Box brushes aside fears of AI’s threat with powerful earnings beat – News

Box Inc. bucked the trend of software companies crumbling in the face of the artificial intelligence threat, crushing Wall Street’s profit forecast, beating expectations on earnings, and offering solid guidance going forward.

The news sent Box’s stock up more than 4% in extended trading.

The cloud content management company reported earnings before certain costs such as stock compensation of 49 cents per share, easily beating the analysts’ consensus estimate of 34 cents per share. Revenue for the period rose 9% from a year earlier, to $305.9 million, just ahead of the $304.2 million analyst target.

Box’s net income did decline, though. The company reported a profit of $81.7 million on its bottom line, down from $194 million in the year-ago period.

Chief Executive Aaron Levie (pictured) said the strong performance was driven by solid momentum behind its Enterprise Advanced offering, which provides access to its most sophisticated AI features and tools. He said subscribers to that platform now account for 10% of the company’s revenue. “Customers are looking to leverage the power of AI to transform how they work with their enterprise content,” he explained.

Software companies have been under pressure in recent weeks amid investor’s fears that AI models may cause severe disruption to their business models. The concern is that, as AI becomes more capable, there’s less need for enterprise workers to interact with the underlying software platforms. They’ll simply be able to tell autonomous AI agents what they want to do, and everything will be automated. Some even believe that agents could replace legacy software altogether, simply by building their own platforms, though many think that’s unlikely.

Box’s response to this threat has been to lean on AI itself, enhancing the capabilities of its content management platform. Its AI offerings are centered on the Box AI suite, which launched in 2023 and includes a host of AI agents that can automate repetitive tasks on behalf of its users. With Box AI Studio, companies can even create their own AI agents.

During the quarter, Box bolstered its AI features with the launch of a new data extraction tool called Box Extract, which enables employees to dig up useful business insights locked in their documents that they’d be unlikely to surface by themselves. It also debuted Box Shield Pro, an AI-native add-on that expands its existing content security platform with agentic AI to automate content classification, detect ransomware faster and streamline security operations.

Those updates appear to have helped accelerate Box’s momentum during the quarter. It reported that its remaining performance obligations, which are a measure of future revenue, increased by 17% from a year earlier, to $1.7 billion. Its adjusted operating margin expanded from 27.3% a year ago to 30.6% at the end of the quarter.

For the current quarter, Box said it’s looking at earnings of 36 cents per share at the midpoint of its range, above the Street’s consensus estimate of 32 cents. It’s also estimating $304 million in revenue, way ahead of the Street’s $296.5 million forecast. For the full year, it’s looking at total sales of $1.275 billion versus the $1.27 billion consensus.

Photo: Robert Hof/ News