Q4 2025 Earnings Summary
- Strong early adoption of Enterprise Advanced and Box AI is driving growth, with dozens of deals closed in Q4 and significant interest from both existing and new customers. This demonstrates Box's ability to capitalize on AI-driven opportunities and suggests potential acceleration in revenue growth. ,
- Increased customer commitment reflected in lengthening contract durations and early renewals, indicating customer confidence in Box's platform and long-term growth prospects. The company is seeing customers sign multiyear deals and renew early to access Enterprise Advanced features.
- Expansion of partner and system integrator ecosystem to extend reach and drive larger deals, especially with the focus on AI and intelligent content management. This critical go-to-market initiative can help accelerate growth and penetrate new markets.
- The company's revenue guidance implies back-end weighted growth with gradual acceleration throughout the year, which poses a risk if the anticipated growth does not materialize as expected.
- The company acknowledges a dynamic macro environment with growing uncertainty, which could negatively impact client purchasing decisions and demand for Box's products.
- The company expects minimal operating margin expansion in FY'26 due to significant investments in AI and go-to-market initiatives, potentially affecting short-term profitability compared to previous years' margin improvements.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +6.3% (from $262.88M in Q4 2024 to $279.52M in Q4 2025) | Revenue growth was driven by improved sales performance, reflecting stronger market demand compared to the previous period. |
Cost of Revenue | Decreased (from $62.72M in Q4 2024 to $58.78M in Q4 2025) | Operational efficiencies and better cost management helped reduce cost of revenue, which contributes to an improved gross margin. |
Gross Profit | +10.3% (from $200.16M in Q4 2024 to $220.74M in Q4 2025) | The gross profit boost is largely the result of a lower cost of revenue combined with higher sales, enhancing profitability margins compared to the previous quarter. |
Operating Expenses | +13.3% (from $178.99M in Q4 2024 to $202.80M in Q4 2025) | Increased spending in R&D, Sales & Marketing, and G&A drove operating expenses higher, which signals greater investments in growth initiatives despite pricing pressures compared to the prior period. |
Operating Income | -15% (from $21.16M in Q4 2024 to $17.94M in Q4 2025) | Despite revenue gains, the rise in operating expenses pressures margins, resulting in a decline in operating income from Q4 2024. |
Net Income | Nearly doubled (from $99.24M in Q4 2024 to $194.01M in Q4 2025) | A dramatic turnaround in net income was achieved, primarily driven by significant tax adjustments, which more than offset rising costs and margin pressures seen in the prior period. |
Income Before Income Taxes | -17% (from $25.59M in Q4 2024 to $21.02M in Q4 2025) | Reduced pretax income indicates cost pressures impacting operating efficiency, though a larger tax benefit later bolstered the net income, underlining a shift in fiscal adjustments compared to Q4 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q1 2026 | no prior guidance | $274 million to $275 million, representing approximately 4% year-over-year growth at the high end and 5% growth in constant currency | no prior guidance |
Gross Margin | Q1 2026 | no prior guidance | Approximately 80% | no prior guidance |
Non-GAAP Operating Margin | Q1 2026 | no prior guidance | Approximately 25% | no prior guidance |
Non-GAAP EPS | Q1 2026 | no prior guidance | $0.25 to $0.26 | no prior guidance |
Billings Growth Rate | Q1 2026 | no prior guidance | Expected to be in the low to mid-teens range | no prior guidance |
Weighted Average Diluted Shares | Q1 2026 | no prior guidance | Approximately 151 million | no prior guidance |
Revenue | FY 2026 | no prior guidance | $1.155 billion to $1.16 billion, representing approximately 6% year-over-year growth | no prior guidance |
Gross Margin | FY 2026 | no prior guidance | Approximately 81%, representing a 40 basis point year-over-year improvement | no prior guidance |
Non-GAAP Operating Margin | FY 2026 | no prior guidance | Approximately 28% | no prior guidance |
Non-GAAP EPS | FY 2026 | no prior guidance | $1.13 to $1.17 | no prior guidance |
Billings Growth | FY 2026 | no prior guidance | Approximately 7%, including a 30 basis point tailwind from FX | no prior guidance |
Cash Taxes | FY 2026 | no prior guidance | Estimated in the range of $12 million to $15 million | no prior guidance |
Weighted Average Diluted Shares | FY 2026 | no prior guidance | Approximately 153 million | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2025 | $279M | $279.52M | Beat |
Revenue | FY 2025 | $1.09B | ≈$1.09B (264.66M+ 270.04M+ 275.91M+ 279.52M) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
AI and Automation in Content Management | Discussed consistently throughout Q1–Q3 with focus on metadata extraction, workflow automation and leveraging AI (e.g., Box AI, GPT‐4 support, AI agents, Box Apps) | Q4 highlights deeper AI integration by replatforming legacy systems, launching Enterprise Advanced and Box AI units to enhance automation and customer workflows | Strengthening focus on AI as product innovation deepens and AI becomes a catalyst for replatforming and operational efficiency. |
