EPS of $0.05 decreased by 28.1% from previous year
Gross margin of 79.9%
Net income of 12.89M
""In Q3, our revenue grew 5% year-over-year or 6% in constant-currency and RPO growth of 13% year-over-year. We delivered record gross margin of 82% and our focus on operational discipline drove record operating margin of 29%, up 440 basis points from a year ago."" - Aaron Levie
Box Inc reported a strong QQ3 2025 performance characterized by robust top-line growth, expanding margins, and meaningful progress on its Intelligent Content Management strategy. Revenue reached $275.9 million, up 5% year over year (6% in constant currency), while remaining disciplined on costs to deliver record gross margins of 81.9% and a 29.1% operating margin. The quarter benefited from the sale of remaining data center assets, which contributed roughly 70 basis points to gross margin. Remaining performance obligations (RPO) grew 13% year over year to $1.30 billion, signaling durable demand and a favorable mix toward longer-duration contracts. Management continues to emphasize Box AI and advanced workflow capabilities as key enablers of next‑phase growth, with Enterprise Plus including unlimited Box AI access and Enterprise Advanced expanding the platform with no-code apps, forms, document generation, AI agents, and Archive for long-tail content management.
Management guided for continued strength into Q4 and FY25, with Q4 revenue of about $279 million (around 6% YoY growth) and FY25 revenue of roughly $1.09 billion (about 5% YoY, ~7% in constant currency). The company projects a non-GAAP full-year EPS of ~$1.70 and a non-GAAP Q4 EPS of ~$0.41, accounting for FX headwinds and BoxWorks-related expenses. Box reiterates a long‑term, high‑teens to double-digit trajectory for RPO growth and emphasizes a diversified go-to-market strategy anchored by strategic partnerships (including Slalom and AWS) and a broadened product lineup (Enterprise Plus, Enterprise Advanced, Box Apps, Box Forms, Box Doc Gen, Box AI Studio, and Box Archive). In short, Box is positioning to convert AI-enabled workflow automation into expanded ARR, higher attach rates, and greater platform monetization over the next 12–24 months, while maintaining strong cash generation and balance-sheet discipline.
Key Performance Indicators
Revenue
275.91M
QoQ: 2.18% | YoY:5.50%
Gross Profit
220.36M
79.86% margin
QoQ: 2.72% | YoY:14.58%
Operating Income
23.41M
QoQ: 15.44% | YoY:105.74%
Net Income
12.89M
QoQ: -37.10% | YoY:20.99%
EPS
0.05
QoQ: -46.53% | YoY:-28.11%
Revenue Trend
Margin Analysis
Key Insights
Q3 revenue: $275.9 million, up 5% YoY and 6% in constant currency (CC). YoY revenue growth aligns with the quarterly trend observed across the SaaS sector in Box’s peer group.
Gross margin: 81.9%, a 560 bp YoY improvement, aided by the completion of the data-center asset sale (≈70 bp lift).
Operating margin: 29.1%, up 440 bp YoY, driven by disciplined expense pacing and smarter back-half hiring, partially offset by FX headwinds (~90 bp impact).
Net income: $12.9 million; non-GAAP EPS: $0.45 for the quarter, above the high end of guidance (Y25 guidance implied $0.42).
RPO: $1.30 billion, +13% YoY and +14% CC, with expectation to recognize ~60% of RPO over the next 12 months.
Financial Highlights
Revenue and growth:
- Q3 revenue: $275.9 million, up 5% YoY and 6% in constant currency (CC). YoY revenue growth aligns with the quarterly trend observed across the SaaS sector in Box’s peer group.
- Gross margin: 81.9%, a 560 bp YoY improvement, aided by the completion of the data-center asset sale (≈70 bp lift).
- Operating margin: 29.1%, up 440 bp YoY, driven by disciplined expense pacing and smarter back-half hiring, partially offset by FX headwinds (~90 bp impact).
- Net income: $12.9 million; non-GAAP EPS: $0.45 for the quarter, above the high end of guidance (Y25 guidance implied $0.42).
- RPO: $1.30 billion, +13% YoY and +14% CC, with expectation to recognize ~60% of RPO over the next 12 months.
- Billings: $265 million, +4% YoY and +3% CC; FX headwind of ~100 bp (≈$3 million).
- Customer economics: ~1,900 customers paying >=$100k annually; Suites attach rate in large deals 83%; Suites revenue share at 59% of total revenue.
- Cash flow and liquidity: Free cash flow of $57 million; cash and equivalents around $609–699 million range depending on reporting line; net debt approximately $144 million; cash flow from operations of $63 million; capital discipline evidenced by buybacks (~$30 million on 1 million shares in Q3).
- International mix: Approximately one-third of revenue is international, with roughly 65% of international revenue from Japan, highlighting Box’s international exposure and the importance of FX and currency dynamics.
Notes on ratios and comparables:
- Net retention rate (NRR) is 102% consistent with prior quarters; annualized churn remains around 3%, highlighting customer stickiness and value realization from the platform.
