EPS of $1.12 increased by 101.7% from previous year
Gross margin of 79.0%
Net income of 194.01M
""We are clearly entering one of the biggest shifts in business that we've ever seen. Driven by AI. AI agents are entering the workforce."" - Aaron Levie, CEO
Box Inc (BOX) Q4 2025 Results – AI-First Enterprise Platform Drives Margin Expansion, Enterprise Advanced Momentum, and 102% Net Retention
Executive Summary
Box Inc reported a solid Q4 2025 with revenue of approximately $279.5 million, up 6% year over year and 8% in constant currency, underscored by robust gross margins and the execution of its AI-driven product strategy. The company launched Enterprise Advanced late in the quarter, signaling a strategic shift toward more expansive, multi-product deals that increasingly embed BoxAI capabilities such as metadata extraction, no-code apps, Box Forms, and DocGen. Management flagged AI as a defining macro trend and positioned Box as an AI-first enterprise platform designed to extract structured data from unstructured content, automate workflows, and accelerate decision-making across the enterprise. For FY2026, Box guided to roughly $1.155–$1.16 billion revenue (about 6% growth), 81% gross margin, ~28% non-GAAP operating margin, and $1.13–$1.17 non-GAAP EPS, reflecting ongoing investments in Box AI, partner ecosystems, and Europe/Japan go-to-market expansion. The balance sheet remains strong with approximately $724 million of cash, access to buybacks (roughly $150 million additional authorization announced), and a net debt position of about $96 million, complemented by sustained free cash flow generation (~$93 million in FY2025). The quarter benefited from a 12% YoY rise in RPO to $1.5 billion and a 102% net retention rate, with suites representing 60% of revenue and an 87% attach rate for large deals. Management emphasized the AI-enabled data extraction and workflow automation as the core growth engines for enterprise-wide adoption. This note synthesizes Q4 fundamentals, management commentary, and the implications for investors in Box’s AI-first growth trajectory.
Key Performance Indicators
Revenue
279.52M
QoQ: 1.31% | YoY:6.33%
Gross Profit
220.74M
78.97% margin
QoQ: 0.17% | YoY:10.28%
Operating Income
17.94M
QoQ: -23.39% | YoY:-15.25%
Net Income
194.01M
QoQ: 1 404.77% | YoY:95.51%
EPS
1.17
QoQ: 2 099.25% | YoY:101.72%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $279.5 million in Q4 2025, up 6% YoY and 8% in constant currency.
Gross margin: 81.0% in Q4 2025 (YoY up ~260 bps; normalized gross margins post data-center asset sale).
Gross profit: $226.0 million, up ~10% YoY.
Operating income: $76 million in Q4 2025, with operating margin of approximately 27.3% (FX headwinds ~110 bps).
Net retention rate (NRR): 102%, unchanged vs prior guidance; implied improvement to 103% by end of FY2026.
Financial Highlights
- Revenue: $279.5 million in Q4 2025, up 6% YoY and 8% in constant currency.
- Gross margin: 81.0% in Q4 2025 (YoY up ~260 bps; normalized gross margins post data-center asset sale).
- Gross profit: $226.0 million, up ~10% YoY.
- Operating income: $76 million in Q4 2025, with operating margin of approximately 27.3% (FX headwinds ~110 bps).
- Net retention rate (NRR): 102%, unchanged vs prior guidance; implied improvement to 103% by end of FY2026.
- Remaining performance obligations (RPO): $1.5 billion, up 12% YoY; long-duration RPO up 21% YoY.
- Billings: $399 million, up 5% YoY and 7% in constant currency.
- Suites: 60% of revenue attributable to Suites customers; Suites attach rate on large deals: 87%.
- Customers with >$100k annual spend: ~1,920 (+8% YoY).
- Non-GAAP EPS: $0.42 for Q4 2025.
- Free cash flow: ~$91 million in Q4; FY2025 free cash flow: $305 million (+13% YoY).
- Cash: End of period cash and equivalents around $724 million; Debt around $721 million; Net debt approximately $96 million.
- Share repurchases: ~7.6 million shares ~ $212 million in FY2025; Additional $150 million buyback authorization announced.
- FY2026 guidance highlights: Revenue $1.155–$1.16 billion; GM ~81%; Non-GAAP OPM ~28%; Non-GAAP EPS $1.13–$1.17; Tax rate guidance: long-term non-GAAP tax rate 27%.
