Box Shares Are Falling Wednesday: Here's Why

Box Inc BOX shares are trading lower Wednesday after the company reported quarterly results and issued weak guidance. Here's what you need to know.

Q2 Earnings: Box said second-quarter revenue increased 6% year-over-year to $261.43 million, which beat the consensus estimate of $261.12 million, according to Benzinga Pro. The company reported quarterly earnings of 36 cents per share, which beat analyst estimates of 35 cents per share.

Cash from operations totaled $33 million in the quarter, up 15% year-over-year. Free cash flow came in at $21 million, up 15%. 

Box also announced an $100 million expansion of its stock repurchase program. During the second quarter, the company repurchased 2.2 million shares at an average price of $28.55. 

"With Box AI, we will be able to securely connect customer's enterprise content with the world's leading AI models, uniquely positioning Box at the center of the future of work," said Aaron Levie, co-founder and CEO of Box.

Co-founder and CFO Dylan Smith added, "While ongoing economic factors have affected our customers' IT budgets and put pressure on our projected fiscal 2024 growth rate, we remain committed to our long-term revenue growth targets as we continue to drive gross margin and operating margin expansion in FY24 and beyond."

Outlook: Box said it expects third-quarter revenue to be between $261 million and $263 million versus estimates of $265.63 million. Adjusted earnings are expected to be in the range of 37 cents to 38 cents per share versus estimates of 39 cents per share. 

Full-year revenue is expected to be between $1.04 billion and $1.044 billion versus estimates of $1.05 billion. The company sees full-year earnings of $1.46 to $1.50 per share versus estimates of $1.49 per share.

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Analyst Changes: Multiple analysts came out with updates following the print. 

• Keybanc analyst Thomas Blakey maintained Box with an Overweight and lowered the price target from $35 to $33.
• Oppenheimer analyst George Iwanyc reiterated Box with an Outperform and maintained a $35 price target.
• Craig-Hallum analyst Chad Bennett downgraded Box from a Buy rating to a Hold rating.

BOX Price Action: Box shares were down 9.58% at $27.85 at the time of writing, according to Benzinga Pro.

Photo: courtesy of Box.