Box, Inc. Q3 FY2025 earnings call

• Box has been intensely focusing on embedding AI into its platform to revolutionize customers' ability to create value from their content. Q3 results reflected strong customer demand for Box AI. - At BoxWorks, Box unveiled a transformational product line - up, launched Enterprise Advanced, and deepened integrations with key technology partners like Anthropic, OpenAI, Google. - Announced intelligent workflow automation capabilities such as Box Apps for creating no - code apps for content - based business processes, Box Forms for collecting structured data, Box Doc Gen for automatically generating documents, and Box Metadata Extract and APIs for extracting structured data. - Also announced major features like new AI advancements, Box Archive for managing large amounts of content, and further integrations with technology partners.

In the third quarter, Box achieved revenue of $276 million, which was at the high - end of the guidance, up 5% year - over - year and 6% in constant - currency. Suites customers now account for 59% of revenue, significantly higher than 51% a year ago. Remaining performance obligations (RPO) were $1.3 billion, a 13% year - over - year increase. Q3 billings were $265 million, up 4% year - over - year and 3% in constant - currency. The company achieved a record gross margin of 81.9%, up 560 basis points year - over - year, and a record operating margin of 29.1%, up 440 basis points year - over - year. The net retention rate was 102%, in - line with expectations.

• For the fourth quarter of fiscal 2025, Box expects revenue to be approximately $279 million, a 6% year - over - year growth. It anticipates non - GAAP operating margin to be approximately 27.5% and non - GAAP EPS to be approximately $0.41. - For the full fiscal year ending January 31, 2025, revenue is expected to be approximately $1.09 billion, a 5% year - over - year growth and 7% growth in constant - currency. The non - GAAP operating margin guidance is raised to approximately 28%, and non - GAAP EPS is expected to be approximately $1.70.

• The macro - environment can impact the business and operating results. - Foreign currency exchange rates can have an impact on financial measures. - Actual events or results may differ materially from forward - looking statements as per risks and uncertainties in SEC filings.

Q: Steve Enders asked about the early feedback on AI solutions and the potential to capture legacy ECM footprints.

A: Aaron Levie discussed that core Box AI interactions and workflow automation capabilities are catalysts for replacing legacy ECM, with AI enabling scale extraction of structured data from documents to automate workflows.

Q: Brian Peterson asked about the Q4 billings outlook and NRR.

A: Dylan Smith said Q4 billings have a challenging comparison from the previous year, but the business trajectory remains strong, and NRR is expected to trend upward over time.

Q: Unidentified Analyst asked about the applicability of the new SKU.

A: Aaron Levie stated the new SKU is broad - based with features relevant for different customer needs, covering various use cases like contract management and digital asset management.

Q: Josh Baer asked about the business impact and financial impact of new products.

A: Aaron Levie and Dylan Smith discussed that the new products are a major growth driver, with data showing positive metrics from customers who leveraged related technology prior to Box's acquisition.