Box Earnings: Content Collaborator Kicks Off Fiscal 2024 as Customers Optimize Spending

We are maintaining our $30 fair value estimate for no-moat-rated Box after the company clocked in a strong quarter to kick off fiscal 2024. The firm’s financials were marginally above our estimates for both sales and profitability. 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. We have previously highlighted Box’s strong upselling activity which has buoyed the firm’s net retention metrics despite lacking an economic moat. However, Box’s net retention rates for the first quarter contracted 500 basis points year over year due to client spending optimization against a turbulent macroeconomic backdrop. With shares trading up after hours, we believe that Box’s shares are fairly valued.