Box Earnings: We Trim Our Estimates After Unpacking a Disappointing Quarter

We are reducing our fair value estimate for no-moat Box to $24 from $30 after the firm reported weaker-than-expected fiscal third-quarter results. Coupled with the weak set of results, management’s outlook for the upcoming fourth quarter and outlook for fiscal 2025 also left plenty lacking, in our opinion. Macro headwinds continue to have an impact on Box with cost-conscious customers continuing to double-check spending on Box’s solutions. Zooming out, beyond the near-term macro pressures, we continue to view Box as a small fish in a large content collaboration pond. This view also informs our no-moat rating for Box as we lack confidence in the firm’s ability to outearn its cost of capital over the next decade. With shares trading down sharply following the company’s earnings report, we view Box as fairly valued relative to our updated valuation.