Latest news with #AaronLevie
Yahoo
28-05-2025
- Business
- Yahoo
BOX Q1 Earnings Call: AI Adoption Drives Billings Surge, Margins Face Near-Term Pressure
Cloud content storage and management platform Box (NYSE:BOX) fell short of the market's revenue expectations in Q1 CY2025 as sales rose 4.4% year on year to $276.3 million. Its non-GAAP EPS of $0.30 per share was 17.2% above analysts' consensus estimates. Is now the time to buy BOX? Find out in our full research report (it's free). Operating Margin: 2.3%, down from 6.8% in the same quarter last year Billings: $242.3 million at quarter end, up 27.2% year on year Market Capitalization: $4.55 billion Box's first quarter results were shaped by early demand for its AI-powered content management offerings and continued momentum in customer upgrades to the Enterprise Advanced suite. CEO Aaron Levie highlighted that clients across industries, including healthcare and financial services, are increasingly migrating content to Box to unlock value from unstructured data using AI. Management noted that most customer expansion in the quarter was driven by pricing improvements, as organizations adopted higher-value packages to access new AI features. CFO Dylan Smith underscored that while net seat growth was modest, the company saw an uptick in early renewals from customers seeking faster access to Box AI capabilities, helping boost billings in the period. Looking ahead, Box's guidance reflects management's belief that AI-driven workflows and integrations with leading technology partners will continue to drive customer expansion and pricing power. Levie stated, 'We're building out the leading Intelligent Content Management Platform to help enterprises fully connect the power of AI to their content.' The company expects pricing to remain the primary lever for revenue growth, but noted that macroeconomic uncertainty and cautious IT spending trends could temper broader enterprise seat growth. Smith explained that Box is aiming for AI adoption to be margin-neutral in the medium term, citing ongoing declines in AI computing costs and efficiencies from its strategic pricing model. The company is positioning its open, partner-centric approach as a differentiator as customers seek interoperable, secure solutions for managing sensitive enterprise data. Management attributed Q1's financial performance to strong demand for AI-enabled content workflows, early customer renewals to access new features, and a growing partner ecosystem supporting migrations from legacy systems. AI suite adoption momentum: Upgrades to Enterprise Advanced, Box's AI-enabled suite, were cited as a major driver of expansion, with customers in healthcare, finance, and government seeking to modernize workflows and consolidate content management under one platform. Early renewals boost billings: Management explained that a surge in early renewals—customers renewing contracts ahead of schedule to access AI features—was responsible for a significant portion of billings outperformance in the quarter, with approximately $7 million attributed to this dynamic. Partner ecosystem expands reach: Strategic alliances, such as the new partnership with DataBank, enabled Box to win deals replacing legacy enterprise content management systems, especially in regulated industries requiring compliant, secure solutions. Interoperability with leading AI platforms: Box's integrations with Microsoft 365 Copilot, IBM watsonx Orchestrate, Google AgentSpace, and OpenAI's Agent SDK were highlighted as competitive advantages, allowing customers to leverage Box content securely across diverse AI tools. Pricing as a key growth lever: CFO Dylan Smith noted that price increases, rather than seat growth, were the main contributors to revenue expansion. He added that net seat growth remains more closely correlated with broader economic conditions, while pricing improvements are expected to continue as customers adopt higher-value packages. Box's outlook is shaped by continued investment in AI-driven content management, pricing improvements, and expanded go-to-market partnerships, balanced against macroeconomic caution and evolving customer spending patterns. AI innovation and integration: Management expects that new AI agent capabilities, broader integrations with third-party platforms, and continued investment in Box AI will help sustain demand for higher-tier products and drive upsell opportunities. Pricing-led expansion: The company anticipates that pricing improvements from upgrades to Enterprise Advanced and other suites will remain the primary source of revenue growth in the near term, outpacing contributions from net seat additions. Margin management amid AI adoption: Box aims to keep AI adoption margin-neutral by leveraging declining AI infrastructure costs and a strategic pricing structure that includes basic AI functionality in standard plans while charging for advanced use cases. However, management acknowledged that the impact of macroeconomic uncertainty on seat growth and IT budgets remains a risk. In the coming quarters, the StockStory team will be monitoring (1) the pace of Enterprise Advanced adoption and upsell success across industries, (2) the sustainability of early renewal and billings growth as contract timing normalizes, and (3) Box's ability to deepen integrations with major AI platforms and partners. We will also track the impact of macroeconomic trends on seat expansion and the effectiveness of new AI features introduced at BoxWorks in September. Box currently trades at a forward price-to-sales ratio of 4×. Should you double down or take your chips? Find out in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today. 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Yahoo
27-05-2025
- Business
- Yahoo
Box (NYSE:BOX) Beats Q1 Sales Targets, Stock Jumps 10.9%
Cloud content storage and management platform Box (NYSE:BOX) reported Q1 CY2025 results topping the market's revenue expectations , with sales up 4.4% year on year to $276.3 million. Guidance for next quarter's revenue was optimistic at $290.5 million at the midpoint, 2.6% above analysts' estimates. Its non-GAAP profit of $0.30 per share was 17.2% above analysts' consensus estimates. Is now the time to buy Box? Find out in our full research report. Revenue: $276.3 million vs analyst estimates of $274.7 million (4.4% year-on-year growth, 0.6% beat) Adjusted EPS: $0.30 vs analyst estimates of $0.26 (17.2% beat) The company slightly lifted its revenue guidance for the full year to $1.17 billion at the midpoint from $1.16 billion Management raised its full-year Adjusted EPS guidance to $1.24 at the midpoint, a 7.8% increase Operating Margin: 2.3%, down from 6.8% in the same quarter last year Free Cash Flow Margin: 42.8%, up from 32.7% in the previous quarter Billings: $242.3 million at quarter end, up 27.2% year on year Market Capitalization: $4.50 billion Founded in 2005 by Aaron Levie and Dylan Smith, Box (NYSE:BOX) provides organizations with software to securely store, share and collaborate around work documents in the cloud. A company's long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Box's 6.6% annualized revenue growth over the last three years was weak. This fell short of our benchmark for the software sector and is a rough starting point for our analysis. This quarter, Box reported modest year-on-year revenue growth of 4.4% but beat Wall Street's estimates by 0.6%. Company management is currently guiding for a 7.6% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, similar to its three-year rate. This projection is underwhelming and suggests its newer products and services will not accelerate its top-line performance yet. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. Billings is a non-GAAP metric that is often called 'cash revenue' because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract. Box's billings punched in at $242.3 million in Q1, and over the last four quarters, its growth slightly outpaced the sector as it averaged 11.7% year-on-year increases. This alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects. The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it's the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability. Box is very efficient at acquiring new customers, and its CAC payback period checked in at 28 months this quarter. The company's rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Box more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments. We were impressed by how significantly Box blew past analysts' billings expectations this quarter. We were also glad its EPS guidance for next quarter trumped Wall Street's out, we think this quarter featured some important positives. The stock traded up 10.9% to $34.90 immediately after reporting. Box put up rock-solid earnings, but one quarter doesn't necessarily make the stock a buy. Let's see if this is a good investment. When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-05-2025
- Business
- Yahoo
Box Reports First Quarter Fiscal 2026 Financial Results
