Box's 2026 Q1 Earnings Call: Unpacking Contradictions in AI Impact, Demand Drivers, and Federal Contracts

AI impact on margins and seat growth, AI adoption and demand drivers, early renewals and pricing strategy, customer conversations and demand picture, federal vertical and government contracting are the key contradictions discussed in Box's latest 2026Q1 earnings call.



Revenue and Billings Growth:
- Box, Inc. reported revenue growth of 4% year-over-year, or 5% in constant currency, for Q1 FY2026.
- The company experienced strong billings growth, up 27% year-over-year, and up 17% in constant currency.
- Growth was attributed to increased customer demand for Box AI capabilities and strong bookings, including early renewals that provided a tailwind of approximately 400 basis points.

Operating Margins and Profitability:
- Box delivered operating margins of 25.3% for Q1, exceeding guidance by $0.04.
- This was driven by cost management and strategic pricing improvements, particularly through the adoption of Enterprise Advanced and AI capabilities.

Remaining Performance Obligations (RPO) and Suite Customers:
- Box's RPO increased by 21% year-over-year, reaching $1.5 billion.
- Suite customers now represent 61% of revenue, up from 56% a year ago.
- The rise in RPO and suite customer share was driven by early traction with Enterprise Advanced and strong demand for AI capabilities.

Early Renewals and Contract Duration:
- Box saw a significant impact from early renewals, contributing approximately 400 basis points to Q1 billings growth.
- This was primarily due to customers adopting Box AI capabilities and upgrading to Enterprise Advanced earlier than scheduled.