Core Insights - Box reported second-quarter fiscal 2026 non-GAAP earnings of 33 cents per share, a decline of 25% year over year, but exceeded the Zacks Consensus Estimate by 6.45% [1] - Total revenues reached $294 million, surpassing the consensus mark by 1.21%, with a 9% year-over-year increase on a reported basis and 7% on a constant-currency basis [1][8] Q2 Financial Performance - Billings for the quarter were $265 million, reflecting a 3.3% year-over-year increase on a reported basis and 6% on a constant-currency basis [2] - 63% of revenues were generated from Suite customers during the second quarter [2] - The net retention rate was 103%, up 100 basis points year over year [3] - Remaining performance obligations (RPO) totaled $1.5 billion, a 16% increase year over year, with short-term RPO at $812 million (up 12%) and long-term RPO at $664 million (up 21%) [3] Operating Metrics - Non-GAAP gross margin for Q2 was 81%, contracting by 20 basis points year over year but expanding by 100 basis points sequentially [4] - Non-GAAP operating margin was 28.6%, which expanded by 20 basis points year over year and 400 basis points sequentially [4] Balance Sheet and Cash Flow - As of July 31, 2025, cash and cash equivalents were $758 million, up from $689.7 million as of April 30, 2025 [5] - The company generated $46 million in cash from operations in Q2, down from $127.1 million in the previous quarter [5] - Non-GAAP free cash flow for the quarter was $35.7 million [5] Share Repurchase - In Q2, Box repurchased approximately 1.2 million shares for $40 million, with roughly $112 million remaining under its current buyback capacity [6] Guidance - For Q3 fiscal 2026, Box expects revenues between $298 million and $299 million, indicating an 8% year-over-year increase [9] - For fiscal 2026, expected revenues are between $1.16 billion and $1.175 billion, also indicating an 8% year-over-year increase [10] - Non-GAAP operating margin for both Q3 and fiscal 2026 is expected to be 28% [9][10] - Non-GAAP earnings for Q3 are projected to be between 31-32 cents per share, and for fiscal 2026, between $1.26 and $1.28 per share [9][10]

Core Viewpoint - Box Inc. has raised its revenue guidance for fiscal year 2026 to $1.175 billion, driven by a doubling of enterprise premium agreements and accelerated AI applications [1] Group 1: Financial Performance - The company reported a 9% revenue growth [1] - Significant new clients include a U.S. law firm and a Fortune 500 hotel chain [1] Group 2: Strategic Partnerships - Box has established new partnerships with OpenAI and Salesforce to enhance its AI ecosystem [1]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $294 million, exceeding guidance and reflecting a 9% year-over-year growth, or 7% in constant currency [28] - Remaining performance obligations (RPO) grew 16% year-over-year to $1.5 billion, with short-term RPO increasing by 12% [29] - Q2 billings were $265 million, up 3% year-over-year, driven by strong bookings and early renewals [30] - The net retention rate improved to 103%, up from 102% in the previous quarter [31] - Gross margin for Q2 was 81.4%, reflecting a 40 basis point year-over-year increase [31] Business Line Data and Key Metrics Changes - The Enterprise Advanced plan saw significant customer adoption, contributing to revenue growth and customer upgrades [8][10] - Suites customers accounted for 63% of total revenue, up from 58% a year ago, driven by the adoption of Box.ai and Enterprise Advanced [29] - The company experienced strong momentum in Enterprise Plus, which also contributed to revenue growth [10] Market Data and Key Metrics Changes - Approximately one-third of revenue is generated outside the U.S., with 65% of international revenue coming from Japan [34] - The company noted a favorable foreign exchange impact on revenue and billings growth [35][38] Company Strategy and Development Direction - The company is focusing on driving the adoption of Enterprise Advanced and enhancing its AI capabilities to transform enterprise workflows [20][24] - Plans for the second half of the year include new workflow and no-code app capabilities, enhancing productivity through AI integration [18][19] - The company aims to maintain a