Box(BOX) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 FY 2026, revenue grew by 4% year over year, or 5% in constant currency, reaching $276 million [7][24] - Remaining Performance Obligations (RPO) increased by 21% year over year to$ 1.5 billion [7][25] - Billings rose by 27% year over year to $242 million, exceeding expectations [26] - Operating margin was reported at 25.3%, slightly down from 26.6% year over year [28] - Earnings per share (EPS) was$ 0.30, exceeding guidance by $0.04 [28] Business Line Data and Key Metrics Changes - Suite customers now represent 61% of total revenue, up from 56% a year ago, driven by strong demand for AI capabilities [25] - The company saw strong momentum in customer adoption of Enterprise Advanced, particularly in Q1 [7][17] Market Data and Key Metrics Changes - The company reported a net retention rate of 102%, up from 101% year over year [26] - The annualized full churn rate remained at 3%, indicating continued customer stickiness [26] Company Strategy and Development Direction - The company is focused on building an intelligent content management platform that integrates AI capabilities to enhance enterprise workflows [12][20] - Partnerships with major AI providers like OpenAI and IBM are being leveraged to enhance product offerings and customer engagement [15][70] - The company aims to drive pricing improvements in the range of 20% to 40% for Enterprise Advanced deals [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about customer demand for AI-driven solutions, noting robust conversations with clients [42] - Despite strong Q1 results, management remains cautious about macroeconomic uncertainties impacting IT spending [32] - The company expects revenue growth of approximately 7% year over year for FY 2026, with guidance adjusted to$ 1.165 billion to $1.170 billion [32][36] Other Important Information - The company received FedRAMP high authorization, allowing U.S. government agencies to utilize its platform for sensitive data [19] - The company is committed to a disciplined capital allocation strategy, including ongoing stock repurchase programs [29] Q&A Session Summary Question: Demand picture and guidance prudence - Management reported healthy customer conversations and strong momentum heading into Q2, while remaining prudent due to the macro environment [41][43] Question: Billings and RPO growth vs. revenue guidance - The difference in growth rates is attributed to timing, with early renewals impacting Q1 results [45][46] Question: Seat growth and down-sell trends - Seat growth is occurring, but pricing increases are the primary driver of revenue expansion [50][51] Question: Early renewals and their impact - Early renewals were driven by customers adopting AI capabilities, with expectations for continued but moderated early renewals [58][86] Question: AI adoption and customer engagement - The company is seeing a mix of early adopters and broader deployments of AI capabilities across various industries [61][82] Question: Integration with AI partners and monetization - The company aims to provide seamless integration with various AI platforms while monetizing through user seats and AI unit volume [90][98]