BOX

Image source: The Motley Fool. Tuesday, Aug. 25, 2026 at 5:00 p.m. ET Vice President, Investor Relations - Cynthia Hiponia Co-Founder and Chief Executive Officer - Aaron Levie Co-Founder and Chief Financial Officer - Dylan Smith Cynthia Hiponia: Good afternoon, and welcome to Box's Second Quarter Fiscal 2027 Earnings Conference Call. I'm Cynthia Hiponia, Vice President, Investor Relations. On the call today, we have Aaron Levie, Box Co-Founder and CEO; and Dylan Smith, Box Co-Founder and CFO. Following our prepared remarks, we will take your questions. Today's call is being webcast and will also be available for replay on our IR website. Supplemental slides are now available on our website. On this call, we will be making forward-looking statements, including our third quarter and full fiscal year 2027 financial guidance and our expectations regarding our financial performance for fiscal 2027 in future periods, including gross margins, operating margin, operating leverage, future profitability, net retention rates, remaining performance obligations, revenue and billings and the impact of foreign currency exchange rates and our expectations regarding the size of our market opportunity, including the growing opportunity driven by the increasing role of unstructured data in AI agents in the enterprise, our planned investments, future product offerings, go-to-market initiatives and growth strategies, the timing and market adoption of and benefits from our new products, solutions and pricing models, our ability to address enterprise challenges, including enabling organizations to automate critical workflows and deliver value for our customers. The benefits from our deepening partnerships with leading AI labs, hyperscalers and systems integrators and our capital allocation strategies, including potential repurchase of our common stock and future share count reductions. These statements reflect our best judgment based on factors currently known to us, and actual events or results may differ materially. Please refer to our earnings press release filed today and the risk factors and documents that we file with the SEC including our most recent quarterly report on Form 10-Q for information on risks and uncertainties that may cause actual results to differ materially from statements made on this earnings call. These forward-looking statements are being made as of today, August 25, 2026, and we disclaim any obligation to update or revise them should they change or cease to be up to date. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. You will find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release and in the supplemental slides, which can be found on the Investor Relations page of our website. Unless otherwise indicated, all references to financial measures are on a non-GAAP basis. Finally, please see our earnings deck posted on our IR website for a more detailed look at our Q3 and full year '27 guidance. Thank you. With that, let me turn the call over to Aaron. Aaron Levie: Thanks, Cynthia, and thank you all for joining the call today. Box delivered exceptional second quarter results, continuing the strong momentum we saw in Q1 and led by the rapid customer adoption of Enterprise Advanced. Second quarter revenue exceeded our guidance, growing 9% year-over-year or 11% in constant currency and produced operating margins of 29%. We drove a net retention rate of 106% ahead of our expectations of 105%, driven by both price per seat increases and seat expansion. Our Q2 billings growth of 17% year-over-year and RPO growth of 15% year-over-year reflect the success of our strategic investments in both go-to-market and product road map in delivering solutions to customers that address their most critical challenges in AI. Some examples of our Enterprise Advanced wins in the quarter included a leading multinational investment bank that upgraded from Enterprise Plus to Enterprise Advanced transitioning its legacy file servers to Box Platform. This deployment will expand its license to a wall-to-wall agreement to deliver unstructured data insights across its global banking teams. Next, a major federal agency upgraded from Enterprise Plus to Enterprise Advanced with a 4x seat expansion to replace its legacy contract life cycle management and collaboration platforms. In partnership with Salesforce, Box will power secure Claude-based CLM and document management across key legal and research divisions, replacing multiple SaaS vendors. This agency-wide modernization is enabled by Box's FedRAMP High compliance, our secure identity verified e-signatures and Enterprise Advanced capabilities. With record Q2 bookings these wins and many others make it clear that our role in enabling enterprises to get the most out of their enterprise content and transform in the era of AI is becoming increasingly significant. During the second quarter, I spoke with many enterprise technology leaders who highlighted their primary goals and challenges in implementing AI. One of the most common topics is how enterprises can get the right context to AI agents in a secure and governed way as well as tap into the full value of their unstructured data. To do this, enterprises need a secure platform that can connect all the intelligence and capabilities of AI models to enterprise content and workflows. The world's most advanced super intelligence is only as useful as the underlying enterprise knowledge and corporate information that it has access to. Instead of companies sitting on millions or hundreds of millions of files that they know very little about with AI agents, they can now ask questions about this data, mine it all for intelligence and automate nearly any workflow that involves this enterprise content. This is the intelligent content management platform that we are building. These technology leaders that I'm speaking with are also recognizing that as AI model capabilities advance rapidly across an expanding set of vendors like OpenAI, Google, Anthropic, Meta, xAI, NVIDIA and more, that enterprises will need a model neutral platform that connects their content and workflows through these models and agents securely. With AI costs continuing to rise, the ability to draw the right cost performance mix with any vendor becomes essential rather than migrating content and workflows into separate systems to unlock AI's benefits, our intelligent content management platform gives enterprises a single platform where they can swap models or agents on their content at any time securely. Now Box is at the center of the greatest transformation in how enterprises work, and we are continuing to drive our product and go-to-market strategies to take full advantage of this massive opportunity. Building on our product leadership. In the second quarter, we announced a range of new capabilities that help customers transform the value of their content with AI. We introduced new security capabilities designed to give organizations greater control over AI agents working with their enterprise content with new agent guardrails, third-party agent activity oversight, prompt injection detection agent classification-based access policies and more customers will be able to extend Box's enterprise-grade security controls to both Box Agents and third-party agents such as Claude, ChatGPT, Gemini and more. To support our headless initiatives, Box announced new MCP integrations with Anthropic's Claude for Legal, Databricks, Harvey, IBM's Watsonx Orchestrate Agent Catalog, Notion Custom Agents, Slack's Slackbot and SpaceX's Grok. Box partnered with Anthropic as a launch partner for Claude's new legal industry solutions using the Box MCP server as the secured governance layer for agentic legal work. New MCP tools now let Claude execute multistep matter operations directly in Box, copying and uploading files, tagging metadata, managing collaborator access. Turning Claude from a QA chatbot into an active practice agent. All actions stay governed by the firm's existing Box permissions and ethical walls, avoiding the governance gap of moving sensitive client data into unsanctioned tools. Also, earlier this month, we announced the release of the Box MCP server for Databricks now available in the Databricks marketplace. This integration lets data analysts, scientists and engineers, combine, connect and query unstructured content from Box, including their contracts, clinical records, financial assets and specifications alongside structured sources like CRM and ERP, all without duplicating data or moving it outside of Box's secured governance boundary. This unlocks the use cases across industries from health care teams spotting care gaps by combining clinical records with referral and billing data to financial services firms accessing borrow and covenant risk by joining loan documents with banking data. Now as we look further into the second half of FY '27, we're continuing to drive significant innovation across our platform to help enterprises maximize the value of their content in the era of AI. Building on the momentum of Box Automate, Box Extract and Box Apps, our platform is evolving into a premier agentic workflow automation system designed to streamline critical content processes like client onboarding contract reviews, brand asset verification, supply chain automation and thousands of other workflows in an enterprise. Additionally, we're advancing Box Extract to help power complex document extraction needs across a range of industries from financial services to life sciences. Our model neutral agentic harness ensures that customers can both improve the accuracy of this extraction and lower their costs by choosing exactly the right model they need for any document type. Box is also modernizing its core content management infrastructure with improvements in metadata management, large file support and file system capabilities, we are paving the way for enterprises to retire legacy on-premises ECM systems and migrate their unstructured data to a secure cloud native platform where it can be easily accessed by AI. In Q2, we've continued to see more and more enterprises look to migrate off these legacy systems in favor of a much more modern AI-driven approach. At Box, we're also optimizing our developer ecosystem to support AI agents working with enterprise content at scale and introducing new tools and improvements such as Enhanced MCP server support, deeper integrations with leading agents like Claude, ChatGPT, Copilot and Salesforce Agentforce and improved context retrieval APIs, which will allow developers to securely connect enterprise content to AI agents. We're focused on delivering the world's best headless experiences for working with enterprise content securely across any AI agent and monetizing this usage through our AI units and API volume. Finally, all of these innovations are anchored by Box's industry-leading security and compliance foundation. As we recently saw with the OpenAI Hugging Face incident, enterprise will increasingly need platforms that can securely protect their corporate data and ensure that neither humans nor agents can get access to information they shouldn't have access to. As external AI