Q3 2025 Earnings Summary
- Launch of Enterprise Advanced and Box Apps to Drive Significant Growth: Box is introducing Enterprise Advanced, a new plan that includes Box Apps, an AI-powered no-code application builder that allows customers to create custom workflows and applications easily. This expansion is expected to open up hundreds or thousands of new use cases, accelerating the move away from legacy enterprise content management systems and driving significant growth in the coming years. Aaron Levie stated, "This is going to be a core focus for us over time."
- Integration of Crooze Technology Enhances Customer Retention and Economics: Box's acquisition and integration of Crooze technology have shown that customers leveraging Crooze have incredibly powerful metrics and KPIs, including higher retention rates and overall ACVs. This integration allows customers to construct custom dashboards, workflows, and metadata views, embedding Box more deeply into their business processes, which is expected to improve customer economics and increase stickiness. Aaron Levie mentioned, "We studied the customers that had leveraged Crooze. And the metrics and KPIs on these customers were just incredibly powerful as compared to any other kind of cohort we have."
- AI Capabilities Accelerate Replacement of Legacy Systems: Box's advancements in AI, particularly in extracting metadata and automating workflows, are expected to accelerate the replacement of legacy enterprise content management systems, opening up significant growth opportunities. Aaron Levie highlighted that AI enables them to extract structured data at scale for the first time, driving growth in traditional ECM takeouts: "AI really is the first time that we can do that at scale in a much more accelerated fashion. And I think that will drive much more growth of these kind of traditional ECM takeouts."
- Net Retention Rate (NRR) remained at 102% for the last two quarters, indicating potential challenges in expanding revenue from existing customers and possibly signaling customer churn issues. While management expects NRR to trend upward over time, current levels may suggest headwinds.
- Q4 billings growth is projected to be in the low single-digit range, a slowdown compared to the previous year's 10% constant currency billings growth. This deceleration suggests potential weakening in sales momentum and could impact future revenue growth. Management attributes this to difficult comparisons due to strong early renewals and multiyear customer prepayments in the prior year.
- The impact of new product offerings, such as Enterprise Advanced, is not expected to significantly contribute to revenue in the near term. Management indicates that these products will be drivers for next year's revenue growth, suggesting that the benefits of recent innovations may take time to materialize, potentially limiting near-term revenue growth.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +5.5% (Q3 2025: $275.91M vs. Q3 2024: $261.54M) | Revenue increased by about $14.37M largely due to continued customer adoption and product mix improvements that built on prior period growth. The previous Q3 2024 base, where revenue drivers such as suite adoption were already in play ( ), set the stage for further expansion in Q3 2025 ( ). |
Operating Income | +106% (from $11.38M to $23.41M) | Operating income more than doubled because of compounding effects from revenue growth, a sharp decline in non-operating expenses, and significant margin expansion. Improvements such as lower depreciation & amortization along with a reduced COGS (as seen in earlier period cost-control initiatives) contributed to this robust increase ( vs. ). |
Cost of Goods Sold (COGS) | ~20% Decrease (from ~$69.23M to ~$55.56M) | COGS fell prominently as the public cloud migration and operational efficiencies helped trim bandwidth, data center, and related costs that had been higher in Q3 2024. The Q3 2024 figures reflect transitional expenses, while Q3 2025 shows the benefits of these cost optimizations ( vs. ). |
Depreciation & Amortization | ~59% Decrease (from ~$14.51M to ~$5.93M) | D&A expenses dropped sharply in Q3 2025 as adjustments in the asset base—such as asset sales or reaching full depreciation on previously capitalized items—took effect. These changes provided a tailwind for margins compared to the higher expense base seen in Q3 2024 ( vs. ). |
Earnings per Share (EPS) | Increase from $0.03 to $0.05 | EPS improved notably as a result of higher operating income, margin expansion, and effective share repurchase strategies, which reduced the share count. This outcome built on the steady profitability improvements seen in prior quarters ( vs. ). |
Cash and Cash Equivalents | ~50% Increase (from $406.62M in Q2 2025 to $608.77M in Q3 2025) | Cash reserves surged owing to strong operating cash generation and favorable investing activity outcomes. The Q2 2025 base of $406.62M benefited from continued operational performance improvements leading into Q3 2025, reinforcing liquidity ( vs. ). |
