Box Inc. ((BOX)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Box Inc. has delivered a strong performance in its latest earnings call, showcasing impressive revenue growth and expanding AI capabilities. Despite facing challenges such as foreign exchange headwinds and delays in the government sector, the company has demonstrated robust customer and partnership growth, indicating a positive momentum for the future.
Revenue Growth and Exceeding Guidance
Box Inc. reported a revenue of $301 million for Q3 2026, marking a 9% year-over-year growth and surpassing its guidance. The company has set its sights on achieving a total revenue of approximately $1.175 billion for the fiscal year 2026, indicating confidence in its growth trajectory.
Strong Operating Margin
The company achieved an operating margin of 28.6% in Q3, exceeding expectations. Looking ahead, Box forecasts an operating margin of 30% for the upcoming quarter, reflecting its efficient operational management.
Advancements in AI Capabilities
Box has announced new AI features such as Box Extract and Box Automate, aimed at driving intelligent workflows. The company is integrating with leading AI models from OpenAI, Google, Anthropic, AWS, and others, positioning itself at the forefront of AI-driven innovation.
Increase in Large Customers and Suite Adoption
Box has seen a significant increase in large customers, with over 2,000 now paying at least $100,000 annually. Additionally, suite customers account for 64% of revenue, up from 59% a year ago, showcasing strong adoption of its comprehensive solutions.
Partnerships and Strategic Collaborations
The company has strengthened its partnerships with AWS, Deloitte, TCS, and others to enhance its AI capabilities and accelerate digital transformation, further expanding its market reach and influence.
Net Retention Rate Improvement
Box’s net retention rate improved to 104%, driven by the momentum of Box AI and Enterprise Advanced. This improvement highlights the company’s ability to retain and expand its customer base effectively.
Impact of Foreign Exchange Rates
Foreign exchange rates posed a challenge, impacting earnings per share and billings. Despite this, Box has managed to maintain its growth trajectory through strategic initiatives.
Government Sector Delays
The timing of deals was affected by a government shutdown, causing incremental shifts in the federal vertical. Box is navigating these challenges while continuing to focus on its growth strategies.
Forward-Looking Guidance
Box Inc. provided robust financial guidance for the future, with a forecasted revenue of approximately $304 million for Q4 and a gross margin of 82%. The company expects a non-GAAP operating margin of approximately 30% for the quarter. For the full year, Box anticipates a revenue of $1.175 billion and a non-GAAP operating margin of 28%. Strategic investments in AI capabilities and go-to-market initiatives are expected to drive further growth.
In summary, Box Inc. has demonstrated strong performance in its latest earnings call, with impressive revenue growth and expanding AI capabilities. Despite challenges such as foreign exchange headwinds and government sector delays, the company has shown robust customer and partnership growth, indicating a positive outlook for the future.