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BOX
Earnings call · Jul 2026 (Q2 FY27)

BOX Q2 FY27 earnings call BOX

Aug 25, 2026 Source

Executive summary

Box Q2 FY27 — Strong AI Adoption Drives Revenue Beat and NRR Improvement

Box delivered a strong second quarter, driven by rapid customer adoption of Enterprise Advanced and increasing Box AI usage, leading to a revenue beat and improved net retention. The company is strategically positioning its intelligent content management platform as essential for secure AI agent integration with enterprise data, focusing on model-neutral solutions and legacy system migrations. While billings growth is projected to moderate in Q3 due to seasonality and FX, the underlying demand and leading indicators remain robust.

Highlights

5

  • Q2 revenue of $321 million exceeded guidance, growing 9% YoY (11% CC).

  • Q2 billings grew 17% YoY (16% CC), significantly outperforming expectations for low double-digit growth.

  • Remaining Performance Obligations (RPO) increased 15% YoY (17% CC) to $1.7 billion.

  • Net retention rate improved to 106%, exceeding guidance of 105% and up from 103% in the prior year.

  • Free cash flow grew 67% YoY to $60 million, and cash flow from operations grew 54% YoY to $71 million.

Concerns

3

  • Q3 billings growth guidance of 9% is a step down from Q2's 17% growth, attributed to lumpiness and FX impact.

  • Gross margin for Q3 and FY27 is expected to be approximately 80.5%, with Q4 at 80%, reflecting capacity dynamics with public cloud providers and AI adoption costs.

  • FX headwinds impacted Q2 EPS by $0.04 and are expected to impact Q3 EPS by $0.02 and FY27 EPS by $0.09.

Guidance & targets

CategoryTargetConfidence
Q3 FY27 Revenue
$329 million
high materiality
High
Q3 FY27 Billings Growth
9%
medium materiality
High
Q3 FY27 Gross Margin
80.5%
medium materiality
High
Q3 FY27 Operating Margin
28%
high materiality
High
Q3 FY27 EPS
$0.39
high materiality
High
Q3 FY27 Weighted Average Diluted Shares
$142 million
low materiality
High
FY27 Revenue
$1.29 billion
high materiality
High
FY27 Billings Growth
roughly in line with revenue growth
medium materiality
High
FY27 Gross Margin
80.5%
medium materiality
High
FY27 Operating Margin
28%
high materiality
High
FY27 EPS
$1.54
high materiality
High
FY27 Weighted Average Diluted Shares
$141 million
low materiality
High
Net Retention Rate
106%
high materiality
High

BOX operating KPIs by quarter

BOX operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q4 FY26 Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change 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 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 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 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 transcript
105% In Q1, our Enterprise Advanced net retention rate was higher than our overall net retention rate of 105%. Source 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 transcript
+1 pt
Annualized full churn rate —
3% Our annualized full churn rate remained at 3%. Source transcript
3% Our annualized full churn rate remained at 3%. Source transcript
0 pt

Operating figures the company states on every call, 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) $1.7 billion Q2 FY27

up 15% YoY (17% CC)

Short-term RPO approximately 55% of total RPO Q2 FY27

up 11% YoY (14% CC)

Expected to be recognized over the next 12 months.

Billings $310 million Q2 FY27

up 17% YoY (16% CC)

Exceeded expectations for low double-digit growth, driven by Q2 booking strength.

Product announcements

ProductTypeDetails
Agent Guardrails, Third-Party Agent Activity Oversight, Prompt Injection Detection, Agent Classification-Based Access Policiesupdate
MCP integrations with Anthropic's Claude for Legallaunch
Box MCP server for Databrickslaunch
Enhanced MCP server support, deeper integrations with leading agents, improved context retrieval APIsroadmap

Deals & partnerships

Anthropic Launch partner for Claude's new legal industry solutions

Box partnered with Anthropic as a launch partner for Claude's new legal industry solutions, using the Box MCP server as the secured governance layer for agentic legal work. New MCP tools allow Claude to execute multistep matter operations directly in Box.

Databricks Integration of Box MCP server for Databricks

The Box MCP server for Databricks is now available in the Databricks marketplace, allowing data analysts, scientists, and engineers to combine and query unstructured content from Box alongside structured sources without data duplication.

DataBank Leading insurance provider adopted Box Enterprise Advanced with Shield Pro and AI units

In partnership with DataBank, a leading insurance provider adopted Box Enterprise Advanced with Shield Pro and purchased additional AI units to drive a comprehensive platform modernization. This leverages Box's platform APIs, Box Sign APIs, and Box AI to connect Box directly into the firm's custom middleware for core systems, including Guidewire.