agents interact with enterprise data, Box is implementing robust guardrails, comprehensive audit logs and real-time security alerts to ensure that content remains protected, governed and visible at all times. We'll continue to deliver industry-leading data protection and governance capabilities to ensure the security of unstructured data in an enterprise. Now we will be sharing much more about our product road map at this year's BoxWorks in San Francisco in early November, where we'll be making major product announcements, we'll hear directly from customers that are taking advantage of the Box Platform and hear directly from our partners, including the CEO of NVIDIA, Jensen Huang; Lip-Bu Tan, the CEO of Intel; and Michael Truell, the CEO and Founder of Cursor. Next, for our go-to-market strategy, we remain focused on accelerating the adoption of Enterprise Advanced, enabling customers to power their intelligent workflows with content while driving the growth of platform revenue. To win in key industries such as financial services, life sciences, government, education, media and entertainment, legal and other key verticals, we will continue to deepen our vertical-specific marketing sales motions, collateral solutions and ecosystem partnerships. We are also expanding our FDE or Forward Deployed Engineering efforts to ensure that customers can successfully implement and tune AI agents on their enterprise content for everything from document processing to agentic content workflows. Additionally, we are expanding our system integrator ecosystem, collaborating with vertical regional and global system integrators to embed our platform deeper into enterprises critical content workflows. Finally, our partnerships with major hyperscalers like Amazon and Google will be central to expanding our enterprise distribution and enablement. In the second quarter, we continued to see strong momentum in customer wins enabled by these partners, a critical part of our go-to-market strategy. For instance, in partnership with DataBank, a leading insurance provider has adopted Box Enterprise Advanced with Shield Pro and purchased additional AI units to drive a comprehensive platform modernization. These deployments leverage Box's platform APIs, the Box Sign APIs and Box AI to connect Box directly into the firm's custom middleware for core systems, including Guidewire. This positions the insurance provider to modernize more than 100 terabytes of content, retire multiple legacy platforms and integrate Box AI across high-volume workflows like mail room and policy processing. Working with Slalom, a large U.S. state DMV upgraded from Enterprise Plus to Enterprise Advanced and purchased additional AI units as the foundation for a new intelligent document processing initiative. This agency is replacing a costly legacy document processing system with classification and metadata extraction powered by Box AI. This solution will extract key information from identity documents at scale and automatically populate Salesforce records associated with each driver profile, streamlining licensing applications and renewals across the state. At Box, we have an extraordinary opportunity to serve as the defining platform for securing, managing, governing and applying intelligence to unstructured enterprise data at scale. Nearly all mission-critical workflows, such as processing regulatory data, automating insurance claims with AI, reviewing legal contracts, managing aviation research or facilitating collaboration in pharma are all fundamentally powered by enterprise content. Our intelligent content management platform sits squarely at the center of these vital business processes. We're incredibly excited at Box about the market transformation happening right now due to AI and we have the team, the technology and the customer base to fundamentally take advantage of this massive opportunity. Now let me turn the call over to Dylan. Dylan Smith: Thanks, Aaron, and good afternoon, everyone. We had another very strong quarter in Q2, driven by record Q2 bookings and increasing Box AI adoption. As a result, we exceeded guidance across all top and bottom line results, delivering our fifth consecutive quarter of accelerating revenue growth in constant currency. As Aaron discussed, we advanced our leading intelligent content management platform by deepening our AI and agentic capabilities while investing in key go-to-market initiatives to drive continued enterprise advanced momentum. Q2 revenue of $321 million was up 9% year-over-year and up 11% in constant currency, exceeding our guidance. Customers paying us at least $100,000 annually grew by 10% year-over-year. Suites customers now account for 69% of revenue, up from 63% a year ago. We ended Q2 with remaining performance obligations, or RPO, of $1.7 billion, a 15% year-over-year increase or 17% in constant currency. Both short-term and long-term RPO accelerated sequentially with short-term RPO up 11% year-over-year and up 14% in constant currency. We expect to recognize roughly 55% of our RPO over the next 12 months. Q2 billings of $310 million were very strong growing by 17% year-over-year or 16% in constant currency. This result exceeded our expectations for low double-digit growth with the outperformance driven primarily by Q2 booking strength. In Q2, our net retention rate improved to 106%, above our guidance of 105% and up from 103% in the year ago period. Our annualized full churn rate remained at 3%. This outperformance was driven by continued improvement in our seat expansion rate as well as the impact of very strong net retention results within our Enterprise Advanced customer base, which exceeded our overall net retention rate. We now expect our net retention rate to be 106% exiting FY '27. We delivered Q2 gross margin of 81.2% in line with our expectations. Operating income of $95 million resulted in operating margin expansion of 90 basis points from the year ago period to 29.4% which reflects a 100 basis point headwind from FX. This was above our guidance of 28.5%. In Q2, we delivered EPS of $0.40 which was above our guidance of $0.39. This includes an FX headwind of $0.04, $0.01 higher than our prior expectations. Turning to our cash flow and balance sheet. In Q2, we generated free cash flow of $60 million and cash flow from operations of $71 million, up 67% and 54% year-over-year, respectively. These results were driven by strong linearity, allowing us to collect a healthy portion of our Q2 bookings within the quarter. We ended Q2 with $446 million in cash, cash equivalents, restricted cash and short-term investments. In Q2, we repurchased 2.6 million shares for approximately $66 million. As of July 31, 2026, we had approximately $378 million of remaining buyback capacity under our current share repurchase plan. With that, let me now turn to our Q3 and updated FY 2027 guidance. Note that our second half expenses will be more weighted towards Q4 and versus our typical seasonality due to the expected impacts from BoxWorks occurring in Q4 this year as well as the recent extension of our Redwood City headquarters lease. For the third quarter of fiscal 2027, we expect Q3 revenue to be approximately $329 million, representing approximately 9% year-over-year growth or 11% in constant currency. We anticipate our Q3 billings growth rate to be roughly in line with revenue growth of 9% which includes an expected tailwind from FX of approximately 70 basis points. We expect Q3 gross margin to be approximately 80.5%. We anticipate Q3 operating margin to be approximately 28%, which includes an expected headwind from FX of approximately 80 basis points. We expect Q3 EPS to be approximately $0.39, which includes an expected headwind from FX of approximately $0.02. Weighted average diluted shares are expected to be approximately $142 million. For the full fiscal year ending January 31, 2027, we are raising our revenue expectations for the full year by $10 million to approximately $1.29 billion, representing 10% year-over-year growth or 11% in constant currency. We expect our FY '27 billings growth to be roughly in line with revenue growth. This includes an expected headwind of approximately 150 basis points from FX. We expect FY '27 gross margin to be approximately 80.5% with Q4 gross margin expected to be roughly 80%. This reflects the strong and growing adoption of Box's Platform and Box AI as well as the capacity dynamics of our public cloud providers. We continue to expect FY '27 operating margin to be approximately 28%, which includes an expected headwind from FX of 80 basis points. This reflects our ongoing focus on delivering operational efficiencies even as we continue to invest in driving durable revenue growth. We now expect FY '27 EPS of approximately $1.54, which includes an expected headwind from FX of approximately $0.09. Adjusting for the impact of the currency and share count movements versus our previous expectations, this represents an increase of $0.01 versus our prior guidance. Weighted average diluted shares are expected to be approximately $141 million. This represents a significant reduction from 149 million shares in the prior year as we continue to execute our disciplined capital allocation strategy. The $10 million raise to our revenue expectations this year reflects continued momentum across the business with demand for Box AI and the growing adoption of Enterprise Advanced, driving continued acceleration in our revenue growth rate and continued improvements in our net retention rate. As Box's intelligent content management platform is increasingly becoming the foundation enterprises rely on to securely unlock AI's value across their content, Box is well positioned to drive durable long-term growth. With that, Aaron and I will be happy to take your questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of Lucky Schreiner with D.A. Davidson. Lucky Schreiner: Great. Aaron, I thought it was really interesting to hear about your expectations for innovation in the back half of the year. And I wanted to follow up on that. The longer agentic workflows tend to be more token intensive. So can you give us an update on how you view token cost evolving here and how OpenSource model adoption factors into customers implementing some of those longer form workflows and maybe sneak in, like any difference in unit economics between frontier model versus OpenSource for you guys internally? Aaron Levie: Yes. So you're exactly right. The kind of momentum we're seeing generally correlates to interestingly, two dimensions, either one longer-running agents that do more processing work in a single session or the ability to run agents off of large amounts of data, which can be broken up kind of discretely on a per item or a per document basis, both of which have the exact same type of tendency to be very token intensive, very consumption heavy which is both great for us. I mean, basically on every dimension because it means that customers will increasingly want those types of workflows to happen inside of platforms that are model neutral because the more tokens your use case requires, the more, obviously, over time, you're going to be price sensitive