Box stock moved sharply higher Wednesday, after file-sharing and enterprise software company Box reported better-than-expected quarterly earnings and announced an expanded collaboration with Microsoft to boost its Box AI offering.
Box late Tuesday reported adjusted earnings of 42 cents per share on sales of $262.9 million for its fiscal 2024 fourth quarter. On average, analysts projected the Redwood City, Calif.-based company would post adjusted earnings of 38 cents per share on sales of $263.3 million, according to FactSet. Sales increased 3% year over year while earnings per share increased 13.5%.
For the current quarter ending in April, Box guided for sales of $262 million. That was in line with expectations from analysts heading into the report, according to FactSet. However, the company is projecting sales growth of 5% to between $1.08 billion and $1.085 billion for its fiscal 2025, which ends in January 2024. That is slightly below the $1.089 billion projected by analysts, according to FactSet.
On the stock market today, Box stock rose more than 8% to close at 29.60.
Box AI Push
Like most data-focused software companies, Box is working to offer corporate clients tools for generative artificial intelligence. The company also announced late Tuesday that it would integrate Microsoft Azure's OpenAI Service into its Box AI product.
Launched in beta mode in May 2023, Box AI allows corporations to integrate large language models into the data they store on Box. That could allow Box users to build tools to analyze documents and process queries, among other uses, Box said in its announcement.
The collaboration with Microsoft "enables Box customers to benefit from the most advanced AI models in the world," the company said.
Box also announced Tuesday that the Box AI product is now generally available to customers in the firm's Enterprise Plus plans.
Box Chief Executive Aaron Levie told analysts Tuesday that the company is taking a "platform-neutral" approach to AI. He believes Box can benefit as Big Tech companies race to build bigger and better AI large language models.
"When you're a client of Box, you don't have to choose between whether you want the best of Google, or the best of Microsoft and OpenAI, or the best of Amazon, or Anthropic, or IBM," Levie said. "You don't have to make that decision about where you move your data to get the value of those capabilities. By having your content in Box, it will work with all of the AI coming from those different vendors."
Box Stock: Q4 'Better Than Feared'
For its January quarter, Box said that billings climbed 6% year over year to $379.3 million. That was slightly better than the $373 million projected by analysts.
For the full fiscal 2024, Box passed $1 billion in sales for the first time, Chief Financial Officer Dylan Smith noted in the company's news release. Sales increased 5% overall for the year.
In comments to analysts, Smith said the company's sales outlook for its current fiscal year reflects a "continued constrained IT budget environment." The company also cited foreign exchange headwinds for the below-consensus outlook. Smith told analysts that 60% of Box's international revenue comes from Japan.
UBS analyst Rich Hilliker called Box's results "better than feared" in a client note Tuesday. UBS reiterated a buy rating for the stock and upped its price target to 34, from 33. Hilliker believes the company is positioning itself for more AI-related business.
"While some investors and industry experts have been critical of Box's pace to market with AI (we agree there's more still to come beyond integrating/partnering), our team's checks suggest larger-scale enterprise adoption of generative AI is likely a (second half 2024) or (first half 2025) motion, which appears to align with the likely time to market of Box's new premium tiers," Hilliker wrote.
Box Stock: Technical Ratings
Founded in 2005, Box says its data-sharing tools are used by 68% of the Fortune 500.
With Wednesday's gain, Box stock is up gained 15% this year, though up just 8% over the past 12 months. On Monday, Box shares jumped 5%. The gains followed an announcement the stock will be added to the S&P SmallCap 600.
Coming into the report, Box stock had an IBD Composite Rating of 76 out of a best possible 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.
In addition, Box stock has an Accumulation/Distribution Rating of C+, which indicates slightly more institutional buying than selling of shares.
Box stock has traded within a long consolidation pattern for the past 57 weeks, according to IBD MarketSurge, which shows a buy point at 34.98.