Slalom Large U.S. state DMV upgraded to Enterprise Advanced and purchased AI units

Working with Slalom, a large U.S. state DMV upgraded from Enterprise Plus to Enterprise Advanced and purchased additional AI units as the foundation for a new intelligent document processing initiative. Box AI powers classification and metadata extraction to populate Salesforce records associated with driver profiles.

Risks & headwinds

Foreign currency exchange rates Q2 FY27, Q3 FY27, FY27

$0.04 EPS headwind in Q2 FY27; $0.02 EPS headwind in Q3 FY27; $0.09 EPS headwind in FY27; 150 bps billings growth headwind in FY27

Mitigation:Not explicitly stated, but company adjusts guidance for FX impact.

Public cloud provider capacity dynamics Q3 FY27, Q4 FY27, FY27

Impacts gross margin, with Q3 FY27 expected at 80.5% and Q4 FY27 at 80%

Mitigation:Expects to unlock efficiency projects as constraints ease.

AI model data retention policies (e.g., Fable) Ongoing

Less adoption for models without zero data retention

Mitigation:Box ensures in-production models meet criteria around zero data retention and compliance. Anticipates Anthropic will evolve its stance due to revenue impact.

What to watch in Q3 FY27

Q3 FY27 Billings Growth

Q3 FY27
Current Q2 FY27: 17% YoY (16% CC)
Target 9% YoY

Why it matters

To assess if the deceleration is merely lumpiness and FX, or if it indicates a broader slowdown in demand, despite strong underlying indicators.

We anticipate our Q3 billings growth rate to be roughly in line with revenue growth of 9% which includes an expected tailwind from FX of approximately 70 basis points.

Q&A highlights

How do token costs evolve for longer agentic workflows, and how does open-source model adoption factor into customer implementation? What are the unit economics differences between frontier and open-source models for Box?

Longer, token-intensive agentic workflows are growing, which benefits Box as customers seek model-neutral platforms to optimize costs. Box's agentic harness directs workloads to the cheapest model at the required accuracy level, including open-weight models or those with competitive pricing. This drives AI unit growth and Enterprise Advanced upgrades.

“by having a model neutral layer, which is our agentic harness, we can then make sure that we are directing the workload to whatever is the effectively cheapest model at the accuracy level that the customer is looking for.”

asked by Lucky Schreiner · answered by Aaron Levie

2 min read 6 chapters

Detailed narrative

AI-Driven Product Innovation and Strategy

Box is evolving its platform into an intelligent content management system, focusing on secure integration of AI agents with enterprise content and workflows. New security capabilities like agent guardrails and prompt injection detection extend Box's controls to third-party AI agents. The company is also advancing Box Automate and Box Extract for agentic workflow automation and complex document extraction, leveraging a model-neutral approach to optimize accuracy and cost.

Strategic Partnerships and Ecosystem Expansion

Box announced new MCP integrations with Anthropic's Claude for Legal and Databricks, enabling advanced legal and data analysis workflows directly within Box's secure governance layer. The company is expanding its system integrator ecosystem and strengthening partnerships with hyperscalers like Amazon and Google to enhance enterprise distribution and enablement, leading to significant customer wins.

Enterprise Advanced Adoption and Legacy Migration

The rapid adoption of Enterprise Advanced is a key driver of growth, with notable wins including a multinational investment bank and a major federal agency upgrading and expanding licenses. This adoption is fueled by the need for enterprises to migrate off legacy on-premises ECM systems to cloud-native platforms that can securely integrate with AI agents, addressing the challenge of unlocking value from unstructured data.

Security and Governance in the AI Era

Box emphasizes its role in providing industry-leading security and compliance for unstructured data, especially with the rise of AI agents. The company is building new guardrails, alerting mechanisms, and anomaly detection capabilities to protect against potential risks from AI agents accessing or processing sensitive information, reinforcing its value proposition as a robust system of record.

Go-to-Market and FDE Initiatives

The go-to-market strategy focuses on accelerating Enterprise Advanced adoption and platform revenue growth across key industries. Box is expanding its Forward Deployed Engineering (FDE) efforts to help customers implement and tune AI agents on their enterprise content, ensuring successful transformation with AI and driving materially bigger upsells on existing accounts.

BoxWorks 2026 Preview

BoxWorks, scheduled for early November in San Francisco, will feature major product announcements and insights from customers and partners, including CEOs from NVIDIA, Intel, and Cursor. This event is expected to showcase further product roadmap advancements and strategic directions for the company.

AI-generated summary of the company's earnings call. Not investment advice.