because you want to make sure that you're optimizing that cost structure for the use case. So by having a model neutral layer, which is our agentic harness, we can then make sure that we are directing the workload to whatever is the effectively cheapest model at the accuracy level that the customer is looking for. In some cases, that can be an open weight model, and we have some -- there's models on the horizon that we're quite excited about, that we'll be opening up. We assume in the second half based on some of the visibility we have from partners. In other cases, it can be just the sheer competition that's happening between the labs. You've seen things like OpenAI bringing down their prices or Gemini bring down its prices. That actually also flows into our product as more either margin or relief or more consumption from customers. But in general, the again, the trend that we're going to continue to see is customers are going to say, "I have millions, tens of millions, hundreds of millions of documents. I want to be able to run agentic workflows on these documents to automate processes or extract intelligence from data or be able to use all this information as kind of critical knowledge from my organization." And then our layer is really in the best position to both, again, deliver the highest level of accuracy at the cost profile that our customers are looking for. So you're going to see AI unit growth continue to go upward. You're going to see more upgrades into Enterprise Advanced and even Box as a headless platform performs well in that environment as well. So these are all great trends for us. Lucky Schreiner: Awesome. Last one for me. It was interesting to hear about the legacy migrations. Can you give us a sense like those tend to be long and painful processes. Obviously, your partnerships improve that. But maybe like how have you been able to speed up that process, I imagine Box Shuttle and AI capabilities in general help you out there? And what's the customer demand to go through that kind of painful modernization process today? Aaron Levie: Yes. Yes. It's interesting. So we've obviously talked about this a bit over the past couple of years. I think it started out as something that we assumed and kind of could feel would happen but it was still very early in the trajectory. Now we're actually seeing example after example on the rise, which is if you're an enterprise and you still have a large amount of your unstructured data in legacy systems or on-premises environments. Your contracts, your research files, your insurance claim data, your loan processing documents, your KYC documents, your agency documents in a government agency, all of that data is often sort of effectively trapped and closed off from AI agents. So as you have an AI strategy that assumes that an agent is going to read a document or process a claim or look through a contract or be able to process an image for brand guideline failures, all of that data needs to be available and accessible to AI agents in secure ways in these workflows. And so many of the legacy approaches to doing document management or enterprise content management just simply don't work as companies are modernizing how they're going to work with and automate their enterprise content workflows. So that's leading to this catalyst of more and more customers reaching out to us calling us and then obviously going out into their environments for either large-scale migrations or really kind of replatforming their next generation of these workflows. We had a number of deals in Q2 that kind of represent this combination of very much agentic workflow-driven use cases that have a data migration or a legacy ECM system migration as a part of the where the dollars are going to come from. So on the horizon, we actually see quite a bit of this opportunity continuing to grow. And so in the second half and certainly as we go into next year, you'll see a continued amount of product launches and updates that help facilitate and accelerate that migration, all of which are these next-generation features that help customers manage their content in the cloud at scale in these business processes and be able to bring AI agents to that content very seamlessly and securely. Operator: Your next question comes from the line of George Kurosawa with Citi. George Michael Kurosawa: I'm on for Steve Enders. Maybe just a question on the security role that Box plays within these agentic workflows. If you could talk about the governance and security side, what is maybe new or different from -- in terms of enterprises needs in an agentic world versus dealing with human users? How is Box's role there evolved? Aaron Levie: Yes. This is an area of an incredible amount of surface area. So which is very exciting for us. Obviously, it's an incredibly dynamic and sometimes kind of stress space for the customer ecosystem, but we have -- there's a lot of innovation really available here. If you think about what agents tend to need, not only do they need basically all of the same level of security and controls that humans need. So they need access levels, they need -- they need to be only able to view or edit the documents that you want them to, you need to be able to obviously be alerted if they're either going rogue or you're seeing kind of too much usage happen. So that's kind of the basic foundation that we're drafting off of in the core of Box's security and access control capabilities, which is why we're in a very strong position to take a lot of these workloads. But what's interesting is, over time, they're actually going to need additional protections that we didn't commonly think that end users needed. Things like an end user could only -- a human user could really only process a certain amount of data at scale and so you could quickly kind of detect if maybe a user was doing something that they shouldn't be or there be very limited kind of blast radius or damage that they could do if they kind of went rogue or there's some malicious actor in the system. Whereas AI agents have the ability effectively with just kind of -- it's kind of just correlated to their compute level, to be able to either work with large amounts of data, access the wrong information. In the case of the hugging phase or OpenAI very much go out and execute on a goal to the kind of ultimate level that its compute is allowing. And so what that means is that enterprises are going to need an all-new set of guardrails, alerting mechanisms, anomaly detection capabilities, ways of really having a better a better set of controls on what agents can do with their data. And that could be things like, okay, agents inside of these folders or at these usage levels shouldn't be able to write data or shouldn't be able to download data, they can only kind of view it or we need to be able to monitor their activity or we need to be monitored -- or we need to be alerted after a certain threshold of activity happens under certain kinds of agents. And maybe we don't want to let these kinds of agents into our systems, but we're fine to let those other agents in the system. So all of that functionality is effectively kind of net new for the agentic era. But what it's all built on is the same foundation and capabilities that we've been working on for a number of years. So Shields, for instance, which is our advanced threat detection and security products from Box, we're going to continue to build out more and more features that help our customers protect this data that both again, let them protect human users, the agentic users in the system. There's new forms of identity controls that we need to be building out that we're excited to share more about over the coming quarters. We obviously are going to continue to integrate with the broader security ecosystem to help protect enterprise data. But these are all things that continue to reinforce our value proposition and reinforce the need for secure very, very robust systems of record on data. This is kind of why we -- in the -- maybe the first part of this year when there was a lot of commentary on maybe people just vibe code different kinds of applications, to us, it was a little bit kind of humorous just because we know the level of security and protection that is necessary for these enterprise systems. And I think as people saw the OpenAI Hugging Face incident has kind of made it more resonate what's really possible out there from a security risk standpoint. So we take our position very seriously. We're going to be doubling down in all of our security investments and make sure that we are the best platform for helping customers protect all of the unstructured data. George Michael Kurosawa: Okay. That's great color. And then maybe one for Dylan. You referenced a couple of different dynamics on the gross margin side, AI usage and then capacity in the public cloud providers. If you could just double-click what are some of the moving pieces there? How should we think about that going forward? Dylan Smith: Yes. So as noted, really, the two biggest drivers are the kind of strong and growing adoption of Box's Platform, Box AI specifically as well as the capacity dynamics with our public cloud providers. To double-click a bit, really, number one, we're really pleased with, especially the new features a lot of the kind of heavier workloads and kind of agentic processes that Aaron mentioned are certainly kind of a quickly growing and net new type of use case that customers are using the platform for. And then on the capacity dynamics, that's really related to kind of limited access to certain components of the infrastructure just given what's going on in the environment, and that really an impact on the kind of level and impact of the infrastructure efficiencies that we expect to deliver this year. So certainly, as those constraints ease, we'll continue to unlock those efficiency projects. But those are some of the things that we're seeing that are impacting gross margin versus our initial expectations during the year. Operator: Your next question comes from the line of Matt Bullock with Bank of America. Unknown Analyst: This is Jacob on for Matt Bullock. I think we're hearing kind of more and more about kind of enterprises going wall to wall. You mentioned a few on the call today. Could you talk specifically about how kind of the AI governance or AI agent governance opportunity is like driving this? Why is there a benefit to going wall-to-wall rather than just having Box maybe within a certain department when it comes to like embedding AI workflows? Aaron Levie: Yes. Definitely, we've had some great wall-to-wall wins. I would say we're in a position where we can both capture the individual line of business use case that a customer is trying to automate or be able to bring AI to as well as the wall-to-wall notion. So I think we're actually both motions are humming at the moment. But to your point, the wall-to-wall benefits for a customer are really imagine a scenario where you have rolled out a variety of AI agents to your enterprise, maybe some people are using ChatGPT, others are using Claude Cowork. Maybe your developers are using Cursor, your sales