Box’s third quarter results showed solid operational progress, with revenue coming in above Wall Street’s expectations and non-GAAP profit matching consensus. However, the market responded negatively, with shares trading down notably after the release. Management attributed performance to continued customer adoption of AI-driven products and upgrades to Enterprise Advanced, as well as healthy momentum in billings and net retention. CEO Aaron Levie noted, “The adoption, just the timing of when we started to see the impact of Enterprise Advanced and some of our newer AI capabilities, is exceeding our expectations.”
Is now the time to buy BOX? Find out in our full research report (it’s free for active Edge members).
Box (BOX) Q3 CY2025 Highlights:
- Revenue: $301.1 million vs analyst estimates of $299 million (9.1% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.31 vs analyst estimates of $0.31 (in line)
- Adjusted Operating Income: $86.1 million vs analyst estimates of $83.85 million (28.6% margin, 2.7% beat)
- Revenue Guidance for Q4 CY2025 is $304 million at the midpoint, roughly in line with what analysts were expecting
- Management slightly raised its full-year Adjusted EPS guidance to $1.28 at the midpoint
- Operating Margin: 8.3%, in line with the same quarter last year
- Billings: $296 million at quarter end, up 11.8% year on year
- Market Capitalization: $4.48 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Box’s Q3 Earnings Call
- Matt Balik (Bank of America) asked about progress on key growth levers and whether Enterprise Advanced adoption was on track; CEO Aaron Levie said uptake of AI capabilities is exceeding expectations and seat expansion is outpacing prior trends.
- Brian Peterson (Raymond James) inquired about the impact of FedRAMP High authorization and public sector momentum; Levie noted strong pipeline growth in government and minimal disruption from the recent shutdown.
- Josh Baer (Morgan Stanley) questioned competitive dynamics and whether AI adoption was leading to legacy vendor displacement; Levie explained that AI-driven workflows are causing customers to migrate from older systems to Box for the first time.
- George Kurosawa (Citi) sought details on the relative impact of price increases versus seat growth in net retention; Levie said both factors are contributing, but seat growth from new use cases is now the largest variable.
- Fredrik Gooding (William Blair) asked if enterprise AI adoption was nearing an inflection point and which Box features were most impactful; Levie cited Box Extract and workflow automation as key drivers, with adoption accelerating in sectors like healthcare and finance.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will watch (1) adoption rates and customer feedback for Box Extract and Box Automate, (2) the pace of seat expansion and net retention improvement among Enterprise Advanced users, and (3) the effectiveness of Box’s expanded partner channel and new vertical sales initiatives. Sustained innovation in AI-driven content management will also be a key determinant of future performance.
Box currently trades at $31.20, up from $30.30 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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