Box (BOX -0.46%), the enterprise content management platform, reported results for the second quarter of fiscal 2026 on August 26, 2025. The company reported revenue growth. Revenue was $294.0 million, compared to expectations of $290–$291 million, while robust performance in long-term contracts lifted future revenue commitments. However, net earnings per share (non-GAAP) dropped to $0.33, below the prior year, largely due to tax-related accounting effects. Billings saw a marked slowdown, raising caution for upcoming revenue momentum. Overall, the period showed tangible gains in sales and product innovation, but future billing and margin trends will be important to monitor.
| Metric | Q2 FY26(three months ended July 31, 2025) | Q2 FY25(three months ended July 31, 2024) | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $0.33 | $0.44 | (25.0 % decrease) |
| Revenue (GAAP) | $294.0 million | $270.0 million | 8.9 % |
| Non-GAAP Operating Margin | 28.6 % | 28.4 % | 0.2 pp |
| Non-GAAP Free Cash Flow | $35.7 million | $32.7 million | 9.2% |
| Billings | $264.9 million | $256.4 million | 3.3 % |
| Remaining Performance Obligations | $1.5 billion | $1.469 billion | 2.1 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.
What Box Does and Keys to Its Business
Box specializes in cloud‑based content management and file sharing for businesses. Its platform enables enterprises to securely store, manage, and collaborate on documents and digital content from anywhere.
The company's main focus is providing secure, compliant, and easily integrated solutions that work well with other business software. It targets large organizations, especially those in regulated industries that require strict security and compliance standards. Box’s business relies on growing recurring revenue through long‑term subscription contracts and expanding the use of its artificial intelligence (AI) powered tools and advanced workflow automation.
Key Developments and Metrics in the Quarter
Box reached $294.0 million for the period, up from $270.0 million a year earlier. This beat its previous guidance range and marked a step up in sales growth versus the first quarter, when growth was slower. Operating margin on a non-GAAP (generally accepted accounting principles) basis was 28.6%, compared to 28.4% in Q2 fiscal year 2025.
While reported revenue and margins were strong, non‑GAAP earnings per share fell to $0.33 from $0.44. Management explained this was primarily due to changes in deferred tax accounting, a non-cash effect that reduced non-GAAP earnings by $0.14 per share. Net cash provided by operating activities was $46.0 million. Non-GAAP free cash flow was $35.7 million, up 9% year-over-year.
One of the most watched metrics in software businesses is billings, which measures the total value of invoices sent to customers during the quarter. Box’s billings increased by only 3%, a significant deceleration in billings growth from the prior quarter (Q1 FY2026), when early renewals had boosted growth. Company filings and management indicated that part of the slowdown was due to those renewals pulling business into the previous period.
Forward-looking indicators, however, strengthened. Remaining Performance Obligations (RPO), which represents contracted future revenue not yet recognized, jumped 16% to $1.5 billion. Short‑term RPO rose 12% and long‑term RPO climbed 21%. These figures suggest the company is signing larger or longer-term contracts, particularly through its “Enterprise Advanced” plan, which bundles advanced AI features, workflow automation, and security tools.
During the quarter, Box continued launching new product features and integrations. Product highlights included enhancements to its AI-powered platform: general availability of its Enhanced Extract Agent (used for data extraction and workflow automation), as well as early access to its Model Context Protocol (MCP) Server, which manages the use of external AI models. Box AI Studio, one of its core AI offerings, gained support for recent generative AI models from OpenAI, Anthropic, and xAI. The company deepened platform integrations with major software partners, including a new connector for OpenAI’s ChatGPT (AI chat assistant), and tighter links with Snowflake (cloud data analytics), Salesforce (business software), and others. These integrations allow companies to use Box as the central hub for content while leveraging powerful AI tools for search, compliance, or automation use cases.
Notable customer wins included large organizations such as Marriott International (hospitality), the Japan Ministry of Defense (public sector), and well‑known firms in legal, technology, and retail. Box’s ongoing traction in regulated and government sectors is tied to its focus on compliance, security, and “platform neutrality” in supporting a wide array of software partners and AI systems. Box received FedRAMP High Authorization, allowing U.S. government agencies and authorized government contractors to leverage its ICM platform, including Box AI and Box Hubs, for highly sensitive data, but Box showcased growing relevance with U.S. federal government users, including a collaboration with the General Services Administration.
On the cost side, Box saw expenses grow due to continued investment in product development and sales and marketing. Stock-based compensation was $60.8 million, compared to $55.1 million in Q2 FY2025. The company also repurchased $39.9 million in its own shares, showing ongoing use of free cash flow for shareholder returns. Capital spending was modest, with capital expenditures of $2.1 million, and Box does not currently pay a dividend.
Looking Ahead: Guidance and What to Watch
For the next quarter, Box expects GAAP revenue of $298–299 million, targeting around 8 % growth. Non-GAAP operating margin is forecast at about 28%. Non-GAAP EPS is projected in the range of $0.31 to $0.32, again pressured by ongoing non-cash deferred tax accounting, with management flagging a roughly $0.14 negative impact similar to this quarter. For the full fiscal year, guidance was raised modestly to $1.170–$1.175 billion in GAAP revenue and non-GAAP EPS of $1.26–$1.28.
Box pays dividends to preferred stockholders.
Investors and observers should monitor whether billings growth recovers in the coming quarters. Watch for further adoption of Box's Enterprise Advanced subscription and expansion of AI-driven content solutions, and for management’s ability to manage foreign exchange headwinds since about one‑third of sales are outside the United States, mainly in Japanese Yen. Attention will also be on how Box turns strong pipeline and bookings into realized revenue and achieves sustained operating margin progress while investing in product innovation.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