strong security posture as it expands its AI capabilities, ensuring customer trust [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for AI capabilities and the potential for significant growth in enterprise content management [27][39] - The company is committed to a disciplined capital allocation strategy while continuing to invest in its AI-driven platform [27] Other Important Information - The current Chief Revenue Officer announced retirement, with Jeff Newsome appointed as the new CRO [22][24] - The company plans to showcase new product announcements at the upcoming BoxWorks conference [90] Q&A Session Summary Question: What drove the outperformance in Enterprise Advanced? - Management indicated that the outperformance was influenced by strong bookings, early renewals, and the demand for AI capabilities across the business [41][42] Question: How is the pipeline expanding with Enterprise Advanced? - The company noted that the use cases for Enterprise Advanced are broadening, leading to larger deal sizes and more complex workflows [42][43] Question: What is driving the net seat growth? - The increase in net seat growth is attributed to the relevance of Enterprise Advanced to more users and departments [47][48] Question: How much of the Q2 outperformance was due to early renewals? - Management stated that early renewals contributed to the outperformance, but all factors had a similar impact [51][53] Question: What are the next steps for customers comfortable with metadata extraction? - The company plans to automate workflows tied to extracted data, enhancing the overall value of unstructured data [60][62] Question: What is the vision for the MCP server? - The MCP server aims to centralize access to unstructured data across various AI systems, enhancing security and efficiency [66][68]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $294 million, reflecting a 9% year-over-year growth and a 7% increase in constant currency [26] - Remaining performance obligations (RPO) grew by 16% year-over-year, reaching $1.5 billion [27] - Q2 operating margin was 28.6%, with earnings per share (EPS) of $0.33, exceeding guidance [30] Business Line Data and Key Metrics Changes - Customer adoption of Enterprise Advanced significantly increased, contributing to strong revenue growth [6] - Suites customers now account for 63% of total revenue, up from 58% a year ago, driven by the adoption of Box.ai and Enterprise Advanced [27] - The company experienced a net retention rate of 103%, an improvement from 102% in the previous quarter [28] Market Data and Key Metrics Changes - Approximately one-third of revenue is generated outside the U.S., with 65% of international revenue coming from Japan [32] - Q2 billings were $265 million, up 3% year-over-year, exceeding expectations despite foreign exchange headwinds [28] Company Strategy and Development Direction - The company is focusing on driving the adoption of Enterprise Advanced and enhancing AI capabilities to transform enterprise workflows [18][21] - Plans to introduce new workflow and no-code app capabilities to automate critical workflows around content [16] - The company aims to maintain a strong security posture to protect sensitive enterprise data as AI capabilities expand [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in AI adoption and its impact on business growth [25] - The company is committed to a disciplined capital allocation strategy while investing in key initiatives to drive growth [25] - Management acknowledged the challenges in the macroeconomic environment but remains focused on long-term growth opportunities [54] Other Important Information - The company announced the retirement of its current Chief Revenue Officer, with Jeff Newsome appointed as the new CRO [20] - The upcoming BoxWorks conference is expected to showcase significant product launches and updates [23] Q&A Session Summary Question: What drove the outperformance in billings? - Management indicated that the outperformance was influenced by strong bookings, early renewals, and the demand for AI capabilities in Enterprise Advanced [40][41] Question: How is the pipeline expanding with Enterprise Advanced? - The company noted that the use cases for