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BOX INC (BOX)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue was $275.9M (+5% YoY; +6% constant currency) and non-GAAP diluted EPS reached a record $0.45; gross margin (non-GAAP) was 81.9% and operating margin (non-GAAP) was 29.1%, both records .
  • RPO grew 13% YoY to $1.282B; billings rose 4% YoY to $264.7M; FX was a headwind to EPS (~$0.02) and margins .
  • Guidance: Q4 FY25 revenue ~$279M and non-GAAP EPS ~$0.41; full-year FY25 non-GAAP operating margin raised to ~28% and non-GAAP EPS raised to ~$1.70, with FX headwind of ~190 bps to revenue growth .
  • Product catalysts: Box announced “the most transformational product line-up” (Enterprise Advanced with Box Apps, Forms, Doc Gen, AI Studio, Archive) and deeper AI integrations (AWS Bedrock, Anthropic, Amazon Titan); Hubs is GA with Box AI .

What Went Well and What Went Wrong

What Went Well

  • Record profitability: non-GAAP gross margin 81.9% (+560 bps YoY) and non-GAAP operating margin 29.1% (+440 bps YoY), supported by disciplined cost management and sale of remaining data center assets (~70 bps GM benefit) .
  • Suites momentum: 83% suite attach rate in large deals in Q3 (vs. 79% a year ago) and suites now 59% of revenue; ~1,900 customers paying ≥$100k annually (+8% YoY) .
  • Strategic product and AI roadmap: “the most transformational product line-up” (Enterprise Advanced) to expand upsell opportunities; deeper partnerships (AWS Bedrock) and Box Hubs to scale AI use cases .

What Went Wrong

  • FX headwinds pressured results: ~$0.02 EPS headwind in Q3 and incremental FX headwinds embedded in Q4/FY25 guidance (revenue headwind ~190 bps for FY25) .
  • Lower cash flow YoY: Q3 cash from operations $62.6M (-13% YoY) and non-GAAP free cash flow $57.4M (-2% YoY) .
  • Billings growth modest and Q4 setup: Q3 billings +4% YoY; Q4 billings expected low-single-digit due to tough prior-year comp (early renewals, multiyear prepayments) and FX .

Financial Results

Quarterly P&L and Margin Trend

MetricQ1 FY25Q2 FY25Q3 FY25
Revenue ($USD Millions)$264.658 $270.039 $275.913
GAAP Diluted EPS ($)$0.08 $0.10 $0.05
Non-GAAP Diluted EPS ($)$0.39 $0.44 $0.45
GAAP Gross Margin (%)78.0% 79.4% 79.9%
Non-GAAP Gross Margin (%)80.2% 81.6% 81.9%
GAAP Operating Margin (%)6.8% 7.5% 8.5%
Non-GAAP Operating Margin (%)26.6% 28.4% 29.1%

YoY Comparison (Q3 FY24 vs Q3 FY25)

MetricQ3 FY24Q3 FY25
Revenue ($USD Millions)$261.537 $275.913
Billings ($USD Millions)$253.740 $264.685
RPO ($USD Billions)$1.131 $1.282
Non-GAAP Diluted EPS ($)$0.36 $0.45

KPIs and Cash Flow

KPI / MetricQ1 FY25Q2 FY25Q3 FY25
Suite Attach Rate in Large Deals (%)85% 87% 83%
Suites % of Revenue56% 58% 59%
Customers ≥$100k (count)~1,800 >1,800 ~1,900
Net Retention Rate (%)101% 102% 102%
Annualized Full Churn (%)3% 3% 3%
Billings ($USD Millions)$190.466 $256.435 $264.685
Cash from Operations ($USD Millions)$131.204 $36.298 $62.582
Non-GAAP Free Cash Flow ($USD Millions)$123.244 $32.735 $57.361

