Box: Strong Billings And Still Underappreciated

Core Viewpoint - Box has shown strong performance in Q2, with a notable increase in billings and an optimistic outlook for FY25, indicating potential for further growth in the cloud-based storage market [1][2][12]. Financial Performance - Box's revenue grew 3.3% year-over-year to $270 million, while billings increased by 10% year-over-year, recovering from a -1% growth in Q1 [5][7]. - The company expects FY25 revenue between$ 1.066 billion and $1.090 billion, reflecting a 5% year-over-year growth [2][3]. - Pro forma EPS is projected to be between$ 1.64 and $1.66, marking a 6% increase at the midpoint [3]. Operational Metrics - Box's operating margin guidance has been raised by 50 basis points to 27.5%, with pro forma operating margins reaching 28.4%, up from 24% in FY24 [3][11]. - The net retention rate improved to 102%, indicating effective customer retention and upselling strategies [8]. Market Position and Strategy - Box operates in a$ 74 billion total addressable market (TAM) for storage, content collaboration, and data security, with only about 2% market penetration [3]. - The company has a multi-product strategy, with over two-thirds of new deal bookings coming from customers purchasing multiple Box products [3]. - Box remains founder-led, which is seen as a positive factor for its strategic direction and operational consistency [3]. Competitive Landscape - Box's growth rate of 10% in billings significantly outpaces its main competitor, Dropbox, which reported only 1.7% revenue growth in Q2 [5][6]. - The company maintains a stable churn rate of 3%, demonstrating strong customer loyalty and product stickiness [8].