Enterprise Advanced are broadening, leading to larger deal sizes and more complex workflows [42][44] Question: What is driving net seat growth? - The increase in net seat growth is attributed to the relevance of Enterprise Advanced to more users across customer organizations [47] Question: How common are upgrades to Enterprise Advanced? - Upgrades to Enterprise Advanced are occurring more frequently than expected, with significant pricing uplifts observed [49] Question: How does early renewal impact Q2 performance? - Early renewals contributed to the strong performance, with similar impacts from various factors driving overall outperformance [52][54] Question: What are the next steps for customers using metadata extraction? - Customers are expected to automate workflows tied to extracted data, enhancing operational efficiency [60][64] Question: What is the vision for the MCP server? - The MCP server aims to serve as a central repository for unstructured data, allowing seamless access across various AI systems [66][70]

Financial Performance - Revenue for Q2'26 reached $294 million[7], driven by Suites momentum[6] - Total Remaining Performance Obligations (RPO) increased by 16% year-over-year to $1476 million[9, 10] - Billings increased by 3% year-over-year[13] - Non-GAAP gross margin was 81.4% in Q2'26[17], a decrease of 20 bps year-over-year[16] - Non-GAAP operating margin was 28.6% in Q2'26[21], an increase of 20 bps year-over-year[20] Cash Flow and Capital Allocation - The company repurchased approximately 1.2 million shares of Class A common stock for approximately $40 million in Q2'26[26] - As of July 31, 2025, the company had approximately $112 million of remaining Board-approved buyback capacity under the current plan[26] Customer Metrics - Net retention rate was stable at 103%[33, 34] - Customers paying more than $100k annually grew by 8% year-over-year[39] - 63% of total revenue came from Suites[37] Guidance - Q3'26 revenue is projected to be $298 to $299 million, representing year-over-year growth of 8%[30] - Fiscal year 2026 revenue is projected to be $1.170 to $1.175 billion, representing year-over-year growth of 8%[30]

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) Box reported strong Q2 FY26 financial results, driven by its Intelligent Content Management platform and strategic AI initiatives, securing new client wins and expanding its ecosystem [Q2 FY26 Performance Overview](index=1&type=section&id=Q2%20FY26%20Performance%20Overview) Box reported strong preliminary Q2 FY26 financial results, with revenue at $294 million (+9% YoY) and RPO growing 16% to $1.5 billion, achieving GAAP operating margin of 7.0% and non-GAAP of 28.6% Q2 FY26 Key Financial Highlights | Metric | Value | YoY Change | | :-------------------------------- | :---------------- | :--------- | | Revenue | $294 Million | +9% (+7% CC) | | Remaining Performance Obligations | $1.5 Billion | +16% (+16% CC) | | GAAP Operating Margin | 7.0% | -0.5 pp | | Non-GAAP Operating Margin | 28.6% | +0.2 pp | | GAAP Net Income Per Share | $0.05 | -0.05 | | Non-GAAP Net Income Per Share | $0.33 | -0.11 | [Strategic Commentary & AI Focus](index=1&type=section&id=Strategic%20Commentary%20%26%20AI%20Focus) Box's CEO emphasized the Intelligent Content Management platform and AI agents for unstructured data, while the CFO noted strong Box AI demand supporting strategic investments - Box is doubling down on its Intelligent Content Management platform to leverage AI agents for unstructured data, with strong momentum seen in Enterprise Advanced[2](index=2&type=chunk) - Strong demand for Box AI is driving operating results above guidance, enabling strategic investments in product innovation and go-to-market initiatives[2](index=2&type=chunk) [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) Box secured new client wins, expanded its AI framework with new agent and protocol launches, and strengthened its ecosystem through strategic partnerships and government collaborations - Secured wins or expansions with leading organizations across Hospitality, Legal, Media and Entertainment, Public Sector, Retail, and Technology industries[5](index=5&type=chunk) - Delivered new updates to Box's AI framework, including