Summary
Box reported fiscal 2026 second quarter revenue of $294.0 million, up 9% from a year earlier and up 7% in constant currency. Year to date, revenue was $570.3 million, up 6.7%. Gross profit for the quarter was a record $232.5 million, up from $214.5 million, while gross margin of 79.1% slipped from 79.4%. Remaining performance obligations ended the quarter at $1.5 billion, up 16% both as reported and in constant currency. Inside that total, short-term RPO of $812 million rose 12% and long-term RPO of $664 million rose 21%. Net retention rate was 103%, versus 102% a year ago. Management credited seat growth among existing customers and strong attach rates on multi-product Suites such as Enterprise Plus and Enterprise Advanced, and noted that foreign exchange added roughly 200 basis points to revenue growth in the quarter.
Profitability was flatter than the top line. GAAP operating income of $20.6 million was up from $20.3 million, but operating margin narrowed to 7.0% from 7.5% as expenses kept pace with the top line. On a non-GAAP basis, operating income was $84.0 million, or 28.6% of revenue, up from $76.7 million, or 28.4%. Net income of $13.4 million was down 34.4% from $20.5 million, and diluted EPS of $0.05 fell from $0.10. The company attributed part of the per-share pressure to non-cash deferred tax expense, which cost $0.04 per share in the quarter compared with $0.01 a year earlier, partly offset by a $0.01 benefit from favorable foreign exchange rates. Non-GAAP diluted EPS was $0.33, compared with $0.44.
Cash generation improved. Operating cash flow was $46.0 million for the quarter, up 27% from a year earlier, and capital expenditures were $2.1 million, up from $0.4 million. Non-GAAP free cash flow was $35.7 million, up 9%. Billings of $264.9 million rose 3%, or 6% in constant currency, and Box said the quarter's billings growth was unfavorably affected by approximately 250 basis points from foreign exchange. Deferred revenue of $547.3 million was up 9% year over year. Box repurchased 1.2 million shares during the quarter at a weighted average price of $32.48 for a total of $40.2 million, leaving $112.1 million authorized for more buybacks.
Guidance points to slower sequential growth but steady margins. For the third quarter of fiscal 2026, revenue is expected between $298 million and $299 million, up 8% year over year, or 7% in constant currency, including an expected positive impact of approximately 80 basis points from foreign exchange. GAAP operating margin is guided to about 8% and non-GAAP operating margin to about 28%. Third quarter GAAP EPS is expected between $0.05 and $0.06, including a $0.04 negative impact that reflects a $0.05 hit from non-cash deferred tax expense and a $0.01 benefit from favorable exchange rates. Non-GAAP diluted EPS is guided to $0.31 to $0.32. For the full fiscal year 2026, Box expects revenue of $1.170 billion to $1.175 billion, up 8% year over year, with an expected positive impact of approximately 90 basis points from foreign exchange. Full-year GAAP operating margin is guided to roughly 7% and non-GAAP operating margin to roughly 28%. Full-year GAAP EPS is guided to $0.18 to $0.20, including a $0.15 negative impact, and non-GAAP diluted EPS to $1.26 to $1.28. Diluted share count is expected near 150 million for both the quarter and the full year.
The main risks sit on the demand and currency side. Box said it continues to see more customer scrutiny on larger deals, which can delay sales cycles, and it flagged possible churn as customers and prospects reduce budgets. About one third of revenue is generated outside the U.S., and approximately 65% of that is billed in Japanese Yen, so currency swings carry real weight. Management also listed tariffs, inflation, reduced U.S. federal spending, the Russia-Ukraine conflict and the conflict in the Middle East as pressures on customer behavior. Competition and pricing pressure, security vulnerabilities and the ability to realize benefits from third-party partnerships round out the concerns. On the product side, Box pushed AI deeper into the platform, including general availability of Box Hubs and the Enhanced Extract Agent, a beta of a remote Model Context Protocol server, a connector for OpenAI's ChatGPT, and support for GPT-5, Claude 4 and Grok 4 in Box AI Studio. The company also recorded workforce reorganization charges in the first half, primarily severance and related personnel costs, as it realigned spending toward these priorities.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $294.0M | $276.3M | +6.4% | $270.0M | +8.9% |
| Gross profit | $232.5M | $215.6M | +7.8% | $214.5M | +8.4% |
| Gross margin | 79.1% | 78.0% | +1.0 pp | 79.4% | -0.4 pp |
| Research & development | $71.7M | $72.3M | -0.8% | $65.4M | +9.6% |
| Sales & marketing | $102.2M | $99.1M | +3.1% | $95.2M | +7.3% |
| General & administrative | $38.0M | $37.9M | +0.3% | $33.6M | +13.2% |
| Total operating expenses | $211.9M | $209.3M | +1.3% | $194.2M | +9.1% |
| Operating income (loss) | $20.6M | $6.3M | +224.7% | $20.3M | +1.5% |
| Operating margin | 7.0% | 2.3% | +4.7 pp | 7.5% | -0.5 pp |
| Net income (loss) | $13.4M | $8.2M | +64.1% | $20.5M | -34.4% |
| Net margin | 4.6% | 3.0% | +1.6 pp | 7.6% | -3.0 pp |
| Diluted EPS | $0.05 | $0.02 | +$0.03 | $0.10 | -$0.05 |
| Net retention rate | 103.0% | 102.0% | +1.0 pp | 102.0% | +1.0 pp |
Risks
Adverse economic conditions and customer budget scrutiny are lengthening sales cycles and reducing sales. MD&A states Box continued to see additional customer scrutiny on larger deals due to the challenging macroeconomic environment in the three months ended July 31, 2025, and may continue to experience customer churn and delayed sales cycles.
