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BOX Declines 14% in 6 Months: What's Ahead for the Stock?
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Key Takeaways
BOX shares fell 13.8% in six months, hurt by macro headwinds and rising costs.
Box expects 8% revenue growth and a stable 28% operating margin in fiscal 2026.
AI launches, partner ecosystem and rise in $100K clients supported 12% billings growth in 3Q26.
Box (BOX - Free Report) shares have dropped 13.8% in the past six months, underperforming the Zacks Internet Software industry’s decline of 3.9% and the broader Zacks Computer and Technology sector’s return of 22.3%. The underperformance can be attributed to a challenging macroeconomic environment and mounting expenses related to investments in cloud infrastructure, sales and marketing, and administration.
In the trailing nine months ended Oct. 31, the gross margin was flat at 81.2% over the year-ago period. Operating expenses increased 9.7% year over year to $635.6 million, driven by 11.2% growth in research and development expenses (25% of sales), 7.4% increase in sales and marketing (35% of sales), and 13% growth in general and administrative expenses (13% of sales). The operating margin over the same timeframe has contracted 50 basis points (bps) year over year.
Box expects a gross margin of 81% for fiscal 2026, indicating a 20 bps contraction from fiscal 2025. However, the operating margin is expected to be 28% for fiscal 2026 (including positive forex impacts of 10 bps), roughly unchanged from fiscal 2025.
Box is expected to benefit from strong customer demand for Box AI and the growing adoption of its Enterprise Advanced suite. A growing number of new use cases involving AI agents is expected to boost BOX’s prospects. Box offers an AI platform that serves as a secure, neutral AI content platform for the most important enterprise content. The Box AI platform connects AI models and agents, and prevents content sprawl and security risks of do-it-yourself solutions. The platform ensures data governance and compliance.
Launch of Box Extract, a data extraction solution powered by AI agents that delivers accurate data and insights from a multitude of content types, including documents, presentations and images. This allows enterprises to easily extract any structured data and insights from their unstructured documents, such as contracts and invoices. Box Automate is an agentic workflow automation solution that is designed to orchestrate work across agents and teams. The company has added powerful AI capabilities for Box apps, its non-code solution for quickly building content apps. Meanwhile, Box Shield Pro is a powerful new suite of security capabilities powered by AI.
Partnerships with the likes of OpenAI, AWS, Google, Anthropic and IBM are enhancing Box’s AI Agent ecosystem and enabling seamless workflows across enterprise content. Partner-led user wins delivered double-digit revenue growth in the third quarter of fiscal 2026.
A strong portfolio is helping Box maintain its clientele. The company now has more than 2,000 customers paying at least $100K annually, up 7% year over year. The net retention rate in the third quarter of fiscal 2026 was 104% ahead of management’s expectation of 103%, driven by price per seat increases and seat expansion. Box’s investments in go-to-market initiatives and product improvements are driving billings, which grew 12% year over year in the third quarter of fiscal 2026. Remaining performance obligation (RPO) grew 18% year over year to $1.5 billion. Box expects to recognize 55% of its RPO over the next 12 months.
Favorable Forex to Aid BOX’s Q4 & FY26 Guidance
The company expects fourth-quarter revenues to be $304 million, indicating 9% year over year or 8% constant-currency (cc) growth. Box expects fourth-quarter billings growth in the low-digit range, including a tailwind of 70 bps from favorable forex. While the gross margin is expected to be 82%, the operating margin is anticipated to be 30%.
Non-GAAP earnings are expected to be 33 cents per share. The Zacks Consensus Estimate for Box’s fourth-quarter fiscal 2026 earnings is pegged at 33 cents per share, down by a penny over the past 30 days, indicating a decline of 21.4% from the figure reported in the year-ago quarter.
The company expects fiscal 2026 revenues to be $1.175 billion, indicating year-over-year growth of 8% on a reported basis or 7% at cc.
Box expects fiscal 2026 billings growth to be 9-10%, including a forex tailwind of 130 bps, which is, however, 100 bps lower than management’s previous expectation.
Box expects fiscal 2026 non-GAAP earnings of $1.28 per share. The consensus mark for Box’s fiscal 2026 earnings is pegged at $1.28 per share, unchanged over the past 30 days, indicating a decrease of 25.2% from the figure reported in fiscal 2025.
Long-term earnings growth rates for Advanced Energy Industries, Digital Turbine and Kimball Electronics are currently pegged at 33.4%, 42.4% and 20%, respectively. Shares of Advanced Energy Industries and Kimball Electronics have appreciated 66.8% and 54.7%, respectively, whereas shares of Digital Turbine have declined 27% over the past six months.
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BOX Declines 14% in 6 Months: What's Ahead for the Stock?
