Macro Pressures Land a Solid Punch on Box As 2024 Outlook Is Weaker Than Expected; Maintain FVE

We are maintaining our $30 fair value estimate for no-moat Box after the firm reported fourth-quarter results largely in line with our estimates but provided a disappointing outlook heading into its fiscal 2024. While the firm’s financial results have been solid over the last few quarters, we hold our opinion that Box faces an intense competitive landscape marred by legacy ecosystems. We have previously been encouraged by Box’s ability to consistently increase its net retention rate despite lacking an economic moat. However, Box’s net retention rates contracted 300 basis points year over year as a result of slower headcount growth and budgetary conservatism. With shares trading down to $30.50 after market close, we believe shares are fairly valued.