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Box (NYSE:BOX) Q4: Beats On Revenue, Stock Soars


Kayode Omotosho /
2022/03/02 4:25 pm EST
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Cloud content storage and management platform Box (NYSE:BOX) beat analyst expectations in Q4 FY2022 quarter, with revenue up 17.3% year on year to $233.3 million. Guidance for next quarter's revenue was $234 million at the midpoint, which is 1.68% above the analyst consensus. Box made a GAAP loss of $4.32 million, improving on its loss of $4.94 million, in the same quarter last year.

Is now the time to buy Box? Access our full analysis of the earnings results here, it's free.

Box (BOX) Q4 FY2022 Highlights:

  • Revenue: $233.3 million vs analyst estimates of $228.6 million (2.08% beat)
  • EPS (non-GAAP): $0.24 vs analyst estimates of $0.23 (2.85% beat)
  • Revenue guidance for Q1 2023 is $234 million at the midpoint, above analyst estimates of $230.1 million
  • Management's revenue guidance for upcoming financial year 2023 is $993 million at the midpoint, beating analyst estimates by 1.28% and predicting 13.5% growth (vs 13.3% in FY2022)
  • Free cash flow of $33.2 million, roughly flat from previous quarter
  • Gross Margin (GAAP): 72.2%, up from 70.5% same quarter last year

“In fiscal 2022, we achieved strong results across all of our financial metrics, executing on our vision for the Box Content Cloud while exceeding our guidance for growth and profitability,” said Aaron Levie, co-founder and CEO of Box.

Founded in 2005 by Aaron Levie and Dylan Smith, Box (NYSE:BOX) provides organizations with software to securely store, share and collaborate around work documents in the cloud.

The catch phrase 'digital transformation' orginally referred to the digitization of documents within enterprises. The growth of digital documents has spurred an explosion of collaboration within and between businesses, which in turn is driving the demand for e-signature and content management platforms.

Sales Growth

As you can see below, Box's revenue growth has been mediocre over the last year, growing from quarterly revenue of $198.9 million, to $233.3 million.

Box Total Revenue

This quarter, Box's quarterly revenue was once again up 17.3% year on year. We can see that revenue increased by $9.31 million in Q4, which was roughly the same as in Q3 2022. This steady quarter-on-quarter growth shows the company is able to maintain its paced growth trajectory.

Guidance for the next quarter indicates Box is expecting revenue to grow 15.5% year on year to $234 million, improving on the 10.2% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $993 million at the midpoint, growing 13.5% compared to 13.3% increase in FY2022.

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Profitability

What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Box's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 72.2% in Q4.

Box Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.72 left to spend on developing new products, marketing & sales and the general administrative overhead. This is around the lower average of what we typically see in SaaS businesses. Gross margin has a major impact on a company’s ability to invest in developing new products and sales & marketing, which may ultimately determine the winner in a competitive market so it is important to track.

Key Takeaways from Box's Q4 Results

With a market capitalization of $3.75 billion Box is among smaller companies, but its more than $586.2 million in cash and positive free cash flow over the last twelve months give us confidence that Box has the resources it needs to pursue a high growth business strategy.

We liked to see that Box guided for revenue growth next year to continue. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is up 6.2% on the results and currently trades at $27.56 per share.

Should you invest in Box right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.