Revenue of $276 Million, up 4% Year-Over-Year, up 5% in Constant Currency Remaining Performance Obligations of $1.469 billion, up 21% Year-Over-Year, or 17% on a constant currency basis GAAP Operating Margin of 2.3% and Non-GAAP Operating Margin of 25.3% GAAP Net Income Per Share of $0.02 and Non-GAAP Net Income Per Share of $0.30 REDWOOD CITY, Calif., May 27, 2025--(BUSINESS WIRE)--Box, Inc. (NYSE:BOX), the leading Intelligent Content Management ("ICM") platform, today announced preliminary financial results for the first quarter fiscal year 2026, which ended April 30, 2025. "We are at a pivotal moment in history where AI is revolutionizing work and business," said Aaron Levie, co-founder and CEO of Box. "In this AI-first era, organizations are embracing this shift to stay competitive. At Box, we help businesses unlock value from their unstructured data with our Intelligent Content Management platform. Earlier this month, we unveiled our largest set of AI innovation yet, including new AI Agents that integrate with the leading models and software platforms to accelerate decision-making, automate workflows, and boost productivity." "We achieved robust first-quarter results, surpassing our guidance and delivering double-digit growth in both billings and short-term RPO," said Dylan Smith, co-founder and CFO of Box. "As we address the vast opportunity of AI to transform unstructured data into actionable insight, our balanced financial approach allows us to invest confidently in our ICM platform while delivering profitable growth and consistently returning value to our shareholders." Fiscal First Quarter Financial Highlights All comparisons are against the prior year comparable quarter Revenue of $276.3 million, up 4%, or 5% on a constant currency basis. Remaining performance obligations ("RPO") of $1.469 billion, up 21%, or 17% on a constant currency basis. Short-term RPO of $812 million, up 13%, and long-term RPO of $657 million, up 32%. Billings of $242.3 million, up 27%, or 17% on a constant currency basis. GAAP gross profit of $215.6 million, or 78.0% of revenue, up from $206.4 million, or 78.0% of revenue. Non-GAAP gross profit of $222.3 million, or 80.5% of revenue, up from $212.2 million, or 80.2% of revenue. GAAP operating income of $6.3 million, or 2.3% of revenue, compared to $18.0 million, or 6.8% of revenue. Non-GAAP operating income of $69.8 million, or 25.3% of revenue, compared to $70.4 million, or 26.6% of revenue. GAAP diluted earnings per share ("EPS") of $0.02, compared to $0.08, impacted by $0.01 from favorable foreign exchange rates. This also includes a negative impact of $0.01 from the recognition of non-cash deferred tax expenses, in line with the prior period. Non-GAAP diluted EPS of $0.30, compared to $0.39, impacted by $0.01 from favorable foreign exchange rates. This also includes a negative impact of $0.12 from the recognition of non-cash deferred tax expenses, compared to $0.01. Net cash provided by operating activities of $127.1 million, down 3%. Non-GAAP free cash flow of $118.3 million, down 4%. Growth on a constant currency basis and impact from foreign exchange is determined by comparing current period reported results with the current results calculated using the equivalent rates in the prior period. For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the section titled, "About Non-GAAP Financial Measures and Other Key Metrics," and the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures at the end of this press release. Recent Business Highlights Delivered wins or expansions with leading organizations across a variety of industries, including Aerospace and Defense (Kawasaki Heavy Industries, Ltd. and The Boeing Company), Financial Services (Haventree Bank and SitusAMC), Hospitality (The Wendy's Company), Legal (Lewis Brisbois and Wilkinson Stekloff), Life Sciences (Regeneron Pharmaceuticals and Zealand Pharma), Professional Services (Insperity and PBMares), Public Sector (California Department of Justice and U.S. Army Civilian Human Resources Agency), and Retail (MGA Entertainment and Skechers USA). Received FedRAMP High Authorization, allowing U.S. government agencies and authorized government contractors to leverage Box's ICM platform, including Box AI and Box Hubs, for highly sensitive data. Revealed the next evolution of the Box AI platform by introducing a new generation of AI Agents designed to transform how organizations work with content. With this new innovation, customers will be able to leverage AI Agents for Search, Deep Research, and enhanced data extraction so they can uncover more value from their content in Box. Announced a strategic partnership with IBM to help organizations accelerate the adoption of enterprise-level AI for content-driven workflows using IBM watsonx and Box AI. Companies can now use Box AI with models from IBM watsonx, including open source IBM Granite and the latest Llama models from Meta. Announced the availability of Box AI for Mobile for business and enterprise plans, bringing the power of AI-driven insights directly to your fingertips. Launched Box Archive, allowing Enterprise Advanced customers to retain and protect inactive content for long-term storage, helping organizations efficiently store and protect their growing volume of information. Announced support for Google's Gemini 2.5 Flash & Gemini 2.5 Pro, Google's Gemma 3, Meta's Llama 4 Models, NVIDIA Llama Nemotron reasoning models, OpenAI Agents SDK, OpenAI's o3 & o4-Mini models, OpenAI's GPT-4.1 & GPT-4.5, and xAI's Grok 3. Introduced a new Box AI Agent for Microsoft 365 Copilot, to help customers unlock intelligent experiences that allow users to securely search, analyze, and act on Box content directly within Microsoft's productivity tools, including Copilot Chat and Microsoft Teams. Announced a partnership with Google Agentspace, combining Box's platform with the Agentspace ecosystem of agents, and Google's Agent-to-Agent Protocol, allowing users to interact, automate, and deliver intelligent business insights across previously siloed systems. Announced as a launch partner for Salesforce AgentExchange, empowering customers to harness the full potential of AI agents by integrating their data seamlessly through Box, and Salesforce Life Sciences partner network, bringing the power of AI to pharmaceutical and medtech companies looking to unlock the value of their unstructured content. Announced an integration of Box AI capabilities with the new ServiceNow AI Agent Fabric, connecting AI agents and tools from any source, centralizing governance via its AI Control Tower and enabling seamless end-to-end automation. Announced a strategic partnership with DataBank to deliver AI-powered solutions that streamline business processes like contract lifecycle management, digital asset management, and intelligent document processing. Hosted Content + AI Virtual Summit, attracting thousands of attendees and customer speakers from leading organizations to discuss the future of ICM. Recognized as the 2025 Google Cloud Global Partner of the Year for Business Applications, a testament to the incredible milestones achieved with Google Cloud, delivering cutting-edge integrations and AI-driven innovations that empower organizations worldwide. Update on Share Repurchase Plan In the first quarter of fiscal year 2026, Box repurchased approximately 1.6 million shares for approximately $50 million. As of April 30, 2025, approximately $152 million of buyback capacity was remaining under Box's current share repurchase plan. Outlook As a reminder, approximately one third of Box's revenue is generated outside of the U.S., of which approximately 65% is in Japanese Yen. The following guidance includes the expected impact of FX headwinds, assuming present foreign currency exchange rates. As Box has become consistently profitable, the Company has released valuation allowances associated with certain deferred tax assets. Accordingly, in fiscal year 2026, Box will be recognizing deferred tax expense. This non-cash expense is reflected in Box's GAAP and non-GAAP diluted net income per share guidance for the second quarter of fiscal year 2026 and full fiscal year 2026. Q2 FY26 Guidance Revenue is expected to be in the range of $290 million to $291 million, up 8% year-over-year, or 6% on a constant currency basis at the high-end. This includes an expected positive impact of approximately 220 basis points due to FX. GAAP operating margin is expected to be approximately 6.0%, and non-GAAP operating margin is expected to be approximately 28%. This includes an expected positive impact of approximately 80 basis points due to FX. GAAP net income per share attributable to common stockholders is expected to be in the range of $0.01 to $0.02. GAAP EPS guidance includes an expected negative impact of $0.02, which includes a positive impact of $0.02 from favorable exchange rates and a negative impact of $0.04 from the recognition of non-cash deferred tax expenses. Non-GAAP diluted net income per share attributable to common stockholders is expected to be a range of $0.30 to $0.31. Non-GAAP EPS guidance includes an expected negative impact of $0.12, which includes a positive impact of $0.02 from favorable exchange rates and a negative impact of $0.14 from the recognition of non-cash deferred tax expenses, as compared to a negative impact of $0.01 in the prior year. Weighted-average diluted shares outstanding are expected to be approximately 150 million. Full Year FY26 Guidance Full year FY26 guidance below assumes a neutral impact from foreign exchange rates, assuming present foreign currency exchange rates. Revenue is expected to be in the range of $1.165 billion to $1.170 billion, up 7% year-over-year. This includes an expected positive impact of approximately 120 basis points due to FX. GAAP operating margin is expected to be approximately 7.0%, and non-GAAP operating margin is expected to be approximately 28%. This includes an expected positive impact of approximately 40 basis points due to FX. GAAP net income per share attributable to common stockholders is expected to be in the range of $0.16 to $0.20. GAAP EPS guidance includes an expected negative impact of $0.10, which includes a positive impact of $0.07 from favorable exchange rates and a negative impact of $0.17 from the recognition of non-cash deferred tax expenses. Non-GAAP diluted net income per share attributable to common stockholders is expected to be in the range of $1.22 to $1.26. Non-GAAP EPS guidance includes an expected negative impact of $0.49, which includes a positive impact of $0.07 from favorable exchange rates and a negative impact of $0.56 from the recognition of non-cash deferred tax expenses, as compared to a negative impact of $0.04 in the prior year. Weighted-average diluted shares outstanding are expected to be approximately 151 million. All forward-looking non-GAAP financial measures contained in this section titled "Outlook" exclude estimates for stock-based compensation expense, intangible assets amortization, and as applicable, other special items. Box has provided a reconciliation of GAAP to non-GAAP net income per share and operating margin guidance at the end of this press release. Webcast and Conference Call Information Box's management team will host a conference call today beginning at 2:00 p.m. (PT) / 5:00 p.m. (ET) to discuss Box's financial results, business highlights and future outlook. A live audio webcast of this call will be available through Box's Investor Relations website at for a period of 90 days after the date of the call. Prepared remarks will be available on the Box Investor Relations website after the call ends. The conference call can be accessed by registering online at at which time registrants will receive dial-in information as well as a conference ID. A live webcast will be accessible from the Box investor relations website at A replay will be available at the same