Why Box Shares Rose 8% This Week
What happened
Shares of Box (NYSE: BOX) beat the market this week, rising 8% through Thursday trading compared to a 1.7% decline in the S&P 500.
The cloud software services specialist reported positive earnings results for the third quarter and lifted its outlook for the full fiscal year.
Image source: Getty Images.
So what
Sales through late October rose 14%, the company said on Tuesday afternoon, to mark Box's third consecutive quarter of accelerating gains. Revenue was up 12% in Q2, for context.
In a conference call with Wall Street analysts, CEO Aaron Levie and his team said the gains were mainly due to healthy demand for Box's newest services aimed at easing the transition to remote working. "With Box," he said, "users are more productive, enterprises are more secure, and IT management is simplified and less expensive."
Management highlighted Box's improving net retention rate, which rose to 109% from 106% last quarter, as evidence of the company's success at marketing more of its services to existing customers even as it adds new ones.
Now what
Management raised its 2021 outlook on both the top and bottom lines. Revenue gains are expected to accelerate for a fourth straight quarter in Q4 so that overall sales expand 13% compared to last year's 11% increase.
That pace is modest given the booming rate of expansion in the wider industry. But it still represents improvement compared to Box's previous estimates for the year.
Investors interested in the stock might want to watch the business over the next few quarters for solid signs that it is gaining market share in this crowded industry. In the meantime, the shift toward remote work is likely to continue lifting the businesses of Box and its competitors.
10 stocks we like better than Box
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Box wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 10, 2021
Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Box. The Motley Fool has a disclosure policy.
