Share Repurchase Plan
On July 9, 2021, the Board of Directors authorized a $260 million Share Repurchase Plan, utilizing the unused portion of the $500 million intended for the Modified Dutch Auction Tender Offer to opportunistically repurchase additional shares of Box’s Class A common stock. As of August 24, 2021, the company had repurchased 2.9 million shares of its Class A common stock at a weighted average price of $23.89 for a total of $70 million under this Plan. Combined with the Modified Dutch Auction Tender, the company had repurchased a total of 12.2 million shares of Class A common stock for a total of $308 million.
Business Highlights since Last Earnings Release
- Delivered wins and expansions with leading organizations such as Arc’teryx, Live Nation, Pan-American Life Insurance Group, the Reserve Bank of New Zealand, Tokyo Electron Ltd., and the U.S. Small Business Administration.
- Named a Leader in The Forrester Wave™: Content Platforms, Q2 2021 and the 2021 Nucleus Research Value Matrix for Content Services and Collaboration.
- Began rolling out Box Sign, the company’s native e-signature capability, to customers on Business and Enterprise plans. The launch of Box Sign includes unlimited signatures using the Box web app and a robust set of APIs, enabling businesses to digitize and modernize the way agreements are managed and governed in the cloud.
- Introduced Enterprise Plus, a new offering that builds on Box’s successful Suites offerings and includes all major products: Box Shield, Box Governance, Box Relay, Box Platform, and the most advanced e-signature capabilities of Box Sign when available.
- Released new self-service Box Shuttle migration tools to give customers more control when moving off of legacy technology and centralizing content on Box.
- Released the new Box Connector for Microsoft Graph, which allows content in Box to be surfaced across the Microsoft ecosystem, including Office 365, Office Online search, and SharePoint.
- Announced the general availability of a new integration with ServiceNow’s Legal Service Delivery application to modernize legal operations. This new integration brings together ServiceNow’s advanced workflows expertise while ensuring confidential legal content is secured on Box’s Content Cloud.
- Announced that the company’s 11th annual BoxWorks will be taking place virtually on October 6, where attendees will learn about the Content Cloud and hear from industry and customer speakers.
- Recognized as a Top Bay Area Corporate Philanthropist in 2021 by San Francisco Business Times and one of Fortune’s Best Large Workplaces for Millennials for 2021.
Outlook
- Q3 FY22 Guidance: Revenue is expected to be in the range of $218 million to $219 million. GAAP operating margin is expected to be approximately negative 2.5%, and non-GAAP operating margin is expected to be approximately 20%. GAAP basic and diluted net loss per share attributable to common stockholders are expected to be in the range of $0.09 to $0.08. Non-GAAP diluted net income per share attributable to common stockholders is expected to be in the range of $0.20 to $0.21. Weighted-average basic and diluted shares outstanding are expected to be approximately 154 million and 162 million, respectively.
- Full Year FY22 Guidance: Revenue is expected to be in the range of $856 million to $860 million. GAAP operating margin is expected to be approximately negative 3%, and non-GAAP operating margin is expected to be approximately 19.5%. GAAP basic and diluted net loss per share attributable to common stockholders are expected to be in the range of $0.34 to $0.32. Non-GAAP diluted net income per share attributable to common stockholders is expected to be in the range of $0.79 to $0.81. Weighted-average basic and diluted shares outstanding are expected to be approximately 158 million and 166 million, respectively.
All forward-looking non-GAAP financial measures contained in this section titled “Outlook” exclude estimates for stock-based compensation expense, intangible assets amortization, and as applicable, other special items. Box has provided a reconciliation of GAAP to non-GAAP net income (loss) per share guidance at the end of this press release.
Webcast and Conference Call Information
Box’s management team will host a conference call today beginning at 2:00 PM (PT) / 5:00 PM (ET) to discuss Box’s financial results, business highlights and future outlook. A live audio webcast of this call will be available through Box’s Investor Relations website at www.box.com/investors for a period of 90 days after the date of the call. Prepared remarks will be available on the Box Investor Relations website after the call ends.