webcast link until 11:59 p.m. on June 3, 2025. Box has used, and intends to continue to use, its Investor Relations website ( as well as certain X accounts (@box, @levie and @boxincir), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Information on or that can be accessed through Box's Investor Relations website, these X accounts, or that is contained in any website to which a hyperlink is provided herein is not part of this press release, and the inclusion of Box's Investor Relations website address, these X accounts, and any hyperlinks are only inactive textual references. This press release, the financial tables, as well as other supplemental information including the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures, are also available on Box's Investor Relations website. Box also provides investor information, including news and commentary about Box's business and financial performance, Box's filings with the Securities and Exchange Commission, notices of investor events and Box's press and earnings releases, on Box's Investor Relations website. Forward-Looking Statements This press release 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 short- and long-term success, market adoption and retention, capabilities, and benefits of such product introductions and enhancements, the success of strategic partnerships and acquisitions, the impact of macroeconomic conditions on its business, its ability to grow and scale its business and drive operating efficiencies, the impact of fluctuations in foreign currency exchange rates on its future results, its net retention rate, its ability to achieve revenue targets and billings expectations, its revenue and billings growth rates, its ability to expand operating margins, its long-term financial targets, its ability to maintain profitability on a quarterly or ongoing basis, its free cash flow, its ability to continue to grow unrecognized revenue and remaining performance obligations, its revenue, billings, GAAP and non-GAAP gross margins, GAAP and non-GAAP net income per share, GAAP and non-GAAP operating margins, the related components of GAAP and non-GAAP net income per share, weighted-average outstanding share count expectations for Box's fiscal second quarter and full fiscal year 2026 in the section titled "Outlook" above, equity burn rate, any potential repurchase of its common stock, whether, when, in what amount and by what method any such repurchase would be consummated, and the share price of any such repurchase. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: (1) adverse changes in general economic or market conditions, including those caused by changes in tariffs, sanctions, international treaties, export/import laws and other trade restrictions, the Russia-Ukraine conflict and the conflict in the Middle East, inflation, and fluctuations in foreign currency exchange rates; (2) delays or reductions in information technology spending; (3) factors related to Box's highly competitive market, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by Box's current or future competitors; (4) the development of the cloud content management market; (5) the risk that Box's customers do not renew their subscriptions, expand their use of Box's services, or adopt new products offered by Box on a timely basis, or at all; (6) Box's ability to provide timely and successful enhancements, integrations, new features and modifications to its platform and services; (7) actual or perceived security vulnerabilities in Box's services or any breaches of Box's security controls; (8) Box's ability to realize the expected benefits of its third-party partnerships; and (9) Box's ability to successfully integrate acquired businesses and achieve the expected benefits from those acquisitions. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Box. While Box believes these estimates are meaningful, they could differ from the actual amounts that Box ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2025. Box assumes no obligations and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended April 30, 2025. Additional information on potential factors that could affect Box's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings Box makes with the Securities and Exchange Commission from time to time, including the Annual Report on Form 10-K filed for the fiscal year ended January 31, 2025. These documents are available on the SEC Filings section of Box's Investor Relations website located at Box does not assume any obligation to update the forward-looking statements contained in this press release to reflect events that occur or circumstances that exist after the date on which they were made. About Non-GAAP Financial Measures and Other Key Metrics To supplement Box's consolidated financial statements, which are prepared and presented in accordance with GAAP, Box provides investors with certain non-GAAP financial measures and other key metrics, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to common stockholders, non-GAAP net income per share attributable to common stockholders, billings, remaining performance obligations, non-GAAP free cash flow and free cash flow margin. The presentation of these non-GAAP financial measures and key metrics is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures and key metrics, please see the reconciliation of these non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures at the end of this press release. Box uses these non-GAAP financial measures and key metrics for financial and operational decision-making (including for purposes of determining variable compensation of members of management and other employees) and as a means to evaluate period-to-period comparisons. Box's management believes that these non-GAAP financial measures and key metrics provide meaningful supplemental information regarding Box's performance by excluding certain expenses that may not be indicative of Box's recurring core business operating results. Box believes that both management and investors benefit from referring to these non-GAAP financial measures and key metrics in assessing Box's performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures and key metrics also facilitate management's internal comparisons to Box's historical performance as well as comparisons to Box's competitors' operating results. Box believes these non-GAAP financial measures and key metrics are useful to investors both because they (1) allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) are used by Box's institutional investors and the analyst community to help them analyze the health of Box's business. A limitation of non-GAAP financial measures and key metrics is that they do not have uniform definitions. Further, Box's definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, Box's non-GAAP financial measures and key metrics should be considered in addition to, and not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based compensation expense, if Box did not pay a portion of compensation in the form of stock-based compensation expense, the cash salary expense included in cost of revenue and operating expenses would be higher, which would affect Box's cash position. The accompanying tables have more details on the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures. Non-GAAP gross profit and non-GAAP gross margin. Box defines non-GAAP gross profit as GAAP gross profit excluding expenses related to stock-based compensation ("SBC") included in cost of revenue, acquired intangible assets amortization, and as applicable, other special items. Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue. Although SBC is an important aspect of the compensation of Box's employees and executives, determining the fair value of certain of the stock-based instruments Box utilizes estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude SBC in order to better understand the long-term performance of Box's core business and to facilitate comparison of Box's results to those of peer companies. Management also views amortization of acquired intangible assets, such as the amortization of the cost associated with an acquired company's developed technology and trade names, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense that is not typically affected by operations during any particular period. Box also excludes expenses associated with a non-recurring workforce reorganization from non-GAAP gross profit as they are considered by management to be special items outside of Box's core operating results. Non-GAAP operating income and non-GAAP operating margin. Box defines non-GAAP operating income as GAAP operating income excluding expenses related to SBC, acquired intangible assets amortization, and as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue. Box excludes the following expenses as they are considered by management to be special items outside of Box's core operating results: (1) expenses related to certain litigation, (2) expenses associated with a non-recurring workforce reorganization, consisting primarily of severance and other personnel-related costs, and (3) expenses related to acquisitions. Non-GAAP net income attributable to common stockholders and non-GAAP net income per share attributable to common stockholders. Box defines non-GAAP net income attributable to common stockholders as GAAP net income attributable to common stockholders excluding expenses related to SBC, acquired intangible assets amortization, amortization of debt issuance costs, the income tax effects related to deferred taxes, induced conversion of convertible notes, undistributed earnings attributable to preferred stockholders, and as applicable, other special items as described in the preceding paragraph. Box defines non-GAAP net income per share attributable to common stockholders as non-GAAP net income attributable to common stockholders divided by the weighted-average outstanding shares. Billings. Billings reflect, in any particular period, (1) sales to new customers, plus (2) subscription renewals and (3) expansion within existing customers, and represent amounts invoiced for all products and professional services. Box calculates billings for a period by adding changes in deferred revenue and contract assets in that period to revenue. Box believes that billings help investors better understand sales activity for a particular period, which is not necessarily reflected in revenue as a result of the fact that Box recognizes subscription revenue ratably over the subscription term. Box considers billings a significant performance measure. Box monitors billings to manage the business, make planning decisions, evaluate performance and allocate resources. Box believes that billings offers valuable supplemental information regarding the performance of the business and helps investors better understand the sales volumes and performance of the business. Although Box considers billings to be a significant performance measure, Box does not consider it to be a non-GAAP financial measure because it is calculated using exclusively revenue, deferred revenue, and contract assets, all of which are financial measures calculated in accordance with GAAP. Remaining performance obligations. Remaining performance obligations ("RPO") represent, at a point in time, contracted revenue that has not yet been recognized. RPO consists of deferred revenue and backlog. Backlog is defined as non-cancellable contracts deemed certain to be invoiced and recognized as revenue in future periods. