Box (NYSE:BOX) reported upside second-quarter earnings results and guidance yesterday, but shares are currently down 1.3% as analysts question whether the growth rate is enough in a competitive landscape. The company is also two weeks away from its annual shareholder meeting where investors will vote on strategy and management amid a high-profile spat with activist investor Starboard Value.
For the second quarter, Box sales barely topped Wall Street estimates, growing 12% year-over-year to $214.49 million. Adjusted earnings of $0.21 per share beat estimates by two cents.
Remaining Performance Obligations were up 27% on the year to $922.4 million.
Non-GAAP operating margin improved 500 basis points year-over-year to 21%.
"Q2 showed continued acceleration in revenue growth, RPO, and operating margin,” says Dylan Smith, co-founder and CFO. “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.”
For the third quarter, revenue is expected to come in between $218 million and $219 million and adjusted EPS between $0.20 and $0.21. Analysts had expected Box to guide for $217.02 million in sales and $0.20 earnings per share.
The full-year outlook includes revenue of $856 million to $860 million compared to the $845.05 million consensus and adjusted EPS of $0.79 to $0.81 compared to the $0.79 consensus.
“While the company is tracking positively toward its operational improvement plan, a low-teens growth rate is insufficient to make us incrementally positive in a competitive landscape that is saturated with well-established players,” writes investment banking and asset management firm JMP Securities, maintaining a Market Perform rating on the company.
Starboard Value, which holds about an 8% stake in Box, has pushed for the company for changes including new board members, suggested management changes that have reportedly targeted CEO Aaron Levie and a potential sale of the company. Last month, Box revealed that Starboard had rejected its settlement attempts.