the general availability of the Enhanced Extract Agent and beta launch of the remote Model Context Protocol (MCP) Server, alongside updates to Box AI Units, Box AI Studio, and AI Admin Console[10](index=10&type=chunk) - Announced general availability of Box Hubs with new features for organization, governance, and API, and delivered the Box connector for OpenAI's ChatGPT[10](index=10&type=chunk) - Formed strategic partnerships with Anthropic (Financial Analysis Solution), Snowflake (Openflow), AWS (Bedrock AgentCore Runtime), and Salesforce (MCP Partner Network) to enhance AI capabilities and content integration[10](index=10&type=chunk) - Collaborated with the U.S. General Services Administration (GSA) for OneGov, providing federal agencies access to Box's AI functionality, and hosted the Box Federal Summit and regional BoxWorks events[10](index=10&type=chunk) [Fiscal Second Quarter Financial Results](index=1&type=section&id=Fiscal%20Second%20Quarter%20Financial%20Results) Box reported strong Q2 FY26 financial results, including increased revenue, gross profit, and operating cash flow, while managing balance sheet changes and net income fluctuations [Key Financial Highlights (Q2 FY26)](index=1&type=section&id=Key%20Financial%20Highlights%20%28Q2%20FY26%29) Box reported a 9% increase in revenue to $294.0 million for Q2 FY26, with strong RPO growth of 16% to $1.5 billion, achieving record GAAP gross profit and increased net cash from operating activities Q2 FY26 Key Financial Metrics (YoY Change) | Metric | Q2 FY26 Value | YoY Change | | :-------------------------------- | :---------------- | :--------- | | Revenue | $294.0 million | +9% (+7% CC) | | Remaining Performance Obligations | $1.5 billion | +16% (+16% CC) | | Short-term RPO | $812 million | +12% | | Long-term RPO | $664 million | +21% | | Billings | $264.9 million | +3% (+6% CC) | | GAAP Gross Profit | $232.5 million (79.1%) | +$18.0 million (+1.7 pp) | | Non-GAAP Gross Profit | $239.2 million (81.4%) | +$19.0 million (-0.2 pp) | | GAAP Operating Income | $20.6 million (7.0%) | +$0.3 million (-0.5 pp) | | Non-GAAP Operating Income | $84.0 million (28.6%) | +$7.3 million (+0.2 pp) | | GAAP Diluted EPS | $0.05 | -$0.05 | | Non-GAAP Diluted EPS | $0.33 | -$0.11 | | Net Cash from Operating Activities | $46.0 million | +27% | | Non-GAAP Free Cash Flow | $35.7 million | +9% | [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of July 31, 2025, Box's total assets decreased to $1.62 billion from $1.67 billion, with total liabilities also decreasing to $1.40 billion from $1.47 billion, while stockholders' deficit improved slightly Condensed Consolidated Balance Sheets (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :------------------------------------------ | :-------------- | :--------------- | | **ASSETS** | | | | Cash and cash equivalents | $657,826 | $624,575 | | Total current assets | $1,042,740 | $1,097,779 | | Total assets | $1,624,581 | $1,667,520 | | **LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT** | | | | Total current liabilities | $853,159 | $922,076 | | Total liabilities | $1,398,658 | $1,470,244 | | Total stockholders' deficit | $(269,355) | $(296,962) | | Total liabilities, convertible preferred stock and stockholders' deficit | $1,624,581 | $1,667,520 | [Condensed Consolidated Statements of Operations](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 FY26, Box's revenue increased to $294.0 million, and gross profit rose to $232.5 million, but net income attributable to common stockholders decreased to $8.1 million due to higher taxes and preferred stockholder earnings Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $293,999 | $270,039 | $570,271 | $534,697 | | Gross profit | $232,477 | $214,526 | $448,076 | $420,932 | | Income from operations | $20,578 | $20,280 | $26,916 | $38,287 | | Net income | $13,445 | $20,496 | $21,639 | $37,718 | | Net income attributable to common stockholders | $8,097 | $14,341 | $11,611 | $25,855 | | Diluted EPS | $0.05 | $0.10 | $0.08 | $0.18 | | Total stock-based compensation expense | $60,758 | $55,111 | $115,652 | $106,273 | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Box's net cash from operating activities increased to $46.0 million for