Box (NYSE:BOX) Q3 2026 Earnings Call December 02, 2025 05:00 PM ET Company ParticipantsDylan Smith - Co-founder and CFOAaron Levie - Co-founder and CEOMatt Bullock - Equity Research AssociateFrederick Gooding - Equity Research AssociateCynthia Hiponia - VP of Investor RelationsConference Call ParticipantsJosh Baer - Software Small and Midcap Research AnalystNone - AnalystGeorge Kurosawa - Equity Research AnalystOperatorLadies and gentlemen, thank you for standing by. My name is Abby, and I will be your conf ...

Box (NYSE:BOX) Q3 2026 Earnings Call December 02, 2025 05:00 PM ET Speaker0Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Box Incorporated third quarter fiscal 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply ...

December 2, 2025 Forward-looking statements & non-GAAP financial measures This presentation contains forward-looking statements that involve risks, uncertainties, and assumptions, including statements regarding Box's expectations regarding its growth and profitability, the size of its market opportunity, its investments in go-to-market programs, the demand for its products, the potential of AI and its impact on Box, the timing of recent and planned product introductions, enhancements and integrations, the s ...

Financial Performance - Revenue for Q2'26 reached $294 million[7], driven by Suites momentum[6] - Total Remaining Performance Obligations (RPO) increased by 16% year-over-year to $1476 million[9, 10] - Billings increased by 3% year-over-year[13] - Non-GAAP gross margin was 81.4% in Q2'26[17], a decrease of 20 bps year-over-year[16] - Non-GAAP operating margin was 28.6% in Q2'26[21], an increase of 20 bps year-over-year[20] Cash Flow and Capital Allocation - The company repurchased approximately 1.2 million shares of Class A common stock for approximately $40 million in Q2'26[26] - As of July 31, 2025, the company had approximately $112 million of remaining Board-approved buyback capacity under the current plan[26] Customer Metrics - Net retention rate was stable at 103%[33, 34] - Customers paying more than $100k annually grew by 8% year-over-year[39] - 63% of total revenue came from Suites[37] Guidance - Q3'26 revenue is projected to be $298 to $299 million, representing year-over-year growth of 8%[30] - Fiscal year 2026 revenue is projected to be $1.170 to $1.175 billion, representing year-over-year growth of 8%[30]

Financial Data and Key Metrics Changes - Box achieved revenue of $280 million in Q4 2025, up 6% year over year, or 8% in constant currency [10] - For fiscal 2025, revenue was $1.09 billion, up 5% year over year, and operating margin expanded by 320 basis points to 28% [11][37] - Q4 operating margin was 27.3%, and EPS was 42 cents, exceeding guidance by one cent [10][47] - Free cash flow for fiscal 2025 reached a record $305 million, up 13% year over year [37] Business Line Data and Key Metrics Changes - The launch of the Enterprise Advanced plan was a significant milestone, combining multiple products into a single offering [11][21] - The attach rate for suites in large deals was 87%, up from 81% a year ago, with suites now representing 60% of total revenue in Q4 [30][38] - The number of customers paying at least $100,000 annually increased by 8% year over year to approximately 1,920 [38] Market Data and Key Metrics Changes - Box's remaining performance obligations (RPO) grew by 12% year over year to $1.5 billion, indicating long-term customer commitment [40] - Q4 billings were $399 million, up 5% year over year, exceeding expectations despite a minor FX headwind [42] Company Strategy and Development Direction - The company is focusing on AI-driven solutions, emphasizing the importance of intelligent content management and automation [15][20] - Box plans to enhance its AI capabilities and expand its partner ecosystem to drive growth [58][59] - The company aims to leverage its intelligent content management platform to transform enterprise workflows [22][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic macro environment but expressed confidence in Box's ability to help customers drive efficiency and automation [78] - The net retention rate is expected to improve from 102% to 103% by the end of FY 2026, driven by pricing improvements and customer expansion [43][81] - Management highlighted the importance of AI in expanding the customer base and enhancing product offerings [120][122] Other Important Information - The company repurchased approximately 7.6 million shares for about $212 million in FY 2025, representing roughly 70% of free cash flow generation [48] - Box plans to provide more details on its roadmap and growth strategy during the upcoming financial analyst day on March 18th [34] Q&A Session Summary Question: Early momentum with Enterprise Advanced - Management was pleased with the results in Q4 for Enterprise Advanced, noting strong customer interest despite a short rollout period [66][68] Question: Macro environment impact on purchasing - Management acknowledged the dynamic macro environment but emphasized that Box's solutions are positioned to help customers drive efficiency [78] Question: Components of net retention rate - Management indicated that pricing improvements and stable churn rates are key drivers for expected net retention rate growth [81] Question: Core use cases for Enterprise Advanced - Management highlighted use cases such as AI-powered document processing and no-code app functionality as significant drivers of customer interest [92][94] Question: Go-to-market investments - Management discussed a methodical approach to go-to-market investments, focusing on key industries and system integrators [101][102] Question: Revenue seasonality and guidance - Management confirmed that Q1 revenue is expected to be lower due to a leap year impact but anticipates gradual acceleration in revenue growth throughout the year [116]