Box stock broke out of a saucer base buy point after reporting stronger-than-expected earnings late Tuesday. The cloud content and file-sharing company fiscal second-quarter revenue was in-line with estimates but the company raised its sales outlook for the rest of the year.
Box said it earned an adjusted 44 cents per share on sales of $270 million for the July quarter. On average, analysts projected the Redwood City, Calif.-based company would post adjusted earnings of 40 cents per share on sales of $270 million, according to FactSet.
Revenue increased 3% year over year while adjusted EPS increased 11%. Box's total billing for the quarter increased 10% to $256.4 million, compared to a 1% year-over-year decrease in the first quarter.
"We delivered a strong second quarter, with accelerated billings growth as well as record gross margin, operating margin, and EPS," said Dylan Smith, co-founder and CFO of Box, in a news release. "These strong results demonstrate both our proven business model and the success of the investments we're making to build the leading Intelligent Content Management platform."
On the stock market today, Box stock rallied more than 10% to close at 31.94. Shares closed well above a 30.30 buy point from a saucer stock pattern identified by IBD MarketSurge.
Box Boosts Full-Year Revenue Outlook
For the current quarter, Box guided for sales of $275 million at the midpoint of its range. Before the company posting its results, analysts were projecting the software firm would tally $272 million in sales for the October-ended quarter, according to FactSet.
Box also slightly upped its forecast for full-year revenue by about $2 million. The company expects between $1.086 billion and $1.09 billion in sales for its January-ended fiscal 2025, Box said.
The company said the weakening of the U.S. dollar to Japanese Yen has lessened a foreign exchange headwind for its sales. Box generates a third of its revenue outside of the U.S., about 60% of which comes from Japan.
Box Targets AI Growth
Founded in 2005, Box says its data-sharing tools are used by 68% of the Fortune 500. Those offerings include what the company calls its Intelligent Content Cloud that allows companies to share files and collaborate. The offering includes automation options for standard tasks powered by generative AI.
Earlier this month, Box announced it acquired the startup Alphamoon, a developer of AI-powered document processing technology. Terms were not disclosed.
Box Chief Executive Aaron Levie highlighted the deal in a statement with the company's earnings results. He said Box is delivering a "singular platform" for managing enterprise content with intelligence features built in.
"With Box AI and strategic technology acquisitions like Alphamoon, the Box Intelligent Content Cloud can now support more use-cases across the enterprise than traditional (enterprise content management), dramatically expanding our market opportunity," Levie said in the news release Tuesday.
Analysts with William Blair reiterated an outperform rating for Box stock following the earnings report.
"While revenue growth has been muted for several quarters, we believe this quarter's results provide a modicum of confidence that the worst may be behind the company and that Box AI could be a meaningful catalyst going forward," William Blair analyst Jason Ader wrote to clients early Wednesday.
Box Stock: Technical Ratings
Box shares slumped last year and early into 2024 amid concerns about the company's growth. But Box has regained momentum as the company posted better-than-expected quarterly earnings reports in March and May.
Prior to earnings, Box gained a half-percent in Tuesday trading. Shares have gained 24% this year but are up just 5% compared to 12 months ago.
Coming into the report, Box shares had an IBD Composite Rating of 72 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Box's IBD Relative Strength Rating was 61 out of 99. The RS Rating means that Box has outperformed 60% of all stocks in IBD's database over the past year.
