Box Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Box BOX reported first-quarter fiscal 2026 non-GAAP earnings of 30 cents per share (including 1 cent of unfavorable forex impacts), which declined 23.1% year over year. The figure exceeded the Zacks Consensus Estimate by 20%.

Total revenues of $276.3 million surpassed the consensus mark by 0.67%. The top line increased 4.4% year over year on a reported basis and 5% on a constant-currency (cc) basis.

This year-over-year revenue increase was primarily driven by the strong momentum of BOX Suites offerings, which bundle multiple products and services into comprehensive solutions for customers.

Following the release of the first quarter of fiscal 2026 results, Box shares gained 11.35% in the pre-market trading.

Box, Inc. Price, Consensus and EPS Surprise

Box, Inc. price-consensus-eps-surprise-chart | Box, Inc. Quote

BOX’s Q1 Metrics in Detail

Billings were $242.3 million in the reported quarter, increasing 27% year over year (17% growth on a cc basis), with a tailwind of 400 basis points from early renewals and 700 basis points from favorable foreign exchange (FX). 
 
The company generated 61% of its revenues from Suite’s customers in the first quarter of fiscal 2026. Continued growth in customer demand for Box AI and Enterprise Advanced contributed to strong Suite momentum. 

In the first quarter of fiscal 2026, Box introduced a new Box AI Agent for Microsoft MSFT 365 Copilot to help customers securely search, analyse, and act on Box content directly within Microsoft 365, Microsoft Copilot Chat, and Microsoft Teams.

Box’s net retention rate was 102% at the end of the fiscal first quarter, up 100 bps year over year.

The company’s remaining performance obligations (RPO) totaled $1.469 billion, reflecting a 21% year-over-year increase (17% on a cc basis). This includes $812 million in short-term RPO and $657 million in long-term RPO.

BOX’s Q1 Operating Details

The non-GAAP gross margin for first-quarter fiscal 2026 was 80.5%, expanding 30 bps year over year.

Box’s operating expenses of $209.3 million increased 11.1% year over year. As a percentage of revenues, the figure expanded 460 bps from the year-ago quarter to 75.7%.

On a non-GAAP basis, the company recorded an operating margin of 25.3%, which contracted 130 bps year over year.

BOX’s Balance Sheet & Cash Flow

As of April 30, 2025, cash and cash equivalents were $689.7 million, up from $624.6 million as of Jan. 31, 2025.

BOX’s short-term investments amounted to $100.7 million, an increase from $98.2 million in the previous quarter.

Non-current debt was pegged at $449.2 million at the reported quarter’s end compared with $448.6 million at the previous quarter’s end.

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

The company generated a non-GAAP free cash flow of $118.3 million in the reported quarter.

BOX repurchased 1.6 million shares for $50 million in first-quarter fiscal 2026. As of April 30, 2025, approximately $152 million of buyback capacity was remaining under Box’s current share repurchase plan.

BOX Initiates Q2 & FY26 Guidance

For the second quarter of fiscal 2026, Box expects revenues between $290 million and $291 million, suggesting an 8% rise from the prior-year reported figure. The cc growth rate is pegged at 6%. This includes an expected positive impact of approximately 220 basis points due to FX.

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

The non-GAAP operating margin for the fiscal second quarter is expected to be 28%.

For fiscal 2026, BOX expects revenues between $1.16 billion and $1.17 billion, indicating a year-over-year increase of 7%. This includes an expected positive impact of approximately 120 basis points due to FX.

Non-GAAP earnings are expected between $1.22 and $1.26 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The non-GAAP operating margin for the fiscal year is expected to be 28%.

Zacks Rank & Stocks to Consider

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

PagerDuty PD and GitLab GTLB are some better-ranked stocks that investors can consider in the broader sector. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PagerDuty shares have lost 11.3% year to date. PD is set to report its first-quarter fiscal 2026 results on May 29.

Gitlab’s shares have lost 14.8% year to date. GTLB is set to release its first-quarter fiscal 2026 results on June 10.

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

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