What are the underlying assumptions driving the healthy constant currency guidance raise, and how much is based on Q1 performance versus future pipeline?

Dylan Smith explained that the majority of the guidance increase is 'on the come,' driven by continued pipeline build and momentum from Enterprise Advanced, for which they have good visibility. While a portion reflects Q1 outperformance, the significant increase in expectations is due to anticipated ongoing strength in the business. “But the magnitude of the beat, especially when factoring in the FX adjustments, so that $8.5 million increase to our expectations for this year's revenue outcome is really about just the continued pipeline build and momentum that we're seeing in the business that we're, again, really, really pleased by.”

What are the incremental drivers of the upside in net revenue retention, and how does Enterprise Advanced's NRR contribute to the overall rate?

Dylan Smith attributed the overall net retention rate increase primarily to the healthy momentum and adoption of Enterprise Advanced. He noted that the increase is driven by both seat expansion and pricing, with seat expansion being the more significant factor recently. Enterprise Advanced's NRR is higher than the corporate average, thus elevating the blended NRR. “But again, much of that is being driven by Enterprise Advanced. And as that becomes a larger portion of the business and the customer expansion, that rate that's a little bit higher than the overall average is what's bringing up the blended net retention rate to that 105% as well.”

When will AI credits and MCP access become more needle-moving for Box's numbers, and how are customer conversations regarding Box spend, especially with muted hiring impacting seat expansion?

Aaron Levie clarified that core seat business trends remain strong, contradicting broader narratives about weaker seat expansion. He stated that AI units (consumption-based tokens) and API monetization are already driving top-line revenue and will continue to be healthy growth components. Monetization occurs either through burst capacity adjustments or at renewal moments, with clear upside from the consumption model. “But overall, both of those metrics are already driving kind of top line revenue, and I think that will continue to kind of provide a nice healthy component of the revenue over the near, medium and long run.”

BOX

Box (BOX) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Apr 2026 (Q1 FY27)· Information Technology· May 26, 2026

Source: earnings call transcript

Executive summary

Box Q1 FY27 — Double-Digit Revenue Growth Driven by Enterprise Advanced and AI Solutions

Box delivered a strong Q1 FY27, achieving double-digit revenue growth for the first time in over three years, fueled by robust adoption of its Enterprise Advanced suite and AI-powered solutions. The company exceeded guidance across key financial metrics, demonstrating accelerating top-line momentum and expanding profitability. Management highlighted the increasing demand for its intelligent content management platform as enterprises seek to securely integrate AI agents with unstructured data, driving continued investment in product innovation and strategic partnerships.

Highlights

Revenue grew 11% year-over-year (10% in constant currency) to $306 million, marking the first double-digit growth rate in over 12 quarters.
Billings increased 5% year-over-year (13% in constant currency) to $255 million, exceeding expectations due to strong Q1 bookings.
Operating margin expanded to 27.7% (28.1% in constant currency), surpassing guidance of 27.5%.
Net retention rate improved to 105%, above guidance of 104% and up from 102% in the prior year period.
Diluted EPS reached $0.37, exceeding guidance of $0.36, and free cash flow hit a record $128 million.

Concerns

Q1 billings absorbed an FX headwind that was 260 basis points greater than prior expectations.
Q2 revenue guidance includes an expected FX headwind of approximately 170 basis points.
Q2 EPS guidance includes an expected FX headwind of approximately $0.03.
Full-year FY27 revenue guidance includes an expected FX headwind of approximately 90 basis points, 30 basis points higher than prior expectations.
Full-year FY27 billings guidance includes an expected FX headwind of approximately 150 basis points, 50 basis points higher than prior expectations.

