Executive Summary

Q2 FY25 delivered at the high end or above guidance: revenue $270.0M (+3% YoY, +6% CC), record non-GAAP gross margin 81.6%, record non-GAAP operating margin 28.4%, and non-GAAP EPS $0.44; FX reduced EPS by ~$0.05 .
Billings accelerated to $256.4M (+10% YoY) and RPO reached $1.272B (+12% YoY), signaling stronger bookings and longer contract durations, with ~60% of RPO expected to be recognized in 12 months .
Management raised FY25 guidance: revenue to $1.086–$1.09B, non-GAAP operating margin to ~27.5%, and non-GAAP EPS to $1.64–$1.66; Q3 guidance implies continued margin discipline and FX headwinds embedded .
Strategic catalysts: unlimited Box AI queries for Enterprise Plus, Alphamoon IDP acquisition, expanded Slack partnership, and a new $100M buyback expansion; these are supporting suites attach and net retention momentum .

What Went Well and What Went Wrong

What Went Well

Record profitability: non-GAAP operating margin 28.4% (+360 bps YoY) and non-GAAP EPS $0.44 (up $0.08 YoY), with gross margin tailwind (~60bps) from data center asset sales; “record gross margin, operating margin, and EPS” .
Demand drivers: Suite attach rates in >$100K deals hit 87% (up from 78% YoY) and suites accounted for ~57–58% of revenue, catalyzed by Box AI in Enterprise Plus .
Go-to-market and vertical success: bookings outperformance in Japan and public sector; RPO +12% YoY and billings +10% YoY beat expectations .

Quote: “We delivered a strong second quarter, with accelerated billings growth as well as record gross margin, operating margin, and EPS” — Dylan Smith, CFO .

What Went Wrong

FX headwinds reduced GAAP and non-GAAP EPS by ~$0.05 YoY and pressured Q2 non-GAAP operating margin by ~180 bps; FX remains embedded in Q3 and FY25 guidance .
Seat expansion remains under pressure; net retention improvement to 102% came “largely from pricing,” not seat growth .
SMB and some regional segments continue to face macro pressures despite broadly stable conditions; management noted lingering areas of weakness .

Financial Results

Core Metrics vs Prior Quarters

Metric	Q4 FY24 (oldest)	Q1 FY25	Q2 FY25 (newest)
Revenue ($USD Millions)	$262.878	$264.658	$270.039
GAAP Diluted EPS ($)	$0.57 (includes $0.51 tax benefit)	$0.08	$0.10 (FX impact ~$0.05)
Non-GAAP Diluted EPS ($)	$0.42	$0.39	$0.44
GAAP Operating Margin (%)	8.1%	6.8%	7.5%
Non-GAAP Operating Margin (%)	26.7%	26.6%	28.4%
GAAP Gross Margin (%)	76.1%	78.0%	79.4%
Non-GAAP Gross Margin (%)	78.4%	80.2%	81.6%
Billings ($USD Millions)	$379.278	$190.466	$256.435
RPO ($USD Billions)	$1.305	$1.212	$1.272

Notes: Q4 GAAP EPS includes a $0.51 income tax benefit from release of valuation allowance . Q2 GAAP and non-GAAP EPS had ~-$0.05 FX impact .

KPIs

KPI (Q2 FY25)	Value
Net Retention Rate (%)	102%
Suites Attach Rate in >$100K Deals (%)	87%
Suites as % of Revenue	57–58% (management remarks)
Annualized Full Churn Rate (%)	3%
Cash from Operations ($USD Millions)	$36.298
Non-GAAP Free Cash Flow ($USD Millions)	$32.735

Segment breakdown: Box does not disclose revenue by segment; metrics are reported at company level .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q3 FY25	—	$274–$276	New Q3 guide
Non-GAAP Operating Margin (%)	Q3 FY25	—	~28%	New Q3 guide
GAAP Operating Margin (%)	Q3 FY25	—	~7.5%	New Q3 guide
Non-GAAP EPS ($)	Q3 FY25	—	$0.41–$0.42 (FX -$0.02; deferred tax -$0.01)	New Q3 guide
GAAP EPS ($)	Q3 FY25	—	$0.07–$0.08 (FX -$0.02; deferred tax -$0.01)	New Q3 guide
Diluted Shares (Millions)	Q3 FY25	—	~148	New Q3 guide
Revenue ($USD Billions)	FY25	$1.075–$1.08	$1.086–$1.09 (CC +$2M vs prior)	Raised
Non-GAAP Operating Margin (%)	FY25	~27.0	~27.5	Raised
GAAP Operating Margin (%)	FY25	~6.5	~7.0	Raised
Non-GAAP EPS ($)	FY25	$1.54–$1.58	$1.64–$1.66 (FX -$0.12; deferred tax -$0.05)	Raised
GAAP EPS ($)	FY25	$0.20–$0.24	$0.31–$0.33 (FX -$0.12; deferred tax -$0.05)	Raised
Diluted Shares (Millions)	FY25	~150	~148	Lowered