Generative AI may fundamentally alter the market for Box's services, with risks of reduced customer demand and increased costs. Risk factors also cite regulatory uncertainty from the EU AI Act, U.S. state AI bills, and the July 2025 America's AI Action Plan, plus possible disruption if third-party AI services become unavailable or raise computing costs.
Box's increasing focus on cloud content management use cases and enterprise and highly-regulated customers may lead to longer and more expensive sales cycles, greater pricing pressure, and implementation and customization challenges. MD&A specifically cites additional scrutiny on larger deals as a factor in delayed sales cycles.
Data protection, privacy, cybersecurity, and AI regulations are expanding, including GDPR, CCPA/CPRA, the EU AI Act, NIS2, and DORA. Compliance may require data localization, product changes, and additional costs, and DORA allows penalties up to 5 million euros for third-party cloud service providers like Box.
Box stores large amounts of sensitive customer data and is an increasing target as it serves heavily regulated industries. Risk factors note that incorporating AI technologies may create additional cybersecurity risks, and actual or perceived breaches could lead to significant liability, lost customers, and indemnity claims.
As of July 31, 2025, Box had $205.0 million outstanding under the 2026 Convertible Notes due January 15, 2026 and $460.0 million under the 2029 Convertible Notes. Conversions require cash settlement of principal, and failure to repurchase or repay could cause a default and reduce reported working capital if the notes are reclassified as current.
Net retention rate was approximately 103% as of July 31, 2025 and 102% as of July 31, 2024. MD&A says the rate continues to be impacted by heightened budget scrutiny, putting pressure on seat expansion within existing customers and increasing partial customer churn, which could harm future revenue if it declines.
The cloud content management market is intensely competitive, with primary competitors including Microsoft (SharePoint, OneDrive), Google (Drive), OpenText (Documentum), and Dropbox. Some competitors offer lower-priced or free bundled products, which has placed pricing pressure on Box and could reduce sales or margins.
Box is exposed to currency fluctuations, particularly the Japanese Yen, and prior Yen declines negatively affected results in fiscal year 2025. The strengthening of foreign currency exchange rates positively impacted revenue growth rates by approximately 200 basis points for the three months ended July 31, 2025 and 70 basis points for the six months ended July 31, 2025, so future rate moves could reverse that benefit.
Sales to government entities face public sector budget cycles, funding delays, and termination for convenience. Risk factors cite recent efforts to reduce U.S. federal spending, a potential federal government shutdown, a prolonged continuing resolution, or breach of the federal debt ceiling as factors that may limit or delay federal spending on Box solutions.
Box depends on key employees and highly skilled personnel, including an expanded direct sales force. Its hybrid workforce and hiring in lower cost regions such as Poland may lead to productivity disruptions and product development delays, which could impair revenue growth.
Subscription agreements include service level commitments, and Box has experienced past temporary unavailability that resulted in service credits. Future outages or support failures could require credits or refunds, cause subscription terminations, and harm revenue and reputation.
Series A Convertible Preferred Stock accrues cumulative dividends at 3.0% per annum and has liquidation and redemption rights, including redemption after the seventh anniversary or upon a change of control. These obligations could reduce cash available for working capital and dilute Class A common stockholders upon conversion.
SaaS KPIs
All quarters →Billings
Net Retention Rate
Non-GAAP Operating Margin
Remaining Performance Obligations (RPO)
Non-GAAP Free Cash Flow
Non-GAAP Gross Margin
Long-term RPO
Short-term RPO
Summary, forecast, risks and KPIs are extracted from BOX INC's SEC filings for Q2 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.