Summary
Box closed the second quarter of fiscal 2027 with revenue of $321.15 million, up 9.2% from $294.00 million in the same quarter a year earlier. Constant currency growth was 11%. Remaining performance obligations reached $1.70 billion, up 13.3% from $1.50 billion, which management described as 17% growth in constant currency. Short-term RPO of $904.7 million rose 11% and long-term RPO of $787.0 million rose 18%. Billings of $309.5 million climbed 17%. Net retention rate improved to 106% from 103%. For the first six months of the fiscal year, revenue was $627.09 million, up 10.0%. The company credited seat growth, strong attach rates on multi-product Suites such as Enterprise Plus and Enterprise Advanced, and new customer additions.
Profitability improved faster than the top line. Gross profit was $253.96 million, up 9.2%, and gross margin held at 79.1%, flat with the prior-year quarter. Operating income jumped 58.6% to $32.64 million, lifting operating margin to 10.2% from 7.0%. Net income rose 43.0% to $19.22 million, and diluted EPS came in at $0.09 against $0.05. For the six months, operating income was $60.08 million, up 123.2%, and net income was $36.95 million, up 70.7%. On a non-GAAP basis, operating margin was 29.4% and diluted EPS was $0.40, compared with $0.33 a year earlier. Management said foreign currency moves cost $0.04 of EPS in the quarter.
Cash generation was the standout. Operating cash flow was $70.84 million, up 54.1% from a year earlier, while capital expenditures fell 93.5% to $0.12 million. For the six months, operating cash flow was $211.04 million, up 22.0%. Non-GAAP free cash flow, a separate measure that also subtracts capitalized software costs, was $59.7 million, up 67%. Deferred revenue ended the quarter at $595.80 million, up 8.9%. Box repurchased 2.6 million shares for roughly $66 million and had about $378 million of authorization remaining.
For the fiscal third quarter, management guided revenue to approximately $329 million, up 9% year over year, or 11% in constant currency, and flagged an FX headwind of about 170 basis points. Third quarter GAAP operating margin is expected near 10.0% and non-GAAP operating margin near 28.0%. GAAP EPS guidance is about $0.12 and non-GAAP EPS about $0.39. For the full fiscal year 2027, revenue is guided to roughly $1.290 billion, up 10%, with GAAP operating margin near 9.5%, non-GAAP operating margin near 28.0%, GAAP EPS of about $0.38 and non-GAAP EPS of about $1.54.
Product activity stayed heavy. Box expanded Box Zones to 10 regions, adding Israel, Singapore and Switzerland, launched agent security and governance tools, and shipped new MCP integrations with partners including Anthropic, Databricks, Figma, IBM and Slack. Management argues that enterprises deploying AI agents need governed, model-neutral content platforms, and that positioning underpins the Enterprise Advanced push.
Currency is the clearest near-term risk. About 35% of revenue is generated outside the United States and roughly 70% of that is in Japanese Yen, so a stronger dollar drags reported growth. The company also cites pricing pressure and consolidation in a competitive market, customers who delay renewals or trim budgets, delays in IT spending, and security vulnerabilities in its services. Macro conditions, including tariffs, inflation and geopolitical conflicts, could slow sales cycles further. Management still expects net retention to stay above 100%.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $321.1M | $305.9M | +5.0% | $294.0M | +9.2% |
| Gross profit | $254.0M | $243.2M | +4.4% | $232.5M | +9.2% |
| Gross margin | 79.1% | 79.5% | -0.4 pp | 79.1% | +0.0 pp |
| Research & development | $78.4M | $75.9M | +3.3% | $71.7M | +9.3% |
| Sales & marketing | $106.7M | $101.9M | +4.8% | $102.2M | +4.4% |
| General & administrative | $36.2M | $38.0M | -4.7% | $38.0M | -4.7% |
| Total operating expenses | $221.3M | $215.8M | +2.6% | $211.9M | +4.5% |
| Operating income (loss) | $32.6M | $27.4M | +18.9% | $20.6M | +58.6% |
| Operating margin | 10.2% | 9.0% | +1.2 pp | 7.0% | +3.2 pp |
| Net income (loss) | $19.2M | $17.7M | +8.4% | $13.4M | +43.0% |
| Net margin | 6.0% | 5.8% | +0.2 pp | 4.6% | +1.4 pp |
| Diluted EPS | $0.09 | $0.08 | +$0.01 | $0.05 | +$0.04 |
| Net retention rate | 106.0% | 105.0% | +1.0 pp | 103.0% | +3.0 pp |
Risks
The filing expands AI risk substantially, warning that competitors may incorporate generative and agentic AI capabilities more efficiently or achieve faster adoption than Box, and that Box AI, Box Agent, and Box Automate face evolving regulation including the EU AI Act and new state AI laws. Reliance on third-party AI services that may become unavailable or more costly could increase the cost profile of Box's offerings and pressure margins.
MD&A states the business continues to be impacted by pressure from customers' lower headcount growth and greater budget scrutiny on IT decisions, and cites inflation, changing interest rates, tariffs, government shutdowns, and reductions in U.S. federal spending as factors that may cause customer churn and delayed sales cycles.
As sales efforts are increasingly focused on cloud content management use cases targeted at enterprise and highly-regulated customers, Box expects longer and more expensive sales cycles, greater pricing pressure, and more implementation and customization challenges, which could increase costs and leave fewer resources for other customers.
The market is described as fragmented and highly competitive, with primary competitors including Microsoft (SharePoint and OneDrive), Google (Drive), OpenText (Documentum) and Dropbox, some of which offer products at lower prices or for free as part of bundled arrangements, placing pricing pressure on Box.
Net retention rate was approximately 106% as of July 31, 2026 versus 103% as of July 31, 2025, and the filing states it has fluctuated period to period and may decrease again if customers do not renew, renew on less favorable terms, or purchase fewer seats.
Sales to government entities carry additional risks including public sector budgetary cycles, changing certification requirements, and exposure to extended federal government shutdowns, prolonged continuing resolutions, or reduced U.S. federal spending, which have in the past caused federal customers to delay purchases.
As of July 31, 2026, $460.0 million aggregate principal of the 2029 Convertible Notes was outstanding, with principal required to be settled in cash upon conversion. The notes could be reclassified from long-term to current if convertibility conditions are met, which could materially reduce reported working capital, and holders can require repurchase upon a fundamental change.
The Series A Convertible Preferred Stock accrues cumulative dividends at 3.0% per annum compounding quarterly, and holders can require Box to repurchase their shares after the seventh anniversary of issuance, plus a make-whole premium upon certain change of control events, which could impact liquidity and limit additional financing.
The filing states that incorporating AI technologies into product offerings may create additional cybersecurity risks or increase existing ones, and that Box has become more of a target as its customer base grows in heavily regulated industries such as healthcare, government, life sciences, and financial services.
Evolving data protection and privacy regimes including GDPR, the EU Data Act, NIS2, and DORA impose compliance costs and potential penalties, and could require in-region data storage or changes to business practices, with DORA exposing third-party cloud providers to fines of up to 5 million euros for non-compliance.
Box depends on key employees and other highly skilled personnel to grow and operate the business, and the filing notes that failure to hire, retain and motivate personnel, including expanding and optimizing the direct sales force, could prevent effective growth.
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 FY2027 (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.