Q2 FY26, while investing activities shifted to a net outflow, and financing activities saw reduced cash usage due to lower stock repurchases Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $45,964 | $36,298 | $173,023 | $167,502 | | Net cash (used in) provided by investing activities | $(8,510) | $38,818 | $(18,901) | $15,648 | | Net cash used in financing activities | $(65,276) | $(121,407) | $(127,052) | $(157,102) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(31,726) | $(42,669) | $33,443 | $23,459 | | Cash, cash equivalents, and restricted cash, end of period | $659,553 | $407,716 | $659,553 | $407,716 | [Financial Outlook](index=3&type=section&id=Financial%20Outlook) Box provided financial guidance for Q3 and full year FY26, projecting continued revenue growth and stable operating margins, with EPS figures significantly impacted by non-cash deferred tax expenses [Q3 FY26 Guidance](index=3&type=section&id=Q3%20FY26%20Guidance) For Q3 FY26, Box anticipates revenue between $298 million and $299 million (+8% YoY), with GAAP operating margin around 8% and non-GAAP at 28%, while EPS is impacted by deferred tax expenses Q3 FY26 Financial Guidance | Metric | Range | | :------------------------------------------ | :-------------------- | | Revenue | $298 million to $299 million | | YoY Growth (reported) | +8% | | YoY Growth (constant currency) | +7% | | GAAP Operating Margin | ~8% | | Non-GAAP Operating Margin | ~28% | | GAAP Net Income Per Share | $0.05 to $0.06 | | Non-GAAP Diluted Net Income Per Share | $0.31 to $0.32 | | Weighted-average diluted shares outstanding | ~150 million | - Q3 FY26 GAAP EPS guidance includes a negative impact of **$0.05** from non-cash deferred tax expenses, partially offset by a positive impact of **$0.01** from favorable exchange rates[11](index=11&type=chunk) - Q3 FY26 Non-GAAP EPS guidance includes a negative impact of **$0.14** from non-cash deferred tax expenses, partially offset by a positive impact of **$0.01** from favorable exchange rates[11](index=11&type=chunk) [Full Year FY26 Guidance](index=5&type=section&id=Full%20Year%20FY26%20Guidance) For full year FY26, Box projects revenue between $1.170 billion and $1.175 billion (+8% YoY), with GAAP operating margin around 7% and non-GAAP at 28%, with EPS significantly affected by non-cash deferred tax expenses Full Year FY26 Financial Guidance | Metric | Range | | :------------------------------------------ | :-------------------- | | Revenue | $1.170 billion to $1.175 billion | | YoY Growth | +8% | | GAAP Operating Margin | ~7% | | Non-GAAP Operating Margin | ~28% | | GAAP Net Income Per Share | $0.18 to $0.20 | | Non-GAAP Diluted Net Income Per Share | $1.26 to $1.28 | | Weighted-average diluted shares outstanding | ~150 million | - Full year FY26 GAAP EPS guidance includes a negative impact of **$0.19** from non-cash deferred tax expenses, partially offset by a positive impact of **$0.04** from favorable exchange rates[19](index=19&type=chunk) - Full year FY26 Non-GAAP EPS guidance includes a negative impact of **$0.58** from non-cash deferred tax expenses, partially offset by a positive impact of **$0.04** from favorable exchange rates[19](index=19&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) Box provides non-GAAP financial measures to offer additional insights into core business performance, with detailed reconciliations for Q2 FY26 and guidance for Q3 and full year FY26 [About Non-GAAP Financial Measures](index=7&type=section&id=About%20Non-GAAP%20Financial%20Measures) Box provides non-GAAP financial measures to supplement GAAP results, offering insights into core business performance by excluding certain expenses, used for internal decision-making and investor analysis, despite potential comparability limitations - Non-GAAP measures (e.g., gross profit, operating income, net income, billings, RPO, free cash flow) are provided to supplement GAAP results, offering meaningful supplemental information by excluding expenses not indicative of recurring core business operations[23](index=23&type=chunk)[24](index=24&type=chunk) - These measures are used for financial and operational decision-making, evaluating period-to-period comparisons, and assessing performance