Box Inc (NYSE:BOX) Shares Cannot Be Kept Boxed Up After Solid Quarterly Results; Box Sign Could Be A Nice Tailwind
2:48 pm Wednesday, December 01st, 2021
Box (NYSE:BOX) shares cannot be kept boxed up today after the cloud-based content management company reported its fourth straight quarter of expanding revenues in Q3 (Oct). Perhaps a lesser-known cloud storage and electronic signature company, BOX has performed well YTD. Shares have expanded over 40%, crushing two of the company’s main competitors, Dropbox (DBX) and DocuSign (DOCU), which have seen their stocks grow only ~12% and ~9% YTD, respectively.
Although BOX trades at a premium of 31x FY22 earnings compared to DBX and its 15x forward P/E ratio, the company trades at a massive discount relative to DOCU, which trades at a frothy 138x FY22 earnings. Furthermore, given that BOX only recently launched its e-signature feature, which integrates with mammoth enterprise software providers like Salesforce (CRM) and Microsoft (MSFT), we think BOX is a company worth keeping on the radar.
In Q3, BOX’s adjusted EPS upside was rather light at just $0.01, but that result is somewhat typical of the company over the past few quarters. Revenue growth was a slightly different story, appreciating nicely at 14.3% yr/yr to $224.04 mln, which topped estimates. Given the fairly high valuation, the revenue growth may seem somewhat disappointing. However, the remaining performance obligations (RPO) paint a cleaner picture.
RPO in the quarter grew much more robustly than did revenues, up 25% yr/yr to $948.1 mln. This is a forward-looking metric and partly shows customers agreeing to longer-term contracts, a testament to BOX’s technology and accelerating digitalization trends.
Another metric that furthers this point is BOX’s customer growth. In Q3, contracts over $100K grew 56% yr/yr. In addition, more customers are purchasing a suite of BOX’s products; $100K+ suite deals jumped 177% yr/yr, now making up slightly under a third of total revenue, a leap from just the high teens a year ago.
Lastly, the company has already seen solid adoption for Box Sign, BOX’s e-signature offering, even though it was only launched in October. For example, a commercial real estate company purchased Box Sign to centralize its content given BOX’s integration with CRM.
We think Box Sign will quickly become a key growth factor going forward, as the e-sign industry has been rapidly expanding, bolstered by the pandemic. DOCU went from recording around 35% quarterly growth pre-pandemic to posting multiple quarters of growth over 50% since.
