Executive Summary

Q1 FY25 delivered revenue of $264.7M, up 5% YoY (8% constant currency), above the high end of Q1 guidance; non-GAAP EPS was $0.39, materially above $0.35–$0.36 guided, and non-GAAP operating margin reached 26.6% .
Management raised FY25 non-GAAP EPS guidance to $1.54–$1.58 and maintained non-GAAP operating margin at ~27%, while lowering FY25 GAAP operating margin to ~6.5% and FY25 revenue to $1.075–$1.08B due to stronger USD/JPY; FX headwinds increased to 250 bps on revenue and ~160 bps on margin .
AI momentum is a clear tailwind: suite attach rate in large deals reached 85%, suites now comprise 56% of revenue, and RPO stood at $1.2B; gross margin printed a record 80.2% as infrastructure efficiencies flow through .
Stock-reaction catalysts: beat vs guidance on revenue and EPS, first-ever 80% gross margin, and AI product updates (Box Hubs, Box AI) including Azure OpenAI and NVIDIA NIM partnerships; offset by higher FX headwinds and billings down 1% YoY .

What Went Well and What Went Wrong

What Went Well

“Operating margins of 27%, up 400 basis points from a year ago” and revenue growth of 5% YoY (8% constant currency), with profitability ahead of expectations .
Strong bookings linearity drove revenue above the high end of guidance; non-GAAP operating income rose 23% YoY to $70M and suites reached 85% attach in large deals, now 56% of revenue .
Product velocity: beta release of Box Hubs and Box AI for Hubs; partnerships with Microsoft Azure OpenAI and NVIDIA NIM; internal GPT-4o working in Hubs shortly after release .

What Went Wrong

FX headwinds intensified: FY25 revenue growth headwind increased to 250 bps and operating margin headwind to ~160 bps; Q1 EPS included a ~$0.04 negative FX impact .
Billings declined 1% YoY as reported; net retention steady at 101% but SMB segment remains pressured, limiting top-line acceleration .
Sequential GAAP operating margin dipped to 6.8% from 8.1% in Q4 (despite YoY expansion), reflecting FX and seasonal dynamics .

Financial Results

P&L and Margin Comparison

Metric	Q3 FY24	Q4 FY24	Q1 FY25
Revenue ($USD Millions)	$261.537	$262.878	$264.658
GAAP Diluted EPS ($)	$0.04	$0.57	$0.08
Non-GAAP Diluted EPS ($)	$0.36	$0.42	$0.39
GAAP Gross Margin (%)	73.5%	76.1%	78.0%
Non-GAAP Gross Margin (%)	76.3%	78.4%	80.2%
GAAP Operating Margin (%)	4.4%	8.1%	6.8%
Non-GAAP Operating Margin (%)	24.7%	26.7%	26.6%

KPIs and Cash Flow

Metric	Q3 FY24	Q4 FY24	Q1 FY25
Billings ($USD Millions)	$253.740	$379.278	$190.466
Remaining Performance Obligations ($USD Billions)	$1.131	$1.305	$1.212
Cash From Operations ($USD Millions)	$71.782	$89.339	$131.204
Non-GAAP Free Cash Flow ($USD Millions)	$58.317	$81.833	$123.244
Net Retention Rate (%)	N/A	N/A	101%
Annualized Full Churn Rate (%)	N/A	N/A	3%
Suite Attach Rate in Large Deals (%)	N/A	N/A	85%
Weighted Avg Diluted Shares (Millions)	147.625	146.295	148.757

Performance vs Q1 FY25 Guidance

Metric	Q1 Guidance (Mar)	Actual Q1 FY25
Revenue ($USD Millions)	$261–$263	$264.658
Non-GAAP Operating Margin (%)	~25%	26.6%
Non-GAAP Diluted EPS ($)	$0.35–$0.36	$0.39

Consensus vs Actual (S&P Global)

Metric	Actual Q1 FY25	Consensus (S&P Global)
Revenue ($USD Millions)	$264.658	N/A
Primary EPS ($)	$0.08 GAAP ; $0.39 Non-GAAP	N/A

Consensus estimates via S&P Global were unavailable at the time of writing due to API limits; therefore, no estimate comparison is provided.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY25	$1.080–$1.085	$1.075–$1.080	Lower as-reported; +$3M in constant currency
GAAP Operating Margin (%)	FY25	~7.0%	~6.5%	Lowered
Non-GAAP Operating Margin (%)	FY25	~27%	~27%	Maintained; FX headwind +50 bps
GAAP EPS ($)	FY25	$0.22–$0.26	$0.20–$0.24	Lowered (FX, deferred tax)
Non-GAAP EPS ($)	FY25	$1.53–$1.57	$1.54–$1.58	Raised
Diluted Shares (Millions)	FY25	~149	~150	Slightly higher
Revenue ($USD Millions)	Q2 FY25	N/A	$268–$270	New
GAAP Operating Margin (%)	Q2 FY25	N/A	~6.0%	New
Non-GAAP Operating Margin (%)	Q2 FY25	N/A	~27%	New
GAAP EPS ($)	Q2 FY25	N/A	$0.06–$0.07 (includes ~$0.04 FX, ~$0.01 deferred tax)	New
Non-GAAP EPS ($)	Q2 FY25	N/A	$0.40–$0.41 (includes ~$0.04 FX, ~$0.01 deferred tax)	New
FX Headwind to Revenue Growth (bps)	FY25	~170 bps	~250 bps	Increased
FX Headwind to Operating Margin (bps)	FY25	>100 bps	~160 bps	Increased
Deferred Tax Expense Impact ($)	Q1/FY25	$0.02 Q1, $0.06 FY	$0.01 Q2, $0.05 FY	Revised timing/amount