- Valuation context:Box trades with a high-growth SaaS multiple (e.g., price-to-sales around the mid-teens) implying investor is pricing in durable AI-enabled growth and large-scale enterprise adoption.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
275.91M
5.50%
2.18%
Gross Profit
220.36M
14.58%
2.72%
Operating Income
23.41M
105.74%
15.44%
Net Income
12.89M
20.99%
-37.10%
EPS
0.05
-28.11%
-46.53%
Key Financial Ratios
currentRatio
1.64
grossProfitMargin
79.9%
operatingProfitMargin
8.48%
netProfitMargin
4.67%
returnOnAssets
0.95%
returnOnEquity
93.5%
debtEquityRatio
54.6
operatingCashFlowPerShare
$0.44
freeCashFlowPerShare
$0.43
dividendPayoutRatio
29.1%
priceToBookRatio
330.33
priceEarningsRatio
88.36
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategy and AI-led transformation:
- Aaron Levie emphasized an intensified focus on embedding AI into Box and the deployment of Box AI and Hubs to drive productivity, including large enterprise deployments and government use cases (customer examples cited: major advertising groups, a U.S. federal agency, and a long-tenured digital marketing & media firm). This signals early–to–mid stage enterprise demand for AI-enabled workflows. He highlighted the BoxWorks roadmap, including Box Apps, Box Forms, Box Doc Gen, and Box AI Studio, designed to enable no-code/low-code workflow automation and AI-powered data extraction.
- Box announced Box Archive for long-term content management and the Alphamoon technology planned for FY26; Box Archive is positioned to handle petabytes of content for compliance and governance with maintained performance. The leadership stressed an open platform with deeper integrations with Anthropic, Google, AWS (Amazon Bedrock access starting with Claude and Titan), and a broader AI model provider ecosystem.
- Dylan Smith highlighted Q3 results: revenue of $276 million at the high end of guidance, record gross margin (81.9%) and record operating margin (29.1%), and a 13% YoY RPO growth. He noted that Enterprise Advanced will drive next-year revenue growth and that Q4 billings growth is likely to be in the low single digits due to a challenging prior-year comparison, with FX headwinds and BoxWorks-related expense timing factored into the guidance.
- Management underscored a go-to-market shift toward Enterprise Plus with unlimited Box AI and higher attach rates, while Enterprise Advanced is expected to be a key growth driver in FY26, enabling structured data extraction, AI-powered workflows, and expanded API capabilities. They also highlighted ecosystem partnerships (Slalom, Deloitte, TCS, IBM) to drive larger, mission-critical deals and accelerate the replacement of legacy ECM systems.
"In Q3, our revenue grew 5% year-over-year or 6% in constant-currency and RPO growth of 13% year-over-year. We delivered record gross margin of 82% and our focus on operational discipline drove record operating margin of 29%, up 440 basis points from a year ago."
— Aaron Levie
" Enterprise Advanced, which will be generally available in January, will enable all of our customers to power intelligent content workflows across their businesses. It offers Box Apps for building no-code applications and dashboards to customize content experiences, Box Forms for creating forms natively in Box, Box Doc Gen for generating documents on the fly, Box AI Studio for creating custom AI agents..."
— Dylan Smith
Forward Guidance
Assessment of the outlook based on management guidance and industry context:
- Near-term targets: Q4 revenue around $279 million (+6% YoY) with low-single-digit billings growth and non-GAAP operating margin around 27.5%, reflecting BoxWorks-related expenses and FX headwinds (~100 bps). Q4 non-GAAP EPS approximately $0.41, subject to ~ $0.02 FX impact and $0.01 non-cash deferred tax expense.
- Full-year FY25 targets: Revenue near $1.09 billion (+5% YoY, ~7% CC), gross margin ~81%, non-GAAP operating margin ~28%, and non-GAAP EPS around $1.70. FX headwinds expected to subtract roughly 140 bps from FY25 billings and approximately 190 bps from guidance versus prior estimates.
- Growth drivers: Enterprise Plus continues to drive higher attach rates and larger deals; Enterprise Advanced is expected to catalyze next-year growth by enabling more complex, AI-enabled workflows, metadata extraction, and Box Archive use cases. Box AI Studio and Box Apps create no/low-code paths to build enterprise-specific workflows, while Box Archive addresses governance/compliance at scale.
- Risks and monitoring: FX volatility remains a meaningful headwind to both revenue and billings; customer adoption of AI-enabled workflows may take time to fully translate into ARR expansion; macroeconomic conditions could impact enterprise IT budgets; execution risk around launching and pricing Enterprise Advanced at scale.
