Key Highlights

● Second-quarter Revenue was US$321.1 million, up 9% year on year.

● Non-GAAP free Cash Flow rose 67% to US$59.7 million.

● Remaining performance obligations reached US$1.7 billion, up 15% year on year.

● Fiscal 2027 revenue is guided to about US$1.290 billion, up 10%.

Latest verified development

Box Inc (NYSE:BOX), the cloud content-management company, released results for the second quarter of fiscal 2027, the quarter ended 31 July 2026, on 25 August. This is the second quarter of the company's fiscal year, which ends 31 January 2027.

Second-quarter results

Revenue was US$321.1 million, up 9% year on year, or 11% in constant currency. Remaining performance obligations, which measure contracted revenue yet to be recognised, were US$1.7 billion, up 15% (17% in constant currency). On a GAAP basis, Operating Income was US$32.6 million, a 10.2% margin, and Diluted Earnings per Share were US$0.09. Non-GAAP operating income was US$94.5 million, a 29.4% margin, with non-GAAP diluted earnings per share of US$0.40.

Non-GAAP free cash flow was US$59.7 million, up 67%, equal to about 18.6% of quarterly revenue on a simple calculation. The gap between GAAP and non-GAAP profit is large, and the adjustments typically include share-based compensation. Chief financial officer Dylan Smith said revenue, billings and operating Margin all exceeded the company's expectations.

Guidance

Management guided to third-quarter revenue of about US$329 million, up 9% (11% in constant currency), with a GAAP Operating Margin of about 10.0% and a non-GAAP margin of about 28.0%. It expects third-quarter GAAP earnings per share of about US$0.12 and non-GAAP earnings per share of about US$0.39.

For fiscal 2027 as a whole, the company forecast revenue of about US$1.290 billion, up 10% (11% in constant currency), a GAAP operating margin of about 9.5% and a non-GAAP margin of about 28.0%. GAAP earnings per share are expected at about US$0.38 and non-GAAP at about US$1.54. Management presents all of these as forecasts that may differ from final results.

What the numbers suggest

Growth of 9% in reported terms is modest by software standards, but the remaining performance obligations figure is growing faster than revenue, which can indicate contracts signed ahead of recognition. The guided non-GAAP margin of 28.0% for the third quarter is below the 29.4% achieved in the second quarter, so margin expansion is not assumed in the outlook.

The currency gap between reported and constant-currency growth also shows that exchange rates are currently reducing reported revenue. Guided third-quarter non-GAAP earnings per share of about US$0.39 are slightly below the US$0.40 reported for the second quarter, even though revenue is guided to rise from US$321.1 million to about US$329 million.

Cash flow, billings and the full-year yardstick

The fiscal 2027 forecast of about US$1.290 billion in revenue and US$1.54 in non-GAAP earnings per share is the yardstick for the remaining quarters, with revenue growth guided at 9% to 10% and remaining performance obligations of US$1.7 billion still to be recognised.

Free cash flow is the standout line, up 67% to US$59.7 million, set against a non-GAAP operating margin that management expects to ease from 29.4% to about 28.0% in the third quarter.