Guidance & targets

Category	Target	Timeline	Confidence
Q2 FY27 Revenue	~$319M high materiality	Q2 · FY27	High
Q2 FY27 Billings growth	low double digits medium materiality	Q2 · FY27	High
Q2 FY27 Gross margin	81%-81.5% medium materiality	Q2 · FY27	High
Q2 FY27 Operating margin	~28.5% high materiality	Q2 · FY27	High
Q2 FY27 EPS	~$0.39 high materiality	Q2 · FY27	High
FY27 Revenue	~$1.28B high materiality	FY27	High
FY27 Billings growth	roughly in line with revenue growth medium materiality	FY27	High
FY27 Gross margin	81%-81.5% medium materiality	FY27	High
FY27 Operating margin	~28% high materiality	FY27	High
FY27 EPS	~$1.56 high materiality	FY27	High
FY27 Weighted average diluted shares	~139M medium materiality	FY27	High

BOX operating KPIs by quarter

BOX operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Jan 2026 Q4 FY26	This call Apr 2026 Q1 FY27	Jul 2026 Q2 FY27	Change vs prior quarter
Remaining performance obligation (RPO)	$1.7B We ended Q4 with remaining performance obligations, or RPO, of $1.7 billion, representing 17% year-over-year growth or 16% in constant currency and providing us with greater visibility into future revenue. Source: earnings call transcript	$1.6B We ended Q1 with remaining performance obligations, or RPO, of $1.6 billion, a 12% year-over-year increase or 16% in constant currency. Source: earnings call transcript	$1.7B We ended Q2 with remaining performance obligations, or RPO, of $1.7 billion, a 15% year-over-year increase or 17% in constant currency. Source: earnings call transcript	+6.3%
Net revenue retention rate	104% We ended Q4 with a net retention rate of 104% and up from 102% in the year ago period, driven by continued improvements in both pricing and net seat expansion trends. Source: earnings call transcript	105% In Q1, our Enterprise Advanced net retention rate was higher than our overall net retention rate of 105%. Source: earnings call transcript	106% We drove a net retention rate of 106% ahead of our expectations of 105%, driven by both price per seat increases and seat expansion. Source: earnings call transcript	+1 pt
Annualized full churn rate	—	3% Our annualized full churn rate remained at 3%. Source: earnings call transcript	3% Our annualized full churn rate remained at 3%. Source: earnings call transcript	0 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Remaining Performance Obligations (RPO) $1.6B Q1 FY27 end

up 12% YoY (16% CC)

Approximately 55% expected to be recognized over the next 12 months.

Short-term RPO up 8% YoY (12% CC) Q1 FY27 end

Product announcements

Product	Type	Timeline
Box Agent	launch	Q1 FY27
Box Automate	launch	Q1 FY27
MCP app support	expansion	Q1 FY27
AI Model Partnerships	update	Q1 FY27

Deals & partnerships

AWS and OpenAI Strategic partnership for agentic document workflows

Box was named as a partner with both organizations in AWS's official announcement on bringing OpenAI as a model partner.

Claude for Legal Solutions Key partner for enterprise content management across legal solutions

Box was highlighted as a key partner, building on its previous inclusion in the Claude for Financial Services launch.

VersaFile (partner) and EMEA automotive, engineering and industrials conglomerate Expanded relationship and upgrade to Enterprise Advanced

Customer upgraded from Business Plus to Enterprise Advanced, added seats, and purchased additional AI units for extract-driven workflows (invoice management, contract life cycle management, e-signature consolidation). This was a partner-led win driven by prebuilt SAP-oriented integrations.

Slalom (partner) and North American consumer finance company Multi-thousand-seat Enterprise Advanced deployment

Customer selected Box as part of a larger digital transformation project anchored on Salesforce Financial Services Cloud, replacing fragmented legacy document management systems, e-signature, and doc generation tools.

Risks & headwinds

Foreign currency exchange rate headwinds Q1 FY27, Q2 FY27, FY27

Q1 billings FX headwind 260 bps greater than prior expectations; Q2 revenue FX headwind ~170 bps; Q2 EPS FX headwind ~$0.03; FY27 revenue FX headwind ~90 bps (30 bps higher than prior); FY27 billings FX headwind ~150 bps (50 bps higher than prior).

Mitigation:Company is driving efficiencies across the business to offset FX headwinds and maintaining constant currency growth targets.

