Box, Inc. BOX shares have surged 39.2% year to date, outperforming the Zacks Computer and Technology sector’s appreciation of 27.5% and the Zacks Internet Software industry’s return of 31.2%.

BOX shares have also outperformed peers like 8x8 Inc. EGHT, BlackLine BL and Five9 FIVN. In the same time frame, BlackLine shares have returned 0.5%, while 8x8 and Five9 shares have lost 15.9% and 47.9%, respectively.

BOX’s strong performance can be attributed to impressive top-line growth, expanding clientele and a rich partner base.

In the second quarter of fiscal 2025, BOX’s revenues were $270 million, which increased 3% year over year and surpassed the Zacks Consensus Estimate by 0.32%. Non-GAAP earnings of 44 cents per share beat the Zacks Consensus Estimate by 10%. The figure jumped 22.2% year over year.

BOX Shares Riding on Strong Clientele

Exiting the second-quarter fiscal 2025, BOX had more than 1,800 customers paying more than $100,000 annually. Strong demand for Box AI has been a game changer.

Suites comprised 87% of BOX’s deals of more than $100,000, up from 78% reported in the year-ago period. Enterprise Plus comprised more than 95% of those deals.

With its acquisition of Crooze in early 2024, BOX aims to be able to transform critical, content-centric business processes for enterprises of all sizes.

BOX has raised its fiscal 2025 top-line and earnings guidance. It now expects revenues in the $1.086-$1.09 billion range, indicating an increase of 5% year over year, and 7% growth in constant currency.

So, does the raised guidance and strong client base aid BOX’s prospects? Let’s analyze.

Expanding Partner Base Aids BOX’s Prospects

Box is enhancing its cloud content management and AI platforms by forging a strong technology partner ecosystem. Its platform seamlessly integrates with leading enterprise technology providers, such as Microsoft Teams, Microsoft Copilot, IBM Technologies, ServiceNow and Salesforce.

BOX recently expanded its collaboration with Slack to bring secure AI to enterprise content. It enables joint customers to use unlimited Box AI queries directly within Slack for timely insights from their Box files.

The company’s extended partnership with Microsoft integrates Azure OpenAI Service into Box AI, while its collaboration with Alphabet incorporates Google Cloud’s generative AI to optimize enterprise workflows.

Through a partnership with Amazon Web Services (AWS), Box now leverages Amazon Bedrock to bring advanced AI tools to its customers, allowing them to build AI-powered applications and manage tasks securely.

Box’s recent collaboration with Slalom combines its Intelligent Content Management platform with Slalom’s expertise to deliver AI-driven solutions across industries like healthcare, finance and retail.

In a significant win, the National Transportation Safety Board has selected BOX as its cloud platform for its new Digital Content Delivery Platform Project.

BOX’s Positive Q3 Guidance

For third-quarter fiscal 2025, Box anticipates revenues in the range of $274-$276 million, indicating a 5% rise on a year-over-year basis. The guidance includes an expected headwind from foreign exchange of approximately 130 basis points.

On a non-GAAP basis, BOX projects earnings of 41-42 cents per share. The guidance includes an expected headwind of 2 cents from foreign exchange and 1 cent from noncash deferred tax expenses.

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $275.05 million, suggesting a year-over-year growth of 5.16%. The consensus mark for earnings is currently pegged at 42 cents per share, suggesting year-over-year growth of 16.67%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Box expects the fiscal third-quarter billings growth rate to be in the mid-single-digit range.

BOX Shares Overvalued

BOX shares are currently overvalued, as suggested by a Value Score of D.

The stock is trading at a premium with a forward 12-month Price/Sales of 4.48x compared with the industry’s 2.99x.

What Should Investors Do With BOX Stock?

Box benefits from a strong portfolio, a rich partner base and an expanding clientele. However, stretched valuation is a concern.

BOX currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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