Note on non-GAAP: non-GAAP excludes SBC, intangible amortization, certain litigation/acquisition expenses, workforce reorg, debt issuance amortization, and undistributed earnings to preferred stockholders per reconciliations .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q4 FY25—~$279New
GAAP Operating Margin (%)Q4 FY25—~7.5%New
Non-GAAP Operating Margin (%)Q4 FY25—~27.5%New
GAAP Diluted EPS ($)Q4 FY25—~$0.07 (incl. ~$0.02 FX and ~$0.01 deferred tax headwind)New
Non-GAAP Diluted EPS ($)Q4 FY25—~$0.41 (incl. ~$0.02 FX and ~$0.01 deferred tax headwind)New
Weighted Avg Diluted Shares (M)Q4 FY25—~151New
Revenue ($USD Billions)FY25$1.086–$1.090 ~$1.090Maintained at top end; FX headwind increased to ~190 bps
GAAP Operating Margin (%)FY25~7.0 ~7.5Raised
Non-GAAP Operating Margin (%)FY25~27.5 ~28.0Raised
GAAP Diluted EPS ($)FY25$0.31–$0.33 ~$0.30Lowered (FX, deferred tax)
Non-GAAP Diluted EPS ($)FY25$1.64–$1.66 ~$1.70Raised
Weighted Avg Diluted Shares (M)FY25~148 ~149Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology InitiativesAnnounced unlimited Box AI queries for Enterprise Plus; Box AI integrations (GPT‑4o); Alphamoon IDP acquisition; Box AI for Metadata API (beta) “Most transformational product lineup” with Enterprise Advanced (Box Apps, Forms, Doc Gen, AI Studio, Archive) and Hubs multi-doc querying; expanded model choice and AI agents Accelerating platformization and AI-enabled workflows
Hubs/Product PerformanceHubs GA enabling AI insights across content; strong early use cases Hubs cited as core value driver in customer upgrades and AI usage Strengthening adoption
Regional Trends (Japan/Public Sector)Japan bookings improvement and record suite attach in Japan; strong public sector momentum Continued suite attach strength (US record); public sector wins called out Stable to improving bookings
Regulatory/ComplianceProgress toward FedRAMP High; “In Process” designation Continued emphasis on FedRAMP High use cases Advancing certifications
Macro/FXFX headwinds updated; less headwind vs prior in Q2; deferred tax expenses FX headwinds increased in FY25 guidance; EPS headwind and margins impacted FX worsening in H2
Pricing/NRRNRR 101% (Q1) to 102% (Q2); pricing driving mix to Enterprise Plus NRR ~102% and expected bottoming; pricing uplift expected with Enterprise Advanced Bottomed and gradually improving

Management Commentary

  • “We delivered strong Q3 financial results and unveiled the most transformational product line-up in Box history… drive a new era of Intelligent Content Management.” — Aaron Levie, CEO .
  • “Revenue growth… came in at the high-end of our guidance… we drove record gross and operating margins.” — Dylan Smith, CFO .
  • “Enterprise Advanced… offers Box Apps… Box Forms… Doc Gen… Box AI Studio… Box Archive… all in one simple plan.” — Aaron Levie, CEO .
  • “Q3 operating margin of 29.1% was up 440 bps… despite absorbing a negative impact from FX of roughly 90 bps.” — Dylan Smith, CFO .
  • “We expect [Enterprise Advanced] to achieve somewhere between a 20% to 40% uplift… relative to Enterprise Plus.” — Dylan Smith, CFO .

Q&A Highlights

  • Billings outlook: Q4 billings low single-digit due to tough comparison (early renewals, multiyear prepayments last year) rather than unusual current-quarter dynamics .
  • AI pricing and unlimited queries: decision driven by falling model costs and desire to remove adoption friction; high-volume/API use cases will be monetized separately to protect margins .
  • Net retention: management believes NRR has bottomed at ~102%, expecting gradual improvement as newer offerings flow through and macro headwinds subside .
  • Enterprise Advanced pricing uplift: targeted 20–40% uplift vs Enterprise Plus on like-for-like volume .
  • Margin tailwinds: sale of remaining data center assets benefited gross margin (~70 bps) and operating margin; benefit completed after Q3 .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q3 FY25 and Q4 FY25; data was unavailable due to S&P daily request limit exceeded. As a result, we cannot provide Wall Street consensus comparisons for this quarter. The company reported that Q3 revenue landed at the high end of guidance and non-GAAP EPS exceeded the high end, implying a positive surprise vs internal expectations .
  • Directional context: Q3 guidance was $274–$276M revenue and $0.41–$0.42 non-GAAP EPS; actuals were $275.9M and $0.45, respectively .

Key Takeaways for Investors

  • Profitability inflection continues: record non-GAAP margins with disciplined cost structure; watch for FX headwinds that management already embeds in guidance .
  • Upsell runway: Enterprise Advanced (Jan availability) plus Hubs/Box AI should catalyze suite upgrades; management targets 20–40% price uplift vs Enterprise Plus .
  • Demand indicators solid: RPO +13% YoY and net retention ~102% suggest stable-to-improving expansion dynamics .
  • Near-term billings caution: Q4 billings growth guided low-single-digit due to tough comp; not indicative of changed demand backdrop .
  • Cash returns and balance sheet capacity: ~$95M remaining buyback capacity as of 10/31; raised $460M via convertible notes (net proceeds ~$205M after actions) .
  • Regulatory progress broadens TAM: FedRAMP High “In Process,” positioning Box for more sensitive government workflows .
  • AI partnerships strengthen platform moat: AWS Bedrock and model choice (Anthropic Claude, Amazon Titan) reinforce Box’s open, enterprise-grade AI strategy .