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY24 and Q1 FY25)	Current Period (Q2 FY25)	Trend
AI initiatives (Box AI, unlimited queries)	GA of Box AI; Azure OpenAI integration ; Box Hubs and Box AI for Hubs in public beta	Unlimited end-user queries for Enterprise Plus; Box AI adds GPT‑4o, image/spreadsheet support; metadata API; strong Japan adoption	Expanding feature set and adoption
Intelligent Document Processing (IDP)	Acquired Crooze for ECM apps	Acquired Alphamoon IDP tech to automate metadata extraction	Broader automation capabilities
Suites/Enterprise Plus momentum	Emphasis on multiproduct suite; >$100M buyback plan	Suites attach 87%; suites ~57–58% of revenue; upgrades driven by AI	Strengthening attach and upsell
Regional trends (Japan, Public Sector)	FY25 FX headwind called out; RPO and billings growth	Bookings outperformance in Japan and public sector; record attach in Japan	Improving bookings in JP/SLED
Security/compliance (FedRAMP)	Box Shield enhancements; GxP and FDA Part 11 support	Targeting FedRAMP High; Zero Trust 2.0 and GxP validation updates	Advancing compliance footprint
Macro/seat growth	Persistent IT budget pressure in FY24	Macro stable vs Q1; SMB still pressured; seat growth still soft	Stabilizing but cautious

Management Commentary

“We are fundamentally transforming how companies leverage their enterprise content with intelligent content management… delivering a singular platform… with intelligence built right in” — Aaron Levie, CEO .
“We delivered revenue of $270 million at the high end of our guidance, up 3% year-over-year and 6% in constant currency… record EPS result of $0.44” — Dylan Smith, CFO .
“Unlimited end user queries for Box AI… customers can now focus on leveraging AI to drive value without having to worry about usage caps” — Aaron Levie .

Q&A Highlights

Demand and linearity: Quarter was “relatively stable compared to Q1,” with momentum driven by Box AI and Enterprise Plus; linearity healthy .
AI monetization: Unlimited end-user queries to reduce adoption friction amid falling model costs; high-volume/API use cases monetized on a per‑volume basis .
Net retention drivers: Improvement to 102% primarily from pricing; seat expansion trends remain pressured .
Public sector strength: Modernization opportunity across SLED and federal; FedRAMP High in process to unlock more sensitive use cases .
Profitability tailwinds: Data center asset sales add ~60bps tailwind to gross and operating margins in Q2 and Q3; ~30bps for FY25 .
Japan bookings: Early adopters of Box AI; growth across pharma, financial services, and government .

Estimates Context

S&P Global consensus estimates for Q2 FY25 and Q3 FY25 were unavailable due to data access limits during retrieval, so explicit “vs Street” comparisons cannot be provided at this time. Given actuals at the high end or above guidance (revenue $270.0M, non-GAAP EPS $0.44) and raised FY25 revenue and EPS guidance, sell-side models may need upward revisions to FY25 revenue, margins, and EPS trajectories .

Key Takeaways for Investors

Profitability inflection: Record non-GAAP gross margin (81.6%) and operating margin (28.4%) with additional margin tailwinds in Q3 from asset sales; FX still a headwind embedded in guidance .
Bookings momentum: RPO +12% and billings +10% YoY, with ~60% of RPO to be recognized in 12 months; supports near-term revenue visibility .
AI as upgrade catalyst: Unlimited Box AI queries in Enterprise Plus and expanded capabilities (GPT‑4o, metadata) are driving suite attach and pricing-led NRR improvements .
Guidance raised: FY25 revenue, margins, and EPS all increased; Q3 guide consistent with margin discipline and FX assumption updates .
Capital allocation: ~3.9M shares repurchased for ~$102M in Q2; buyback expanded by $100M; recent convertible notes (post-Q2) add flexibility (context beyond Q2) .
Regional/public sector opportunity: Improving bookings in Japan and SLED; FedRAMP High in process broadens federal use cases .
Watch seats/macro: Seat expansion remains a watch item; ongoing SMB pressure; pricing and suite upgrades are carrying NRR near-term .

Appendix: Additional Q2 Details

Cash from operations $36.3M (+11% YoY), non-GAAP FCF $32.7M (+59% YoY) .
Share count dilution contained: weighted-average diluted shares 146.5M (Q2); FY25 guide ~148M .
Non-GAAP adjustments include SBC, amortization of intangibles, acquisition-related and litigation expenses, amortization of debt issuance costs, and undistributed earnings attributable to preferred stockholders .

BOX INC (BOX)·Q2 2025 Earnings Summary