• Q4 Revenue: $280 million, up 6% year-over-year, 8% in constant currency.
• Fiscal 2025 Revenue: $1.09 billion, up 5% year-over-year, 7% in constant currency.
• Q4 Operating Margin: 27.3%, improved by 60 basis points year-over-year.
• Fiscal 2025 Operating Margin: 27.9%, up 320 basis points year-over-year.
• Q4 EPS: $0.42, $0.01 above guidance.
• Fiscal 2025 EPS: $1.71, up 17% year-over-year.
• Q4 Gross Margin: 81.0%, up 260 basis points year-over-year.
• Fiscal 2025 Free Cash Flow: $305 million, up 13% year-over-year.
• Q4 Free Cash Flow: $91 million, up 12% year-over-year.
• Q4 Billings: $399 million, up 5% year-over-year, 7% in constant currency.
• Q4 Net Retention Rate: 102%, up from 101% a year ago.
• Q4 RPO: $1.5 billion, up 12% year-over-year, 14% in constant currency.
• Fiscal 2025 Share Repurchase: 7.6 million shares for $212 million.
• Q4 Customers Paying $100,000+ Annually: Approximately 1,920, up 8% year-over-year.
• Fiscal 2026 Revenue Guidance: $1.155 billion to $1.16 billion, 6% year-over-year growth.
• Fiscal 2026 Gross Margin Guidance: Approximately 81%.
• Fiscal 2026 Non-GAAP EPS Guidance: $1.13 to $1.17.

• Warning! GuruFocus has detected 4 Warning Signs with OWLT.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Box Inc (NYSE:BOX) delivered strong Q4 operating results with revenue of $280 million, up 6% year-over-year, and operating margins of 27.3%.
• The company introduced Enterprise Advanced, a new multiproduct offering, which saw significant customer adoption with several dozen deals closed in Q4.
• Box Inc (NYSE:BOX) achieved record free cash flow of $305 million in fiscal 2025, up 13% year-over-year.
• The company expanded its gross margin to 81.0% in Q4, up 260 basis points year-over-year, reflecting strong product differentiation.
• Box Inc (NYSE:BOX) was recognized as a leader in multiple industry analyst reports, including the Forrester Wave and Gartner Magic Quadrant, highlighting its strong market position.

Negative Points

• Box Inc (NYSE:BOX) faces a dynamic macroeconomic environment, which could impact customer purchasing behavior and overall business performance.
• The company's Q1 non-GAAP operating margin is expected to decrease to approximately 25% from 26.6% a year ago, due to several external factors.
• Box Inc (NYSE:BOX) anticipates a non-GAAP EPS headwind throughout FY26 due to incremental noncash deferred tax expenses.
• The company's guidance for fiscal 2026 implies a more back-end weighted revenue growth, indicating potential challenges in achieving consistent growth throughout the year.
• Box Inc (NYSE:BOX) is making methodical investments in go-to-market initiatives and AI capabilities, which may impact short-term profitability as these investments take time to yield returns.

Q & A Highlights

Q: With the strong billings number this quarter, what early momentum have you seen with Enterprise Advanced, and how do you view the pipeline for this product as we enter fiscal year '26? A: Aaron Levie, CEO: We were very pleased with the Q4 results for Enterprise Advanced. Despite customers having limited time to understand the offering, we closed dozens of deals. The momentum is building, and we expect Enterprise Advanced to be a core part of our sales strategy, although it will be a ramp process.

Q: How do you see the mix of direct versus indirect sales evolving, especially with the emphasis on partners? A: Aaron Levie, CEO: Historically, we've been mostly direct, except in Japan. However, with the transformational workflows we're targeting, partners are becoming more critical. We aim to embed Box into partner workflows, especially with system integrators, to drive more deals and expand our reach.

Q: Given the macroeconomic uncertainty, are you seeing any shifts in client purchasing behavior? A: Aaron Levie, CEO: The environment is dynamic, but we believe Box is well-positioned to help customers drive efficiency and automation. While we remain cautious, we see ourselves as an asset in helping clients leverage technology to retire legacy systems and automate workflows.

Q: Can you provide more details on the core use cases for Enterprise Advanced and its impact on ACV growth? A: Aaron Levie, CEO: Enterprise Advanced includes functionalities like Forms, Doc Gen, and AI-powered document processing. These capabilities allow for automation and intelligence extraction from documents, which are driving demand. Dylan Smith, CFO, added that Enterprise Advanced deals have achieved a 20% to 40% pricing uplift compared to Enterprise Plus.

Q: How should we think about the seasonality of revenue, given the guidance implies a more back-end weighted year? A: Dylan Smith, CFO: Q1 is lower due to the leap year impact, but we expect gradual acceleration in revenue growth throughout the year. This is driven by investments in growth, traction for Enterprise Advanced, and improvements in net retention rate.

Q: What drives the consumption of AI units, and how should we think about their ramping? A: Aaron Levie, CEO: AI units are a flexible abstraction layer for various AI capabilities. For example, extracting data from a document page might cost a certain number of AI units. This model allows customers to leverage AI flexibly without complex billing for each use case.

Q: How is Box AI impacting new customer wins and broader platform adoption? A: Aaron Levie, CEO: AI is a catalyst for replatforming traditional content management systems. It opens up opportunities for customers to automate workflows and gain insights from unstructured data, driving broader adoption of Box's platform.

Q: Can you explain the increase in long-term RPO and why you're seeing better contract duration? A: Dylan Smith, CFO: The increase is due to customers viewing Box as a strategic platform, leading to multiyear deals. Early renewals also contribute, as customers want to access Enterprise Advanced capabilities sooner, extending contract durations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.