Box (BOX) investor relations material

Executive summary

• Q2 FY27 revenue reached $321.1M, up 9% year-over-year (11% in constant currency), driven by strong AI adoption, suites momentum, and customer expansion.

• Net retention rate improved to 106%, reflecting seat expansion and Enterprise Advanced adoption.

• Billings grew 17% year-over-year, supported by record Q2 bookings and strong demand for AI-driven solutions.

• Free cash flow rose 67% year-over-year to $59.7M, and operating cash flow increased 54% to $70.8M.

• Continued innovation in AI, security, and workflow automation, with new product launches and integrations.

Financial highlights

• Q2 revenue: $321.1M (+9% YoY, +11% constant currency); billings: $309.5M–$420M (+17% YoY); gross margin: 79.1% (GAAP), 81.2% (non-GAAP).

• Operating margin: 10.2% (GAAP), 29.4% (non-GAAP); net income attributable to common stockholders: $13.1M.

• EPS: $0.09 (GAAP), $0.40 (non-GAAP), both impacted by FX headwinds.

• Free cash flow: $59.7M–$60M (+67% YoY); cash from operations: $70.8M–$71M (+54% YoY).

• Ended Q2 with $445.6M–$446M in cash and equivalents; repurchased 2.6M shares for $66M; $378M buyback capacity remains.

Outlook and guidance

• Q3 FY27 revenue expected at ~$329M (+9% YoY, +11% constant currency); Q3 EPS: $0.12 (GAAP), $0.39 (non-GAAP).

• FY27 revenue guidance: ~$1.29B (+10% YoY, +11% constant currency); FY27 EPS: $0.38 (GAAP), $1.54 (non-GAAP).

• FY27 gross margin expected at 80.5% (non-GAAP); operating margin at 28% (non-GAAP).

• Weighted average diluted shares expected to be 141M for FY27, down from 149M prior year.

• Management expects cost of revenue and operating expenses to rise in absolute terms but decrease as a percentage of revenue.