force has Salesforce Agentforce. Now all of those agents are running around, they need access to corporate information to be able to make decisions or be able to work with your information. So that could be your research materials, your marketing assets, your HR documents, your contracts. The challenge is if you have 3 or 5 or 10 different systems where all of those agents all have to be able to work with and equally use successfully, and you have to be able to secure the access controls to all of that data, it's just a very, very difficult problem. It's a many-to-many relationship problem, and that's generally not a clean architecture for most enterprises. So what you're going to see is a consistent pattern across various data planes where how do we move our canonical data in different topics into sources of truth. So you've seen that in the structured data world with things like Databricks or Snowflake, we're seeing these kind of mass migration projects. You've obviously, over the years, seen that in ERP systems or CRM systems. But we also think there's quite a bit of momentum on the same for unstructured data. So you'll go to an enterprise and they'll say, "Hey, I want to be able to have all these agents have access to corporate knowledge." That, again, is we need to make sure that those agents are working off of the real source of truth the authoritative copy of data, which means that you can't have a fragmented landscape that everybody is working from. So that's one of the core wall-to-wall benefits. That's the kind of like knowledge worker end-user productivity benefit. There's also security benefits, there's governance benefits. We've been building a lot of features in Enterprise Advanced that help you with things like data retention, data archival. We have new capabilities around records management that we're excited to share in the next couple of quarters. But all of that is really around the need for robust infrastructure that helps you manage all that enterprise content, which is really the context for those agents. Dylan Smith: Yes. And the only thing I'd add, this is Dylan, is, as we talked about our confidence as we launched it in Enterprise Advanced, also being a potential catalyst for seat expansion because of the capabilities that it enables and the types of workflows that customers can now do using those capabilities. A lot of those are really cross-departmental, right? So if you think about whether it's a sales enablement workflow or a contract life cycle management workflow or something like that, yes, there might be a primary business unit who's really driving it, championing it, but that might go across 4, 5, 6 different departments. And if they don't have access to Box, they're going to run into all the challenges that Aaron was mentioning. And that's why we've seen -- I mean you look at the increase in our net retention rate and those trends, the biggest driver of that has been higher seat expansion for exactly that reason. Operator: Your next question comes from the line of Chris Quintero with Morgan Stanley. Christopher Quintero: Aaron, maybe for you kind of high level, we've been hearing a lot about zero data retention as a key enabler for AI growth and compliance. And we've seen how some of the recent models have influenced some potential changes around that. So curious how you're thinking about that from the Box perspective and what's the opportunity there for you all? Aaron Levie: Yes. So this is obviously a very hot topic at the moment, mostly driven by the release of Fable. In general, maybe one of the underappreciated reasons for just the rapid rise of AI growth is the fact that very quickly, most of the leading labs coalesce around the idea of zero data retention, which basically in simplest terms means that when I kind of am interacting with an AI model and I have information in the context window, that data doesn't sort of get stored and sit around for a week or 30 days in the servers of those AI labs, it's sort of just a kind of a femoral pass-through. And that's what led to enterprises being very comfortable with the adoption of AI in their organizations, whether that was direct adoption or through more of these kind of applied AI layers like a Box or a Harvey or Sierra, Decagon, et cetera. And so the challenge, obviously, with something like Fable was they launched without zero data retention, which obviously means that there can be less adoption, you have to have kind of a separate exception handling that customers have to go through. And we've made it very clear in our platform that the sort of in production GA generally available models we'll have a set of criteria that are met around zero data retention, certain compliance requirements, ways that the infrastructure is hosted, being able to have certain regions that it all operates in. And that's the enterprise trust that we've been able to establish with organizations as we deliver AI to them. And that's again where I think you're going to see a huge benefit to this applied AI layer is being able to really sort of bridge the breakthroughs of AI models with the actual real enterprise workflows that need compliance, they need guardrails, they need security, they need governance. They need these kind of regulatory controls. So that's kind of the state of the industry. My guess realistically is actually just Anthropic will evolve their stance on this because they'll see it in the revenue. And they'll have to change course. And I think we'll just see more and more modern approaches to how these companies will both meet their safety -- internal kind of AI safety requirements with offering things that kind of technically resembles ZDR for their users. Christopher Quintero: Got it. Very helpful. And then great to hear about the FDE motion, the expansion you're putting through there. So curious what are some of the key learnings you've had on that whole motion as you've now kind of ramped it up and grown over the past few months? Aaron Levie: Yes. So this is a pretty exciting area because if you kind of think about the types of challenges, workflows, goals that customers have when working with enterprise content and unstructured data and agents, let's say, you're a bank, let's say, you're a pharma company, let's say, you're an insurance provider. You're seeing all of this potential with AI. And certainly, in your internal use cases, things like coding agents, et cetera, are showing incredible breakthroughs and productivity gains. But the rest of your organization, the back-office processes, the customer-facing workflows, you're trying to figure out how do I actually get the same AI gains in those parts of the business? And some of that's a data challenge, some of that's an architecture challenge, some of that's an information governance challenge, all of which obviously Box is very, very expert in. But a lot of times, it's also how do I tune these agents, how do I pick the model, how do I run evals against my data and compare what model is the best to use for certain types of workflows or certain kinds of document processing tasks. And so Box from just a talent standpoint, a brand standpoint and a technology standpoint, I think best represents being able to help customers go through that journey. And so our the FDE motion really kind of originated by us effectively doing that with a number of our individuals across our consulting team and our solutions engineering team. So we've been increasingly more programmatizing that and scaling that across customers. I think this is going to continue to be an investment area for us, both for the rest of this year and certainly next year. And again, in essence, it's really about helping our customers transform with AI, making sure that they can actually get the -- again, the data environment set up in the way that they need, making sure that they understand how to do the right types of evaluations of AI models and agents on their documents, continue to kind of tune these workflows. There's been some engagements we've worked on with customers where we've gone back maybe nearly a half a dozen times because there's been a new model breakthrough, and we want to introduce that into the customers' environment and make sure that they can get those either productivity gains or cost savings as a result of that. And that really, again, requires a high degree of technical expertise on the side of both the vendor and the customer, which is why you're seeing this big push on FDE's right now. Operator: Your next question comes from the line of Brian Peterson with Raymond James Company. Johnathan McCary: This is Jonathan McCary on for Brian. I'll ask one just multi-parter. Aaron, I realize it's early days, but I wanted to ask on the consumption trends. It sounds like that's ramping nicely. How much of the traction there is customers that are seeing enough success to actually come back and refill the tank, so to speak, on credits prior to renewal. And then relatedly, is the ramping feature adoption there on the AI platform predominantly from existing customers? Or are we at a stage where that's actually driving material competitive wins on the net new side as well? Aaron Levie: Yes. Great question. So consumption is obviously off of a lower base than many other parts of the business, but has been growing, I think, quite rapidly, especially kind of on a year-over-year standpoint in Q2, we saw really nice wins on the growth side. A lot of it is the customer still doing their initial big kind of growth workloads just because the -- we're still relatively early in the AI unit monetization. And then by virtue of just the scale of our existing customer base, a lot of it is from existing customers. But what's interesting is that is often leading to materially bigger upsells on those existing customers. So it's a little bit might be even incidental in some cases, that it's an existing account because the new transaction is so different or bigger because of the new use case that they have with us. So we're seeing really great opportunities across the board where customers are saying, "Hey, I thought of you as a place where I put my documents or I put my content. Now it's a place where actually I can run the workflow and intelligent workflow on you, which is really changing the calculus of the conversation." And I was in a conversation just literally 3 days ago with a customer that has been at Box probably nearly a decade. And the moment we showed them our agentic workflow automation tool it like completely changed the type of conversation we are having. And this is a customer that theoretically could have already known about all of those use cases and capabilities, but we caught them in when they were at a juncture of a new set of use cases that they need to run their documents and document processing and that will absolutely kind of turn into now another sales motion where we go and work with that customer to expand what they're doing with Box. So that kind of how it's working every single day right now across our customer base. And what that's leading to is almost back to the last question, more on the FDE front, more on the verticalization piece, more