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty that is due upon cancellation. While Box believes RPO is a leading indicator of revenue as it represents sales activity not yet recognized in revenue, it is not necessarily indicative of future revenue growth as it is influenced by several factors, including seasonality, contract renewal timing, average contract terms and foreign currency exchange rates. Box monitors RPO to manage the business and evaluate performance. Box considers RPO to be a significant performance measure. Box does not consider RPO to be a non-GAAP financial measure because it is calculated in accordance with GAAP, specifically under ASC Topic 606. Non-GAAP free cash flow and free cash flow margin. Box defines non-GAAP free cash flow as cash flows from operating activities less net capital expenditures (purchases of property and equipment less proceeds from sales of property and equipment), principal payments of finance lease liabilities, capitalized internal-use software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of Box's core business. Free cash flow margin is calculated as non-GAAP free cash flow divided by revenue. Box specifically identifies adjusting items in the reconciliation of GAAP to non-GAAP financial measures. Box considers non-GAAP free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in Box's business and strengthening its balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity. About Box Box (NYSE:BOX) is the leader in Intelligent Content Management. Our platform enables organizations to fuel collaboration, manage the entire content lifecycle, secure critical content, and transform business workflows with enterprise AI. Founded in 2005, Box simplifies work for leading global organizations, including AstraZeneca, JLL, Morgan Stanley, and Nationwide. Box is headquartered in Redwood City, CA, with offices across the United States, Europe, and Asia. Visit to learn more. And visit to learn more about how Box empowers nonprofits to fulfill their missions. BOX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) April 30, January 31, 2025 2025 ASSETS Current assets: Cash and cash equivalents $ 689,628 $ 624,575 Short-term investments 100,777 98,241 Accounts receivable, net 178,078 292,707 Other current assets 87,687 82,256 Total current assets 1,056,170 1,097,779 Operating lease right-of-use assets, net 82,620 77,970 Goodwill 80,526 76,969 Deferred tax assets 248,458 245,417 Other long-term assets 173,595 169,385 Total assets $ 1,641,369 $ 1,667,520 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 85,448 $ 80,069 Accrued compensation and benefits 29,856 49,721 Debt, net, current 204,191 203,907 Deferred revenue 557,345 588,379 Total current liabilities 876,840 922,076 Debt, net, non-current 449,231 448,638 Operating lease liabilities, non-current 71,535 68,771 Other liabilities, non-current 29,180 30,759 Total liabilities 1,426,786 1,470,244 Series A convertible preferred stock 494,716 494,238 Stockholders' deficit: Common stock 14 14 Additional paid-in capital 681,363 677,088 Accumulated other comprehensive loss (7,561 ) (11,921 ) Accumulated deficit (953,949 ) (962,143 ) Total stockholders' deficit (280,133 ) (296,962 ) Total liabilities, convertible preferred stock and stockholders' deficit $ 1,641,369 $ 1,667,520 BOX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended April 30, 2025 2024 Revenue $ 276,272 $ 264,658 Cost of revenue (1) 60,673 58,252 Gross profit 215,599 206,406 Operating expenses: Research and development (1) 72,301 62,673 Sales and marketing (1) 99,099 92,673 General and administrative (1) 37,861 33,053 Total operating expenses 209,261 188,399 Income from operations 6,338 18,007 Interest income 6,698 5,689 Interest expense (2,696 ) (805 ) Other income (expense), net 2,804 (1,026 ) Income before income taxes 13,144 21,865 Provision for income taxes 4,950 4,643 Net income $ 8,194 $ 17,222 Accretion and dividend on series A convertible preferred stock (4,228 ) (4,240 ) Undistributed earnings attributable to preferred stockholders (451 ) (1,469 ) Net income attributable to common stockholders $ 3,515 $ 11,513 Net income per share attributable to common stockholders Basic $ 0.02 $ 0.08 Diluted $ 0.02 $ 0.08 Weighted-average shares used to compute net income per share attributable to common stockholders Basic 144,434 145,299 Diluted 149,614 148,757 (1) Includes stock-based compensation expense as follows: Three Months Ended April 30, 2025 2024 Cost of revenue $ 4,832 $ 4,621 Research and development 18,806 17,819 Sales and marketing 17,867 17,783 General and administrative 13,389 10,939 Total stock-based compensation $ 54,894 $ 51,162 BOX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended April 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,194 $ 17,222 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,896 4,688 Stock-based compensation expense 54,894 51,162 Amortization of deferred commissions 13,319 13,360 Other (2,214 ) 817 Changes in operating assets and liabilities: Accounts receivable, net 120,354 135,565 Deferred commissions (8,568 ) (7,850 ) Operating lease right-of-use assets, net 5,656 8,536 Other assets (3,761 ) (1,666 ) Accounts payable, accrued expenses and other liabilities (14,509 ) (16,186 ) Operating lease liabilities (6,287 ) (8,937 ) Deferred revenue (46,915 ) (65,507 ) Net cash provided by operating activities 127,059 131,204 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short-term investments (33,319 ) (47,489 ) Maturities of short-term investments 31,650 24,896 Sales of short-term investments — 3,567 Purchases of property and equipment (349 ) (1,276 ) Proceeds from sales of property and equipment 38 2,696 Capitalized internal-use software costs (8,411 ) (5,564 ) Net cash used in investing activities (10,391 ) (23,170 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repurchases of common stock (49,659 ) (32,134 ) Payments of dividends to preferred stockholders (3,750 ) (3,750 ) Proceeds from exercise of stock options 202 9,637 Proceeds from issuances of common stock under employee stock purchase plan 16,654 15,677 Employee payroll taxes paid for net settlement of stock awards (24,790 ) (21,309 ) Other (433 ) (3,816 ) Net cash used in financing activities (61,776 ) (35,695 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 10,277 (6,211 ) Net increase in cash, cash equivalents, and restricted cash 65,169 66,128 Cash, cash equivalents, and restricted cash, beginning of period 626,110 384,257 Cash, cash equivalents, and restricted cash, end of period $ 691,279 $ 450,385 BOX, INC. RECONCILIATION OF GAAP TO NON-GAAP DATA (In Thousands, Except Per Share Data and Percentages) (Unaudited) Three Months Ended April 30, 2025 2024 GAAP gross profit $ 215,599 $ 206,406 Stock-based compensation 4,832 4,621 Acquired intangible assets amortization 994 1,152 Workforce reorganization 894 — Non-GAAP gross profit $ 222,319 $ 212,179 GAAP gross margin 78.0 % 78.0 % Stock-based compensation 1.8 1.8 Acquired intangible assets amortization 0.4 0.4 Workforce reorganization 0.3 — Non-GAAP gross margin 80.5 % 80.2 % GAAP operating income $ 6,338 $ 18,007 Stock-based compensation 54,894 51,162 Acquired intangible assets amortization 994 1,152 Expenses related to litigation 421 79 Workforce reorganization 7,123 — Non-GAAP operating income $ 69,770 $ 70,400 GAAP operating margin 2.3 % 6.8 % Stock-based compensation 19.9 19.3 Acquired intangible assets amortization 0.4 0.5 Expenses related to litigation 0.1 — Workforce reorganization 2.6 — Non-GAAP operating margin 25.3 % 26.6 % GAAP net income attributable to common stockholders $ 3,515 $ 11,513 Stock-based compensation 54,894 51,162 Acquired intangible assets amortization 994 1,152 Expenses related to litigation 421 79 Amortization of debt issuance costs 891 476 Workforce reorganization 7,123 — Income tax effects of non-GAAP adjustments (1) (17,239 ) — Undistributed earnings attributable to preferred stockholders (5,356 ) (5,982 ) Non-GAAP net income attributable to common stockholders $ 45,243 $ 58,400 GAAP net income per share attributable to common stockholders, diluted $ 0.02 $ 0.08 Stock-based compensation 0.37 0.34 Acquired intangible assets amortization 0.01 0.01 Amortization of debt issuance costs 0.01 — Workforce reorganization 0.05 — Income tax effects of non-GAAP adjustments (1) (0.12 ) — Undistributed earnings attributable to preferred stockholders (0.04 ) (0.04 ) Non-GAAP net income per share attributable to common stockholders, diluted $ 0.30 $ 0.39 Weighted-average shares used to compute net income per share attributable to common stockholders, diluted 149,614 148,757 GAAP net cash provided by operating activities $ 127,059 $ 131,204 Purchases of property and equipment (349 ) (1,276 ) Proceeds from sales of property and equipment 38 2,696 Principal payments of finance lease liabilities — (2,141 ) Capitalized internal-use software costs (8,411 ) (7,239 ) Non-GAAP free cash flow $ 118,337 $ 123,244 GAAP net cash used in investing activities $ (10,391 ) $ (23,170 ) GAAP net cash used in financing activities $ (61,776 ) $ (35,695 ) (1) Non-GAAP tax provision uses a long-term projected tax rate of 26.8%, which reflects currently available information and could be subject to change. BOX, INC. RECONCILIATION OF GAAP REVENUE TO BILLINGS (In Thousands) (Unaudited) Three Months Ended April 30, 2025 2024 GAAP revenue $ 276,272 $ 264,658 Deferred revenue, end of period 574,119 513,572 Less: deferred revenue, beginning of period (608,600 ) (586,871 ) Contract assets, beginning of period 4,160 2,452 Less: contract assets, end of period (3,662 ) (3,345 ) Billings $ 242,289 $ 190,466 BOX, INC. