Summary
Box reported fiscal third quarter revenue of $224.0 million, up 14.3% from a year earlier. That marked the third consecutive quarter of accelerating year-over-year growth. Remaining performance obligations ended the quarter at $948.1 million, up 25.4%, and deferred revenue reached $429.7 million, up 21.2%. Net retention rate was 109%, up from 103% a year earlier and up 300 basis points sequentially. Billings were $231.5 million, up 25%. The company added paying organizations, with the count up 6% from October 31, 2020 to October 31, 2021, and non-U.S. revenue rose to 33% of total revenue from 28%.
Gross profit was $161.0 million, up 15.7%, and gross margin improved to 71.8% from 71.0%. The bottom line moved the other way. Operating loss widened to $11.1 million from $2.6 million, and operating margin fell to negative 4.9% from negative 1.3%. Net loss widened to $13.9 million from $5.3 million. Diluted EPS was negative $0.12. The company said the wider operating loss included fees related to shareholder activism. Operating cash flow was $46.1 million, up 2.3%. Free cash flow, a non-GAAP measure, was $31.2 million, compared with $26.2 million a year earlier. For the nine months, revenue was $641.0 million, up 12.1%, and gross profit was $456.2 million, up 12.4%. The year-to-date operating loss narrowed to $27.5 million from $34.4 million, and the year-to-date net loss narrowed to $37.1 million from $38.5 million. Year-to-date operating margin improved to negative 4.3% from negative 6.0%. Operating cash flow for the nine months was $185.6 million, up 33.3%.
Management raised its full-year fiscal 2022 revenue guidance to $868 million to $870 million, up 13% at the high end. For the fourth quarter of fiscal 2022, revenue is expected to be $227 million to $229 million, up 15% at the high end. The full-year non-GAAP operating margin is expected to be approximately 20%, and fourth-quarter non-GAAP operating margin approximately 21%. Full-year non-GAAP diluted net income per share is guided to $0.83 to $0.84. For the fourth quarter, non-GAAP diluted net income per share is guided to $0.22 to $0.23. Box also expanded its share repurchase program by $200 million, bringing total authorization to $700 million, with approximately $260 million of remaining capacity as of November 29, 2021.
Operationally, Box rolled out Box Sign globally, added malware deep scan for Box Shield to help combat ransomware, and deepened integrations with Microsoft Office and Teams, Salesforce, Slack, and Zoom. Customer wins and expansions included Canon, Epic Games, NASA Johnson Space Center, Lionsgate, Robinhood Markets, and Zoom Video Communications. Risks remain. The COVID-19 pandemic could still cause customer churn, delayed sales cycles, and reduced budgets. The market is highly competitive, with pricing pressure, industry consolidation, and new entrants. Customers may not renew or expand their subscriptions. Security vulnerabilities or breaches could hurt the business. Box also faces execution risk from integrating acquisitions. Management noted that RPO is not necessarily indicative of future revenue growth because of seasonality, contract renewal timing, average contract terms, and foreign currency exchange rates. The company expects billings to concentrate in the back half of its fiscal year, especially in the fourth quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $224.0M | $214.5M | +4.5% | $196.0M | +14.3% |
| Gross profit | $161.0M | $153.7M | +4.7% | $139.2M | +15.7% |
| Gross margin | 71.8% | 71.7% | +0.2 pp | 71.0% | +0.8 pp |
| Research & development | $55.8M | $52.7M | +5.9% | $49.5M | +12.9% |
| Sales & marketing | $76.4M | $72.8M | +4.9% | $67.1M | +13.8% |
| General & administrative | $39.9M | $34.3M | +16.2% | $25.2M | +57.9% |
| Total operating expenses | $172.1M | $159.8M | +7.7% | $141.8M | +21.3% |
| Operating income (loss) | -$11.1M | -$6.1M | -81.5% | -$2.6M | -324.1% |
| Operating margin | -5.0% | -2.9% | -2.1 pp | -1.3% | -3.6 pp |
| Net income (loss) | -$13.9M | -$8.7M | -59.3% | -$5.3M | -162.3% |
| Net margin | -6.2% | -4.1% | -2.1 pp | -2.7% | -3.5 pp |
| Net retention rate | 109.0% | 106.0% | +3.0 pp | 103.0% | +6.0 pp |
Risks
Operating loss widened to $11.1 million in the quarter ended October 31, 2021 from $2.6 million a year earlier, and G&A expense rose 58% year over year, primarily due to $10.1 million in shareholder activism fees in the quarter. Responding to activist shareholders can be costly and disrupt operations, as with the recent proxy contest.
The Series A Convertible Preferred Stock issued to KKR accrues cumulative 3.0% dividends and has redemption rights after the seventh anniversary plus change-of-control make-whole payments, which could reduce cash available for working capital, capital expenditures, acquisitions, and other general corporate purposes and limit additional financing. The conversion feature also dilutes Class A common stockholders and reduces relative voting power.
The $345.0 million 0.00% convertible senior notes due 2026 require cash settlement of principal, and holders can require repurchase upon a fundamental change; failure to pay would default and could accelerate debt under the senior credit facility. The if-converted accounting method may reduce reported diluted EPS, and convertibility conditions could force reclassification to a current liability and materially reduce reported working capital.
Sales efforts are increasingly focused on complex cloud content management use cases and enterprise and highly-regulated customers, which can lengthen and raise the cost of sales cycles, increase pricing and customization challenges, and delay revenue recognition. MD&A attributes recent revenue growth to large deals and strong Suites attach rates, increasing exposure to these dynamics.
Business depends substantially on customers renewing subscriptions and expanding use; net retention rate was 109% as of October 31, 2021, up from 103% a year earlier, but it may decline or fluctuate and has decreased in prior periods. A decline in renewals or expansion would harm future operating results.
The cloud content management market is intensely competitive and fragmented, with primary competitors including Microsoft and OpenText, and Microsoft, Google, and Dropbox in enterprise file sync and share. Some competitors offer lower priced or free products, creating pricing pressure that could reduce sales, lower margins, or cause losses.
COVID-19 has negatively impacted some customers and prospects, causing increased customer churn and delayed sales cycles, and the company continues to require non-essential U.S. employees to work remotely. Although the pandemic did not materially adversely affect third quarter FY2022 results, future developments remain uncertain and could delay or reduce customer spending.
Non-U.S. revenue rose to 33% of revenue in the quarter ended October 31, 2021 from 28% a year earlier, driven by strong growth in Japan, and the company has expanded internationally including an office in Warsaw and the acquisition of SignRequest B.V. in the Netherlands. This exposes it to regulatory, geopolitical, Brexit, foreign exchange, and staffing risks.
Data protection and privacy laws are evolving, including GDPR penalties, the CJEU invalidation of the EU-US Privacy Shield, and California CCPA and CPRA requirements, which could increase compliance costs and require changes to data processing practices. Failure to satisfy data protection, security, and industry-specific requirements such as HIPAA or FedRAMP could harm growth.
SaaS KPIs
All quarters →Billings
Net Retention Rate
Non-GAAP Operating Margin
Free Cash Flow
Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from BOX INC's SEC filings for Q3 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.