with system integrators all of which we're seeing great success in from a go-to-market investment standpoint. Operator: Our next question comes from Joshua Trautman with RBC Capital Markets. Joshua Trautman: This is Joshua Trautman on for Rishi Jaluria. Congrats on the quarter. You guys have mentioned strong product adoption and some different tailwinds to retention. And I was just curious around how international deals have helped participate in that and how those conversations with those clients have been developing? Aaron Levie: Yes. Great. For us, it was a broad-based quarter. So we're quite happy with the results. We had great wins in Japan, some of the leading enterprises out there that we're hope we'll be able to announce relatively soon some of those big wins, some great wins in EMEA. So we had great traction and participation from EMEA. And then obviously, U.S. business across everything from public sector, U.S. enterprise, commercial, great momentum. All of which very similar contours of conversation around how do you transform with AI agents. I was out in Japan in the beginning of June and just overwhelming excitement around how do you bring more automation to your enterprise content with the power of AI agents. But again, those are very similar to the conversations that we're having here in the U.S. and those that we're having in Europe. Operator: Your next question comes from the line of Jason Ader with William Blair. Jason Ader: I wanted to ask about billings, very strong in Q2. Billing for Q3, I think you guided to 8%. Just can you help us understand if there's some seasonality there, why the step down from Q2 to Q3? Dylan Smith: Sure. So a lot of moving pieces in there and billings is inherently lumpy. And if you look back to even entering the year that's kind of the dynamic that we had expected, which is a combination of very different -- everything from very different kind of FX impact quarter-to-quarter to kind of ease or difficulty of some of the comps. So I would say if you think about the full year billings outcome, even since our initial guidance 6 months ago, we've raised those expectations pretty significantly more than $20 million and showing a strong acceleration from where we were last year. And so we really think about it as that dynamic as not at all indicative of the change that we're seeing in the demand and momentum in the business as the underlying kind of leading indicators of that growth and bookings remain very healthy from pipeline to Enterprise Advanced adoption to RPO and NRR, our net retention rate, both moving in the right direction. So really a function of we say just some of the variability quarter-to-quarter as well as the fact that, as always, we want to be thoughtful and prudent about how we guide. I mean, even looking back to this year so far, we've had pretty significant outperformance against the guidance that we set up. And hopefully, that trend continues, but just really wanted to be kind of thoughtful about that. Jason Ader: Okay. And for the year, I think you said billings growth and revenue growth about the same. Wouldn't -- I guess, it just -- it would seem to me, given the momentum you have, the billings growth would be ahead of revenue growth just because it's more of a leading indicator. Can you just help reconcile that? Dylan Smith: Yes. I mean I would say -- I mean I do expect it to be ahead on a constant currency basis as there is more of an FX impact to billings than revenue, and we did give the revenue as we're talking about growing at roughly the same rate, that's on an as-reported basis. But again, some of it is just kind of the way that we think about setting expectations and there's as you'd imagine, more variability in billings plus just some of the dynamics around compares that didn't show up in the same way as revenue. So I would say kind of other factors outside of the underlying momentum are impacting each of those metrics a little bit differently. But to your point, we do expect billings growth to be a leading indicator of revenue to be ahead of it if we keep up the momentum that we've been on. And I think you see that type of dynamic for example, in our short-term RPO growth, which is both a few points ahead of either of those metrics and you're kind of moving in the right direction and accelerating. Operator: We have reached the end of the Q&A. I will now pass the call off to Cynthia Hiponia for closing remarks. Cynthia Hiponia: Great. Thank you, everyone, for joining us again this afternoon. As Aaron mentioned, we're hosting BoxWorks in San Francisco on November 5, and we'll be once again doing another Investor Relations product briefing at the event. So we look forward to giving you more details, and we'll talk to you on our next earnings call. Thank you. Before you buy stock in Box, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Box wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $437,097!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,355,077!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 1, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Box. The Motley Fool has a disclosure policy. Box (BOX) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by rapid customer adoption of Enterprise Advanced, which fueled record Q2 bookings and a net retention rate improvement to 106%. Management attributes growth to the 'intelligent content management' framework, where Box acts as a secure governance layer for unstructured data accessed by AI agents. Strategic positioning focuses on being 'model neutral,' allowing enterprises to swap between AI providers like OpenAI, Google, and Anthropic to optimize cost and performance. Operational momentum is shifting toward 'agentic workflow automation,' moving beyond simple storage to active processing of legal, financial, and clinical documents. Legacy system migrations are accelerating as enterprises realize on-premises data is effectively 'trapped' and inaccessible to modern AI agents. The partnership ecosystem, including Salesforce and Databricks, is expanding Box's reach into high-volume workflows like policy processing and clinical record analysis. Full-year revenue guidance was raised by $10 million to approximately $1.29 billion, reflecting sustained demand for Box AI and Enterprise Advanced. Management expects net retention rate to reach 106% by the end of FY '27, supported by seat expansion and price-per-seat increases. Strategic investments are being directed toward 'Forward Deployed Engineering' (FDE) to help customers tune AI agents and run evaluations on their specific data. Future product innovation will focus on 'headless' initiatives, monetizing AI usage through AI units and API volume rather than just seat-based licensing. Second-half expenses will be weighted toward Q4 due to the BoxWorks event and the extension of the Redwood City headquarters lease. Gross margin expectations for Q4 were adjusted to roughly 80% due to capacity constraints at public cloud providers and the compute-intensive nature of AI workloads. Foreign exchange remains a significant headwind, impacting Q2 EPS by $0.04 and projected to impact full-year EPS by approximately $0.09. The company continues a disciplined capital allocation strategy, repurchasing 2.6 million shares in Q2 with $378 million in remaining buyback capacity. Security risks, highlighted by recent industry incidents, are driving new R&D into 'agent guardrails' and prompt injection detection to protect enterprise content. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that longer-running agents are token-intensive, which benefits Box by making customers more price-sensitive and reliant on Box's model-neutral layer. The 'agentic harness' allows customers to direct workloads to the cheapest model at the required accuracy level, whether open-source or frontier models. AI unit growth is expected to continue upward as customers run agents across millions of documents for extraction and automation. Agents require a new set of guardrails because they can process data at a scale and speed that creates a larger 'blast radius' if they go rogue. Box is implementing net-new features like agent classification-based access policies and real-time alerting for anomalous agent activity. Management emphasized that these security needs reinforce the value of a robust system of record like Box over 'vibe-coded' applications. Enterprises are moving to wall-to-wall deployments to avoid a 'fragmented landscape' where different agents (e.g., ChatGPT, Claude, Copilot) access inconsistent data sources. Consolidating unstructured data into Box provides a single 'authoritative copy' for all corporate AI agents to work from securely. Enterprise Advanced is acting as a catalyst for seat expansion because AI workflows often cross multiple departments like sales, legal, and HR.

This article first appeared on GuruFocus. Revenue: Q2 revenue of $321 million, up 9% year-over-year (11% in constant currency), exceeding guidance. Billings: Q2 billings of $310 million, up 17% year-over-year (16% in constant currency). Remaining Performance Obligations (RPO): $1.7 billion, up 15% year-over-year (17% in constant currency). Net Retention Rate: Improved to 106%, above guidance of 105% and up from 103% in the year-ago period. Gross Margin: Q2 gross margin of 81.2%, in line with expectations. Operating Margin: Q2 operating margin of 29.4%, expanding 90 basis points year-over-year (including a 100 basis point FX headwind). Earnings Per Share (EPS): Q2 EPS of $0.40, above guidance of $0.39 (including an FX headwind of $0.04). Cash Flow: Q2 free cash flow of $60 million and cash flow from operations of $71 million, up 67% and 54% year-over-year, respectively. Share Repurchases: Repurchased 2.6 million shares for approximately $66 million in Q2. Customer Metrics: Customers paying at least $100,000 annually grew 10% year-over-year; suites customers account for 69% of revenue, up from 63% a year ago. Full-Year Guidance: FY27 revenue expected to be approximately $1.29 billion (10% year-over-year growth); FY27 EPS expected to be approximately $1.54. Warning! GuruFocus has detected 4 Warning Signs with NZSE:STU. Is BOX fairly valued? Test your thesis with our free DCF calculator. Release Date: August 25, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Box Inc (NYSE:BOX) delivered exceptional Q2 results with revenue growing 9% year-over-year (11% in constant currency), exceeding guidance and marking the fifth consecutive quarter of accelerating constant currency revenue growth. Strong customer adoption of Enterprise Advanced drove record Q2 bookings, a 17% year-over-year increase in billings, and a 15% rise in RPO, reflecting robust demand for AI-driven content management solutions. Net retention rate improved to 106%, ahead of guidance, driven by both price-per-seat increases and seat expansion, particularly within the high-value Enterprise Advanced customer base. The company is strategically positioned at the center of the AI transformation with a model-neutral platform, enabling customers to securely connect enterprise content to leading AI agents like Claude, ChatGPT, and Gemini, and monetize usage