against historical data and competitors[24](index=24&type=chunk) - Limitations include non-uniform definitions across companies, potential for limited comparability, and the fact that they are not substitutes for GAAP measures[25](index=25&type=chunk) [Reconciliation of GAAP to Non-GAAP Data (Q2 FY26)](index=15&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Data%20%28Q2%20FY26%29) Box provided detailed reconciliations from GAAP to non-GAAP figures for gross profit, operating income, net income, and free cash flow for Q2 FY26, with key adjustments including stock-based compensation and acquired intangible asset amortization Reconciliation of GAAP to Non-GAAP Gross Profit (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | GAAP gross profit | $232,477 | $214,526 | | Stock-based compensation | $5,666 | $4,731 | | Acquired intangible assets amortization | $993 | $981 | | Workforce reorganization | $45 | — | | **Non-GAAP gross profit** | **$239,181** | **$220,238** | | GAAP gross margin | 79.1% | 79.4% | | **Non-GAAP gross margin** | **81.4%** | **81.6%** | Reconciliation of GAAP to Non-GAAP Operating Income (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | GAAP operating income | $20,578 | $20,280 | | Stock-based compensation | $60,758 | $55,111 | | Acquired intangible assets amortization | $993 | $981 | | Acquisition-related expenses | $270 | $293 | | Expenses related to litigation | $334 | $25 | | Workforce reorganization | $1,052 | — | | **Non-GAAP operating income** | **$83,985** | **$76,690** | | GAAP operating margin | 7.0% | 7.5% | | **Non-GAAP operating margin** | **28.6%** | **28.4%** | Reconciliation of GAAP to Non-GAAP Net Income Attributable to Common Stockholders (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | GAAP net income attributable to common stockholders | $8,097 | $14,341 | | Stock-based compensation | $60,758 | $55,111 | | Acquired intangible assets amortization | $993 | $981 | | Amortization of debt issuance costs | $888 | $477 | | Workforce reorganization | $1,052 | — | | Income tax effects of non-GAAP adjustments | $(17,231) | — | | Undistributed earnings attributable to preferred stockholders | $(5,339) | $(6,486) | | **Non-GAAP net income attributable to common stockholders** | **$49,822** | **$64,742** | | GAAP diluted EPS | $0.05 | $0.10 | | **Non-GAAP diluted EPS** | **$0.33** | **$0.44** | | Non-GAAP free cash flow | $35,720 | $32,735 | [Reconciliation of GAAP Revenue to Billings (Q2 FY26)](index=17&type=section&id=Reconciliation%20of%20GAAP%20Revenue%20to%20Billings%20%28Q2%20FY26%29) Box's billings for Q2 FY26 were $264.9 million, an increase from the prior year, calculated by adjusting GAAP revenue for changes in deferred revenue and contract assets to reflect sales activity Reconciliation of GAAP Revenue to Billings (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP revenue | $293,999 | $270,039 | $570,271 | $534,697 | | Deferred revenue, end of period | $547,263 | $502,104 | $547,263 | $502,104 | | Less: deferred revenue, beginning of period | $(574,119) | $(513,572) | $(608,600) | $(586,871) | | Contract assets, beginning of period | $3,662 | $3,345 | $4,160 | $2,452 | | Less: contract assets, end of period | $(5,931) | $(5,481) | $(5,931) | $(5,481) | | **Billings** | **$264,874** | **$256,435** | **$507,163** | **$446,901** | [Reconciliation of GAAP to Non-GAAP Guidance (Q3 & FY26)](index=18&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Guidance%20%28Q3%20%26%20FY26%29) Box provided reconciliations for GAAP to non-GAAP net income per share and operating margin guidance for Q3 and full year FY26, primarily adjusting for stock-based compensation and income tax effects Reconciliation of GAAP to Non-GAAP Net Income Per Share Guidance | Metric | Three Months Ended October 31, 2025 | Fiscal Year Ended January 31, 2026 | | :------------------------------------------ | :---------------------------------- | :--------------------------------- | | GAAP net income per share attributable to common stockholders, diluted | $0.05 - $0.06 | $0.18 - $0.20 | | Stock-based compensation | $0.38 | $1.53 | | Acquired intangible asset amortization | $0.01 | $0.03 | | Income tax effects of non-GAAP adjustments | $(0.11) | $(0.44) | | Undistributed earnings attributable to preferred stockholders | $(0.03) | $(0.14) | | **Non-GAAP net income per share attributable to common stockholders, diluted** | **$0.31 - $0.32** | **$1.26 - $1.28** | | Weighted-average shares, diluted | 150,000 | 150,500 | Reconciliation of GAAP to Non-GAAP Operating Margin Guidance | Metric | Three Months Ended October 31, 2025 | Fiscal Year Ended January 31, 2026 | | :-------------------------------- | :---------------------------------- | :--------------------------------- | | GAAP operating margin | 8.0% | 7.0% | | Stock-based compensation | 19.5% | 19.5% | | Acquired intangible assets amortization | 0.5% | 0.5% | | Other (workforce reorganization and litigation) | — | 1.0% | | **Non-GAAP operating margin** | **28.0%** | **28.0%** | [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides details on Box's webcast and conference call, forward-looking statements, company overview, and contact information for investor and media inquiries [Webcast and Conference Call](index=5&type=section&id=Webcast%20and%20Conference%20Call) Box's management team hosted a conference call on August 26, 2025, to discuss financial results and outlook, with a live audio webcast and replay available on its Investor Relations website - A conference call was hosted on August 26, 2025, at 2:00 p.m. (PT) / 5:00 p.m. (ET) to discuss financial results, business highlights, and future outlook[14](index=14&type=chunk) - A live audio webcast and replay were accessible via Box's Investor Relations website (www.boxinvestorrelations.com)[14](index=14&type=chunk)[15](index=15&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements subject to various risks and uncertainties, including those related to growth, AI impact, and market conditions, with actual results potentially differing materially - The press release includes forward-looking statements regarding Box's growth, profitability, market opportunity, AI impact, product introductions, strategic partnerships, and financial targets for Q3 and full fiscal year 2026[18](index=18&type=chunk) - Actual results could differ materially due to factors such as adverse economic conditions, delays or reductions in IT spending, intense market competition, development of the intelligent content management market, customer retention, and security vulnerabilities[20](index=20&type=chunk)[21](index=21&type=chunk) - Box does not assume any obligation to update these forward-looking statements[22](index=22&type=chunk) [About Box](index=9&type=section&id=About%20Box) Box, Inc. (NYSE:BOX) is a leader in Intelligent Content Management, providing a platform for collaboration, content lifecycle management, security, and AI-driven workflow transformation for global organizations - Box is a leader in Intelligent Content Management, offering a platform for collaboration, content lifecycle management, secure content, and enterprise AI-driven workflow transformation[33](index=33&type=chunk) - Founded in 2005, Box serves leading global organizations like AstraZeneca, JLL, Morgan Stanley, and Nationwide[33](index=33&type=chunk) - Headquartered in Redwood City, CA, with offices across the United States, Europe, and Asia[33](index=33&type=chunk) [Contacts](index=9&type=section&id=Contacts) Contact information for Box's investor relations and media inquiries is provided for direct communication - Investor inquiries can be directed to Cynthia Hiponia and Elaine Gaudioso at ir@box.com[35](index=35&type=chunk) - Media inquiries can be directed to Sheridan Hoover at press@box.com[35](index=35&type=chunk)

AI Platform Evolution - Box transitioned to an agentic-first design for metadata extraction to enhance its AI platform [1] - The shift to agentic architecture was driven by the limitations of pre-generative AI data extraction and challenges with a pure LLM approach [1] - Agentic architecture unlocks advantages in data extraction [1] Technical Architecture - Box's AI agent reasoning framework supports the agentic routine for data extraction [1] - The agentic architecture addresses the challenge of unstructured data in enterprises [1] Key Lessons - Building agentic architecture early is a key lesson learned [1]