- International exposure: ~1/3 of revenue outside the US; Japan is the primary international market.
- Strategic focus: Enterprise Advanced launch, BoxAI units, AI Studio, no-code apps, Box Relay, Box Archive; expanding partner ecosystem and SIs.
- Cash flow cadence: Operating cash flow ~in line with revenue, with continued strong FCF generation amid growth investments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
279.52M
6.33%
1.31%
Gross Profit
220.74M
10.28%
0.17%
Operating Income
17.94M
-15.25%
-23.39%
Net Income
194.01M
95.51%
1 404.77%
EPS
1.17
101.72%
2 099.25%
Key Financial Ratios
currentRatio
1.19
grossProfitMargin
79%
operatingProfitMargin
6.42%
netProfitMargin
69.4%
returnOnAssets
11.6%
returnOnEquity
98.3%
debtEquityRatio
3.66
operatingCashFlowPerShare
$0.71
freeCashFlowPerShare
$0.65
dividendPayoutRatio
1.93%
priceToBookRatio
24.39
priceEarningsRatio
6.2
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and AI leadership: Box positions itself as an AI-first enterprise platform, emphasising BoxAI, metadata extraction, no-code Box Apps, DocGen, and AI Studio as core levers for enterprise workflows. Aaron Levie characterizes Box as entering a major AI-led shift in business processes and claims Box AI will empower any employee to access the expertise embedded in enterprise data.
- Enterprise Advanced momentum: By late Q4, dozens of Enterprise Advanced deals were secured, underscoring customer demand for integrated AI-enabled workflows, metadata extraction, and AI agents. Management highlighted that Enterprise Advanced represents a foundational shift in how Box engages large customers with broad automation use cases.
- Go-to-market and partnerships: Box is expanding its partner ecosystem and SI relationships to embed Box into customer workflows, particularly for larger, multi-product deals. Dylan Smith noted that indirect go-to-market economics are largely comparable to direct, supported by partner value (e.g., cost leverage and broader reach).
- Financial posture and guidance: FY2025 revenue growth of 5% YoY (7% CC) with 27.9% GM and 27.3% OPM; emphasis on margin expansion through cost discipline and location strategy (e.g., Poland). FY2026 guidance anticipates continued margin expansion and investment-driven growth, with a long-term tax rate of 27% for non-GAAP results and a modest cash tax footprint. Management underscored the FX headwinds in Q4 and the offsetting tailwinds in H1 FY2026.
"We are clearly entering one of the biggest shifts in business that we've ever seen. Driven by AI. AI agents are entering the workforce."
— Aaron Levie, CEO
"Enterprise Advanced deals have achieved the target pricing uplift of 20% to 40% vs Enterprise Plus, and we’re seeing momentum across existing Enterprise Plus customers upgrading into Enterprise Advanced."
— Dylan Smith, CFO
Forward Guidance
Box maintains a constructive growth and margin expansion path anchored by Enterprise Advanced adoption and Box AI. For FY2026, management guided to:
- Revenue: $1.155–$1.16 billion (≈6% YoY growth; 7% billings growth with modest FX tailwinds of ~30 bps).
- Gross margin: ~81% (up ~40 bps YoY when excluding data-center sales effects noted in prior-year comparisons).
- Non-GAAP operating margin: ~28% (with a ~60 bps negative impact from last year’s data-center equipment sales in the comp).
- Non-GAAP EPS: $1.13–$1.17 (includes a ~0.52 impact from incremental noncash deferred taxes; 153 million weighted shares).
- Cash taxes: $12–$15 million; long-term tax rate of 27% on non-GAAP adjustments.
- Capital allocation: Ongoing buybacks with an additional $150 million authorization; strong FCF support.
