It has been about a month since the last earnings report for Box (BOX). Shares have added about 4.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Box due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Box Q3 Earnings and Revenues Top Estimates
Box reported third-quarter fiscal 2022 earnings per share of 22 cents, which surpassed the Zacks Consensus Estimate by 4.8%. The figure also grew 4.8% sequentially and 10% from the year-ago period.
Total revenues were $224.04 million, surpassing the consensus mark by 2.5%. Also, the top line increased 14.3% year over year and 4.5% from second-quarter fiscal 2022.
The growing adoption of Box’s Content Cloud drove top-line growth.
The company closed 97 deals in the fiscal third quarter, up 56% year over year.
BOX saw a 63% attach rate of its suites due to the increasing demand for multi-product suite offerings.
Strength in customer expansion and retention drove the results. Box’s net retention rate was 109% at the fiscal third quarter-end, up 300 basis points (bps) sequentially.
Billings and Deferred Revenues
Billings were $231.5 million for the reported quarter, which increased 25% year over year. This improvement was due to an increase in sales from both Enterprise and SMB markets.
Deferred revenues were $429.7 million, improving 21% from the prior-year quarter.
Quarter in Detail
Box witnessed several wins and expansions with companies like Canon, Epic Games, General Services Administration, NASA, Johnson Space Center, Lionsgate, Robinhood Markets, U.S. Air Force Reserve Command, and Zoom Video Communications in the reported quarter.
The company expanded the availability of its e-signature capability, Box Sign, to help businesses in digitizing and modernizing agreements, which is worth mentioning.
BOX introduced the all-new Box Notes and an updated Box Mobile app, and announced deeper integrations with Microsoft 365, Slack and Zoom.
Box’s introduction of malware deep scan for Box Shield to help customers reduce ransomware-related risks supported the quarterly results.
Non-GAAP gross profit for the fiscal third quarter was $167.3 million, up 16.2% year over year. As a percentage of revenues, the figure expanded 130 bps from the prior-year quarter.
Box’s operating expenses of $172.1 million increased 21.3% year over year. As a percentage of revenues, the figure expanded 450 bps from the year-ago quarter.
On a non-GAAP basis, the company recorded an operating margin of 21%, which expanded 270 bps from the prior-year quarter.
Balance Sheet and Cash Flow
As of Oct 31, 2021, cash and cash equivalents were $568.3 million compared with $779.4 million as of Jul 31, 2021. BOX’s short-term investments amounted to $140 million compared with $50 million in the previous quarter.
Accounts receivables amounted to $154.6 million at the fiscal third quarter-end, which increased from $134.4 million at the prior quarter-end.
The company generated $46.1 million of cash from operations in the reported quarter, up from $44.8 million in the previous quarter. Additionally, BOX generated a free cash flow of $31.2 million in the fiscal third quarter.
For fourth-quarter fiscal 2022, Box expects revenues between $227 million and $229 million, suggesting a 15% year-over-year rise.
On a non-GAAP basis, the company projects earnings per share of 22-23 cents.
For fiscal 2022, Box has raised its revenue guidance from $856-$860 million to $868-$870 million, indicating an increase of 13% from the year-ago period’s reported figure.
On a non-GAAP basis, the company projects earnings per share of 83-84 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 16.22% due to these changes.
At this time, Box has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Box has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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