Legacy fragmented or on-premises content management infrastructure Ongoing

Discussed_not_quantified

Mitigation:Box's intelligent content management platform helps organizations move away from fragmented systems towards a unified, secure content layer, enabling full value from AI.

Securely connecting AI agents to unstructured data Ongoing

Discussed_not_quantified

Mitigation:Box provides a platform for securely managing unstructured data for AI agents, offering enterprise-grade security, governance, and permission controls, and building more granular access controls for external agents.

Malicious use of data or rogue agents Ongoing

Discussed_not_quantified

Mitigation:Box is building on its leadership in content security with more granular access controls, safeguards around sensitive data, improved visibility into concerning agent activity, and agent guardrails.

What to watch in Q2 FY27

AI unit monetization ramp-up

next quarter

Current Ramping up, early phases

Target Continued growth and more significant impact on revenue

Why it matters

AI unit consumption is a new growth lever for Box, and its acceleration will indicate the success of AI product adoption and monetization.

Still, again, the early phases, but seeing good momentum with a lot of the heavy workload use cases like Box Extract that drives pretty heavy AI unit consumption from customers.

Find out whether BOX delivers this. Inve re-checks your case every morning.

Q&A highlights

How is Agentic AI adoption translating to customer usage of Box, especially among sophisticated customers, and what are the key use cases?

Aaron Levie stated that Agentic AI adoption is still early but shows significant upside. Key use cases include the document extraction agent, which is a 'killer app,' and Box Automate for advanced content workflows like client onboarding and RFP processes. He noted increased platform usage via Box APIs for external agents and ramping AI unit monetization, all contributing to Enterprise Advanced revenue momentum.

“Some of the biggest use cases that we're seeing so far, things like our document extraction agent has absolutely kind of become a killer app for us within enterprises that have large amounts of contracts or invoices or financial documents.”

asked by Steven Enders · answered by Aaron Levie

2 min read 5 chapters

Detailed narrative

Enterprise Advanced Driving Growth and Value

Box's Enterprise Advanced suite is a key driver of accelerated growth, demonstrating strong customer adoption and a net retention rate higher than the overall company average of 105%. This premium offering commands a 30-40% price premium over Enterprise Plus, reflecting the recognized value of its intelligent workflow capabilities, including Box Agent, Box Extract, and Box Automate.

The suite is central to Box's strategy of enabling enterprises to securely manage unstructured data for AI agents and automate critical workflows.

AI Innovation and Platform Strategy

Box is positioning itself as the intelligent content management platform for the 'agentic era,' where AI agents interact with enterprise data. The company announced the general availability of Box Agent, a unified AI engine for content search, analysis, and generation, and Box Automate, a workflow automation solution.

Box is also expanding MCP app support and deepening partnerships with leading AI model providers and platforms like OpenAI, Claude, and Gemini, emphasizing choice and flexibility for customers.

Security and Governance for AI Agents

As AI agents become major users of enterprise data, Box is enhancing its leadership in content security and governance. The company is developing more granular access controls, safeguards for sensitive data, and improved visibility into agent activity to prevent malicious use or rogue agents.

Box aims to serve as a neutral layer, allowing customers to optimize costs and performance by swapping different AI models and harnesses based on workload requirements, providing a strategic advantage in token budgeting.

Go-to-Market Expansion and Strategic Partnerships

Box is focused on expanding its go-to-market efforts through a vertical strategy, targeting industries like financial services, life sciences, and legal, to deliver tailored AI solutions. The company is also strengthening its partner ecosystem, collaborating with frontier AI labs, system integrators, and hyperscalers.

Recent highlights include being named a partner with AWS and OpenAI for agentic document workflows and being featured in Claude's legal and financial services announcements, leading to partner-led Enterprise Advanced wins.

Disciplined Capital Allocation

Box continues its disciplined capital allocation strategy, having expanded its share repurchase program by $500 million. In Q1 FY27, the company repurchased 4.8 million shares for approximately $114 million, with $445 million remaining under the current authorization. This strategy aims to reduce total shares outstanding and enhance long-term shareholder value, complementing the company's focus on accelerating revenue growth and expanding profitability.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.