Executive Summary
Box delivered a solid QQ2 2026 performance underscored by AI-enabled product momentum and disciplined execution. Revenue reached $294.0 million, up 9% year over year (8% to 7% in constant currency), while remaining performance obligations (RPO) rose to $1.5 billion, a 16% YoY increase. The company reported a robust gross margin around the low- to mid-80s on a quarterly basis and an operating margin in the high-20s, delivering non-GAAP EPS of $0.33. Net retention remained healthy at 103%, with churn steady at 3%, and 2,000 customers paying at least $100,000 annually, up 8% YoY. These metrics reflect Box’s AI-forward strategy, led by Enterprise Advanced and Box AI capabilities, which are expanding addressable use cases beyond traditional content collaboration.
Management emphasized a clear AI-first operating model, highlighting the integration of AI agents with automated workflows to modernize unstructured-data processes across legal, finance, HR, operations, and more. They outlined a roadmap that includes enhanced workflow/no-code capabilities, deeper Box AI features inside core collaboration tools, and broader access to AI agents via APIs, with support for leading models (OpenAI GPT-5, Claude 4.1, Grok 4) and external ecosystems (Snowflake, AWS Bedrock, Salesforce MCP). The near-term guidance implies continued growth momentum, tempered by FX headwinds and a BoxWorks-driven cost shift in Q3. The balance sheet remains highly liquid, with net cash, meaningful share repurchases, and a capital-allocation framework that prioritizes shareholder value while investing in AI-enabled scale.
Key Performance Indicators
QoQ: -1.18% | YoY:-60.49%
QoQ: 200.00% | YoY:-39.70%
Key Insights
Revenue: $294.0M, up 9% YoY and 7% CC; Gross Profit: $239.0M, up 9% YoY; Gross Margin: ~81% (Q2 around 81.4% reported by management; excluding last year's DC equipment tailwind, margin up ~40bp YoY); Operating Income: $84.0M; Operating Margin: 28.6%; Net Income: $8.1M; EPS (GAAP): $0.06; EPS (Non-GAAP): $0.33; RPO: $1.50B, up 16% YoY; Short-term RPO growth: 12% YoY; Billings: $265.0M, up 3% YoY and 6% CC; Net Retention Rate (NRR): 103% vs 102% prior quarter; 2,000 customers paying ≥$100k,...
Financial Highlights
Revenue: $294.0M, up 9% YoY and 7% CC; Gross Profit: $239.0M, up 9% YoY; Gross Margin: ~81% (Q2 around 81.4% reported by management; excluding last year's DC equipment tailwind, margin up ~40bp YoY); Operating Income: $84.0M; Operating Margin: 28.6%; Net Income: $8.1M; EPS (GAAP): $0.06; EPS (Non-GAAP): $0.33; RPO: $1.50B, up 16% YoY; Short-term RPO growth: 12% YoY; Billings: $265.0M, up 3% YoY and 6% CC; Net Retention Rate (NRR): 103% vs 102% prior quarter; 2,000 customers paying ≥$100k, up 8% YoY; Churn: 3%; Free Cash Flow: $36.0M; Operating Cash Flow: $46.0M; Cash, Cash Equivalents, and Short-Term Investments: $760.0M; Weighted avg diluted shares: ~150.0M; Shares repurchased: 1.2M for ~$40.0M; Remaining buyback capacity: ~$112.0M; FY2026 guidance raised to $1.17–$1.175B in revenue; Q3 guidance: Revenue $298–$299M; Gross margin 81%; Non-GAAP op margin ~28%; Non-GAAP EPS $0.31–$0.32; FX tailwind ~+$0.01; Full-year non-GAAP EPS guidance: $1.26–$1.28; FX tailwind ~+$0.04; Weighted avg shares ~150M.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
294.00M |
8.87% |
6.42% |
| Gross Profit |
232.48M |
8.37% |
7.83% |
| Operating Income |
20.58M |
1.47% |
224.68% |
| Net Income |
8.10M |
-60.49% |
-1.18% |
| EPS |
0.06 |
-39.70% |
200.00% |
Management Commentary
Key management takeaways from the earnings call:
- Growth drivers and AI strategy: Dylan Smith highlighted that Enterprise Advanced deals center on AI agents and workflow automation, enabling data extraction from unstructured documents and the creation of custom agents via Box AI Studio. He noted that deals are getting larger as customers unlock new use cases like contract management and digital asset workflows. Quote: “The unique thing that we're seeing across all of the Enterprise Advanced deals is really a core focus on being able to use some combination of AI agents and workflow automation together.”
- AI-first execution and model interoperability: Aaron Levie emphasized Box’s neutral stance toward AI models and partnerships with OpenAI, Anthropics, Snowflake, AWS Bedrock, and Salesforce, underscoring flexibility in model selection and integration with Box’s workflow layers. He also outlined a roadmap for all-new workflow/no-code apps and API accessibility for AI agents.
- Momentum and guidance: Aaron reiterated strong Q2 execution with “results above our guidance,” with Enterprise Advanced and Enterprise Plus driving the upswing. He also stressed Box’s security and governance capabilities as enablers for broader AI adoption in enterprise contexts.
- FCF and capital allocation: Dylan highlighted cash flow strength and buybacks, with Box ending Q2 at a healthy liquidity position and continuing opportunistic capital returns. The company also signaled cost headwinds from BoxWorks timing in Q3 which are offset by operational efficiency gains and revenue growth.
The unique thing that we're seeing across all of the Enterprise Advanced deals is really a core focus on being able to use some combination of AI agents and workflow automation together.
— Dylan Smith
AI agents are going to bring a new level of automation and deliver deeper business insights to their businesses.
— Aaron Levie
Forward Guidance
Management guidance for the remainder of FY2026 (period ending January 31, 2026):
- Q3 2026 revenue: $298–$299 million, up ~8% YoY; gross margin ~81%; non-GAAP operating margin ~28% (last year Q3 had a 70bp DC equipment tailwind); non-GAAP EPS $0.31–$0.32, including ~$0.01 FX tailwind; weighted average diluted shares ~150 million. Note: BoxWorks moved from Q4 to Q3, introducing approximately a 100bp operating margin headwind year-over-year due to reclassification of expenses (~$3 million).
- FY2026 guidance: Revenue raised to $1.17–$1.175 billion, about 8% YoY growth (7% in constant currency); gross margin ~81%; non-GAAP operating margin ~28% (FX tailwinds ~+10bp); non-GAAP EPS $1.26–$1.28, about +3c to +6c versus prior guidance, FX tailwind ~+$0.04; weighted average diluted shares ~150 million; Q2 results imply continued AI-driven demand for Enterprise Advance and Suite customers.
- Outlook commentary: The company expects roughly 55% of RPO to be recognized in the next 12 months; management emphasized the “AI-driven ahead in enterprise content” as a long-duration growth engine and continues to invest in intelligent content platform capabilities and GTM initiatives to sustain Enterprise Advanced momentum. Key risk factors include FX volatility, macro environment, data protection/compliance requirements, and competition from broader cloud content and collaboration platforms.
- Investment implications: Box’s 81% gross margin and mid-to-high 20s operating margin profile, coupled with sustained FCF generation and a net cash position, provide a solid foundation for ongoing AI investments and potential deleveraging of non-GAAP metrics as AI adoption scales.