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER SHARE GUIDANCE (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended Fiscal Year Ended July 31, 2025 January 31, 2026 GAAP net income per share attributable to common stockholders, diluted $ 0.01 - $ 0.02 $ 0.16 - $ 0.20 Stock-based compensation 0.40 0.40 1.52 1.52 Acquired intangible asset amortization 0.01 0.01 0.03 0.03 Expenses related to litigation — — 0.02 0.02 Amortization of debt issuance costs 0.01 0.01 0.02 0.02 Workforce reorganization 0.01 0.01 0.05 0.05 Income tax effects of non-GAAP adjustments (1) (0.11 ) (0.11 ) (0.44 ) (0.44 ) Undistributed earnings attributable to preferred stockholders (0.03 ) (0.03 ) (0.14 ) (0.14 ) Non-GAAP net income per share attributable to common stockholders, diluted $ 0.30 - $ 0.31 $ 1.22 - $ 1.26 Weighted-average shares, diluted 150,000 151,000 (1) Non-GAAP tax provision uses a long-term projected tax rate of 26.8%, which reflects currently available information and could be subject to change. BOX, INC. RECONCILIATION OF GAAP TO NON-GAAP OPERATING MARGIN GUIDANCE (Unaudited) Three Months Ended Fiscal Year Ended July 31, 2025 January 31, 2026 GAAP operating margin 6.0 % 7.0 % Stock-based compensation 21.0 19.5 Acquired intangible assets amortization 0.5 0.5 Other (1) 0.5 1.0 Non-GAAP operating margin 28.0 % 28.0 % (1) Other includes workforce reorganization and expense related to litigation. View source version on Contacts Investors: Cynthia Hiponia and Elaine Gaudioso+1 650-209-3463ir@ Media: Sheridan Hooverpress@ Sign in to access your portfolio
Business Wire
27-05-2025
- Business
- Business Wire
Box Reports First Quarter Fiscal 2026 Financial Results
REDWOOD CITY, Calif.--(BUSINESS WIRE)--Box, Inc. (NYSE:BOX), the leading Intelligent Content Management ('ICM') platform, today announced preliminary financial results for the first quarter fiscal year 2026, which ended April 30, 2025. 'We are at a pivotal moment in history where AI is revolutionizing work and business,' said Aaron Levie, co-founder and CEO of Box. 'In this AI-first era, organizations are embracing this shift to stay competitive. At Box, we help businesses unlock value from their unstructured data with our Intelligent Content Management platform. Earlier this month, we unveiled our largest set of AI innovation yet, including new AI Agents that integrate with the leading models and software platforms to accelerate decision-making, automate workflows, and boost productivity.' 'We achieved robust first-quarter results, surpassing our guidance and delivering double-digit growth in both billings and short-term RPO,' said Dylan Smith, co-founder and CFO of Box. 'As we address the vast opportunity of AI to transform unstructured data into actionable insight, our balanced financial approach allows us to invest confidently in our ICM platform while delivering profitable growth and consistently returning value to our shareholders.' Fiscal First Quarter Financial Highlights All comparisons are against the prior year comparable quarter Revenue of $276.3 million, up 4%, or 5% on a constant currency basis. Remaining performance obligations ('RPO') of $1.469 billion, up 21%, or 17% on a constant currency basis. Short-term RPO of $812 million, up 13%, and long-term RPO of $657 million, up 32%. Billings of $242.3 million, up 27%, or 17% on a constant currency basis. GAAP gross profit of $215.6 million, or 78.0% of revenue, up from $206.4 million, or 78.0% of revenue. Non-GAAP gross profit of $222.3 million, or 80.5% of revenue, up from $212.2 million, or 80.2% of revenue. GAAP operating income of $6.3 million, or 2.3% of revenue, compared to $18.0 million, or 6.8% of revenue. Non-GAAP operating income of $69.8 million, or 25.3% of revenue, compared to $70.4 million, or 26.6% of revenue. GAAP diluted earnings per share ('EPS') of $0.02, compared to $0.08, impacted by $0.01 from favorable foreign exchange rates. This also includes a negative impact of $0.01 from the recognition of non-cash deferred tax expenses, in line with the prior period. Non-GAAP diluted EPS of $0.30, compared to $0.39, impacted by $0.01 from favorable foreign exchange rates. This also includes a negative impact of $0.12 from the recognition of non-cash deferred tax expenses, compared to $0.01. Net cash provided by operating activities of $127.1 million, down 3%. Non-GAAP free cash flow of $118.3 million, down 4%. Growth on a constant currency basis and impact from foreign exchange is determined by comparing current period reported results with the current results calculated using the equivalent rates in the prior period. For more information on the non-GAAP financial measures and key metrics discussed in this press release, please see the section titled, 'About Non-GAAP Financial Measures and Other Key Metrics,' and the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures at the end of this press release. Recent Business Highlights Delivered wins or expansions with leading organizations across a variety of industries, including Aerospace and Defense (Kawasaki Heavy Industries, Ltd. and The Boeing Company), Financial Services (Haventree Bank and SitusAMC), Hospitality (The Wendy's Company), Legal (Lewis Brisbois and Wilkinson Stekloff), Life Sciences (Regeneron Pharmaceuticals and Zealand Pharma), Professional Services (Insperity and PBMares), Public Sector (California Department of Justice and U.S. Army Civilian Human Resources Agency), and Retail (MGA Entertainment and Skechers USA). Received FedRAMP High Authorization, allowing U.S. government agencies and authorized government contractors to leverage Box's ICM platform, including Box AI and Box Hubs, for highly sensitive data. Revealed the next evolution of the Box AI platform by introducing a new generation of AI Agents designed to transform how organizations work with content. With this new innovation, customers will be able to leverage AI Agents for Search, Deep Research, and enhanced data extraction so they can uncover more value from their content in Box. Announced a strategic partnership with IBM to help organizations accelerate the adoption of enterprise-level AI for content-driven workflows using IBM watsonx and Box AI. Companies can now use Box AI with models from IBM watsonx, including open source IBM Granite and the latest Llama models from Meta. Announced the availability of Box AI for Mobile for business and enterprise plans, bringing the power of AI-driven insights directly to your fingertips. Launched Box Archive, allowing Enterprise Advanced customers to retain and protect inactive content for long-term storage, helping organizations efficiently store and protect their growing volume of information. Announced support for Google's Gemini 2.5 Flash & Gemini 2.5 Pro, Google's Gemma 3, Meta's Llama 4 Models, NVIDIA Llama Nemotron reasoning models, OpenAI Agents SDK, OpenAI's o3 & o4-Mini models, OpenAI's GPT-4.1 & GPT-4.5, and xAI's Grok 3. Introduced a new Box AI Agent for Microsoft 365 Copilot, to help customers unlock intelligent experiences that allow users to securely search, analyze, and act on Box content directly within Microsoft's productivity tools, including Copilot Chat and Microsoft Teams. Announced a partnership with Google Agentspace, combining Box's platform with the Agentspace ecosystem of agents, and Google's Agent-to-Agent Protocol, allowing users to interact, automate, and deliver intelligent business insights across previously siloed systems. Announced as a launch partner for Salesforce AgentExchange, empowering customers to harness the full potential of AI agents by integrating their data seamlessly through Box, and Salesforce Life Sciences partner network, bringing the power of AI to pharmaceutical and medtech companies looking to unlock the value of their unstructured content. Announced an integration of Box AI capabilities with the new ServiceNow AI Agent Fabric, connecting AI agents and tools from any source, centralizing governance via its AI Control Tower and enabling seamless end-to-end automation. Announced a strategic partnership with DataBank to deliver AI-powered solutions that streamline business processes like contract lifecycle management, digital asset management, and intelligent document processing. Hosted Content + AI Virtual Summit, attracting thousands of attendees and customer speakers from leading organizations to discuss the future of ICM. Recognized as the 2025 Google Cloud Global Partner of the Year for Business Applications, a testament to the incredible milestones achieved with Google Cloud, delivering cutting-edge integrations and AI-driven innovations that empower organizations worldwide. Update on Share Repurchase Plan In the first quarter of fiscal year 2026, Box repurchased approximately 1.6 million shares for approximately $50 million. As of April 30, 2025, approximately $152 million of buyback capacity was remaining under Box's current share repurchase plan. Outlook As a reminder, approximately one third of Box's revenue is generated outside of the U.S., of which approximately 65% is in Japanese Yen. The following guidance includes the expected impact of FX headwinds, assuming present foreign currency exchange rates. As Box has become consistently profitable, the Company has released valuation allowances associated with certain deferred tax assets. Accordingly, in fiscal year 2026, Box will be recognizing deferred tax expense. This non-cash expense is reflected in Box's GAAP and non-GAAP diluted net income per share guidance for the second quarter of fiscal year 2026 and full fiscal year 2026. Q2 FY26 Guidance Revenue is expected to be in the range of $290 million to $291 million, up 8% year-over-year, or 6% on a constant currency basis at the high-end. This includes an expected positive impact of approximately 220 basis points due to FX. GAAP operating margin is expected to be approximately 6.0%, and non-GAAP operating margin is expected to be approximately 28%. This includes an expected positive impact of approximately 80 basis points due to FX. GAAP net income per share attributable to common stockholders is expected to be in the range of $0.01 to $0.02. GAAP EPS guidance includes an expected negative impact of $0.02, which includes a positive impact of $0.02 