Box Finishes the Second Quarter With Impressive Customer Wins; Maintain $30 FVE

We are maintaining our fair value estimate for Box of $30 after the firm reported strong second-quarter results slightly above our estimates. 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. While we do not justify an economic moat for Box, the firm has continued to maintain high levels of upselling activity, evidenced by its climbing net retention rate. Despite the firm operating against macroeconomic headwinds, Box remains confident in its ability to deliver robust growth, maintaining its revenue outlook and raising bottom-line estimates for the full year of fiscal 2023. With shares trading around $29 after market close, we believe Box is fairly valued.