Advanced Enterprise Product Offerings | Q1–Q3 emphasized Enterprise Plus success, integration with Box AI, Box Hubs, Box Apps and early rollout of advanced offerings driving high‐value deals | Q4 builds on the momentum with the introduction of Enterprise Advanced, achieving higher pricing uplifts and bundling more intelligent features | Evolving product suite with new offerings that drive revenue potential and enhance competitive differentiation. |
Legacy ECM Replacement and Digital Transformation | Across Q1–Q3, Box consistently positioned its AI-enabled platform as the modern alternative to legacy ECM systems, with digital transformation being a key driver in content management improvements | Q4 reaffirms that AI is a major catalyst to replatform traditional ECM systems and accelerate digital transformation for content-centric workflows | Steady and bullish emphasis on modernizing core processes, indicating a persistent strategic driver for future growth. |
Customer Commitment and Retention | Q1–Q3 discussions underscored stable net retention rates (around 101–102%), early renewals and longer contracts bolstering customer loyalty | Q4 highlights increased long-term contracts with a 21% RPO growth, strong early renewals and a net retention rate holding at 102% with anticipated further improvement | Strengthening customer loyalty with enhanced contract terms and commitment, reflecting improved retention dynamics. |
Partner and Ecosystem Expansion Initiatives | In Q1–Q3, Box discussed expanding its partner ecosystem (integrations with leading platforms, AI model partnerships, and collaboration with system integrators like Deloitte, IBM) | Q4 places an even greater emphasis on partner-led deals, incorporates learnings from Japan’s channel model, and announces investments in partner enablement to drive higher deal volumes | Greater strategic reliance on partners to drive growth and market reach, signaling a more robust ecosystem strategy. |
Revenue Growth Dynamics and Billings Guidance | Q1–Q3 reported moderate revenue growth (3–5% YoY) with guidance adjustments due to FX impacts and periodic headwinds, noting improvements in constant currency performance | Q4 guidance reflects approximately 6% YoY revenue growth and steady billings gains, although FX headwinds and leap year adjustments continue to temper results | Positive revenue outlook with improved growth targets but balanced by external FX pressures and other timing effects. |
Operating Margin and Profitability Pressures | Q1–Q3 saw margins improve (with record margins in Q3 around 29.1%) partly due to non‐recurring data center benefits, though hints emerged that such tailwinds were temporary | Q4 cautions that the end of one-time tailwinds (like data center asset sales) will reduce future margin expansion, leading to modest improvements despite ongoing investments | Increasing profitability pressures as non-recurring benefits phase out, prompting a more cautious near-term outlook on margin expansion. |
Macroeconomic Uncertainty and FX Headwinds | Q1–Q3 repeatedly noted significant FX headwinds (ranging from 250 bps to around 90–110 bps) with persistent macro uncertainty impacting segments; sentiment was cautious yet stable | Q4 acknowledges a dynamic macro environment with FX headwinds (70 bps on revenue; 110 bps on margin in Q4) while forecasting a neutral impact on revenue for FY 2026 under current rates | Persistent external risks remain a challenge even as Box projects stabilization, keeping sentiment cautious about short-term volatility. |
Integration and Impact of Crooze Technology | Q1–Q3 discussions detailed Crooze integration to support no-code apps, enhanced metadata extraction and ECM modernization, often in conjunction with Alphamoon technology | Q4 saw no mention of Crooze technology integration in earnings call communications [document Q4] | Diminished focus suggests that integration may have matured or become less of a headline topic in Q4 messaging. |
SMB Segment and Seat Expansion Challenges | Q1 and Q2 mentioned pressures in the SMB segment and relatively muted seat growth, while Q3 had little commentary on these topics | Q4 provides limited discussion; minimal seat growth is noted with no new insights on SMB challenges | Steady challenges continue in the SMB segment with ongoing muted seat growth, reflecting an area of concern but with little change in sentiment. |
Stock-Based Compensation Concerns | Q1 included discussion on SBC where management noted that despite share buybacks and lower net share issuance, SBC as a percentage of revenue remains high but is expected to decline over time ; not mentioned in Q2–Q3 | Q4 did not address stock-based compensation, indicating reduced focus on this issue during the most recent call. | Decreased focus suggests that SBC concerns have become less prominent or are viewed as a non-urgent matter in current communications. |
Discontinuation of One-Time Asset Sale Benefits | Q2 mentioned that data center asset sales would conclude in Q3, signaling that their margin tailwind would cease; not a topic in Q1 or Q3 discussions | Q4 explicitly notes that the one-time benefits from data center equipment sales (providing ~100 bps headwind relief in prior periods) will not recur, impacting Q1 FY2026 margins | Emerging headwind as the loss of non-recurring benefits prompts a more cautious view on future profitability, highlighting a shift toward more normalized margin expectations. |
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Guidance and Revenue Seasonality
Q: Is revenue growth expected to be back-end weighted?