from favorable exchange rates and a negative impact of $0.04 from the recognition of non-cash deferred tax expenses. Non-GAAP diluted net income per share attributable to common stockholders is expected to be a range of $0.30 to $0.31. Non-GAAP EPS guidance includes an expected negative impact of $0.12, which includes a positive impact of $0.02 from favorable exchange rates and a negative impact of $0.14 from the recognition of non-cash deferred tax expenses, as compared to a negative impact of $0.01 in the prior year. Weighted-average diluted shares outstanding are expected to be approximately 150 million. Full Year FY26 Guidance Full year FY26 guidance below assumes a neutral impact from foreign exchange rates, assuming present foreign currency exchange rates. Revenue is expected to be in the range of $1.165 billion to $1.170 billion, up 7% year-over-year. This includes an expected positive impact of approximately 120 basis points due to FX. GAAP operating margin is expected to be approximately 7.0%, and non-GAAP operating margin is expected to be approximately 28%. This includes an expected positive impact of approximately 40 basis points due to FX. GAAP net income per share attributable to common stockholders is expected to be in the range of $0.16 to $0.20. GAAP EPS guidance includes an expected negative impact of $0.10, which includes a positive impact of $0.07 from favorable exchange rates and a negative impact of $0.17 from the recognition of non-cash deferred tax expenses. Non-GAAP diluted net income per share attributable to common stockholders is expected to be in the range of $1.22 to $1.26. Non-GAAP EPS guidance includes an expected negative impact of $0.49, which includes a positive impact of $0.07 from favorable exchange rates and a negative impact of $0.56 from the recognition of non-cash deferred tax expenses, as compared to a negative impact of $0.04 in the prior year. Weighted-average diluted shares outstanding are expected to be approximately 151 million. All forward-looking non-GAAP financial measures contained in this section titled 'Outlook' exclude estimates for stock-based compensation expense, intangible assets amortization, and as applicable, other special items. Box has provided a reconciliation of GAAP to non-GAAP net income per share and operating margin guidance at the end of this press release. Webcast and Conference Call Information Box's management team will host a conference call today beginning at 2:00 p.m. (PT) / 5:00 p.m. (ET) to discuss Box's financial results, business highlights and future outlook. A live audio webcast of this call will be available through Box's Investor Relations website at for a period of 90 days after the date of the call. Prepared remarks will be available on the Box Investor Relations website after the call ends. The conference call can be accessed by registering online at at which time registrants will receive dial-in information as well as a conference ID. A live webcast will be accessible from the Box investor relations website at A replay will be available at the same webcast link until 11:59 p.m. on June 3, 2025. Box has used, and intends to continue to use, its Investor Relations website ( as well as certain X accounts (@box, @levie and @boxincir), as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Information on or that can be accessed through Box's Investor Relations website, these X accounts, or that is contained in any website to which a hyperlink is provided herein is not part of this press release, and the inclusion of Box's Investor Relations website address, these X accounts, and any hyperlinks are only inactive textual references. This press release, the financial tables, as well as other supplemental information including the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures, are also available on Box's Investor Relations website. Box also provides investor information, including news and commentary about Box's business and financial performance, Box's filings with the Securities and Exchange Commission, notices of investor events and Box's press and earnings releases, on Box's Investor Relations website. Forward-Looking Statements This press release 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 short- and long-term success, market adoption and retention, capabilities, and benefits of such product introductions and enhancements, the success of strategic partnerships and acquisitions, the impact of macroeconomic conditions on its business, its ability to grow and scale its business and drive operating efficiencies, the impact of fluctuations in foreign currency exchange rates on its future results, its net retention rate, its ability to achieve revenue targets and billings expectations, its revenue and billings growth rates, its ability to expand operating margins, its long-term financial targets, its ability to maintain profitability on a quarterly or ongoing basis, its free cash flow, its ability to continue to grow unrecognized revenue and remaining performance obligations, its revenue, billings, GAAP and non-GAAP gross margins, GAAP and non-GAAP net income per share, GAAP and non-GAAP operating margins, the related components of GAAP and non-GAAP net income per share, weighted-average outstanding share count expectations for Box's fiscal second quarter and full fiscal year 2026 in the section titled 'Outlook' above, equity burn rate, any potential repurchase of its common stock, whether, when, in what amount and by what method any such repurchase would be consummated, and the share price of any such repurchase. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: (1) adverse changes in general economic or market conditions, including those caused by changes in tariffs, sanctions, international treaties, export/import laws and other trade restrictions, the Russia-Ukraine conflict and the conflict in the Middle East, inflation, and fluctuations in foreign currency exchange rates; (2) delays or reductions in information technology spending; (3) factors related to Box's highly competitive market, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by Box's current or future competitors; (4) the development of the cloud content management market; (5) the risk that Box's customers do not renew their subscriptions, expand their use of Box's services, or adopt new products offered by Box on a timely basis, or at all; (6) Box's ability to provide timely and successful enhancements, integrations, new features and modifications to its platform and services; (7) actual or perceived security vulnerabilities in Box's services or any breaches of Box's security controls; (8) Box's ability to realize the expected benefits of its third-party partnerships; and (9) Box's ability to successfully integrate acquired businesses and achieve the expected benefits from those acquisitions. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Box. While Box believes these estimates are meaningful, they could differ from the actual amounts that Box ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2025. Box assumes no obligations and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended April 30, 2025. Additional information on potential factors that could affect Box's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings Box makes with the Securities and Exchange Commission from time to time, including the Annual Report on Form 10-K filed for the fiscal year ended January 31, 2025. These documents are available on the SEC Filings section of Box's Investor Relations website located at Box does not assume any obligation to update the forward-looking statements contained in this press release to reflect events that occur or circumstances that exist after the date on which they were made. About Non-GAAP Financial Measures and Other Key Metrics To supplement Box's consolidated financial statements, which are prepared and presented in accordance with GAAP, Box provides investors with certain non-GAAP financial measures and other key metrics, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to common stockholders, non-GAAP net income per share attributable to common stockholders, billings, remaining performance obligations, non-GAAP free cash flow and free cash flow margin. The presentation of these non-GAAP financial measures and key metrics is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures and key metrics, please see the reconciliation of these non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures at the end of this press release. Box uses these non-GAAP financial measures and key metrics for financial and operational decision-making (including for purposes of determining variable compensation of members of management and other employees) and as a means to evaluate period-to-period comparisons. Box's management believes that these non-GAAP financial measures and key metrics provide meaningful supplemental information regarding Box's performance by excluding certain expenses that may not be indicative of Box's recurring core business operating results. Box believes that both management and investors benefit from referring to these non-GAAP financial measures and key metrics in assessing Box's performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures and key metrics also facilitate management's internal comparisons to Box's historical performance as well as comparisons to Box's competitors' operating results. Box believes these non-GAAP financial measures and key metrics are useful to investors both because they (1) allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) are used by Box's institutional investors and the analyst community to help them analyze the health of Box's business. A limitation of non-GAAP financial measures and key metrics is that they do not have uniform definitions. Further, Box's definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, Box's non-GAAP financial measures and key metrics should be considered in addition to, and not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based compensation expense, if Box did not pay a portion of compensation in the form of stock-based compensation expense, the cash salary expense included in cost of revenue and operating expenses would be higher, which would affect Box's cash position. The accompanying tables have more details on the reconciliations of non-GAAP financial measures and certain key metrics to their nearest comparable GAAP financial measures. Non-GAAP gross profit and non-GAAP gross margin. Box defines non-GAAP gross profit as GAAP gross profit excluding expenses related to stock-based compensation ('SBC') included in cost of revenue, acquired intangible assets amortization, and as applicable, other special items. Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue. Although SBC is an important aspect of the compensation of Box's employees and executives, determining the fair value of certain of the stock-based instruments Box utilizes estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude SBC in order to better understand the long-term performance of Box's core business and to facilitate comparison of Box's results to those of peer companies. Management also views amortization of acquired intangible assets, such as the amortization of the cost associated with an acquired company's developed technology and trade names, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense that is not typically affected by operations during any particular period. Box also excludes expenses associated with a non-recurring workforce reorganization from non-GAAP gross profit as they are considered by management to be special items outside of Box's core operating results. Non-GAAP operating income and non-GAAP operating margin. Box defines non-GAAP operating income as GAAP operating income excluding expenses related to SBC, acquired intangible assets amortization, and as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue. Box excludes the following expenses as they are considered by management to be special items outside of Box's core operating results: (1) expenses related to certain litigation, (2) expenses associated with a non-recurring workforce reorganization, consisting primarily of severance and other personnel-related costs, and (3) expenses related to acquisitions. Non-GAAP net income attributable to common stockholders and non-GAAP net income per share attributable to common stockholders. Box defines non-GAAP net income attributable to common stockholders as GAAP net income attributable to common stockholders excluding expenses related to SBC, acquired intangible assets amortization, amortization of debt issuance costs, the income tax effects related to deferred taxes, induced conversion of convertible notes, undistributed earnings attributable to preferred stockholders, and as applicable, other special items as described in the preceding paragraph. Box defines non-GAAP net income per share attributable to common stockholders as non-GAAP net income attributable to common stockholders divided by the weighted-average outstanding shares. Billings. Billings reflect, in any particular period, (1) sales to new customers, plus (2) subscription renewals and (3) expansion within existing customers, and represent amounts invoiced for all products and professional services. Box calculates billings for a period by adding changes in deferred revenue and contract assets in that period to revenue. Box believes that billings help investors better understand sales activity for a particular period, which is not necessarily reflected in revenue as a result of the fact that Box recognizes subscription revenue ratably over the subscription term. Box considers billings a significant performance measure. Box monitors billings to manage the business, make planning decisions, evaluate performance and allocate resources. Box believes that billings offers valuable supplemental information regarding the performance of the business and helps investors better understand the sales volumes and performance of the business. Although Box considers billings to be a significant performance measure, Box does not consider it to be a non-GAAP financial measure because it is calculated using exclusively revenue, deferred revenue, and contract assets, all of which are financial measures calculated in accordance with GAAP. Remaining performance obligations. Remaining performance obligations ('RPO') represent, at a point in time, contracted revenue that has not yet been recognized. RPO consists of deferred revenue and backlog. Backlog is defined as non-cancellable contracts deemed certain to be invoiced and recognized as revenue in future periods. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty that is due upon cancellation. While Box believes RPO is a leading indicator of revenue as it represents sales activity not yet recognized in revenue, it is not necessarily indicative of future revenue growth as it is influenced by several factors, including seasonality, contract renewal timing, average contract terms and foreign currency exchange rates. Box monitors RPO to manage the business and evaluate performance. Box considers RPO to be a significant performance measure. Box does not consider RPO to be a non-GAAP financial measure because it is calculated in accordance with GAAP, specifically under ASC Topic 606. Non-GAAP free cash flow and free cash flow margin. Box defines non-GAAP free cash flow as cash flows from operating activities less net capital expenditures (purchases of property and equipment less proceeds from sales of property and equipment), principal payments of finance lease liabilities, capitalized internal-use software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of Box's core business. Free cash flow margin is calculated as non-GAAP free cash flow divided by revenue. Box specifically identifies adjusting items in the reconciliation of GAAP to non-GAAP financial measures. Box considers non-GAAP free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in Box's business and strengthening its balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity. About Box Box (NYSE:BOX) is the leader in Intelligent Content Management. Our platform enables organizations to fuel collaboration, manage the entire content lifecycle, secure critical content, and transform business workflows with enterprise AI. Founded in 2005, Box simplifies work for leading global organizations, including AstraZeneca, JLL, Morgan Stanley, and Nationwide. Box is headquartered in Redwood City, CA, with offices across the United States, Europe, and Asia. Visit to learn more. And visit to learn more about how Box empowers nonprofits to fulfill their missions. BOX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended April 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,194 $ 17,222 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,896 4,688 Stock-based compensation expense 54,894 51,162 Amortization of deferred commissions 13,319 13,360 Other (2,214 ) 817 Changes in operating assets and liabilities: Accounts receivable, net 120,354 135,565 Deferred commissions (8,568 ) (7,850 ) Operating lease right-of-use assets, net 5,656 8,536 Other assets (3,761 ) (1,666 ) Accounts payable, accrued expenses and other liabilities (14,509 ) (16,186 ) Operating lease liabilities (6,287 ) (8,937 ) Deferred revenue (46,915 ) (65,507 ) Net cash provided by operating activities 127,059 131,204 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short-term investments (33,319 ) (47,489 ) Maturities of short-term investments 31,650 24,896 Sales of short-term investments — 3,567 Purchases of property and equipment (349 ) (1,276 ) Proceeds from sales of property and equipment 38 2,696 Capitalized internal-use software costs (8,411 ) (5,564 ) Net cash used in investing activities (10,391 ) (23,170 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repurchases of common stock (49,659 ) (32,134 ) Payments of dividends to preferred stockholders (3,750 ) (3,750 ) Proceeds from exercise of stock options 202 9,637 Proceeds from issuances of common stock under employee stock purchase plan 16,654 15,677 Employee payroll taxes paid for net settlement of stock awards (24,790 ) (21,309 ) Other (433 ) (3,816 ) Net cash used in financing activities (61,776 ) (35,695 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 10,277 (6,211 ) Net increase in cash, cash equivalents, and restricted cash 65,169 66,128 Cash, cash equivalents, and restricted cash, beginning of period 626,110 384,257 Cash, cash equivalents, and restricted cash, end of period $ 691,279 $ 450,385 Expand BOX, INC. RECONCILIATION OF GAAP TO NON-GAAP DATA (In Thousands, Except Per Share Data and Percentages) (Unaudited) Three Months Ended April 30, 2025 2024 GAAP gross profit $ 215,599 $ 206,406 Stock-based compensation 4,832 4,621 Acquired intangible assets amortization 994 1,152 Workforce reorganization 894 — Non-GAAP gross profit $ 222,319 $ 212,179 GAAP gross margin 78.0 % 78.0 % Stock-based compensation 1.8 1.8 Acquired intangible assets amortization 0.4 0.4 Workforce reorganization 0.3 — Non-GAAP gross margin 80.5 % 80.2 % GAAP operating income $ 6,338 $ 18,007 Stock-based compensation 54,894 51,162 Acquired intangible assets amortization 994 1,152 Expenses related to litigation 421 79 Workforce reorganization 7,123 — Non-GAAP operating income $ 69,770 $ 70,400 GAAP operating margin 2.3 % 6.8 % Stock-based compensation 19.9 19.3 Acquired intangible assets amortization 0.4 0.5 Expenses related to litigation 0.1 — Workforce reorganization 2.6 — Non-GAAP operating margin 25.3 % 26.6 % GAAP net income attributable to common stockholders $ 3,515 $ 11,513 Stock-based compensation 54,894 51,162 Acquired intangible assets amortization 994 1,152 Expenses related to litigation 421 79 Amortization of debt issuance costs 891 476 Workforce reorganization 7,123 — Income tax effects of non-GAAP adjustments (1) (17,239 ) — Undistributed earnings attributable to preferred stockholders (5,356 ) (5,982 ) Non-GAAP net income attributable to common stockholders $ 45,243 $ 58,400 GAAP net income per share attributable to common stockholders, diluted $ 0.02 $ 0.08 Stock-based compensation 0.37 0.34 Acquired intangible assets amortization 0.01 0.01 Amortization of debt issuance costs 0.01 — Workforce reorganization 0.05 — Income tax effects of non-GAAP adjustments (1) (0.12 ) — Undistributed earnings attributable to preferred stockholders (0.04 ) (0.04 ) Non-GAAP net income per share attributable to common stockholders, diluted $ 0.30 $ 0.39 Weighted-average shares used to compute net income per share attributable to common stockholders, diluted 149,614 148,757 GAAP net cash provided by operating activities $ 127,059 $ 131,204 Purchases of property and equipment (349 ) (1,276 ) Proceeds from sales of property and equipment 38 2,696 Principal payments of finance lease liabilities — (2,141 ) Capitalized internal-use software costs (8,411 ) (7,239 ) Non-GAAP free cash flow $ 118,337 $ 123,244 GAAP net cash used in investing activities $ (10,391 ) $ (23,170 ) GAAP net cash used in financing activities $ (61,776 ) $ (35,695 ) Expand (1) Non-GAAP tax provision uses a long-term projected tax rate of 26.8%, which reflects currently available information and could be subject to change. Expand BOX, INC. (In Thousands) (Unaudited) Three Months Ended April 30, 2025 2024 GAAP revenue $ 276,272 $ 264,658 Deferred revenue, end of period 574,119 513,572 Less: deferred revenue, beginning of period (608,600 ) (586,871 ) Contract assets, beginning of period 4,160 2,452 Less: contract assets, end of period (3,662 ) (3,345 ) Billings $ 242,289 $ 190,466 Expand BOX, INC. