Company Reports

We will discontinue analyst coverage of Box on or about Sept. 25.

Box delivered strong second-quarter results, with leading indicators supporting a more durable growth outlook. Constant-currency revenue grew 11%, billings rose 16%, and net retention improved to 106% on higher pricing, seat expansion, and Enterprise Advanced adoption.

Box is an intelligent content management platform that consolidates data from various cloud applications into a single location. To compete in a world dominated by unstructured cloud data and artificial intelligence, Box has been quick to add data extraction and agent-builder features to its offering. Unfortunately for Box, its competition in intelligent content management is Microsoft and Google. These hyperscalers have bundling, distribution, and scale advantages that are likely to win out. On top of this, recent step-function improvements in AI-lab agentic products can disrupt traditional software business models, especially as direct-to-enterprise back-end integrations improve. Overall, we see limited growth potential.

Box delivered a respectable first quarter, with revenue growth returning to double digits for the first time in three years, as the higher-priced product suite expanded margins and saw stronger retention. Still, the sequential guidance implies some moderation, and full-year guidance was modest.

Box’s fourth-quarter earnings exceeded management’s revenue expectations by 1%, non-GAAP operating margin by 1 percentage point, and earnings per share by nearly 50%. Remaining performance obligations, or RPOs, continue to rise, up 17% year over year.

Box is an intelligent content management platform that consolidates data from various cloud applications into a single location. To compete in a world dominated by unstructured cloud data and artificial intelligence, Box has been quick to add data extraction and agent-builder features to its offering. Unfortunately for Box, its competition in intelligent content management is Microsoft and Google. These hyperscalers have bundling, distribution, and scale advantages that are likely to win out. On top of this, recent step-function improvements in AI-lab agentic products can disrupt traditional software business models, especially as direct-to-enterprise back-end integrations improve. Overall, we see limited growth potential.

Box’s third-quarter earnings beat management expectations on revenue and operating margin but only met expectations on earnings per share. Remaining performance obligations continue to rise, up 17% year over year.

Box, founded in 2005, was a first mover in the file sync and share market, just ahead of Dropbox in 2007. Both companies benefited early on from the digitization trend and the desire to store and collaborate within files easily. Growth was strong through the 2000s, but by 2010, FSS became crowded. Microsoft and Google solutions emerged and began taking market share.

Box shares are up 5% in after-hours trading following the release of second-quarter earnings, where it beat management expectations on revenue, non-GAAP operating margin, and non-GAAP earnings per share. Remaining performance obligations continue to trend upward, with 16% year-over-year growth.

Box, founded in 2005, was a first mover in the file sync and share market, just ahead of Dropbox in 2007. Both companies benefited early on from the digitization trend and the desire to store and collaborate within files easily. Growth was strong through the 2000s, but by 2010, FSS became crowded. Microsoft and Google solutions emerged and began taking market share.

Box shares rallied 10% following first-quarter earnings, where the company exceeded management's forecast for revenue, operating margins, and earnings per share. Non-GAAP Gross Margin expanded 50 basis points to 80.5% versus a year ago, and client billings rose 27% year over year.

We are transferring coverage of file sync and share and content management providers Dropbox and Box. Both were pioneers in FSS, but as the market commoditized, they moved toward content management. Both are now exploring AI initiatives, but they face stiff competition from tech giants.

Box, founded in 2005, was a first mover in the file sync and share market, just ahead of Dropbox in 2007. Both companies benefited early on from the digitization trend and the desire to store and collaborate within files easily. Growth was strong through the 2000s, but by 2010, FSS became crowded. Microsoft and Google solutions emerged and began taking market share.

Box closed out fiscal 2025 with a set of strong financial results, which included sales of $280 million, growing 6%, and adjusted operating margin of 27%, up 60 basis points. Along with earnings, Box also provided a solid outlook for fiscal 2026, with sales and profitability both set to expand.

We believe Box has successfully carved out a niche for its product portfolio in a highly competitive enterprise collaboration space. With offerings encompassing the entire workflow stack of a business user, we believe the firm’s product portfolio stands to benefit from economic tailwinds in an increasingly digitized world.

We believe Box has successfully carved out a niche for its product portfolio in a highly competitive enterprise collaboration space. With offerings encompassing the entire workflow stack of a business user, we believe the firm’s product portfolio stands to benefit from economic tailwinds in an increasingly digitized world.

Box reported solid third-quarter financial results, with sales and adjusted margins expanding 6% and 400 basis points year over year to $276 million and 29%, respectively. These solid results prompted Box to raise its fiscal 2025 sales outlook marginally.

We maintain our $25 fair value estimate for no-moat Box after the firm reported strong second-quarter results, with revenues aligned with our expectations and guidance and adjusted earnings per share exceeding our estimates. With a strong quarter, management also raised its full-year guidance. Despite these positive developments, we believe Box still has ground to cover before we consider making any material changes to our forecasts. Macro headwinds still loom large, and we await a clear inflection in demand for Box’s solutions.

We maintain our $25 fair value estimate for no-moat Box after the firm reported first-quarter earnings largely in line with our prior estimates. While macro pressures continue to hit Box’s business, we believe these headwinds will subside as fiscal 2025 progresses, with a demand-side recovery in fiscal 2026. However, looking beyond the near term, we continue to view Box as a small player in a large content collaboration pond. This thesis also underpins our no moat rating for Box as we lack confidence in the firm’s ability to generate returns above its cost of capital in the long run. With shares trading flat afterhours, we view Box’s shares as fairly valued and currently trading in the 3-star range.

We raise our fair value estimate for no-moat Box to $25 per share from $24, after the firm reported financial results largely in line with our prior estimates along with guidance that implied better profitability than our previous estimates. While near-term macroeconomic headwinds continue to bear down on Box’s business, we were encouraged to see management call out signs of stabilization in the company’s core markets. Beyond the near-term macroeconomic 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 up slightly following the company’s earnings report, we view Box as fairly valued relative to our updated valuation.