Business Context and Reporting Period
Company: Box, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: July 31, 2026
Business Overview: Box provides an Intelligent Content Management (ICM) platform enabling organizations to securely manage cloud content. The company operates as a single reporting segment and focuses on subscription-based services, including AI-enabled products and workflow automation.
Key Financial Metrics
| Metric | Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 |
|---|---|---|
| Revenue | $321.1 million | $627.1 million |
| Gross Profit | $254.0 million | $497.2 million |
| Gross Margin | 79.1% | 79.3% |
| Operating Income | $32.6 million | $60.1 million |
| Operating Margin | 10.2% | 9.6% |
| Net Income | $19.2 million | $36.9 million |
| Net Income Attributable to Common Stockholders | $13.1 million | $25.0 million |
| Diluted EPS (Common) | $0.09 | $0.18 |
| Operating Cash Flow | $70.8 million (QTD) | $211.0 million (YTD) |
| Non-GAAP Free Cash Flow | $59.7 million (QTD) | $187.5 million (YTD) |
| Cash and Short-Term Investments | $444.1 million (as of July 31, 2026) | N/A |
| Debt (Convertible Notes, net) | $452.2 million | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 9% year-over-year (YoY) for the quarter and 10% YoY for the six-month period. Growth was driven by seat growth and strong attach rates for multi-product Suites, partially offset by foreign currency headwinds (approx. 170 bps impact for the quarter).
- Profitability Expansion: Operating income increased 59% YoY for the quarter ($32.6M vs. $20.6M) and 123% YoY for the six-month period ($60.1M vs. $26.9M). Operating margin expanded to 10.2% from 7.0% in the prior year quarter.
- Expense Management: Sales and marketing expenses as a percentage of revenue decreased by 150-200 basis points YoY. General and administrative expenses decreased 5% YoY for the quarter, primarily due to lower stock-based compensation and workforce reorganization costs.
- Cash Flow: Operating cash flow increased 54% YoY for the quarter. Non-GAAP free cash flow increased 67% YoY for the quarter.
- Remaining Performance Obligations (RPO): RPO increased 15% YoY to $1.7 billion, indicating a strong sales pipeline.
Guidance, Outlook, and Risks
- Strategic Initiatives: Management highlighted the expansion of Box Zones to 10 regions and the launch of Box Agent security and governance to protect enterprise content from AI agent risks. The company is focusing on AI integration and multi-product Suites adoption.
- Capital Allocation: The Board authorized a $500 million expansion of the share repurchase plan in March 2026. As of July 31, 2026, approximately $378 million remained available. The company repurchased 7.4 million shares for $180.7 million in the first six months of fiscal 2027.
- Key Risks:
- AI and Technology: Risks related to the adoption of generative AI, including potential inaccuracies, regulatory scrutiny (e.g., EU AI Act), and intellectual property claims.
- Competition: Intense competition from Microsoft, Google, and Dropbox, particularly regarding pricing pressure and bundled offerings.
- Macroeconomics: Exposure to foreign currency fluctuations (notably Japanese Yen) and global economic conditions affecting customer IT spending.
- Security: Risks of data breaches, cyberattacks, and service outages given the mission-critical nature of the platform.
- Subsequent Event: On August 21, 2026, the company amended its corporate headquarters lease, extending the term to 2040 and reducing square footage, with total undiscounted base rent of approximately $283.3 million.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 106% Net Retention Rate and the contribution of AI-enabled products to revenue growth.
- Debt Obligations: Review the terms of the $460 million 1.50% Convertible Senior Notes due 2029 and the potential for cash settlement upon conversion.
- Preferred Stock: Assess the impact of the Series A Convertible Preferred Stock (KKR) on liquidity, including accrued dividends and liquidation preferences.
- Foreign Exchange: Monitor the impact of currency fluctuations, particularly the Japanese Yen, on future revenue and operating margins.
- Stock Repurchases: Track the execution of the $500 million repurchase authorization and its impact on share count and EPS.