through AI units. Box Inc (NYSE:BOX) continues to expand its ecosystem and go-to-market motion with key partnerships (e.g., Anthropic, Databricks, Salesforce) and Forward Deployed Engineering (FDE) efforts, successfully winning large, wall-to-wall deals across financial services, government, and insurance sectors. The company raised its full-year revenue guidance by $10 million to approximately $1.29 billion (10% growth) and expects FY27 EPS of $1.54, demonstrating confidence in sustained momentum and disciplined capital allocation with significant share count reduction. Box Inc (NYSE:BOX) faces a headwind from foreign currency exchange (FX), which negatively impacted operating margin by 100 basis points in Q2 and is expected to create an 80 basis point headwind for the full year. Gross margin is expected to decline to approximately 80.5% for FY27 (from 81.2% in Q2) due to the strong adoption of Box AI and capacity constraints from public cloud providers, limiting near-term infrastructure efficiencies. The company's Q3 billings growth guidance of roughly 9% represents a significant deceleration from the 17% growth seen in Q2, which could raise concerns about the sustainability of the recent bookings momentum. Operating margin guidance for Q3 is expected to be 28%, a sequential decline from 29.4% in Q2, partly due to FX headwinds and increased investments in go-to-market and product innovation. The company's growth is still heavily dependent on the successful execution of its AI monetization strategy, which is in early stages, and the broader adoption of AI agents in the enterprise remains uncertain and competitive. The recent OpenAI/Hugging Face incident highlights the significant security risks associated with AI agents, and Box Inc (NYSE:BOX) must continuously invest in new guardrails and security features to maintain customer trust and mitigate potential threats. Q: How do you view token cost evolution and the impact of open-source model adoption on longer, more token-intensive agentic workflows? Are there differences in unit economics between frontier and open-source models for Box? A: Aaron Levie (CEO) explained that the momentum in AI usage correlates with either longer-running agents or agents processing large volumes of data, both of which are token-intensive and beneficial for Box. He emphasized that Box's model-neutral agentic harness allows customers to direct workloads to the most cost-effective model for their accuracy needs, whether that be open-weight models or frontier models. He noted that increased competition among AI labs, such as OpenAI and Gemini lowering prices, flows into Box's product as either margin relief or increased consumption, driving AI unit growth and upgrades to Enterprise Advanced. Q: Can you provide an update on the security and governance role Box plays in agentic workflows? What is new or different about enterprise needs in an agentic world versus dealing with human users? A: Aaron Levie (CEO) stated that AI agents require all the same security and access controls as humans, but also need new protections due to their ability to process data at scale and potentially go rogue. He highlighted new capabilities such as agent guardrails, anomaly detection, and alerting mechanisms that Box is building to monitor and control agent activity. He stressed that this reinforces Box's value proposition as a secure system of record, especially in light of incidents like the OpenAI Hugging Face breach, and that Box is doubling down on security investments to protect unstructured data. Q: What are the key drivers behind the gross margin dynamics, specifically regarding AI usage and public cloud provider capacity? How should we think about this going forward? A: Dylan Smith (CFO) explained that the two biggest drivers are the strong adoption of Box's platform and Box AI, particularly the heavier, agentic workloads, and the capacity dynamics with public cloud providers. He noted that limited access to certain infrastructure components due to the current environment has impacted the level of infrastructure efficiencies expected this year. As these constraints ease, Box will continue to unlock efficiency projects, but these factors are currently impacting gross margin versus initial expectations. Q: How is the AI governance and agent governance opportunity driving enterprises to go wall-to-wall with Box, rather than just within a specific department? A: Aaron Levie (CEO) explained that wall-to-wall benefits arise from the need for a single source of truth for unstructured data that multiple AI agents (e.g., ChatGPT, Claude, Cursor) can access securely. He noted that a fragmented landscape of systems creates a many-to-many relationship problem that is difficult to manage. Box's platform provides the canonical data plane for these agents, ensuring they work off authoritative data with proper governance. Dylan Smith (CFO) added that Enterprise Advanced capabilities often drive seat expansion across multiple departments, as workflows like contract lifecycle management or sales enablement are cross-functional, contributing to improved net retention rates. Q: How is Box thinking about zero data retention (ZDR) as a key enabler for AI growth and compliance, and what is the opportunity there? A: Aaron Levie (CEO) noted that ZDR has been a critical factor in enterprise AI adoption, as it ensures data isn't stored by AI labs. He highlighted that Box's platform meets strict criteria around ZDR, compliance, and regional hosting, establishing enterprise trust. He predicted that labs like Anthropic will likely evolve their stance on ZDR due to revenue implications, and that Box's applied AI layer bridges the gap between AI model breakthroughs and real enterprise workflows requiring compliance and governance. Q: What are the key learnings from Box's Forward Deployed Engineering (FDE) motion as it has ramped up over the past few months? A: Aaron Levie (CEO) explained that FDE helps customers navigate the challenges of implementing AI on enterprise content, including data architecture, governance, and model tuning. He noted that Box's expertise in these areas, combined with its technology and brand, positions it well to guide customers through this journey. He highlighted that FDE engagements often involve multiple iterations as new model breakthroughs emerge, allowing customers to achieve productivity gains or cost savings, and that this will continue to be a key investment area for Box. Q: How much of the AI consumption traction is from customers refilling credits prior to renewal, and is the AI platform driving competitive wins on the net new side? A: Aaron Levie (CEO) stated that consumption is growing rapidly year-over-year, though off a lower base. While much of it comes from existing customers, it often leads to materially bigger upsells as customers realize Box can run intelligent workflows, not just store content. He shared an example of a decade-long customer whose conversation completely changed after seeing Box's agentic workflow automation, leading to new sales motions and expansion opportunities. Q: How have international deals contributed to the strong quarter, and how are those conversations developing? A: Aaron Levie (CEO) noted that the quarter was broad-based, with great wins in Japan, EMEA, and the U.S. across public sector, enterprise, and commercial segments. He highlighted that conversations globally are very similar, focusing on how to bring automation to enterprise content with AI agents, and expressed overwhelming excitement, particularly from his trip to Japan, about leveraging AI for content automation. Q: Can you explain the strong Q2 billings growth and the expected step-down in Q3? Is there seasonality or other factors at play? A: Dylan Smith (CFO) explained that billings are inherently lumpy, with varying FX impacts and comps quarter-to-quarter. He noted that full-year billings expectations have been raised significantly since initial guidance, reflecting strong demand and momentum. He emphasized that leading indicators like pipeline, Enterprise Advanced adoption, RPO, and net retention rate remain healthy, and the Q3 guidance reflects a prudent approach rather than a change in underlying demand. Q: Given the momentum, why is billings growth expected to be roughly in line with revenue growth for the year, rather than ahead? A: Dylan Smith (CFO) clarified that on a constant currency basis, billings growth is expected to be ahead of revenue growth, but on an as-reported basis, FX impacts billings more than revenue. He also noted that billings have more variability and different compares, but reiterated that billings should be a leading indicator of revenue if momentum continues. He pointed to short-term RPO growth, which is a few points ahead of both metrics and accelerating, as evidence of this dynamic. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Box, Inc.? Here are five stocks we like better. Box exceeded Q2 fiscal 2027 expectations: Revenue rose 9% year over year to $321 million, while non-GAAP operating margin reached 29.4% and EPS was $0.40, both ahead of guidance. Enterprise Advanced and AI adoption strengthened growth: Billings increased 17%, net retention improved to 106%, and customers are increasingly using Box for secure, governed AI workflows, legacy migrations and agent integrations. Full-year revenue guidance was raised: Box now expects fiscal 2027 revenue of approximately $1.29 billion, or 10% year-over-year growth, alongside continued momentum in cash flow, subscriptions and share repurchases. Investors Were Dead Wrong About Box—This AI-Driven Comeback Just Proved It BOX (NYSE:BOX) reported second-quarter fiscal 2027 results that exceeded its guidance, citing record bookings, accelerating adoption of its Enterprise Advanced offering and increased demand for AI-driven content workflows. Revenue for the quarter totaled $321 million, up 9% year over year, or 11% in constant currency. The company posted non-GAAP operating income of $95 million and an operating margin of 29.4%, above its 28.5% guidance. Non-GAAP earnings per share were $0.40, compared with guidance of $0.39. → Rocket Lab's Sell-Off Is Fading—Is It Finally Safe to Buy? Why Smartsheet Stock is an Undervalued Gem of an Investment “Box delivered exceptional second quarter results, continuing the strong momentum we saw in Q1 and led by the rapid customer adoption of Enterprise Advanced,” Co-Founder and CEO Aaron Levie said. Second-quarter billings rose 17% year over year to $310 million, exceeding management’s expectation for low-double-digit growth. Remaining performance obligations increased 15% from a year earlier to $1.7 billion, or 17% in constant currency. Box said it expects to recognize roughly 55% of RPO over the next 12 months. → Travel + Leisure Goes Big—Is It Ready to Rally? 