Summary
Box reported FY2026 third-quarter revenue of $301.1 million, up 9.1% from the prior-year quarter. Gross profit was a record $239.5 million, up 8.7%, while gross margin slipped to 79.6%, down 0.3 percentage points. Operating income rose 7.1% to $25.1 million, but operating margin edged down 0.2 percentage points to 8.3%. Net income fell 6.4% to $12.1 million, and diluted EPS was $0.05, flat year over year. Management flagged pressure from foreign exchange and non-cash deferred tax expense on GAAP profitability.
On a year-to-date basis, revenue was $871.4 million, up 7.5%. Operating income was $52.0 million, down 15.8%, and net income was $33.7 million, down 33.4%. Diluted EPS was $0.12, down 47.8%. Operating cash flow for the nine months was $246.1 million, up 6.9%.
Cash generation remained a bright spot in the quarter. Operating cash flow was $73.0 million, up 16.7%, and capital expenditures were $1.7 million, up 539.5%. Deferred revenue was $546.0 million, up 11.1%, and remaining performance obligations stood at $1.5 billion. Billings were $296.0 million, up 12%. Non-GAAP operating income was $86.1 million, or 28.6% of revenue, and non-GAAP free cash flow was $61.4 million, up 7%. Net retention rate improved to 104% from 102%, which management linked to Box AI and Enterprise Advanced adoption, higher price per seat, and seat expansion.
Product activity centered on agentic AI. Box announced Box Extract for data extraction, Box Automate for agentic workflow automation, and Box Shield Pro for AI-driven security. It added support for Anthropic's Claude Sonnet 4.5, Google's Gemini 3 Pro, Mistral AI's Medium 3 Small 3.1, and OpenAI's GPT-5 and GPT-5.1 in Box AI Studio. Box signed a multi-year strategic collaboration with Amazon, announced a partnership with Tata Consultancy Services, and integrated with Slack's Work Objects. Customer wins and expansions included Sony Group Corporation, WPP Group, Bumble Bee Foods, Elf Cosmetics, Morgan Lewis, Williams Connolly, the Department of Energy, Naval Air Systems Command, CCBank, KSL Capital Partners, and Tokyo Metro. The company also highlighted GSA OneGov support and FedRAMP High Authorization.
For the fourth quarter of FY2026, management guided revenue growth of 9% year over year, or 8% on a constant currency basis. Non-GAAP operating margin is guided to approximately 30%, and non-GAAP diluted EPS to approximately $0.33. For the full FY2026 year, revenue growth is guided at 8% year over year, with non-GAAP operating margin of approximately 28% and non-GAAP EPS of approximately $1.28. The guidance includes a negative impact from non-cash deferred tax expense, and the company expects weighted-average diluted shares of approximately 147 million for the fourth quarter and 149 million for the full year.
Box also kept returning capital to shareholders. During the third quarter it repurchased 2.4 million shares for approximately $77 million, leaving about $35 million of buyback capacity. The board authorized an additional $150 million expansion of the repurchase program through December 1, 2026. The company has $205 million of 0% convertible senior notes due January 31, 2026, and it intends to repay principal in cash and deliver any conversion premium in shares, with no meaningful dilution unless the premium is above the capped call price of $35.58. Risks include macroeconomic uncertainty, foreign exchange volatility, especially the Japanese Yen, budget scrutiny, customer churn, delayed sales cycles, competition, security vulnerabilities, and integration of acquisitions and partnerships. About 40% of revenue comes from outside the U.S., and roughly 65% of that is in Japanese Yen, which keeps currency swings a live issue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $301.1M | $294.0M | +2.4% | $275.9M | +9.1% |
| Gross profit | $239.5M | $232.5M | +3.0% | $220.4M | +8.7% |
| Gross margin | 79.5% | 79.1% | +0.5 pp | 79.9% | -0.3 pp |
| Research & development | $73.9M | $71.7M | +3.1% | $67.9M | +9.0% |
| Sales & marketing | $103.1M | $102.2M | +0.8% | $95.4M | +8.0% |
| General & administrative | $37.5M | $38.0M | -1.4% | $33.7M | +11.2% |
| Total operating expenses | $214.5M | $211.9M | +1.2% | $196.9M | +8.9% |
| Operating income (loss) | $25.1M | $20.6M | +21.8% | $23.4M | +7.1% |
| Operating margin | 8.3% | 7.0% | +1.3 pp | 8.5% | -0.2 pp |
| Net income (loss) | $12.1M | $13.4M | -10.3% | $12.9M | -6.4% |
| Net margin | 4.0% | 4.6% | -0.6 pp | 4.7% | -0.7 pp |
| Diluted EPS | $0.05 | $0.05 | ±$0.00 | $0.05 | ±$0.00 |
| Net retention rate | 104.0% | 103.0% | +1.0 pp | 102.0% | +2.0 pp |
Risks
MD&A states that inflation, higher interest rates, tariffs, slower growth, a stronger dollar versus the Japanese Yen, government shutdowns, and reductions in U.S. federal spending may continue to pressure customer behavior; Box may continue to experience customer churn and delayed sales cycles and customers reducing budgets.
Net retention rate was 104% as of October 31, 2025, up from 102% as of October 31, 2024, but remains pressured by heightened budget scrutiny, pressure on seat expansion within existing customers, and increased partial customer churn.
The risk factor states generative AI may fundamentally alter the market for Box services in unpredictable ways, including reduced customer demand and increased costs of doing business; competitors include Microsoft, Google, OpenText and Dropbox.
Privacy and data protection obligations continue to expand, including the EU Data Act, NIS2, DORA (effective January 2025 with fines up to 5 million euros for third-party cloud service providers), GDPR, CCPA/CPRA, and other U.S. state laws.
As sales efforts increasingly focus on enterprise and highly regulated customers, Box faces longer and more expensive sales cycles, greater pricing pressure, and greater implementation and customization challenges.
As of October 31, 2025, Box had $460.0 million of 2029 Convertible Notes and $205.0 million of 2026 Convertible Notes, with the 2026 notes maturing January 15, 2026; if holders convert, Box must settle principal in cash, and conditions may require reclassifying the notes as current, materially reducing reported working capital.
Box cites the EU AI Act, a July 2025 U.S. AI Action Plan, and state AI bills in Arkansas, California, Colorado, Illinois, Maryland, Montana, New York, and Texas; developing and deploying third-party AI systems may increase computing costs and impact margins.
Federal government demand is affected by public sector budgetary cycles, an extended federal government shutdown, efforts to reduce U.S. federal spending, a prolonged continuing resolution, or potential U.S. sovereign default; prior shutdowns have caused some federal customers to delay purchases.
The Series A Convertible Preferred Stock has a 3.0% cumulative dividend and redemption rights, including a make-whole premium upon certain change of control events, which could reduce cash available for working capital and other corporate purposes.
Box depends on key employees and highly skilled personnel; the nine-month MD&A reports $8.3 million of workforce reorganization charges and headcount increases in lower cost regions including Poland, and failure to hire, retain, and motivate personnel, including the direct sales force, could impair 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 Q3 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.