Box, Inc. (BOX) - 10-K Summary
Business Context and Reporting Period
Company: Box, Inc.
Filing Type: Form 10-K (Annual Report)
Fiscal Year Ended: January 31, 2026
Business Overview: Box is the leading Intelligent Content Management (ICM) provider, offering a SaaS platform for managing unstructured data. The platform focuses on security, compliance, workflow automation, and AI integration. As of January 31, 2026, Box served over 100,000 paying organizations globally.
Key Financial Metrics
| Metric (in millions) | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Revenue | $1,177.3 | $1,090.1 | +8.0% |
| Gross Profit | $932.6 | $862.0 | +8.2% |
| Gross Margin | 79.2% | 79.1% | +0.1% |
| Operating Income | $83.2 | $79.6 | +4.5% |
| Operating Margin | 7.1% | 7.3% | -0.2% |
| Net Income (GAAP) | $115.4 | $244.6 | -52.8% |
| Net Income Attributable to Common Stockholders | $87.1 | $201.6 | -56.8% |
| Diluted EPS | $0.58 | $1.36 | -57.4% |
| Operating Cash Flow | $356.5 | $332.3 | +7.3% |
| Non-GAAP Free Cash Flow | $312.9 | $304.6 | +2.7% |
| Cash & Short-Term Investments | $479.6 | $722.8 | -33.6% |
Note: Net income decline in FY2026 was primarily due to the absence of a one-time $177.6 million tax benefit from the release of a valuation allowance recorded in FY2025.
Material Changes vs. Prior Period
- Revenue Growth: Driven by seat growth, net of churn, and strong attach rates for multi-product Suites (Enterprise Plus and Enterprise Advanced). Foreign currency fluctuations positively impacted revenue by approximately 80 basis points.
- Cost of Revenue: Increased 7% due to higher amortization of capitalized software ($13.7M increase) and public cloud infrastructure costs ($7.9M increase), partially offset by reduced data center expenses following the completion of migration to the public cloud.
- Operating Expenses:
- R&D: Increased 11% ($29.7M) due to higher employee costs and stock-based compensation, driven by a 5% headcount increase, primarily in lower-cost regions.
- Sales & Marketing: Increased 6% ($23.8M) due to employee costs, stock-based compensation, and workforce reorganization expenses.
- G&A: Increased 10% ($13.5M) due to stock-based compensation and employee costs.
- Debt Activity: In September 2024, Box issued $460.0 million of 1.50% Convertible Senior Notes due 2029. In January 2026, the company settled the remaining $205.0 million of its 2026 Convertible Notes at maturity.
- Share Repurchases: Repurchased 9.7 million shares for $292.9 million during FY2026. On December 2, 2025, the Board authorized a $150 million expansion of the repurchase plan.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Remaining Performance Obligations (RPO): Increased 17% to $1.71 billion, driven by customer expansion, conversion to multi-product Suites, and longer contract terms.
- Billings: Increased 10% to $1.22 billion, indicating strong sales activity.
- Net Retention Rate: Improved to 104% (from 102% in FY2025), though management notes continued pressure from budget scrutiny and partial churn.
- AI Strategy: Continued investment in Box AI, including the general availability of Box Extract (metadata extraction) and Box Shield Pro (AI-driven security).
Key Risks & Contingencies:
- Competition: Intense competition from Microsoft (SharePoint/OneDrive), Google (Drive), and OpenText. Pricing pressure remains a risk.
- AI Risks: Potential for reputational harm, legal liability, or regulatory scrutiny related to generative AI outputs and data privacy.
- Macroeconomic Factors: Global economic conditions, inflation, and geopolitical conflicts (Russia-Ukraine, Middle East) may delay sales cycles or reduce customer spending.
- Cybersecurity: As a target for nation-state and organized crime actors, any security breach could materially harm reputation and operations.
- Debt Obligations: Servicing the 2029 Convertible Notes and potential cash settlement upon conversion could impact liquidity.
Investor Verification Checklist
- Net Retention Sustainability: Verify if the 104% net retention rate can be maintained amidst heightened customer budget scrutiny and potential churn.
- AI Monetization: Assess the revenue contribution and margin impact of new AI features (Box Extract, Box Shield Pro) versus the associated infrastructure costs.
- Debt Maturity Profile: Review the cash flow requirements for the 2029 Convertible Notes and the potential dilution or cash outflow upon conversion.
- Stock-Based Compensation: Monitor the trajectory of stock-based compensation ($233.7M in FY2026), which significantly impacts GAAP profitability.
- Foreign Currency Exposure: Evaluate the impact of the Japanese Yen and other foreign currencies on future revenue and operating expenses, given ~40% of revenue is foreign-denominated.