- Key factors investors should monitor: progression of RPO growth into FY26, actual adoption and renewal rates of Enterprise Advanced, net retention stabilization as newer offerings mature, international growth (especially Japan), operating leverage from H2-influenced expense timing, and the ongoing impact of FX on revenue mix and billings.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BOX Focus
79.86%
8.48%
93.50%
88.36%
GDDY
61.60%
22.10%
53.40%
28.91%
FFIV
80.40%
23.40%
4.79%
17.40%
GEN
80.40%
37.90%
7.39%
26.78%
CCCS
76.90%
12.00%
0.15%
605.02%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Box is well-positioned to convert AI-driven workflow capabilities into durable, multi-product revenue growth. The QQ3 2025 results demonstrate solid execution: 5% revenue growth (6% CC), record margins, and a robust RPO pipeline, underpinned by a strategic push into Intelligent Content Management. The combination of Box AI, Box Apps, Box Forms, Doc Gen, AI Studio, and Box Archive supports a scalable platform that can capture a broad set of enterprise workflows, driving higher attach rates and increased platform revenue. The AWS Bedrock integration with Anthropic Claude and Titan, plus partnerships with SI partners, should help expand adoption across industries and geographies. However, near-term headwinds from FX and a cautious Q4 billings outlook relative to the prior year require careful monitoring. The long-term thesis is intact as Enterprise Advanced monetizes deeper workflows and metadata capabilities, enabling a broader market footprint and higher long-run efficiency in sales & marketing spend. Overall, the stance is cautiously constructive with a disciplined focus on execution and currency risk management. Return potential will hinge on penetration of Enterprise Advanced and the velocity of Box AI adoption across large customers; investors should watch RPO evolution, NRR stabilization, and FX sensitivity as primary indicators of trajectory into FY26.
Key Investment Factors
Growth Potential
Box's strategic shift to Intelligent Content Management (ICM) positions the company to convert a broad set of content workflows into highly monetizable, multi-product engagements. The combination of Box AI, Hub-based querying, Box Apps (no-code workflow building), Box Forms, Doc Gen, and AI Studio enables scalable, AI-driven workflows across contracts, invoices, digital assets, and governance, which should lift ARR per customer, expand attachment rates, and improve customer retention. The planned rollout of Enterprise Advanced (January generally available) aggregates Box Apps, Box Forms, Doc Gen, AI Studio, and Box Archive into a single plan, potentially driving higher AMCs and API usage, with expected uplift of 20-40% for Enterprise Advanced pricing relative to Enterprise Plus on a like-for-like basis. Management cited strong early customer demand and momentum from BoxWorks discussions as proof points for future growth.
Profitability Risk
Key risks include FX volatility and its impact on billings and revenue recognition, potential longer sales cycles for new Enterprise Advanced offerings, and execution risk in broadening customer adoption of AI-enabled workflows across diverse industries. Competitive pressure from entrenched ECM/Content platforms (e.g., Microsoft, Google) and potential commoditization of AI functionality could compress pricing or limit wallet share. Dependency on large, multi-year customer contracts may result in variability in quarterly billings and RPO composition. Finally, the aspirational TAM expansion hinges on successful integration and partner ecosystem expansion (SIs like Slalom, Deloitte, IBM, etc.).
Financial Position
Box demonstrates a strong liquidity and balance-sheet profile with cash and equivalents in the vicinity of $609–699 million (per sources), total debt around $753 million and net debt of approximately $144 million, and free cash flow generation of $57 million in Q3. The company carries a long-term debt load that is manageable relative to cash flow, and it maintains a robust RPO pipeline ($1.30B) that underpins revenue visibility. The balance sheet supports continued investments in AI-enabled product development and selective tuck-in M&A while sustaining capital returns via stock repurchases (~$30 million in Q3) and potential dividends (not currently material). Net retention remains strong at 102%, with churn around 3%, signaling durable value from the platform.
SWOT Analysis
Strengths
Leading AI-enabled ECM platform with integrated Box AI, hubs, and no/low-code workflow tools (Box Apps, Box Forms, Box Doc Gen, Box AI Studio).
Strong gross and operating margins (81.9% gross, 29.1% operating in QQ3 2025) and durable FCF generation.
Durable RPO growth (1.30B, +13% YoY) and a high net retention rate (102%).
Expanding go-to-market via Enterprise Plus (unlimited Box AI) and the upcoming Enterprise Advanced to drive higher value and higher attach rates.
Strategic partnerships (AWS, Slalom, Deloitte, IBM, TCS) and an open platform approach bolster ecosystem-driven growth.
Weaknesses
FX headwinds remain material, with guidance calling for ~140 bps negative impact on billings and ~190 bps on FY25 guidance.
High-valuation context may pressure multiple expansion/earnings expectations if growth decelerates.
Long sales cycles for enterprise-grade offerings and potential dependence on large multi-year contracts.
Opportunities
Massive TAM expansion through Intelligent Content Management, enabling replacements of legacy ECM with AI-driven workflows.
Cross-sell across Suites and beyond, unlocking higher ARRs with Box Apps, Archive, and advanced AI capabilities.
International growth, particularly in Japan, and deeper penetration of large enterprise customers.
Threats
Competitive pressure from incumbents (Microsoft, Google) and evolving AI/ECM offerings in the market.
Macro/tech spend downturns could affect enterprise decision cycles.
Regulatory/compliance and security risk in handling enterprise content, especially with AI-enabled processing.