Box(US:BOX)2025-03-05 00:57Financial 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, or 7% in constant currency [37] - Operating margin for Q4 was 27.3%, and for fiscal 2025, it expanded by 320 basis points to 28% [11][37] - EPS for Q4 was 42 cents, exceeding guidance by one cent, and for fiscal 2025, EPS was $1.71, up 17% year over year [10][37] - 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 contributed to several dozen deals closed in Q4, indicating strong customer demand [12][66] - Suites represented 87% of deals over $100,000, up from 81% a year ago, and accounted for 60% of total revenue in Q4, compared to 55% a year ago [30][38] - Remaining performance obligations (RPO) grew to $1.5 billion, a 12% year-over-year increase [40] Market Data and Key Metrics Changes - Approximately 1,920 total customers are paying at least $100,000 annually, up 8% year over year [38] - The net retention rate for Q4 was 102%, up from 101% a year ago, with an annualized churn rate of 3% [43] Company Strategy and Development Direction - Box is focusing on an AI-first enterprise strategy, leveraging AI to enhance productivity and automate workflows [16][22] - The company plans to advance its platform in FY 2026, with significant product announcements and enhancements to Box apps and AI capabilities [23][24] - Box aims to strengthen its partner ecosystem and expand its go-to-market strategy, particularly in key industries [32][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Box's position to help customers drive efficiency and automation amid a dynamic macro environment [78] - The company anticipates gradual revenue growth acceleration throughout FY 2026, driven by investments in Enterprise Advanced and AI capabilities [116] Other Important Information - Box repurchased approximately 7.6 million shares for about $212 million in FY 2025, representing roughly 70% of free cash flow generation [48] - The company expects a non-GAAP EPS headwind in FY 2026 due to incremental non-cash deferred tax expenses [50] 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 and dozens of deals closed [66][68] Question: Direct vs. indirect sales mix - Management indicated a shift towards more indirect sales through partners, especially in regions outside Japan [72][74] Question: Macro environment impact on purchasing - Management acknowledged the dynamic macro environment but emphasized Box's role in helping customers drive efficiency and automation [78] Question: Components of net retention rate - Management expects improvements in net retention rate driven by pricing contributions from Enterprise Advanced, with minimal contributions from seat growth [81][82] Question: Core use cases for Enterprise Advanced - Key use cases include AI-powered document processing and no-code app functionality, which are driving customer interest [92][94] Question: Go-to-market investments - Management is making methodical investments in key markets and system integrators to enhance sales capacity and drive growth [102][106] Question: Revenue seasonality and guidance - Management expects gradual revenue growth acceleration throughout FY 2026, with Q1 being lower due to the leap year impact [116]