Box 2026 Q1 Earnings Net Income Falls 52.4%

Box reported its fiscal 2026 Q1 earnings on May 29th, 2025. The company fell short of expectations as net income declined significantly by 52.4% year-over-year to $8.19 million. Despite the revenue increase, EPS dropped from $0.08 to $0.02, marking a 75% decline. Box has raised its full-year guidance, anticipating revenue growth of 7% and an increase in non-GAAP EPS, reflecting optimism about its strategic AI investments and the potential tailwind from foreign exchange rates.

Revenue

The total revenue for Box increased by 4.4% to $276.27 million in Q1 2026, compared to $264.66 million in Q1 2025. This growth reflects heightened demand for Box AI, contributing to the overall positive revenue trajectory.

Earnings/Net Income

Box's EPS declined sharply by 75% to $0.02 in Q1 2026 from $0.08 in Q1 2025, while net income fell 52.4% to $8.19 million from $17.22 million in Q1 2025. This performance reflects challenges in profitability, with the EPS indicating a weaker earnings outcome for the quarter.

Post-Earnings Price Action Review

The strategy of buying BOX shares following a revenue miss and holding for 30 days resulted in a 36.98% return, falling short of the benchmark return of 83.88%. The strategy demonstrated a low Sharpe ratio of 0.19, indicative of poor risk-adjusted returns, and faced a maximum drawdown of -38.44%, underscoring its inherent risk. Despite a compound annual growth rate (CAGR) of 6.54%, the volatility stood at 34.47%, highlighting significant fluctuations and making it less appealing when compared to the benchmark. The strategy's underperformance relative to the benchmark suggests a need for reassessment to better manage risk and enhance returns.

CEO Commentary

Aaron Levie, Co-Founder & Chief Executive Officer, emphasized the robust start to FY26, driven by a 4% year-over-year revenue growth attributed to increased customer demand for Box AI. Levie highlighted the momentum in customer adoption of Enterprise Advanced across various sectors, including healthcare and financial services. He underscored the strategic importance of AI, expressing confidence in Box's position in the evolving market and reaffirming the company's commitment to developing a leading Intelligent Content Management Platform.

Guidance

For Q2 FY26, Box projects revenue between $290 million and $291 million, representing about 8% year-over-year growth. The company forecasts a non-GAAP EPS range of $0.30 to $0.31, with a gross margin of approximately 81%. For the full fiscal year, Box anticipates revenue between $1.165 billion and $1.17 billion, reflecting a 7% year-over-year growth. FY26 non-GAAP EPS is expected to be in the range of $1.22 to $1.26, with favorable foreign exchange rates expected to provide a tailwind.

Additional News

Box recently achieved FedRAMP High Authorization, enabling U.S. government agencies to utilize its Intelligent Content Management platform for sensitive data management. Additionally, Box and IBM announced a strategic partnership to enhance enterprise-level AI capabilities, focusing on productivity and content generation. These collaborations aim to leverage Box's AI innovations to streamline business processes across various sectors. Furthermore, Box's recent share repurchase activity saw the company buy back approximately 1.6 million shares for about $50 million, demonstrating its commitment to returning value to shareholders while maintaining a strong balance sheet.