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Box (BOX) Up 23% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Box (BOX - Free Report) . Shares have added about 23% 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 its 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 2021 earnings per share of 22 cents, which surpassed the Zacks Consensus Estimate by 29.4%. Further, the figure surged significantly from earnings of 7 cents per share in the year-ago quarter.

Total revenues were $198.9 million, surpassing the consensus mark of $196.5 million. Further, the top line increased 8% year over year and was above the company’s guidance of $196-$197 million.

Solid demand for Box Shield and Box Relay,which bolstered the company’s Suite adoption rate, contributed well to top-line growth.

Further, Box witnessed several wins and expansions with companies like Arena Pharmaceuticals, Asahi Group Holdings, Pan-American Life Insurance Group and Twilio in the reported quarter. This remained a major positive.

Additionally, increasing average customer contract durations benefited the results.

The company’s rich technology partner ecosystem and high volume of large enterprise deals will likely continue to be strong driving forces in the near term.

Billings and Deferred Revenues

Billings were $310.1 million in the reported quarter, which increased 10%year over year.

Deferred revenues were $465.6 million, improving 10% from the prior-year quarter.

Operating Results

Non-GAAP gross profit for the fiscal fourth quarter was 145.6 million, up 10.9% year over year. As a percentage of revenues, the figure expanded 200 basis points (bps).

Box’s operating expenses (general & administrative, sales & marketing, and research & development) of $143.6 million decreased 7.6% year over year. As a percentage of revenues, the figure contracted to 72.2% from 84.7% in the year-ago quarter.

On a non-GAAP basis, the company recorded operating margin of 18%, which expanded significantly from 7% in the prior-year quarter.

Balance Sheet and Cash Flow

As of Jan 31, 2021, cash and cash equivalents were 595.1 million compared to $275.4 million as of Oct 31, 2020.

Further, accounts receivables amounted to $228.3 million at the end of the fiscal fourth quarter compared with $115.7 million at the end of the fiscal third quarter.

Net cash provided by operations in the reported quarter was $57.5 million, up from $45.1 million in the previous quarter.Further, the company generated free cash flow of $41 million in the fiscal fourth quarter.

Guidance

For the first quarter of fiscal 2022, Box expects revenues between $200 million and $201 million.

On a non-GAAP basis, the company projects earnings per share of 16-17 cents.

For fiscal 2022, Box’s revenues are expected to be $840-$848 million.

On a non-GAAP basis, the company projects earnings per share of 76-81 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 11.52% due to these changes.

VGM Scores

At this time, Box has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 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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