Group 1: Industry Outlook - Morgan Stanley's report indicates that the disruptive impact of AI continues to suppress sentiment in the software industry, and Q2 earnings reports from SaaS companies are unlikely to alleviate concerns [1] - Individual stock performance is expected to diverge, with companies that exceed expectations and raise guidance likely to see significant stock price increases, while those with weak key metrics or slowing growth will heighten market concerns about AI competition or business models [1] Group 2: Company Ratings and Expectations - Morgan Stanley maintains a "Hold" rating on Box (BOX.US), expecting strong Q1 performance to continue into Q2, with potential for significant upward revisions to full-year guidance due to conservative expectations and a stable macroeconomic environment [1] - Morgan Stanley also holds a "Hold" rating on DocuSign (DOCU.US) with a target price of $86, anticipating that Q2 billings may exceed expectations due to a low base effect, but expressing caution regarding potential disappointments in Q3 and the overall outlook for the second half of the year [1] - For Asana (ASAN.US), Morgan Stanley maintains a "Reduce" rating with a target price of $13, noting that while Q2 performance may be stable, growth rates in the second half could slow to mid to high single digits, leading to stock price fluctuations if guidance does not show significant adjustments [2] - Morgan Stanley gives Zoom (ZM.US) a "Hold" rating, expecting Q2 results to significantly exceed market expectations, but indicating that sustained accelerated growth will require more time, thus maintaining a cautious outlook until the company's prospects become clearer [2]

Core Viewpoint - The retail sector is under scrutiny as major retailers like Walmart, Home Depot, Lowe's, and Target prepare to report earnings amidst challenges such as tariffs, inflation, and changing consumer habits [1] Retail Sector Overview - Traditional retail ETFs, such as SPDR S&P Retail ETF (XRT) and VanEck Vectors Retail ETF (RTH), have seen gains of approximately 12.7% and 5.9% respectively over the past three months [2] - Retail sales in July rose less than expected, indicating potential strain on household budgets, despite some companies reporting resilient consumer spending [3] - Earnings growth for the retail sector is projected at 12.6% with a revenue growth of 5.6% [5] Company-Specific Insights Walmart - Walmart has an Earnings ESP of +1.26% and a Zacks Rank of 2, with a positive earnings estimate revision of $0.01 for Q2 fiscal 2026 [7] - As the largest retailer, Walmart's earnings are seen as a key indicator of consumer health, particularly in groceries and essentials [8] Home Depot - Home Depot has an Earnings ESP of +0.35% and a Zacks Rank of 3, with no earnings estimate revision in the past 30 days [9] - The company has experienced a softening demand for big-ticket home improvement projects due to housing affordability issues [11] Lowe's - Lowe's has an Earnings ESP of -0.56% and a Zacks Rank of 3, with a negative earnings estimate revision of $0.01 [10] - The company has delivered an average earnings surprise of 3.22% over the last four quarters [10] Target - Target has an Earnings ESP of -3.05% and a Zacks Rank of 3, with a negative earnings estimate revision of a couple of cents [12] - The company is balancing discretionary categories against stable grocery demand, with a focus on cost management and promotional strategies [13] ETF Insights SPDR S&P Retail ETF (XRT) - SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index and holds 76 diversified stocks, with no single stock exceeding a 2% share [14] - The ETF has an asset under management (AUM) of $429.2 million and an average trading volume of 6.1 million shares [15] VanEck Vectors Retail ETF (RTH) - VanEck Vectors Retail ETF tracks the MVIS US Listed Retail 25 Index, focusing on the largest retail firms [16] - The ETF has an AUM of $255.5 million and trades an average of 4,000 shares daily [17]

Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in navigating significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2] - The individual has a background in auditing with PricewaterhouseCoopers before transitioning to day trading [2]