3 Attractive Mid-Cap Tech Stocks Getting Set to Report Net retention rose to 106%, compared with 103% in the prior-year period and above the company’s 105% target. CFO Dylan Smith attributed the improvement to seat expansion and strong retention within the Enterprise Advanced customer base. Annualized full churn remained 3%. Customers paying at least $100,000 annually increased 10% year over year. Suite customers accounted for 69% of revenue, up from 63% a year earlier. Free cash flow was $60 million, up 67% year over year. Cash flow from operations was $71 million, up 54% year over year. Box ended the quarter with $446 million in cash equivalents, restricted cash and short-term investments. During the period, it repurchased 2.6 million shares for approximately $66 million and had about $378 million remaining under its current repurchase authorization as of July 31. → What Rising Delivery Forecasts Say About Rivian's Stock Prospects Management emphasized that customer demand is increasingly centered on connecting AI agents to enterprise content in a secure, governed environment. Levie said customers are seeking a model-neutral platform that can allow them to use different AI models and agents without moving content and workflows among separate systems. Box cited several Enterprise Advanced customer wins, including a multinational investment bank that upgraded from Enterprise Plus and expanded to a wall-to-wall agreement as it transitions legacy file servers to Box. The company also highlighted a federal agency that upgraded to Enterprise Advanced and expanded seats fourfold to replace legacy contract lifecycle management and collaboration platforms. Box introduced security features aimed at AI agents, including agent guardrails, third-party agent activity oversight, prompt injection detection and classification-based access policies. The company said these controls are intended to extend its security framework to Box agents and external tools including Claude, ChatGPT and Gemini. The company also announced Model Context Protocol, or MCP, integrations with Anthropic’s Claude for Legal, Databricks, Harvey, IBM watsonx Orchestrate Agent Catalog, Notion custom agents, Slackbot and xAI’s Grok. Box said its Databricks integration enables users to combine unstructured content stored in Box with structured CRM and ERP data without duplicating files or moving them outside Box’s governance boundary. Levie said enterprises are increasingly evaluating migrations from legacy enterprise content management systems and on-premises repositories, because those environments can limit AI agents’ ability to securely access contracts, research files, claims documents and other unstructured data. He said Box recorded several second-quarter deals involving agentic workflows alongside data or legacy ECM migrations. The company expects to introduce product features during the second half of fiscal 2027 and into the following year intended to facilitate such migrations. Management also pointed to growing consumption of Box AI units. Levie said that longer-running agents and workflows that process large document volumes are more token-intensive, which he said increases the value of Box’s model-neutral approach. The company aims to route workloads to models that meet customer accuracy and cost requirements, including open-weight models where appropriate. Smith said adoption of heavier AI workloads and agentic processes, along with capacity constraints among public-cloud providers, are affecting gross-margin dynamics. The company expects to pursue infrastructure-efficiency projects as those capacity constraints ease. For the third quarter, Box forecast revenue of approximately $329 million, representing 9% year-over-year growth, or 11% growth in constant currency. The company expects third-quarter billings growth to be roughly in line with revenue growth, gross margin of about 80.5%, operating margin of approximately 28% and non-GAAP EPS of about $0.39. For the fiscal year ending Jan. 31, 2027, Box raised its revenue outlook by $10 million to approximately $1.29 billion, representing 10% growth, or 11% growth in constant currency. The company expects full-year billings growth to be roughly in line with revenue growth, gross margin of approximately 80.5%, operating margin of approximately 28% and non-GAAP EPS of about $1.54. Smith said the updated forecast reflects demand for Box AI, broader Enterprise Advanced adoption, improving net retention and continued momentum across the business. The company expects second-half expenses to be more weighted toward the fourth quarter because BoxWorks will occur in the fourth quarter and due to the recent extension of its Redwood City headquarters lease. Box, Inc is a leading provider of cloud content management and file sharing solutions designed to support enterprises in securely managing, accessing and collaborating on digital content from anywhere. The company offers a unified platform that enables organizations to store, share and automate workflows across various departments, enhancing productivity and ensuring governance over sensitive information. Box's services are tailored to meet the needs of industries such as healthcare, financial services, government and media, where compliance and data security are paramount. The core offerings of Box include its Content Cloud platform, which provides content collaboration, workflow automation, data classification and secure file sharing. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "BOX Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Cloud content management platform Box (NYSE:BOX) reported Q2 CY2026 results exceeding the market’s revenue expectations , with sales up 9.2% year on year to $321.1 million. Guidance for next quarter’s revenue was better than expected at $329 million at the midpoint, 1.4% above analysts’ estimates. Its non-GAAP profit of $0.40 per share was in line with analysts’ consensus estimates. Is now the time to buy Box? Find out in our full research report. Revenue: $321.1 million vs analyst estimates of $319.3 million (9.2% year-on-year growth, 0.6% beat) Adjusted EPS: $0.40 vs analyst estimates of $0.40 (in line) Adjusted Operating Income: $94.51 million vs analyst estimates of $90.9 million (29.4% margin, 4% beat) The company slightly lifted its revenue guidance for the full year to $1.29 billion at the midpoint from $1.28 billion Management lowered its full-year Adjusted EPS guidance to $1.54 at the midpoint, a 1.3% decrease Operating Margin: 10.2%, up from 7% in the same quarter last year Free Cash Flow Margin: 18.6%, down from 41.8% in the previous quarter Billings: $309.5 million at quarter end, up 16.9% year on year Market Capitalization: $4.64 billion Known as the "Content Cloud" for managing the 90% of business data that exists as unstructured files and documents, Box (NYSE:BOX) provides a cloud-based platform that enables organizations to securely manage, share, and collaborate on their content from anywhere on any device. A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Box’s 8.7% annualized revenue growth over the last five years was sluggish. This was below our standard for the software sector and is a poor baseline for our analysis. We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Box’s annualized revenue growth of 7.9% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. This quarter, Box reported year-on-year revenue growth of 9.2%, and its $321.1 million of revenue exceeded Wall Street’s estimates by 0.6%. Company management is currently guiding for a 9.3% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 7.9% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not accelerate its top-line performance yet. ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention. AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice. 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 came in at $309.5 million in Q2, and over the last four quarters, its growth was underwhelming as it averaged 9.9% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers. The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments. It’s relatively expensive for Box to acquire new customers as its CAC payback period checked in at 1,420 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low. We were impressed by how significantly Box blew past analysts’ billings expectations this quarter. We were also glad its adjusted operating income outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its EPS guidance for next quarter was in line with Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock remained flat at $32.94 immediately after reporting. Is Box an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Box (BOX) came out with quarterly earnings of $0.4 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.33 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this online storage provider would post earnings of $0.36 per share when it actually produced earnings of $0.37, delivering a surprise of +2.78%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Box, which belongs to the Zacks Internet - Software industry, posted revenues of $321.15 million for the quarter ended July 2026, surpassing the Zacks Consensus Estimate by 0.66%. This compares to year-ago revenues of $294 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Box shares have added about 11.9% since the beginning of the year versus the S&P 500's gain of 11.8%. While Box has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Box was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.40 on $324.53 million in revenues for the coming quarter and $1.57 on $1.28 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Samsara Inc. (IOT), another stock in the same industry, has yet to report results for the quarter ended July 2026. The results are expected to be released on September 3. This company is expected to post quarterly earnings of $0.17 per share in its upcoming report, which represents a year-over-year change of +41.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Samsara Inc.'s revenues are expected to be $483.3 million, up 23.