- Key factors to monitor: adoption rate of Enterprise Advanced and Box AI units, AI-driven workflow automation impact on long-cycle enterprise deals, competitive dynamics in enterprise content management, FX volatility, and international growth, particularly Japan. Overall, the company aims to achieve continued margin expansion while funding AI-driven product and GTM investments.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BOX Focus
78.97%
6.42%
98.30%
6.20%
GDDY
64.60%
21.40%
28.70%
35.20%
FFIV
80.80%
25.60%
5.28%
19.56%
GEN
80.30%
41.30%
6.26%
28.66%
CCCS
75.20%
8.56%
0.24%
374.29%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Box is positioned to capitalize on the AI-led transformation of enterprise content management through a scalable, AI-first platform. The Enterprise Advanced suite, Box AI units, and no-code workflow capabilities create a pathway to higher ACV, stronger price realization, and deeper multi-product adoption. The company’s 102% NRR, $1.5B RPO backlog, and 60% revenue contribution from Suites indicate meaningful stickiness and upsell opportunities. FY2026 guidance implies modest margin expansion accompanied by strategic investments in product development and GTM partnerships, suggesting a balanced approach to growth and profitability. Investors should monitor Enterprise Advanced uptake, AI unit economics, international expansion, FX sensitivity, and the pace of partner ecosystem development as key catalysts for upside or risk to the model.
Key Investment Factors
Growth Potential
- Structural growth from AI-first content management: metadata extraction, AI agents, and no-code workflow automation with Enterprise Advanced and Box AI Studio are expected to drive larger multi-product deals and higher ACV.
- Box AI Units: a scalable monetization construct enabling high-volume AI usage across documents (metadata extraction, forms/docgen automation, and agentic workflows) with potential to broaden upsell to existing Enterprise Plus/Enterprise Advanced customers.
- International expansion, notably Japan and Poland as engineering/G&A hubs, supporting margin discipline while increasing addressable market.
Profitability Risk
- Macro uncertainty and FX dynamics impacting timing of deal closures and billings.
- Execution risk in scaling Enterprise Advanced adoption across global enterprises and ensuring successful integration with SI partners.
- Competitive landscape in enterprise content management (OpenText, Microsoft, Google, Dropbox) and potential price/feature competition.
- Dependence on large multi-year deals; longer sales cycles could delay revenue realization and margin expansion.
- Regulatory and data-security risks inherent to cloud content management and AI capabilities.
Financial Position
- Strong liquidity and cash flow with approximately $724 million in cash and equivalents at quarter-end, and a net debt position of about $96 million.
- FY2025 free cash flow of ~$305 million supports ongoing buybacks and potential strategic investments.
- Gross margin stability at ~81% and operating margin target ~28% for FY2026, indicating ongoing efficiency improvements and selective investment in growth initiatives.
- Balance sheet flexibility to fund AI-driven product roadmap and partner ecosystem expansion.
SWOT Analysis
Strengths
High gross margins (Q4 81.0%), strong gross profit growth (~$226m in Q4)
Healthy back-order backlog with RPO of $1.5B and 12% YoY growth
Longstanding 102% net retention rate and best-in-class 3% churn
Enterprise Advanced anchors multi-product deals and AI-driven workflow automation
Robust cash flow generation and capital allocation flexibility (FCF $305m in FY2025; $212m buybacks in FY2025; $150m additional buyback authorization)
Global customer base and growing international exposure (1/3 of revenue outside US; significant Japan contribution)
Strength of Box AI, Box Apps, and no-code workflow capabilities (Forms, DocGen, AI Studio)
Industry recognition (leader in Forrester Wave, Gartner MQ)
Weaknesses
Mixed GAAP/Non-GAAP presentation complexity in quarterly reporting (data inconsistencies in some reported metrics)
Reliance on large enterprise deployments with longer sales cycles; potential volatility in timing of big deals
FX exposure and tax-related non-cash headwinds impacting near-term earnings
Geographic concentration risk in international markets (Japan dominates international mix)
Opportunities
Expanded Suite adoption through Enterprise Advanced and AI-enabled workflows (metadata extraction, invoice/contract processing)
Growing partner and SI ecosystem to accelerate reach and multi-geography deployments
AI-driven no-code app deployments that unlock broader use cases across HR, legal, finance, operations
Box Archive and Box Shield enhancements to strengthen security/compliance posture and data governance
Global expansion including Europe and other regions leveraging Poland as an engineering and G&A hub
Threats
Macro headwinds affecting enterprise IT spend and FX volatility
Competitive pressure from OpenText, Microsoft, Google, and other cloud content platforms
Security/regulatory risk linked to handling sensitive enterprise data and AI-enabled processing
Dependence on third-party AI model providers and evolving AI governance standards