Preheat the oven to 350°F. Spray a 9x13-inch baking pan with cooking spray.

Toast the coconut: On a large baking sheet, spread the coconut flakes into an even layer. Bake in the preheated oven, stirring halfway through, until the coconut is golden brown and toasted, 5 to 8 minutes. Keep a close eye on the coconut as it can burn quickly. Let cool on the baking sheet (as it cools, it will continue to toast from the residual heat).

Make the cake batter: In a large bowl, combine the cake mix, eggs, coconut milk, vegetable oil or melted butter, vanilla extract, and lime zest. Mix with a rubber spatula until completely combined. Fold ¾ cup of the toasted coconut into the batter. Pour the batter into the greased baking pan.

Bake: Bake according to the package directions until lightly golden and a toothpick comes out clean, 20 to 28 minutes. Let cool in the pan.

Make the frosting: Using an electric mixer, beat together the softened cream cheese and butter on medium speed until smooth, 3 to 4 minutes. Use a rubber spatula to scrape down the sides. On low speed, add 2 cups of powdered sugar and the vanilla extract. Scrape the sides of the bowl down to fully incorporate. Mix until creamy, adding more sugar as needed, a little at a time, to get your desired sweetness and thickness.

Decorate and serve: Use an offset spatula to spread the frosting on top of the cooled cake. Sprinkle with the remaining ¼ cup toasted coconut flakes. Cream cheese frosted cakes can sit in a room-temperature kitchen for up to one day. To store longer, cover with plastic wrap or a cake cover and refrigerate for up to 4 days. Remove from the fridge 30 minutes before serving to bring to room temperature. Love the recipe? Leave us stars and a comment below!