RESEARCH NOTE: Box Reports Strong Q1 FY2025 Results, Beats Earnings and Revenue Estimates, Fueled by AI Adoption and Strong Ops Performance

By Melody Brue - May 31, 2024

Box (NYSE: BOX) results for Q1 FY2025 exceeded expectations, with strong operating margins, record non-GAAP gross margin, and record growth in free cash flow. The company reported strong interest in its new Box AI suite, which drives the adoption of the Enterprise Plus plan, and particularly the new Box Hubs functionality. Box cofounder and CEO Aaron Levie highlighted the growing significance of unstructured data in the AI era and how the company’s Intelligent Content Cloud is well positioned to address the needs that arise because of this. “The role of unstructured data in enterprises has exploded, and the Box Intelligent Content Cloud is in a prime position to help companies fully tap into the value of their content,” Levie said. (More on the specifics of that value below.)

During the earnings call, Levie expanded on the company’s AI roadmap and the recent launch of Box Hubs and Box AI for Hubs. He addressed how these products aim to solve some of the most significant challenges enterprises face in harnessing the power of AI and content. AI “can enable any new employee in the firm to have as much knowledge access as somebody that’s been at the firm for, you know, a decade or two,” he said. “This content really becomes the kind of digital memory of an organization that anyone can tap into. This ability to instantaneously make all of your employees as knowledgeable as your most experienced employees is transformational,” Levie added.

Here is an overview of the numbers, along with additional company highlights and my analyst’s view on Box.

Quarterly Performance Versus Expectations

Q1 FY2025 Revenue: $265 million, representing a 5.2% year-over-year increase, surpassing analyst expectations of $262.044 million by 1.13%.

EPS: $0.39, up 21.9% YoY, beating analyst estimates of $0.36 by 8.33%.

Other Key Financials

  • Q1 FY2025 Billings: $190.5 million, a 1% decrease YoY, or 5% growth on a constant currency basis. 
  • Cash from Operations: $131 million, a 5% YoY increase.
  • Remaining Performance Obligations (RPO): $1.2 billion as of April 30, 2024, a 3% increase YoY, or 8% growth on a constant currency basis.
  • Non-GAAP Operating Income: $70.4 million for Q1 2025, a record, representing 26.6% of revenue.
  • Non-GAAP Free Cash Flow: $123.2 million for Q1 2025, a record high, a 14% increase YoY.

My Analyst Perspective

During this reporting quarter, Box secured significant new logos and expansions with leading organizations across diverse industries. The company is a clear fit for highly document- and content-centric organizations such as financial services, government, and life sciences. Recent wins with large enterprises across multiple sectors underscore the platform’s broad market appeal and applicability beyond these industries. The introduction of Box Hubs and Box AI for Hubs, plus collaboration with NVIDIA for AI production, demonstrates Box’s commitment to innovation and helping businesses leverage AI and content effectively.

In conversation with analysts on the earnings call, Levie hypothesized that as AI unlocks greater efficiency across lines of business, AI budgets will expand beyond IT and into the departments that are directly benefiting from automation and transformation. “We’re only in the earliest days of what that looks like,” Levie said, “but as AI drives workflow automation and business process transformation, I think you’ll see even increased budget that opens up for AI use cases around content.” If Box continues to build products aligned with this trend, it could be well-positioned to capitalize on Levie’s prediction to drive further growth.

Box is actively executing its go-to-market strategy, emphasizing the adoption of its Enterprise Plus multi-product offering. The company is seeing positive momentum with this strategy, as evidenced by Enterprise Plus accounting for a significant portion of large deals in Q1. Box has also expanded its demand channels through various events and new offerings throughout the year as it aims to modernize customers’ ECM environments. This focus on bringing the total value of its platform to customers, coupled with strategic partnerships, positions Box well in a rapidly evolving market where AI is amplifying the value of unstructured data. However, it’s important to note that while these initiatives are promising, their full impact for reaccelerating Box’s growth may not be realized until FY2026.

On the philanthropic side, is committed to driving positive social impact by leveraging its technology and resources in areas such as child welfare, crisis response, and environmental protection. This commitment aligns with the growing recognition that corporate social responsibility can also drive business success. In FY2024, donated more than $40 million of in-kind product support and provided access to over 11,000 nonprofits through its product donation and discounting program, demonstrating its commitment to making a difference while fostering growth in the nonprofit sector. Box was recently recognized as number 18 on the list of 100 Best Companies to Work For by Great Place to Work and Fortune magazine.

Box’s Pressures

  • Box acknowledges the impact of foreign exchange headwinds and the recognition of deferred tax expenses in international countries on its GAAP and non-GAAP EPS guidance.
  • The global economic landscape, including inflation and currency fluctuations, can impact Box’s revenue growth and profitability, particularly because a significant portion (roughly one-third) of its revenue comes from outside the U.S.
  • In a challenging economic environment, slower decision making could impact the sales cycle for enterprise software.
  • The content management and collaboration market is highly competitive, with major players including Microsoft, Google, and Dropbox vying for market share. Box needs to continuously innovate and differentiate itself to stay relevant.

Looking Ahead

For Q2 FY2025, Box anticipates adjusted earnings between $0.40 and $0.41 per share, while full-year FY2025 adjusted earnings are projected to be between $1.54 and $1.58 per share. Box gave guidance that Q2 FY2025 revenue is expected to be between $268 million and $270 million, potentially reaching a 3% YoY increase.

Box slightly revised its FY2025 revenue guidance to $1.075–$1.1 billion, marginally lower than the previous projection of $1.08–$1.1 billion. The revised guidance still suggests a potential 4% YoY increase at the high end.

Box’s Q1 FY2025 results demonstrate its strong position in the content management space, especially with its focus on AI-driven solutions. The company’s recent product launches and strategic partnerships show a commitment to addressing evolving customer needs in the AI era. The company appears focused on delivering revenue growth while maintaining cost savings and driving operating margin expansion. While facing challenges related to foreign exchange, deferred tax expenses, and general market pressures, Box’s overall financial performance and growth trajectory remain positive. In particular, I look forward to watching its long-term AI strategy play out and seeing where that positions Box in this highly competitive market.

Recent Moor Insights & Strategy Research on Box

RESEARCH NOTE: My Rewarding Experience with’s Digital Transformation Grants for Nonprofits, by Melody Brue — February 20, 2024

RESEARCH NOTE: Box Tackles Enterprise Content Management And Discovery With Box Hubs And AI, by Melody Brue and Patrick Moorhead — November 30, 2023

Box Introduces Box AI To Bring The Power Of AI To Enterprise Content, by Melody Brue and Patrick Moorhead — June 3, 2023

Melody Brue
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Mel Brue is vice president and principal analyst covering modern work and financial services. Mel has more than 25 years of real tech industry experience in marketing, business development, and communications across various disciplines, both in-house and at agencies, with companies ranging from start-ups to global brands. She has built a unique specialty working in technology and highly regulated spaces, such as mobile payments and finance, gaming, automotive, wine and spirits, and mobile content, ensuring initiatives address the needs of customers, employees, lobbyists and legislators, as well as shareholders.