The conference call can be accessed by registering online at http://www.directeventreg.com/registration/event/4886758, at which time registrants will receive dial-in information as well as a passcode and registrant ID. A telephonic replay of the call will be available approximately two hours after the call and will run for one week. The replay can be accessed by dialing:
+ 1-800-585-8367 (U.S. and Canada), conference ID: 4886758
+ 1-416-621-4642 (international), conference ID: 4886758
Box has used, and intends to continue to use, its Investor Relations website (www.box.com/investors), as well as certain Twitter accounts (@box, @levie and @boxincir), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Information on or that can be accessed through Box’s Investor Relations website, these Twitter accounts, or that is contained in any website to which a hyperlink is provided herein is not part of this press release, and the inclusion of Box’s Investor Relations website address, these Twitter accounts, and any hyperlinks are only inactive textual references.
This press release, the financial tables, as well as other supplemental information including the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures, are also available on Box’s Investor Relations website. Box also provides investor information, including news and commentary about Box’s business and financial performance, Box’s filings with the Securities and Exchange Commission, notices of investor events and Box’s press and earnings releases, on Box’s Investor Relations website.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks, uncertainties, and assumptions, including statements regarding Box’s expectations regarding the size of its market opportunity, sales productivity, its leadership position in the cloud content management market, the demand for its products, the timing of recent and planned product introductions, enhancements and integrations, the short- and long-term success, market adoption and retention, capabilities, and benefits of such product introductions and enhancements, the success of strategic partnerships, the impact of its acquisitions on future Box product offerings, the benefits to its customers from completing acquisitions, the time needed to integrate acquired businesses into Box, the impact of the COVID-19 pandemic on its business, its ability to grow and scale its business and drive operating efficiencies, its ability to achieve revenue targets and billings expectations, its revenue growth rate plus free cash flow margin in fiscal year 2022 and beyond, its long-term financial targets for fiscal year 2024 and beyond, its ability to achieve profitability on a quarterly or ongoing basis, its free cash flow, its ability to continue to grow unrecognized revenue and remaining performance obligations, its revenue, billings, GAAP and non-GAAP gross margin, GAAP and non-GAAP net income (loss) per share, GAAP and non-GAAP operating margins, the related components of GAAP and non-GAAP net income (loss) per share, weighted-average outstanding share count expectations for Box’s fiscal third quarter and full fiscal year 2022 in the section titled “Outlook” above, equity burn rate, the KKR-led investment and achievement of its potential benefits, any potential repurchase of its common stock, whether, when, in what amount and by what method any such repurchase would be consummated, and the share price of any such repurchase. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: (1) adverse changes in general economic or market conditions, including those caused by the COVID-19 pandemic; (2) delays or reductions in information technology spending; (3) factors related to Box’s highly competitive market, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by Box’s current or future competitors; (4) the development of the cloud content management market; (5) the risk that Box’s customers do not renew their subscriptions, expand their use of Box’s services, or adopt new products offered by Box on a timely basis, or at all; (6) Box’s ability to provide timely and successful enhancements, integrations, new features and modifications to its platform and services; (7) actual or perceived security vulnerabilities in Box’s services or any breaches of Box’s security controls; (8) Box’s ability to realize the expected benefits of its third-party partnerships; (9) the potential impact of shareholder activism on Box’s business and operations; and (10) Box’s ability to successfully integrate acquired businesses and achieve the expected benefits from those acquisitions. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Box. While Box believes these estimates are meaningful, they could differ from the actual amounts that Box ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021. Box assumes no obligations and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended July 31, 2021.
Additional information on potential factors that could affect Box’s financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings Box makes with the Securities and Exchange Commission from time to time, including the Annual Report on Form 10-K filed for the fiscal year ended January 31, 2021. These documents are available on the SEC Filings section of Box’s Investor Relations website located at www.box.com/investors. Box does not assume any obligation to update the forward-looking statements contained in this press release to reflect events that occur or circumstances that exist after the date on which they were made.
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