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER SHARE GUIDANCE (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended Fiscal Year Ended July 31, 2025 January 31, 2026 GAAP net income per share attributable to common stockholders, diluted $ 0.01 - $ 0.02 $ 0.16 - $ 0.20 Stock-based compensation 0.40 0.40 1.52 1.52 Acquired intangible asset amortization 0.01 0.01 0.03 0.03 Expenses related to litigation — — 0.02 0.02 Amortization of debt issuance costs 0.01 0.01 0.02 0.02 Workforce reorganization 0.01 0.01 0.05 0.05 Income tax effects of non-GAAP adjustments (1) (0.11 ) (0.11 ) (0.44 ) (0.44 ) Undistributed earnings attributable to preferred stockholders (0.03 ) (0.03 ) (0.14 ) (0.14 ) Non-GAAP net income per share attributable to common stockholders, diluted $ 0.30 - $ 0.31 $ 1.22 - $ 1.26 Weighted-average shares, diluted 150,000 151,000 Expand (1) Non-GAAP tax provision uses a long-term projected tax rate of 26.8%, which reflects currently available information and could be subject to change. Expand BOX, INC. (Unaudited) Three Months Ended Fiscal Year Ended July 31, 2025 January 31, 2026 GAAP operating margin 6.0 % 7.0 % Stock-based compensation 21.0 19.5 Acquired intangible assets amortization 0.5 0.5 Other (1) 0.5 1.0 Non-GAAP operating margin 28.0 % 28.0 % Expand (1) Other includes workforce reorganization and expense related to litigation. Expand
Yahoo
22-05-2025
- Business
- Yahoo
Box CEO Aaron Levie on the future of enterprise AI
The buzz in Silicon Valley around AI agents has many asking: What's real and what's hype? Box's cofounder and CEO, Aaron Levie, helps decipher between fact and fiction, breaking down the fast-paced evolution of agents and their impact on the future of enterprise AI. Plus, Levie unpacks how AI is really being adopted in the workplace and what it takes to legitimately build an AI-first organization. Tesla's Cybertruck is officially a flop Zillow: Housing market to see first annual U.S. home price drop since 2011 In rural Texas, where Elon Musk lives, his DOGE cuts are devastating local residents This is an abridged transcript of an interview from Rapid Response, hosted by the former editor-in-chief of Fast Company Bob Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today's top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode. This embedded content is not available in your region. I talked with several months ago about his embrace of AI agents, but the use of his agents hasn't quite taken off the way he hoped. I know you launched Box AI Studio to help organizations build their own custom AI agents. I'm curious how that's going. So far, it's either at or exceeding our expectations on all the use cases that customers are coming up with. So we're pretty blown away about what we're starting to see. We're still very early days to be clear, but the rate of adoption is going fairly exponential, and the imagination that customers now have on this is blowing us away. I've rarely been in a customer conversation, either one-on-one or at a dinner, where I'm not hearing about a new idea that the customer has for Box AI that we did not already have on a whiteboard. And what's exciting—and this is counterintuitive, I think, to a lot of folks outside of AI—you initially sort of see AI in sci-fi and sometimes in news headlines, The New York Times or whatever, as like, 'Okay, it's going after jobs. It's going to replace these types of work.' From my anecdotes, I've had at least 100 interactions with customers in the first quarter of this year, the vast majority, 80%, I'm guessing, the bulk of the time of AI use case kind of conversation was spent on things that the company didn't do before AI. So it wasn't, 'Hey, I want to take this type of work, and I want AI to go replace it.' There's a type of work that we never get around to in our company. I want AI to go and do that, because finally, it's affordable for me to deploy AI agents at the kind of work that we could not fund before. It's opening up people's imagination to, 'Hey, I'm like sitting on 50,000 customer contracts. What if I could have an AI agent go around all those customer contracts, and figure out which customers have the highest propensity to buy this next product from me?' And this is not something that they would have people ever do. So it's not replacing anybody's job. They never said, 'Oh, let's have 50 people go read all the contracts again.' It just never happened. But now, if it only costs them $5,000 for an AI agent to go do that, they would do that all day long. And then guess what? When they get those insights, they're probably going to now have more work for the humans in their business to go and do as a result of this, that hopefully, if it's effective, drives more growth in their business—which then causes even more productivity, and then ultimately hiring and growth. And so it's not kind of everybody's first instinct, but most of the use cases that we're hearing about are things where, 'Because it is now affordable to deploy AI at a problem, I'm actually expanding the set of things my company can go do, and then the work that we can now execute on.' And that's not only very, I think, exciting, but I think it's going to be the default case for most AI adoption in the enterprise. In some of the conversations that I have, it feels almost like some of the businesses and leaders, they don't really know what they're looking for from AI. And hearing you, it sounds a little bit like you have to think about your mindset on it a little differently to open up and find those things that are most valuable to you. Yes. Yeah, every business is going to be different because some of the upside is a virtue of your business model. What are the core parts of your business model that, as a result of access to information, can change or be modified or improved? If I am a law firm, I could either reduce my cost, because now AI is going to do more of the, let's say, paralegal work, or I could expand my service offerings, because now, all of a sudden, my team can venture into more domains because they can take their expertise and use AI to augment that. The default assumption is, 'Oh, no, it's going to go after the hours of a law firm.' But once this technology hits an individual business, they can actually decide to expand their customer base. They can go after, previously, customers that would've been unprofitable for them to serve. So these industries are not as static and zero-sum. The software industry . . . on one hand, everybody says, 'Okay, if AI can do coding, then will we hire fewer engineers?' And in general, my argument is that we'll probably hire as many—if not more—engineers if AI can get really good at coding, because what will happen is the productivity rate of our engineer goes up, which means that we can then ascribe a higher degree of value per engineer in the company. So your ROI is even better on each of those positions? Exactly. And take something like sales. If we can make a sales rep able to sell 5% more, because we give them better data, and they can prepare for a customer meeting that much better, or they can understand exactly the best pitch because they have access to all of Box's data and they can ask it questions, I'm not going to just bank that as 5% more profit. Because what will happen is we're going to internally, in some planning session, we're going to get greedy, and we're going to say, 'Wait a second, that 5% gain that we just got in sales productivity, what if we reinvested that back into the sales team to grow even faster and get that much more market share?' And so you have an entire economy of companies making those individual decisions of, 'Do you bank the profit, or do you use it to go and accelerate growth?' And what we tend to know from history is that the companies that get too greedy on the profit side, you just end up leaving yourself vulnerable to being outflanked by competitors. So capitalism has a pretty convenient way of almost driving the sort of productivity gains of these types of innovations to get reinvested back into the business. You've been talking about running Box in an AI-first way, and encouraging other leaders to do it. Are you like Shopify and Duolingo, who've announced that staffers have to justify anything that's not AI-produced? What does AI-first mean? Yeah. So for us, AI-first means that we want to use AI as a means of driving an acceleration of the customer outcome, an acceleration of decision-making, an acceleration of building new features. So just think about it as mostly a metric of speed. On one hand, you could think about AI as going after like a massive work, and you could say AI is going to remove some part of that massive work and do it instantly, so the massive work goes down, or think about work as a timeline, and not a mass. All we're doing is trying to get through each step so that way, we can get to the next step and so on. And everything's faster. And everything's faster. So I want to have us use AI to move faster down the timeline, not just purely to reduce the total mass of work that we're doing. There's probably one pronounced difference versus, let's say, the Duolingo memo. There's some emerging idea, which is sort of you have to prove that AI can't do this thing for you to get then head count, and our general instinct is actually the opposite. If you can prove that you can use AI, then that's actually when you will get head count, because what we want is we want the dollars of the business to go back into the areas that are the increasing areas of productivity gain, because those areas will then be higher ROI for us over time. This post originally appeared at to get the Fast Company newsletter: Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
