BOX Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Box BOX reported second-quarter fiscal 2026 non-GAAP earnings of 33 cents per share, which declined 25% year over year. The figure exceeded the Zacks Consensus Estimate by 6.45%.

Total revenues of $294 million surpassed the consensus mark by 1.21%. The top line increased 9% year over year on a reported basis and 7% on a constant-currency (cc) basis.

Box shares were up 1.76% at the time of writing this article. Year to date, BOX climbed up 0.9% compared with the broader Zacks Computer and Technology sector’s return of 12.9%

BOX’s Q2 Metrics in Detail

Billings were $265 million in the reported quarter, increasing 3.3% year over year on a reported basis and 6% on a cc basis. 

The company generated 63% of its revenues from Suite’s customers in the second quarter of fiscal 2026. 

Box’s net retention rate was 103% at the end of the fiscal second quarter, up 100 bps year over year.

The company’s remaining performance obligations (RPO) totaled $1.5 billion, up 16% year over year both on a reported and cc basis. This includes $812 million in short-term RPO (up 12% year over year) and $664 million in long-term RPO (up 21% year over year).

BOX’s Q2 Operating Details

Second-quarter fiscal 2026 non-GAAP gross margin was 81%, contracting 20 basis points (bps) year over year. Sequentially, gross margin expanded 100 bps.

As a percentage of revenues, non-GAAP sales and marketing, non-GAAP research and development and non-GAAP general and administrative expenses fell 100 bps sequentially.

On a non-GAAP basis, the company recorded an operating margin of 28.6%, which expanded 20 bps year over year. Sequentially, operating margin expanded 400 bps.

BOX’s Balance Sheet & Cash Flow

As of July 31, 2025, cash and cash equivalents were $758 million, up from $689.7 million as of April 30, 2025.

Box generated $46 million in cash from operations in the fiscal second quarter, up from $127.1 million in the previous quarter. The company generated a non-GAAP free cash flow of $35.7 million in the reported quarter.

In the second quarter of 2025, Box repurchased approximately 1.2 million shares for $40 million. The company had roughly $112 million under its current buyback capacity.

BOX Initiates Q3 & FY26 Guidance

For the third quarter of fiscal 2026, Box expects revenues between $298 million and $299 million, suggesting an 8% year-over-year increase. The cc growth rate is pegged at 7%. This includes an expected positive impact of approximately 80 bps due to favorable forex.

The non-GAAP operating margin for the fiscal third quarter is expected to be 28%. On a non-GAAP basis, BOX expects earnings of 31-32 cents per share. 

For fiscal 2026, BOX expects revenues between $1.16 billion and $1.175 billion, indicating a year-over-year increase of 8%. This includes an expected positive impact of approximately 90 bps due to favorable forex.

The non-GAAP operating margin for the fiscal year is expected to be 28%. Non-GAAP earnings are expected between $1.26 and $1.28 per share.

Zacks Rank & Stocks to Consider

Currently, Box carries a Zacks Rank #3 (Hold).

Astera Labs ALAB, Amphenol APH and Reddit RDDT are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. 

Astera Labs, Amphenol and Reddit each carry a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Astera Labs, Amphenol and Reddit is currently pegged at 47.8%, 20.6% and 34.9%, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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