Box Inc. ((BOX)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Box Inc. painted a picture of a strong start to the fiscal year, characterized by robust revenue, RPO, and billings growth. The company’s financial performance was solid, with earnings per share (EPS) surpassing expectations. However, the call also highlighted some caution due to macroeconomic uncertainties and the impact of early renewals, which could affect future quarters.
Revenue and Billings Growth
Box Inc. reported a 4% year-over-year increase in Q1 revenue, or 5% in constant currency, with billings rising by an impressive 27% year-over-year. This growth was bolstered by early renewals, which provided a significant tailwind.
Strong RPO and Customer Base Expansion
The company saw a 21% year-over-year growth in remaining performance obligations (RPO). Additionally, Box now boasts approximately 1,940 customers paying at least $100,000 annually, marking an 8% increase from the previous year.
Enterprise Advanced Adoption and AI Integration
Box Inc. is experiencing strong momentum with its Enterprise Advanced offering, as customers increasingly adopt Box AI for tasks like metadata extraction and operations streamlining. The company announced updates to its AI Agent and partnerships with major tech players such as Microsoft, Google, and IBM.
Operating Margin and EPS Performance
In Q1, Box achieved an operating margin of 25.3% and an EPS of $0.30, which was $0.04 above guidance. The gross margin also improved, reaching 80.5%, up 30 basis points year-over-year.
FedRAMP High Authorization
Box received FedRAMP High Authorization, enabling U.S. government agencies to use its platform for managing highly sensitive data, which could open new avenues for growth.
Macro Environment and IT Spending Concerns
Despite positive current trends, Box Inc. expressed a prudent outlook for fiscal 2026 due to macroeconomic uncertainties and potential impacts on IT spending.
Early Renewals Impact on Future Quarters
The early renewals in Q1 provided a 400 basis point benefit but also shifted expected revenue from Q2, which may affect future quarter comparisons.
Forward-Looking Guidance
Box Inc. provided optimistic guidance for the upcoming quarters. The company expects Q2 revenue between $290 million and $291 million, representing up to 8% year-over-year growth. For the full fiscal year, Box raised its revenue guidance to between $1.165 billion and $1.17 billion, with a projected 9% growth in billings. The company aims to maintain a gross margin of around 81% and anticipates a non-GAAP operating margin of about 28% for the fiscal year.
In summary, Box Inc.’s earnings call reflected a strong financial performance and strategic growth initiatives, particularly in AI integration and customer base expansion. While the company remains optimistic about its future prospects, it is also cautious due to macroeconomic uncertainties and the potential impact on IT spending. Overall, Box Inc. appears well-positioned to navigate the challenges and opportunities ahead.