Key Takeaways
Box (BOX - Free Report) shares have dropped 13.8% in the past six months, underperforming the Zacks Internet Software industry’s decline of 3.9% and the broader Zacks Computer and Technology sector’s return of 22.3%. The underperformance can be attributed to a challenging macroeconomic environment and mounting expenses related to investments in cloud infrastructure, sales and marketing, and administration.
In the trailing nine months ended Oct. 31, the gross margin was flat at 81.2% over the year-ago period. Operating expenses increased 9.7% year over year to $635.6 million, driven by 11.2% growth in research and development expenses (25% of sales), 7.4% increase in sales and marketing (35% of sales), and 13% growth in general and administrative expenses (13% of sales). The operating margin over the same timeframe has contracted 50 basis points (bps) year over year.
Box expects a gross margin of 81% for fiscal 2026, indicating a 20 bps contraction from fiscal 2025. However, the operating margin is expected to be 28% for fiscal 2026 (including positive forex impacts of 10 bps), roughly unchanged from fiscal 2025.
Box, Inc. Price and Consensus
Box, Inc. price-consensus-chart | Box, Inc. Quote
Can a Strong Portfolio Help BOX Shares Recover?
Box is expected to benefit from strong customer demand for Box AI and the growing adoption of its Enterprise Advanced suite. A growing number of new use cases involving AI agents is expected to boost BOX’s prospects. Box offers an AI platform that serves as a secure, neutral AI content platform for the most important enterprise content. The Box AI platform connects AI models and agents, and prevents content sprawl and security risks of do-it-yourself solutions. The platform ensures data governance and compliance.
Launch of Box Extract, a data extraction solution powered by AI agents that delivers accurate data and insights from a multitude of content types, including documents, presentations and images. This allows enterprises to easily extract any structured data and insights from their unstructured documents, such as contracts and invoices. Box Automate is an agentic workflow automation solution that is designed to orchestrate work across agents and teams. The company has added powerful AI capabilities for Box apps, its non-code solution for quickly building content apps. Meanwhile, Box Shield Pro is a powerful new suite of security capabilities powered by AI.
Partnerships with the likes of OpenAI, AWS, Google, Anthropic and IBM are enhancing Box’s AI Agent ecosystem and enabling seamless workflows across enterprise content. Partner-led user wins delivered double-digit revenue growth in the third quarter of fiscal 2026.
A strong portfolio is helping Box maintain its clientele. The company now has more than 2,000 customers paying at least $100K annually, up 7% year over year. The net retention rate in the third quarter of fiscal 2026 was 104% ahead of management’s expectation of 103%, driven by price per seat increases and seat expansion. Box’s investments in go-to-market initiatives and product improvements are driving billings, which grew 12% year over year in the third quarter of fiscal 2026. Remaining performance obligation (RPO) grew 18% year over year to $1.5 billion. Box expects to recognize 55% of its RPO over the next 12 months.
Favorable Forex to Aid BOX’s Q4 & FY26 Guidance
The company expects fourth-quarter revenues to be $304 million, indicating 9% year over year or 8% constant-currency (cc) growth. Box expects fourth-quarter billings growth in the low-digit range, including a tailwind of 70 bps from favorable forex. While the gross margin is expected to be 82%, the operating margin is anticipated to be 30%.
Non-GAAP earnings are expected to be 33 cents per share. The Zacks Consensus Estimate for Box’s fourth-quarter fiscal 2026 earnings is pegged at 33 cents per share, down by a penny over the past 30 days, indicating a decline of 21.4% from the figure reported in the year-ago quarter.
The company expects fiscal 2026 revenues to be $1.175 billion, indicating year-over-year growth of 8% on a reported basis or 7% at cc.
Box expects fiscal 2026 billings growth to be 9-10%, including a forex tailwind of 130 bps, which is, however, 100 bps lower than management’s previous expectation.
Box expects fiscal 2026 non-GAAP earnings of $1.28 per share. The consensus mark for Box’s fiscal 2026 earnings is pegged at $1.28 per share, unchanged over the past 30 days, indicating a decrease of 25.2% from the figure reported in fiscal 2025.
Zacks Rank & Stocks to Consider
Currently, Box carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Advanced Energy Industries (AEIS - Free Report) , Digital Turbine (APPS - Free Report) and Kimball Electronics (KE - Free Report) , each of which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rates for Advanced Energy Industries, Digital Turbine and Kimball Electronics are currently pegged at 33.4%, 42.4% and 20%, respectively. Shares of Advanced Energy Industries and Kimball Electronics have appreciated 66.8% and 54.7%, respectively, whereas shares of Digital Turbine have declined 27% over the past six months.