Box FY26 earnings - more agents mean more files, and that's good for Box

Enterprise content platform Box reported Q4 and FY26 earnings last night at the upper end of expectations, posting solid revenue growth of 8% for the quarter and the year, and guiding to expect the same in FY27. Revenue for the quarter came to $306 million, while the full year came in at $1.18 billion, and the guidance is to reach $1.275 billion in FY27. Earnings, operating margins and free cash flow were all comfortably positive and rising. Its shares rose slightly in response, although in line with other SaaS stocks, the price remains around 20% down since the start of the calendar year.

No 'SaaS-pocalypse' in sight for Box, then? On the contrary, Aaron Levie, Box's ebullient CEO, welcomes the prospect of surging numbers of AI agents across the enterprise, reasoning that this will only create more demand for the file storage, sharing and management capabilities that are Box's domain. He explains:

What's the simple concept here? It's that agents use files. That is their core thing that they work with. Every time you hear any viral thing online, about an agent storing off its work, creating a memory, having documentation, having a specification to work off of, it's always a file. Those files are going to get generated, they need to get stored somewhere. They're going to need to be governed. They're going to be shared with people. And so that is just the general tailwind that our platform is going to be able to support.

Similarly, the prospect of AI being able to easily create new software applications doesn't pose a threat to a vendor like Box — or indeed, as he's previously made clear, to other established enterprise vendors — because rather than replacing what enterprises already use, those new applications will open up new ways of working with content. Enterprises will still need to control access to that content as it's shared between agents and workers and then manage its storage, which he believes is exactly Box's sweet spot. He explains:

More software is just good for us, because all that software needs to eventually probably touch some type of unstructured data in an enterprise context...

If you're in a regulated industry, you need to govern that data. You need to be able to have audit logs. You need to be able to have a place where you store and and can go do discovery on that information. So the part that actually has to keep state forever, up to the point that the customer cares about working with the data, is the information that that agent worked with.

And so we really imagine a world where, let's say you have 10 or 100 or 1,000 times more agents in an enterprise than people, even they will need to do work on this unstructured information. And importantly, when they do that work, oftentimes an end user will actually need to see the result of that work or go back-and-forth with the agent. So fundamentally, there needs to be some type of shared file system for them to be able to do that work. And that's why we are in a very strong position as a platform for both agents and applications, both of which will grow due to AI, to be able to manage that content...

This is directly what we're seeing already from our customer base and developer base, and so we're just excited to continue to make that as frictionless as possible, and continue to kind of pour fuel on that fire.

Enterprise traction

As evidence of that enterprise traction, Box points to rapid adoption of its top-tier Enterprise Advanced subscription plan, which bundles its complete suite including workflow automation, advanced AI, and secure content management. First introduced in January last year, by the end of Q4 it was already accounting for 10% of the company's total revenue. Among the early adopters, Levie cites a leading biotech company that is set to use AI to extract critical commercial data directly from documents for use in applications, and a leading global robotics company that aims to streamline quote creation and approvals with Box DocGen, Box Sign and Box Apps, as well as applying metadata extraction and OCR to financial and legal documents.

Taking into account customers for other suites, two-thirds (66%) of revenues now come from suite sales, up from 60% a year ago. The overall net retention rate is also up, to 104% from 102% a year ago. This is expected to continue trending up through FY27.

What if agents are consuming Box services through the platform API rather than the traditional user seat licensing model? "We already have a business model for that," says Levie, with API and AI unit consumption options as an alternative to user seats. He continues:

We can grow either through platform consumption or we grow through continued seat adoption, both of which we're seeing right now in the business. And so I think we're protected on both dimensions there. It's really, again, because of the critical nature of how companies need to manage this information. You need data governance, you need data security, you need compliance, you need data residency. None of that can go away in a world of agents.

In fact, probably it becomes more important in a world of agents, because if you have 100 times more agents running around doing loan processes than you had people, the chance of a mistake happening, the risks of an agent revealing the wrong piece of information to a client, goes up exponentially. Those agents don't have context for what they should or shouldn't be sharing. It's very easy to prompt-inject those agents. There's a lot of risks that can emerge. So you need to give them isolated environments, but those are isolated environments that need some degree of controls and mechanisms and, in many cases, collaboration with the user. So that's what we're powering.

That's what our platform has always done for humans and for applications, and now we're adding agents into the mix. And why we see this as, again, just universally, a good thing.

My take

As we keep on saying here at diginomica, systems of agents need systems of knowledge, and as that need for knowledge accelerates, vendors like Box are well placed to benefit. Levie argues the case persuasively.