Box Inc. ((BOX)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Box Inc. recently held its earnings call, which conveyed a largely positive sentiment. The company showcased strong revenue growth and increased customer adoption of its advanced AI offerings. Improvements in operating margins and net retention rates were also highlighted. However, the call did not shy away from acknowledging the challenges posed by macroeconomic conditions and foreign exchange headwinds.
Revenue and Growth Exceed Expectations
Box Inc. reported a Q2 revenue of $294 million, surpassing the high end of its guidance. This marks a 9% year-over-year growth, or 7% in constant currency. The company also noted that nearly 2,000 customers now pay at least $100,000 annually, reflecting an 8% increase year-over-year.
Strong Customer Adoption of Enterprise Advanced
The Enterprise Advanced segment experienced significant customer adoption, with deal closures nearly doubling from the previous quarter. New capabilities, such as AI-powered metadata extraction and intelligent no-code apps, played a crucial role in driving enterprise-wide agreements.
Operating Margins and EPS Above Guidance
Box Inc. achieved operating margins of 29%, with earnings per share (EPS) reaching $0.33, which is $0.02 above the high end of the outlook. This demonstrates the company’s ability to exceed financial expectations.
Positive Net Retention Rate
The net retention rate improved to 103% from 102% in Q1, indicating increased seat growth and steady improvements in pricing. This metric highlights the company’s success in retaining and expanding its customer base.
Partnerships and AI Model Integration
Box has integrated with multiple AI models, including OpenAI’s GPT-5 and Anthropic’s Claude 4.1, enhancing its AI capabilities and customer offerings. These partnerships are expected to bolster the company’s position in the AI space.
Enhanced Product Roadmap
The company announced updates to its Box AI capabilities and plans for new workflow and no-code app capabilities. These enhancements aim to further automate critical workflows and improve user experience.
Macro Environment Challenges
Despite the positive developments, Box remains cautious due to a challenging macroeconomic environment, which could potentially impact future billing and growth.
Deferred Tax Expense Impact
Box anticipates noncash deferred tax expenses to be a non-GAAP EPS headwind of $0.58 in FY 2026, which could affect future financial performance.
Foreign Exchange Headwinds
The company is facing foreign exchange headwinds that are affecting revenue and billing expectations, leading to adjustments in their guidance.
Forward-Looking Guidance
Box Inc. provided robust financial guidance for the future. The company anticipates third-quarter revenues between $298 million and $299 million, with a full fiscal 2026 revenue forecast of $1.17 to $1.175 billion, representing an 8% year-over-year growth. Box plans to continue expanding its intelligent content management platform and leveraging AI to enhance workflow automation and metadata extraction capabilities.
In summary, Box Inc.’s earnings call highlighted a positive outlook with strong revenue growth and increased customer adoption of AI offerings. While the company faces challenges from macroeconomic conditions and foreign exchange headwinds, its strategic initiatives and robust financial guidance suggest a promising future.