Why Are Box (BOX) Shares Soaring Today

What Happened:

Shares of cloud content storage and management platform Box (NYSE:BOX) jumped 9.6% in the morning session after the company reported a "beat and raise" quarter. Box blew past analysts' billings and adjusted operating profit expectations during the quarter. Notably, Box AI (the company's artificial intelligence product) drove upgrades and new logo wins. In line with the theme, the company also announced the acquisition of Alphamoon (AI-powered Intelligent Document Processing technology) to beef up its AI capabilities and catalyze future upgrade cycles. Moving on, guidance was reassuring as the company raised its full-year revenue, operating profits, and EPS forecasts. Overall, this was a strong quarter with several positive aspects.

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What is the market telling us:

Box’s shares are not very volatile than the market average and over the last year have had only 5 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 12 months ago, when the stock dropped 12.3% on the news that the company reported second quarter results that missed analysts' expectations for billings, though revenue and earnings per share (EPS) came in ahead. Looking ahead, revenue and non-GAAP operating profit guidance for next quarter underwhelmed. Full-year revenue guidance was slightly lowered and also missed Wall Street's estimates. 

Lastly, non-GAAP operating profit for the full year was also below expectations. Management hinted at the drivers of the weaker near-term outlook, adding that "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." 

Overall, the results could have been better. Following the results, Craig-Hallum analyst Chad Bennett downgraded the stock's rating from Buy to Hold (Neutral).

Box is up 20.8% since the beginning of the year, and at $31.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Box’s shares 5 years ago would now be looking at an investment worth $2,255.

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