Box, Inc. 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.

Box, Inc. Price, Consensus and EPS Surprise

Box, Inc. price-consensus-eps-surprise-chart | Box, Inc. Quote

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.

Operating 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.

Guidance

For fourth-quarter fiscal 2022, Box expects revenues between $227 million and $229 million, suggesting a 15% year-over-year rise. The Zacks Consensus Estimate for the same is pegged at $223.2 million.

On a non-GAAP basis, the company projects earnings per share of 22-23 cents. The Zacks Consensus Estimate for the same is pegged at 22 cents.

For fiscal 2022, Box has raised its revenue guidance from $856-$860million to $868-$870 million, indicating an increase of 13% from the year-ago period’s reported figure. The Zacks Consensus Estimate for the same is pegged at $858.7 million.

On a non-GAAP basis, the company projects earnings per share of 83-84 cents. The consensus mark for the same is pegged at 81 cents.

Zacks Rank & Stocks to Consider

Box currently carries a Zacks Rank #3 (Hold).

Investors interested in the broader technology sector can consider stocks like Advanced Micro Devices AMD, Mimecast Limited MIME and Arrow Electronics ARW. While Arrow currently sports a Zacks Rank #1(Strong Buy), Advanced Micro Devices and Mimecast carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices has gained 72.7% on a year-to-date basis. The long-term earnings growth rate for the AMD stock is currently projected at 46.2%.

Mimecast has gained 42.5% on a year-to-date basis. The long-term earnings growth rate for the MIME stock is currently projected at 35%.

Arrow Electronics has gained 25% on a year-to-date basis. The long-term earnings growth rate for the ARW stock is currently projected at 27.4%.

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