A: Revenue growth is expected to gradually accelerate throughout the year, driven by investments in growth and traction with Enterprise Advanced. Net retention rate is expected to improve by one point year-over-year, and billings are coming in slightly higher than revenue growth expectations. -
Operating Margin Guidance and AI Investments
Q: Why is operating income margin guidance flat for 2026?
A: Operating margin is expected to be roughly flat year-over-year due to ramping investments in product innovation, particularly around AI, and expanding the partner ecosystem. These investments take time to yield revenue impact, leading to minimal operating margin expansion this year, but we remain on the path to higher operating margin levels. -
Q4 Billings Outperformance and Outlook
Q: What drove the strong billings in Q4 and the outlook?
A: Q4 billings outperformed expectations due to strong adoption and early momentum with Enterprise Advanced and solid bookings. Early renewals contributed about $5 million to Q4 results. For the first half of the year, billings growth rate is expected to be about 7%, consistent with full-year expectations. -
Net Retention Rate Components and Expectations
Q: How is Net Retention Rate expected to improve?
A: Net Retention Rate is expected to improve from 102% to 103% year-over-year, driven largely by continued improvements in price per seat with minimal contribution from seat growth. Full churn rate is expected to remain strong and stable at 3%. -
Pricing Uplift from Enterprise Advanced Plan
Q: What is the ACV uplift from Enterprise Advanced deals?
A: Enterprise Advanced deals have achieved the target pricing uplift of 20% to 40% versus Enterprise Plus. Most deals are with existing Enterprise Plus customers, and it's too early to provide data on new customers adopting Enterprise Advanced. -
Macro Environment Impact on Demand
Q: Are clients showing uncertainty in purchasing due to macro factors?
A: The macro environment is dynamic, but we believe we're well-positioned to help customers drive efficiency and automation. Clients seek more leverage from technology to automate workflows, and we're closely monitoring the situation. -
U.S. Federal Sector Exposure
Q: How exposed is Box to the U.S. federal sector?
A: Our U.S. public sector business represents mid-single-digit percentages of overall revenue, with the federal portion being a low single-digit percentage. While exposure is relatively minimal, we're paying close attention to this segment. -
Increase in Long-Term RPO and Contract Durations
Q: Why is long-term RPO increasing when others see shortening durations?
A: Customers are signing multiyear deals due to increased commitment with Enterprise Advanced. Early renewals also contribute to longer durations, as customers re-up for longer terms to access new capabilities sooner, boosting long-term RPO growth. -
Go-To-Market Investments and Partner Economics
Q: Where are go-to-market investments being made, and how do partner sales compare economically?
A: Investments are focused on key industries, system integrator partnerships, and expanding sales capacity. Partner sales are as profitable as direct sales, with indirect customers effectively just as profitable due to higher pricing and cost efficiencies. -
Internal Use of Box AI and Efficiency Gains
Q: What efficiency gains has Box seen from using Box AI internally?
A: By extensively using Box AI across various processes, we've achieved significant time savings. For example, an HR process now handled by AI saves dozens of hours previously spent on internal emails, enhancing efficiency across the business. -
Impact of Box AI on Platform Replacement
Q: How is Box AI influencing platform replacements?
A: Box AI is catalyzing replatforming of legacy content management systems. It opens opportunities to replace traditional systems lacking modern functionality and addresses use cases previously unmanaged by software, leading to increased automation and growth. -
Understanding AI Units Consumption Model
Q: What drives the consumption of AI units?
A: AI units abstract individual AI functions to simplify billing. Consumption depends on activities like data extraction from documents, with varying AI units based on factors like document pages or model complexity. It's early to model this, as it was just released. -
Top-of-Funnel Interest and New Customer Adoption
Q: Is Enterprise Advanced attracting new customer interest?
A: While currently focused on existing customers, the new functionality, especially around AI, is widening our audience. AI enables engagement with roles like Chief Data Officers and CTOs, expanding conversations and our potential customer base.