Earnings Call Themes & Trends

Topic	Q-2 (Q3 FY24)	Q-1 (Q4 FY24)	Current (Q1 FY25)	Trend
AI/Technology Initiatives	Box AI beta; Box Hubs announced; expanded Google Cloud partnership	Box AI GA on Enterprise Plus; Azure OpenAI integration; Crooze acquisition	Beta of Box Hubs + Box AI for Hubs; GPT-4o in Hubs internally; NVIDIA NIM microservices	Accelerating product cadence and integrations
Go-to-Market & Suites	N/A	Focus on profitable growth; macro pressures persisted	Suite attach 85% in large deals; suites 56% of revenue	Strong suite adoption, AI-driven upgrades
Macro/FX	N/A	FY25 FX headwind to rev ~170 bps; margin >100 bps	FX headwind to rev ~250 bps; margin ~160 bps	Headwinds increased
Infrastructure/Gross Margin	Equipment proceeds headwind impacted margins	Public cloud migration efficiencies noted	First-ever 80% non-GAAP gross margin; further expansion expected	Structural margin improvement
Regulatory/Compliance & Security	N/A	Box Sign support for FDA 21 CFR Part 11; Shield features	Expanding Box Shield; targeting FedRAMP High	Strengthening compliance/security
Regional Trends	N/A	1/3 revenue outside US; ~60% international from Japan	FX commentary reiterates Japan exposure	Ongoing JPY sensitivity

Management Commentary

Aaron Levie: “We are pleased to have delivered first quarter operating results above our guidance… operating margins of 27%, up 400 basis points from a year ago.”
Aaron Levie: “With the latest breakthroughs in AI, we can finally tap into the full value of our content… This will lead to a continued disruption of the traditional enterprise content management landscape.”
Dylan Smith: “Q1 gross margin came in at 80.2%, up 230 basis points year-over-year… operating margin of 26.6% was up 380 basis points year-over-year despite absorbing an FX headwind of roughly 150 basis points.”
Dylan Smith: “We now expect FY ’25 non-GAAP EPS to be in the range of $1.54 to $1.58… This includes the $0.05 impact from deferred tax expenses… and an expected FX headwind of $0.15.”
Press release: “Revenue of $265 Million… record non-GAAP gross margin of 80%… Non-GAAP Free Cash Flow of $123 Million, up 14% YoY.”

Q&A Highlights

AI demand breadth and budgets: Interest across all verticals; current spend largely from IT budgets and displacement of legacy systems; potential for rising LOB budgets as AI automates workflows over 1–2 years .
AI query volume and margins: Hubs already ~¼ of AI queries in early beta; Box expects to maintain gross margins with higher-tier plans and volume-based pricing for high-usage workflows (e.g., metadata extraction) .
Legacy ECM displacement: Directional increase in takeouts and expansions; Crooze integration and AI-driven metadata extraction expected to catalyze further movement off legacy ECM .
Partnerships: Open model layer enables work with major foundation model providers; Box positioned as secure content platform for AI assistants (e.g., ServiceNow demo; Microsoft Copilot integration) and SI-led deployments .
Billings and guidance clarity: As-reported billings guidance lowered due to incremental ~150 bps FX headwind; constant currency expectations unchanged vs initial guide .

Estimates Context

S&P Global consensus for Q1 FY25 revenue and EPS was unavailable due to API limits at the time of writing; therefore, no estimate comparison is provided.
Relative to company guidance, Box beat on revenue ($264.7M vs $261–$263M), non-GAAP EPS ($0.39 vs $0.35–$0.36), and non-GAAP operating margin (~26.6% vs ~25%) .

Key Takeaways for Investors

AI-driven suite adoption is accelerating (85% attach in large deals; suites 56% of revenue), supporting margin expansion and net retention stability (101%) despite SMB pressure .
Revenue and EPS beats vs guidance, plus first-ever 80% non-GAAP gross margin, reflect durable infrastructure efficiency and disciplined OpEx; FCF generation remains strong ($123.2M, +14% YoY) .
FX is the principal near-term headwind: FY25 revenue headwind increased to ~250 bps and operating margin to ~160 bps; as-reported revenue guide nudged lower while constant-currency expectations improved modestly (+$3M) .
Product catalysts: Box Hubs and Box AI for Hubs in beta, GPT-4o integration planned, and Box AI for Metadata API enable retrieval augmented generation and workflow automation—key drivers for upgrades and expansion .
Trading lens: Near-term upside skew from continued AI momentum and margin discipline vs FX drag; watch Q2 billings (low-to-mid single-digit guide with ~50 bps FX headwind) and suite attach trends as signals of demand durability .
Medium-term thesis: Box’s platform-agnostic AI abstraction and secure content layer position it as a critical provider of unstructured data workflows and AI agents, potentially expanding TAM via ECM modernization and embedded partnerships .
Risk checks: SMB softness, FX volatility (especially JPY), and execution on Crooze integration/AI monetization roadmaps remain monitoring points .

Notes on Non-GAAP Adjustments

Non-GAAP EPS and margins exclude SBC, intangible amortization, and certain special items; reconciliations provided in Q1 press release .

BOX INC (BOX)·Q1 2025 Earnings Summary