Long-term Debt | ~75% Increase (from $371.82M in Q2 2025 to $651.68M in Q3 2025) | Long-term debt nearly doubled as the company strategically increased leverage—possibly to fund growth initiatives or operations—after a period of relative stability. The Q2 2025 level of $371.82M moved to a higher target in Q3 2025 as part of a planned capital structure adjustment ( ). |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q4 2025 | $274–$276 million | $279 million | raised |
Billings Growth Rate | Q4 2025 | mid-single-digit range, including FX tailwind of ~210 bps | low single-digit range, including FX tailwind of ~80 bps | lowered |
Non-GAAP Operating Margin | Q4 2025 | 28% | 27.5% | lowered |
Non-GAAP EPS | Q4 2025 | $0.41–$0.42 | $0.41 | lowered |
Weighted Average Diluted Shares | Q4 2025 | Approximately 148 million | Approximately 151 million | raised |
Revenue | FY 2025 | $1.086 billion–$1.09 billion | Approximately $1.09 billion | no change |
Billings Growth Rate | FY 2025 | mid-single-digit range | Approximately 4% | lowered |
Gross Margin | FY 2025 | Approximately 81% | Approximately 81% | no change |
Non-GAAP Operating Margin | FY 2025 | Approximately 27.5% | Approximately 28% | raised |
Non-GAAP EPS | FY 2025 | $1.64–$1.66 | Approximately $1.70 | raised |
Weighted Average Diluted Shares | FY 2025 | Approximately 148 million | Approximately 149 million | raised |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Box AI and Advanced AI Capabilities | Consistently featured from Q4 2024’s GA launch and upsell strategy on Enterprise Plus to extensive coverage in Q1 and Q2 2025 emphasizing AI‐driven workflow automation and metadata extraction. | Q3 2025 continues to spotlight advanced AI capabilities—with deeper integration in workflows, customer demand, and enhanced AI agent and metadata extraction tools. | Bullish and expanding – messaging remains consistently positive with increased sophistication and customer adoption. |
Legacy ECM Replacement and Modernization | Q4 2024 highlighted replacing legacy ECM via Crooze integration , while Q1 2025 and Q2 2025 emphasized AI as a catalyst for transitioning from outdated systems. | Q3 2025 reaffirms legacy ECM replacement driven by AI-enabled metadata extraction and new partnership channels for modernization. | Steady momentum – the strategic importance is maintained and further reinforced through expanded AI integration. |
Enterprise Plan Expansion | Previous periods (Q4 2024, Q1 and Q2 2025) stressed strong Enterprise Plus upsell, premium plan adoption, and emerging hints at Enterprise Advanced. | Q3 2025 emphasizes the general availability of Enterprise Advanced with enhanced features and a 20%-40% pricing uplift, building on the strong performance of Enterprise Plus. | Positive expansion – messaging reflects a healthy upgrade cycle and growing premium offerings that are crucial for future revenue. |
New Product Innovation (Box Apps, Hubs, AI Agent) | Q4 2024 introduced product innovations (Box AI, Box Hubs, Crooze-driven no-code apps) ; Q1 and Q2 2025 further detailed integration of these applications and AI agents to drive intelligent content management. | Q3 2025 continues to promote Box Apps and Box Hubs as key innovations enabling customized workflows and intelligent content management, reaffirming their role in the platform’s evolution. | Ongoing innovation – sustained investment in new capabilities continues to drive customer adoption and differentiation. |
Integration of Crooze Technology | In Q4 2024 and Q1 2025, integration of Crooze was discussed as critical for expanding ECM use cases and enabling no-code workflow automation ; Q2 2025 noted its complementarity with other AI technologies. | Q3 2025 describes Crooze’s integration as unlocking hundreds to thousands of new use cases, further deepening its role in enhancing ECM functionality. | Strengthening integration – the strategic integration is maturing, widening its applicability and impact on the platform. |
Customer Retention and Net Retention Rate Trends | Q4 2024 and Q1 2025 noted a steady retention rate around 101% with stable annual churn at 3% ; Q2 2025 continued this trend. | Q3 2025 reports a modest improvement with a net retention rate of 102%, indicating continued customer stickiness and slight performance gains. | Marginal improvement – retention metrics show gentle upward movement, reinforcing a stable customer base. |
Revenue and Billings Growth Challenges | Q1 and Q4 2024 highlighted challenges including FX headwinds and difficult year-over-year comparisons, with modest as‐reported growth due to legacy billing factors. | Q3 2025 continues to face growth challenges driven by FX headwinds and challenging comparisons from previous strong quarters, as underscored in Q3 discussions. | Persistent pressure – despite steady execution, external factors and tough comparisons keep growth challenges in focus. |
