Box Reports Q1 Fiscal 2026 Earnings with Revenue and Earnings Decline

Box (BOX) announced first-quarter fiscal 2026 non-GAAP earnings of 30 cents per share, including a 1-cent impact from unfavorable foreign exchange, which represents a 23.1% decline year over year. This earnings figure exceeded the Zacks Consensus Estimate by 20%.

Total revenues reached $276.3 million, surpassing the consensus mark by 0.67%. The revenue increased 4.4% year over year on a reported basis and 5% on a constant-currency basis.

The year-over-year growth was mainly fueled by strong demand for BOX Suites offerings, which integrate multiple products and services for customers.

In pre-market trading following the earnings release, Box shares rose 11.35%.

Q1 Detailed Financial Metrics

Billings for the quarter totaled $242.3 million, marking a 27% increase year over year, with a 17% growth on a constant-currency basis. This growth was aided by 400 basis points from early renewals and 700 basis points from favorable foreign exchange impacts.

During the quarter, 61% of Box’s revenues came from Suite customers. Continued interest in Box AI and Enterprise Advanced significantly bolstered Suite performance.

A new Box AI Agent was launched for Microsoft (MSFT) 365 Copilot, enabling customers to search, analyze, and interact with Box content securely within Microsoft 365 applications.

Box’s net retention rate reached 102% at the end of the first fiscal quarter, improving by 100 basis points year over year.

The remaining performance obligations (RPO) amounted to $1.469 billion, reflecting a 21% year-over-year increase, or 17% on a constant-currency basis. This includes $812 million in short-term RPO and $657 million in long-term RPO.

Operating and Financial Performance

The non-GAAP gross margin for the first quarter was 80.5%, expanding 30 basis points from the prior year.

Operating expenses were $209.3 million, up 11.1% year over year. As a percentage of revenue, this marked a 460 basis point increase to 75.7%.

Box recorded a non-GAAP operating margin of 25.3%, a decline of 130 basis points year over year.

Balance Sheet and Cash Flow

As of April 30, 2025, cash and cash equivalents stood at $689.7 million, an increase from $624.6 million on January 31, 2025.

Short-term investments totaled $100.7 million, a slight increase from $98.2 million in the previous quarter.

Non-current debt was reported at $449.2 million, up from $448.6 million at the end of the previous quarter.

Box generated $127.1 million in cash from operations in the fiscal first quarter, increasing from $102.2 million in the prior quarter.

Non-GAAP free cash flow for the quarter was $118.3 million.

In Q1 fiscal 2026, Box repurchased 1.6 million shares for $50 million and has approximately $152 million remaining under its buyback plan.

Q2 and FY26 Guidance

For the second quarter of fiscal 2026, Box projects revenues between $290 million and $291 million, reflecting an 8% year-over-year increase, with a constant-currency growth forecast of 6%, including a favorable impact of about 220 basis points from foreign exchange.

On a non-GAAP basis, Box expects earnings of 30-31 cents per share.

The non-GAAP operating margin for Q2 is anticipated to be 28%.

For fiscal 2026, revenue projections are between $1.16 billion and $1.17 billion, indicating a 7% year-over-year increase, with an estimated 120 basis point boost from foreign exchange.

Non-GAAP earnings are expected to range between $1.22 and $1.26 per share, and the fiscal year’s non-GAAP operating margin is expected to remain at 28%.

Zacks Rank Overview

Currently, Box holds a Zacks Rank #4 (Sell).

PagerDuty (PD) and GitLab (GTLB) are higher-ranked stocks that investors might consider, as they both currently have a Zacks Rank #2 (Buy).

PagerDuty shares have declined 11.3% year to date and is scheduled to report Q1 fiscal 2026 results on May 29, while GitLab has fallen 14.8% year to date and is set to report Q1 fiscal 2026 results on June 10.