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Box (BOX) Up 9.5% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Box (BOX). Shares have added about 9.5% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Box Q4 Earnings and Revenues Top Estimates

Box reported fourth-quarter fiscal 2022 earnings per share of 24 cents, which surpassed the Zacks Consensus Estimate by 4.3%. The figure grew 9.1% both sequentially and year over year.

Total revenues were $233.4 million, beating the consensus mark by 2.3%. Also, the top line increased 17% year over year and 4.2% from the prior quarter.

The growing adoption of Box’s Content Cloud drove top-line growth. The company closed 128 deals in the fiscal fourth quarter, up 6% year over year.

BOX saw a 65% attach rate of its suites due to the increasing demand for multi-product suite offerings. The company reported 83 multi-product suite sales in the reported quarter, increasing 51% year over year. Also, 35% of its revenues were generated from suites sales compared with 24% in the year-ago period.

Strength in customer expansion and retention drove the results. Box’s net retention rate was 111% at the fiscal fourth quarter, expanding 900 basis points (bps) from the prior-year quarter.

The remaining performance obligations for the reported quarter were $1.1 billion, which increased 19% on a year-over-year basis. This is driven by a higher volume of long-term strategic deals.

Billings and Deferred Revenues

Billings were $337.9 million for the reported quarter, which improved 9% year over year.

Deferred revenues were $534.2 million in the fourth quarter, increasing 15% from the prior-year quarter.

Quarter in Detail

Box witnessed several wins and expansions with companies like 23andMe, Crispr Therapeutics, Fanatics, Japan Post Co., Ltd., Twilio, and United Parcel Service of America in the reported quarter.

The company made an enhanced Box for Microsoft Teams integration and an enhanced Box for Slack integration generally available. This aided the fourth-quarter results.

BOX made an enhancement to the Box Admin Console by introducing the latest monitoring and reporting tools to help customers protect important data and run their businesses securely.

The company’s introduction of enhanced capabilities, integrations and developer tools for its native e-signature product, Box Sign, also supported the quarterly results.

Operating Results

Non-GAAP gross profit for the fiscal fourth quarter was $175.2 million, up 20.4% year over year. As a percentage of revenues, the figure was 75%, expanding 190 bps from the prior-year quarter. On a non-GAAP basis, the company recorded an operating margin of 20.8%, which expanded 250 bps from the prior-year quarter.

Box’s operating expenses of $168.8 million increased 17.6% year over year. As a percentage of revenues, the figure expanded 17 bps from the year-ago quarter to 72%.

Balance Sheet and Cash Flow

As of Jan 31, 2021, cash and cash equivalents were $416.3 million compared with $568.3 million as of Oct 31, 2021. BOX’s short-term investments amounted to $170 million compared with $140 million in the previous quarter.

Accounts receivables amounted to $256.3 million at the fiscal fourth-quarter end, which increased from $154.6 million at the prior-quarter end.

Box generated $49.2 million of cash from operations in the reported quarter, up from $46.1 million in the previous quarter. Additionally, the company generated a free cash flow of $33.3 million in the fiscal fourth quarter. In the fourth quarter, Box repurchased 5.5 million shares for approximately $140 million.

Guidance

For first-quarter fiscal 2023, Box expects revenues between $233 million and $235 million, suggesting a 16% year-over-year rise at the high-end. On a non-GAAP basis, the company projects earnings per share of 24-25 cents.

For fiscal 2023, Box anticipates revenues between $990 million and $996 million, indicating a year-over-year increase of 14% at the high-end. On a non-GAAP basis, the company projects earnings per share of $1.10-$1.14.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 15.39% due to these changes.

VGM Scores

Currently, Box has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.

Outlook

Estimates have been broadly 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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