The cloud storage company Box Inc. beat Wall Street’s targets by the narrowest of margins in its latest earnings results, but it warned that current-quarter profit will take a significant hit from the strength of the U.S. dollar.

Investors recoiled at the prospect, and Box’s stock sank more than 8% after-hours.

The Redwood, California-based company reported fiscal 2025 fourth-quarter earnings before certain costs such as stock compensation of 42 cents per share, coming in just ahead of the analyst consensus estimate of 41 cents. Revenue for the period rose 6% from a year earlier, to $279.5 million, edging past the $279.4 million analyst forecast.

All told, Box reported a net profit of $194 million in the quarter, almost doubling its profit of $99.2 million in the year-ago quarter.

The company also reported billings of $398.6 million, up 5% from a year ago. Billings refers to the amount the company has invoiced to customers for products and services over a specific period, which has not yet been translated to revenue. It’s a strong indication of a company’s future financial performance.

In a conference call, Box Chief Executive Aaron Levie (pictured) said the company’s billings were affected by a much larger-than-expected headwind that has arisen from unfavorable currency exchange rates. However, he said the company deserved credit for beating the Street’s targets in every key measure.

“Our proven financial strategy of a balanced approach to rigorous cost discipline while making strategic investments in furthering our intelligent content management platform is paying off,” Levie said.

The CEO also highlighted the company’s ongoing investments in improving its artificial intelligence capabilities. Many of those enhancements are centered on Box AI, a suite of generative AI tools designed to improve productivity by making it easier to search, analyze and create new documents. During the last quarter, it added additional AI offerings such as Box AI Studio and Box Apps, as well as its first AI agents and a new way for customers to keep track of their AI-related costs.

“Early customer adoption highlights that customers are choosing Box to power intelligent metadata extraction from documents, automate workflows and dashboards with Box Apps, customize Box AI with the AI Studio, power complete business processes with Box Sign, Forms and Doc Gen, and so much more,” Levie added. “We are entering one of the biggest shifts in business, driven by AI.”

Holger Mueller of Constellation Research Inc. said there are two key performance indicators that immediately stick out in Box’s results. The first is that it managed to surpass the $1 billion annual revenue milestone for the first time. The second relates to costs: Box was able to keep its cost base to less than 25% of its revenue.

“Box’s costs are mostly spent on cloud infrastructure, so whoever is responsible for that must have done some shrewd negotiating with the company’s cloud infrastructure providers,” Mueller said. “Box also managed to beat inflation while keeping up its investments in AI, but the big question is, can those investments kick-start the double-digit growth investors want to see?”

That appears unlikely, at least not in the immediate future. Although Box’s AI features are gaining momentum, the impact on the company’s bottom line doesn’t seem to be nearly enough.

For the first quarter, Box said it’s looking for adjusted earnings of between 25 and 26 cents per share on sales of $274 million to $275 million, falling short of the Street’s target of 43 cents in earnings and $279.6 million in sales.

The company also forecast a profit of just a penny per share, saying its bottom line will take a six-cent-per-share impact from the stronger U.S. dollar. That’s because about a third of the company’s revenue derives from outside of the U.S. Of its non-U.S. revenue, 65% comes from Japan.

The full year picture doesn’t look much brighter. Box said it anticipates fiscal 2026 earnings of between $1.13 and $1.17 per share on revenue of $1.155 billion to $1.160 billion, while the Street was shooting higher at $1.83 per share in earnings and $1.16 billion in sales.

In an effort to make its results more palatable, Box announced its board of directors has approved a $150 million expansion of its current share repurchase plan. The program had about $52 million worth of buyback capacity prior to the expansion.

Although Box’s stock took a beating today, it has still gained just over 5% in the year to date, and is up more than 20% in the previous 12 months.

Photo: The Demo Conference/Flickr