[Management View]
Box reported strong growth in Q1 FY2026, driven by AI adoption and strategic pricing. Revenue reached $276 million, up 4% YoY, with a 5% increase in constant currency. The company emphasized its focus on AI-driven solutions and Enterprise Advanced suite, which contributed significantly to customer expansion.

[Outlook]
Box expects Q2 FY2026 revenue between $290 million and $291 million, representing 8% growth at the high end. FY2026 revenue guidance is raised to $1.165 billion to $1.17 billion, reflecting a $10 million increase. The company plans to maintain operating margins while expanding AI functionality.

[Financial Performance]
Q1 FY2026 saw a 21% YoY increase in Remaining Performance Obligations (RPO) and a 27% YoY rise in billings. Adjusted EPS was $0.30, exceeding guidance by $0.04. Gross margin improved to 80.5%, up 30 basis points YoY.

[Q&A Highlights]
Question 1: How are customer conversations shaping the demand picture, and what prudence is baked into the guidance?
Answer: Customer conversations are robust, with a strong focus on AI-oriented solutions. Box is cautious due to macroeconomic dynamics, balancing factors in its guidance.

Question 2: Can you explain the discrepancy between strong billings/RPO growth and the lower revenue growth guidance?
Answer: The discrepancy is primarily due to timing, with $7 million in early renewals impacting Q1 billings. About $6 million shifts from Q2, affecting sequential billing dynamics.

Question 3: What are the trends in seat growth versus pricing improvements?
Answer: Seat growth is minor, with pricing driving most customer expansion. Enterprise Advanced and AI use cases are expected to open new opportunities for seat growth.

Question 4: How are early renewals catalyzed, and what impact do AI inference costs have on margins?
Answer: Early renewals are driven by AI capabilities adoption. AI inference costs are dropping, allowing Box to aim for margin neutrality while expanding AI functionality.

Question 5: How is platform innovation impacting customer migration from legacy ECM providers?
Answer: Box is seeing increased migration to modern platforms for AI-driven workflows, with strong momentum from partnerships and system integrators.

Question 6: What assumptions are made regarding early renewals in guidance?
Answer: Box assumes some early renewals but remains conservative. Historical volumes have been higher, driven by customers eager to adopt Enterprise Advanced.

Question 7: How does Box ensure engagement with external AI partners while monetizing deep research use cases?
Answer: Box integrates with AI partners, ensuring data flows to where work is done. Monetization occurs through seat charges and AI unit volume for agentic queries.

Question 8: What is the impact of FedRAMP High certification on federal vertical dynamics?
Answer: FedRAMP High certification bolsters Box's position in capturing sensitive use cases, particularly in DOD-funded projects.

[Sentiment Analysis]
Analysts and management expressed optimism about Box's strategic focus on AI and pricing. The tone was positive, with cautious optimism regarding macroeconomic uncertainties.

[Quarterly Comparison]
| Metric | Q1 FY2026 | Q1 FY2025 |
|--------|-----------|-----------|
| Revenue | $276M | $265M |
| RPO | $1.5B | $1.24B |
| Billings | $242M | $190M |
| Operating Margin | 25.3% | 26.6% |
| Adjusted EPS | $0.30 | $0.26 |
| Gross Margin | 80.5% | 80.2% |

[Risks and Concerns]
Box faces macroeconomic uncertainties impacting IT spending. The company is cautious in its outlook, adjusting for early renewals, FX, and deferred tax expenses.

[Final Takeaway]
Box's Q1 FY2026 performance highlights the successful adoption of AI-driven solutions and strategic pricing as key growth drivers. The company is well-positioned to leverage AI advancements while maintaining operational efficiency. Despite macroeconomic challenges, Box's focus on innovation and customer-centric strategies provides a solid foundation for future growth.