Foreign Exchange (FX) Headwinds | FX impacts were a consistent theme in Q4 2024 and Q1 2025, with significant headwinds affecting revenue, billings, and margins. | In Q3 2025, FX continues to negatively impact performance, with explicit mentions of headwinds (e.g. ~90–100 basis points) and adjustments in future guidance. | Ongoing challenge – FX remains a persistent external risk that is gradually adjusting but continues to affect key financial metrics. |
Operating Margin Sustainability and One-Time Benefits | Q4 2024 noted operating margin improvements (26.7%) driven by disciplined cost management and one-time benefits from data center asset sales. Q1 and Q2 2025 also highlighted margin gains despite FX pressures. | Q3 2025 reported a record operating margin of 29.1%, aided by one-time benefits from data center asset sales, though such factors are expected to taper off in future periods. | Sustainable but tempering – margin improvements remain robust, though reliance on one-time benefits may diminish over time. |
Public Sector and International Market Expansion | Q4 2024 underscored strong public sector performance in the U.S. and notable international momentum particularly in Japan and emerging EMEA opportunities ; Q1 2025 had brief mentions of FedRAMP and international deals. | Q3 2025 does not mention public sector or international market expansion, suggesting a strategic de‐emphasis or shift in focus for the current period. | No longer mentioned – these topics have been dropped from the current period’s discussions, possibly temporarily deprioritized. |
Platform-Neutral AI Strategy | Explicitly highlighted in Q4 2024 and Q1 2025 as a key differentiator, emphasizing an open, model-agnostic approach with partnerships across major providers (Google, Microsoft, OpenAI, etc.). | Q3 2025 lacks specific mention of platform neutrality, indicating that the topic may have matured or been absorbed into broader AI capabilities discussions. | Less emphasis – while still inherent in the architecture, the explicit messaging on platform neutrality has receded in the current period. |
SMB Segment Pressure and Challenges | Q1 and Q2 2025 noted macroeconomic pressures affecting the SMB segment, even as enterprise and federal segments performed strongly. | Q3 2025 does not reference the SMB segment, suggesting the challenges either decreased in importance or were not a focal point in recent discussions. | Topic no longer mentioned – the absence may indicate a deprioritization or resolution of earlier SMB pressures. |
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Enterprise Advanced Impact
Q: What is the expected business impact of Enterprise Advanced?
A: Enterprise Advanced is expected to be a key contributor to future growth, opening up hundreds or thousands of new use cases by allowing customers to build AI-powered, no-code applications for content management and workflows. This will significantly accelerate customers' move off legacy ECM systems and enhance customer economics. -
Enterprise Advanced Pricing
Q: Do we know the pricing details for Enterprise Advanced?
A: They expect a 20% to 40% uplift for Enterprise Advanced relative to Enterprise Plus on a like-for-like volume basis, based on early customer feedback and analysis. -
Net Retention Rate Outlook
Q: Has the Net Retention Rate bottomed out?
A: They believe the Net Retention Rate has bottomed at 102% over the last two quarters and expect it to trend gradually upward over time as new offerings and improving macro conditions positively impact the model. -
Billings Outlook
Q: What factors affect the low single-digit billings growth in Q4?
A: The low single-digit growth rate is due to a difficult comparison from last year's 10% constant currency billings growth, which included strong early renewals and multiyear prepayments, creating a challenging setup. The underlying business trajectory remains strong. -
Customer Adoption of Enterprise Advanced
Q: How broadly applicable is the new SKU within the customer base?
A: Enterprise Advanced is intended to be broad-based, offering something for everyone with AI capabilities, Box Apps for customized workflows, and advanced security features, making it relevant for a significant portion of customers over time. -
Early Feedback on AI Solutions
Q: What is the early feedback on AI solutions impacting legacy ECM?
A: Initial feedback is positive, with customers encouraged to adopt Box AI capabilities included in Enterprise Plus. AI advancements enable extraction of metadata from documents, automating workflows, and replacing legacy ECM environments, driving growth in ECM takeouts. -
Impact on Q4 Renewals
Q: How will new products launching in January affect Q4 renewals?
A: The focus in Q4 remains on Enterprise Plus, with much of the pipeline built around it. While Enterprise Advanced may be included in some conversations, it is expected to be a driver for revenue growth next year.