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Box, Inc. (BOX) : Free Stock Analysis Report Samsara Inc. (IOT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Revenue of $321.1 million, up 9%, or 11% on a constant currency basisRemaining Performance Obligations of $1.7 billion, up 15%, or 17% on a constant currency basisGAAP Operating Margin of 10.2% and Non-GAAP Operating Margin 29.4%GAAP Net Income Per Share of $0.09 and Non-GAAP Net Income Per Share of $0.40 REDWOOD CITY, Calif., August 25, 2026--(BUSINESS WIRE)--Box, Inc. (NYSE:BOX), the leading Intelligent Content Management ("ICM") platform, today announced preliminary financial results for the second quarter of fiscal year 2027, which ended July 31, 2026. "Box delivered exceptional second quarter results, continuing our strong momentum accelerated by the rapid adoption of Enterprise Advanced," said Aaron Levie, co-founder and CEO of Box. "As enterprises deploy AI agents that require secure, well-governed unstructured data for critical context, Box is uniquely positioned as the model-neutral platform of choice. Instead of fragmenting workflows across multiple systems, our customers get a singular platform with enterprise-grade security and control where they can seamlessly connect their content to the world's leading AI models with Box and third-party agents. We are incredibly excited about our product momentum and the massive opportunity ahead." "Q2 results demonstrate strong execution, with revenue, billings, and operating margin all exceeding our expectations," said Dylan Smith, co-founder and CFO of Box. "Net retention rate improved to 106%, and Enterprise Advanced continues to be a key driver of growth, with revenue in constant currency accelerating for a fifth quarter in a row. We believe Box's Intelligent Content Management platform positions us well to deliver durable, long-term growth as enterprises increasingly look to us to securely power AI with context from their content." Fiscal Second Quarter Financial Highlights All comparisons are against the prior year comparable quarter Record revenue of $321.1 million, up 9%, or 11% on a constant currency basis. Remaining performance obligations ("RPO") of $1.7 billion, up 15%, or 17% on a constant currency basis. Short-term RPO of $904.7 million, up 11%, or 14% on a constant currency basis. Long-term RPO of $787.0 million, up 18%, or 22% on a constant currency basis. Billings of $309.5 million, up 17%, or 16% on a constant currency basis. Record GAAP gross profit of $254.0 million, or 79.1% of revenue, up from $232.5 million, or 79.1% of revenue. Record non-GAAP gross profit of $260.7 million, or 81.2% of revenue, up from $239.2 million, or 81.4% of revenue. Record GAAP operating income of $32.6 million, or 10.2% of revenue, up from $20.6 million, or 7.0% of revenue. Record non-GAAP operating income of $94.5 million, or 29.4% of revenue, up from $84.0 million, or 28.6% of revenue. GAAP diluted earnings per share ("EPS") of $0.09, compared to $0.05, impacted by $0.04 from unfavorable foreign currency exchange rates. Non-GAAP diluted EPS of $0.40, compared to $0.33, impacted by $0.04 from unfavorable foreign currency exchange rates. Net cash provided by operating activities of $70.8 million, up 54%. Non-GAAP free cash flow of $59.7 million, up 67%. 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, excluding the effect of hedging. 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 Automotive (Toyota Motor Corporation), Consumer Packaged Goods (Hasbro and The North Face), Financial Services (Piper Sandler Companies and Citizens Business Bank), Legal (McDermott Will & Schulte and Wilson Sonsini), Life Sciences (Argenx and Novartis), Public Sector (California Department of Justice and Federal Communications Commission), and Technology (Red Hat and Siemens). Announced new security capabilities designed to give organizations greater control over AI agents working with enterprise content, including new agent guardrails, third-party agent activity oversight, prompt injection detection, agent classification-based access policies, and more. Announced the expansion of Box Zones, adding new Zones in Switzerland, Israel, and Singapore, while enhancing France and Canada Zones with additional in-region compute capabilities. Released new Admin AI Insights to help optimize customer AI usage and enable clear, thoughtful planning that makes AI predictable. Served as an early launch partner and announced support for Anthropic’s Opus 5, Opus 4.8, Claude Sonnet 5 & Claude Fable 5; Google’s Gemini 3.7 Flash, 3.5 Flash, and 3.5 Flash-Lite; OpenAI’s GPT-5.6; and Meta’s Muse Spark 1.1. Announced new MCP integrations with Anthropic’s Claude for Legal, Databricks, Figma’s Design Agent, Harvey, IBM’s Watsonx Orchestrate Agent Catalog, Notion Custom Agents, Slack’s Slackbot, and SpaceXAI’s Grok. Joined the Open Secure AI Alliance alongside NVIDIA and a broad coalition of industry leaders, as part of an initiative built on the Linux Foundation and OpenSSF community. Update on Share Repurchase Plan In the second quarter of fiscal year 2027, Box repurchased 2.6 million shares for approximately $66 million. As of July 31, 2026, approximately $378 million of buyback capacity was remaining under Box’s current share repurchase plan. Box remains committed to opportunistically returning capital to its shareholders through an ongoing stock repurchase program. Outlook Approximately 35% of Box’s revenue is generated outside of the U.S., of which approximately 70% is in Japanese Yen. The following guidance includes the expected impact of FX headwinds, assuming present foreign currency exchange rates. All forward-looking non-GAAP financial measures contained in this section titled "Outlook" exclude estimates for stock-based compensation expense, acquired 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. Q3 FY27 Guidance Revenue is expected to be approximately $329 million, up 9% year-over-year, or 11% on a constant currency basis. This includes an expected headwind of approximately 170 basis points due to FX. GAAP operating margin is expected to be approximately 10.0% and non-GAAP operating margin is expected to be approximately 28.0%. This includes an expected headwind of approximately 80 basis points due to FX. GAAP net income per share attributable to common stockholders is expected to be approximately $0.12. This includes an expected headwind of approximately $0.02 due to FX. Non-GAAP diluted net income per share attributable to common stockholders is expected to be approximately $0.39. This includes an expected headwind of approximately $0.02 due to FX. Weighted-average diluted shares outstanding are expected to be approximately 142 million. Full Year FY27 Revenue is expected to be approximately $1.290 billion, up 10% year-over-year, or 11% on a constant currency basis. This includes an expected headwind of approximately 100 basis points due to FX. GAAP operating margin is expected to be approximately 9.5% and non-GAAP operating margin is expected to be approximately 28.0%. This includes an expected headwind of approximately 80 basis points due to FX. GAAP net income per share attributable to common stockholders is expected to be approximately $0.38. GAAP EPS guidance includes an expected headwind of $0.09 due to FX, which is $0.01 higher than prior expectations, and an expected headwind of $0.02 due to an increase in expected weighted-average diluted shares outstanding. Non-GAAP diluted net income per share attributable to common stockholders is expected to be approximately $1.54. Non-GAAP EPS guidance includes an expected headwind of $0.09 due to FX, which is $0.01 higher than prior expectations, and an expected headwind of $0.02 due to an increase in expected weighted-average diluted shares outstanding. Weighted-average diluted shares outstanding are expected to be approximately 141 million. 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 www.boxinvestorrelations.com 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 https://events.q4inc.com/attendee/428395900 at which time registrants will receive dial-in information as well as a conference ID. Box has used, and intends to continue to use, its Investor Relations website (www.box.com/investors), as well as certain X accounts (@box and @levie), 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 third quarter and full fiscal year 2027 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 ongoing conflicts 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 intelligent 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 July 31, 2026. Box assumes no obligations and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended July 31, 2026. 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 Quarterly Report on Form 10-Q filed for the fiscal quarter ended April 30, 2026. These documents are available on the SEC Filings section of Box’s Investor Relations website located at www.boxinvestorrelations.com. 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, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to common stockholders, and non-GAAP net income per share attributable to common stockholders. Box defines these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation ("SBC"), acquired intangible assets amortization, and as applicable, other special items. 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 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. In addition to these expenses, Box excludes the following items to calculate non-GAAP net income attributable to common stockholders: (1) amortization of debt issuance costs, (2) induced conversion of convertible notes, (3) the income tax benefit from the release of a valuation allowance on deferred tax assets, (4) non-recurring benefits of federal research and development ("R&D") credits carryforwards and related uncertain tax positions, (5) the income tax effects of non-GAAP adjustments, and (6) undistributed earnings attributable to preferred stockholders. Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income as a percentage of revenue, respectively. Non-GAAP net income per share attributable to common stockholders is defined 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. Short-term RPO consists of the portion that is expected to be recognized within the next 12 months. 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 software development 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 JLL, Morgan Stanley, and Nationwide. Box is headquartered in Redwood City, CA, with offices across the United States, Europe, and Asia. Visit box.com to learn more. And visit box.org to learn more about how Box empowers nonprofits to fulfill their missions. View source version on businesswire.com: https://www.businesswire.com/news/home/20260824340222/en/ Contacts Investors: Cynthia Hiponia and Stefany [email protected] Media: Sheridan [email protected]

Block (XYZ) came out with quarterly earnings of $1.02 per share, beating the Zacks Consensus Estimate of $0.86 per share. This compares to earnings of $0.62 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +18.61%. A quarter ago, it was expected that this mobile payments services provider would post earnings of $0.68 per share when it actually produced earnings of $0.85, delivering a surprise of +25%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Block, which belongs to the Zacks Internet - Software industry, posted revenues of $6.62 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.25%. This compares to year-ago revenues of $6.05 billion. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Block shares have added about 30% since the beginning of the year versus the S&P 500's gain of 13%. While Block has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Block was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.99 on $6.65 billion in revenues for the coming quarter and $3.90 on $26.14 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 44% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Box (BOX), is yet to report results for the quarter ended July 2026. The results are expected to be released on August 25. This online storage provider is expected to post quarterly earnings of $0.40 per share in its upcoming report, which represents a year-over-year change of +21.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Box's revenues are expected to be $319.04 million, up 8.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Block, Inc. (XYZ) : Free Stock Analysis Report Box, Inc. (BOX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research