Box’s 4Q Profit Soars 214%; Street Sees 14% Upside

Cloud content management and file-sharing services provider, Box, reported stellar growth in 4Q earnings, driven by higher sales and improved margins.

Box (BOX) reported adjusted earnings of $0.22 per share that surpassed analysts’ expectations of $0.17 and jumped 214.3% year-over-year. Revenues of $198.9 million beat the Street’s estimates of $196.6 million and increased 8% from the year-ago period.

The company’s non-GAAP gross margin improved 200 basis points to 73% while the non-GAAP operating margin increased 11 percentage points to 18%.

Box’s CFO Dylan Smith said, “Our focus on driving profitable growth allowed us to significantly improve operating margins and cash flow this past year. Going forward, we will continue to focus on profitability improvements while investing in our expanded market opportunity to accelerate top line growth.” (See Box stock analysis on TipRanks)

Box’s 1Q and fiscal 2022 outlook exceeded Street estimates. For 1Q, the company expects revenues and non-GAAP earnings to come in the range of $200-$201 million and $0.16-$0.17 per share, respectively. The Street’s estimates for 1Q revenues and earnings are pegged at $199.1 million and $0.16, respectively.

For fiscal 2022, it projects sales between $840 million and $848 million, while analysts are expecting revenues of $839.8 million. The company forecasts adjusted earnings of $0.76-$0.81 per share in the fiscal year compared with the consensus estimate of $0.76.

Following the earnings release, Oppenheimer analyst Ittai Kidron reiterated a Buy rating and price target of $24 (28% upside potential).

In a note to investors, Kidron wrote, “Box delivered a solid quarter with several positives. Management’s sales strategy is delivering, and Box’s SMB customers are showing signs of returning to pre-COVID-19 levels. As Box continues to execute, we expect larger deal activity and net retention to improve.”

Consensus among analysts is a Moderate Buy based on 3 Buys and 2 Holds. The average analyst price target of $21.33 implies upside potential of about 14% from current levels. Shares have gained around 11% over the past year.

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