Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” and in other parts of this Annual Report on Form 10-K.
A discussion regarding our financial condition and results of operations for the year ended January 31, 2026 compared to the year ended January 31, 2025 is presented below. A discussion regarding our financial condition and results of operations for the year ended January 31, 2025 compared to the year ended January 31, 2024 can be found under Part II, Item 7 of our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on March 10, 2025, which is available on the SEC’s website at www.sec.gov.
Overview
Box is the leading ICM provider. Box gives organizations a single platform for their unstructured data – which typically represents about 90% of all data within an organization. This data is content – from blueprints to wireframes, videos to documents, proprietary formats to PDFs – and it is the source of an organization’s unique value. The Box ICM platform enables our customers to securely manage the entire content lifecycle, from the moment a file is created or ingested to when it is shared, edited, published, approved, signed, classified, and retained. Box keeps content secure and compliant, while also allowing easy access and sharing of this content from anywhere, on any device – both within the organization and with external partners.
With our SaaS platform, customers can work with their content as they need – from secure external collaboration and workspaces to e-signature processes and content workflows – improving employee productivity and accelerating business processes. IT teams can establish a space for compliant content management, and developers can easily create customized portals for white-labeled content collaboration. Administrators have a wide range of security, data protection, and compliance features they can activate to help meet legal and regulatory requirements, internal policies, and industry standards. The Box ICM platform enables a broad range of high-value business use cases and integrates with more than 1,500 leading business applications. With hundreds of file formats and media types supported, Box is compatible with multiple application environments, operating systems, and devices – ensuring that workers can securely access their critical business content whenever and wherever they need it.
We offer our solution to our customers as a subscription-based service, with subscription fees based on the requirements of our customers, including the number of users and functionality deployed. The duration of our contracts with customers ranges from one to three years or more, and we typically invoice our customers at the beginning of the term, in annual, multi-year, quarterly or monthly installments. We recognize revenue as we satisfy our performance obligations. Accordingly, due to our subscription model, we recognize revenue for our subscription services ratably over the term of the contract.
Our objective is to build an enduring business that creates sustainable revenue and earnings growth over the long term. To best achieve this objective, we focus on growing the number of users and paying organizations through direct field sales, direct inside sales, indirect channel sales and through word-of-mouth by individual users, some of whom use our services at no cost. Individual users and organizations can also simply sign up to use our solution on our website. We believe this approach not only helps us build a critical mass of users but also has a viral
effect within organizations as more of their employees use our service and encourage their IT professionals to deploy our services to a broader user base.
As of January 31, 2026, we had over 100,000 paying organizations, and our solution was offered in 25 languages. We define paying organizations as separate and distinct buying entities, such as a company, an educational or government institution, or a distinct business unit of a large corporation, that have entered into a subscription agreement with us to utilize our services.
Organizations typically purchase our solution in the following ways: (i) employees in one or more small groups within the organization may individually purchase our service; (ii) organizations may purchase IT-sponsored, enterprise-level agreements with deployments for specific, targeted use cases ranging from tens to thousands of user seats; (iii) organizations may purchase IT- sponsored, enterprise-level agreements (ELAs) where the number of user seats sold is intended to accommodate and enable nearly all information workers within the organization in whatever use cases they desire to adopt over the term of the subscription; and (iv) organizations may purchase our Box Platform service to create custom business applications for their internal use and extended ecosystem of customers, suppliers and partners. Customers can choose between an a la carte approach (i.e., by purchasing specific add-on products to complement their Box subscription) or one of our bundled plans, which include multiple add-on products to help accelerate customer time to value.
We intend to continue scaling our organization to meet the increasingly complex needs of our customers. Our sales and customer success teams are organized to efficiently serve organizations ranging from small businesses to the world’s largest global organizations. We have invested in our sales and marketing teams to sell our services around the world, as well as in our development efforts to deliver additional features and capabilities of our cloud services to address our customers’ evolving needs. We also expect to continue to make investments in both our infrastructure to meet the needs of our growing global user base and our professional services organization (Box Consulting) to address the strategic needs of our customers in more complex deployments and to drive broader adoption across a wide array of use cases.
Current Period Highlights
For the years ended January 31, 2026 and 2025, our revenue was $1.18 billion and $1.09 billion, respectively, representing year-over-year growth of 8%, or 7% growth on a constant currency basis. As of January 31, 2026, our remaining performance obligations were $1.71 billion, representing a 17% increase from our remaining performance obligations of $1.47 billion as of January 31, 2025, or 16% growth on a constant currency basis. For the year ended January 31, 2026, our gross profit was $932.6 million, and our gross margin was 79.2%, compared to our gross profit of $862.0 million and our gross margin of 79.1% for the year ended January 31, 2025. For the year ended January 31, 2026, our operating income was $83.2 million and our operating margin was 7.1%, compared to our operating income of $79.6 million and our operating margin of 7.3% for the year ended January 31, 2025. For the year ended January 31, 2026, our net cash provided by operating activities was $356.5 million, a 7% increase from our net cash provided by operating activities of $332.3 million for the year ended January 31, 2025. For the year ended January 31, 2026, our non-GAAP free cash flow was $312.9 million, a 3% increase from our non-GAAP free cash flow of $304.6 million for the year ended January 31, 2025.
To supplement our current period highlights, we present growth on a constant currency basis for revenue and remaining performance obligations. Growth on a constant currency basis is determined by comparing current period reported results with the current results calculated using the equivalent rates in the prior period, excluding the effect of hedging.
Continuous Innovation
During the year ended January 31, 2026, several new products and product enhancements were made generally available or announced, including:
Box Extract, our solution that simplifies the process of metadata extraction across the enterprise with AI agents.
Box Automate, our content-focused agentic workflow automation solution that will be built natively in Box to orchestrate work across agents and teams.
Box Shield Pro, our solution that delivers a powerful new suite of security capabilities powered by AI that helps safeguard sensitive data, improve threat detection, and protect against ransomware.
Enhancements to Box AI, including a simplified interface that makes it easy to apply AI actions to content anywhere in the Box User Interface as well as improvements to the customer agent building experience for Box administrators.
Remote Box Model Context Protocol (MCP) Server, a secure content layer for AI that ensures any external AI agent adheres to existing Box security permissions and access policies.
Box Archive, our solution that provides advanced data preservation with long-term content storage.
Impact of Macroeconomic Factors on Our Business
Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior. Economic conditions, including impacts from inflation, higher interest rates, tariffs, slower growth, the stronger dollar versus foreign currencies, particularly the Japanese Yen, government shutdowns, reductions in U.S. federal spending, the ongoing Russia-Ukraine conflict and conflicts in the Middle East, and other changes in economic conditions, may adversely affect our results of operations and financial performance. As a result, we may continue to experience customer churn and delayed sales cycles, as well as customers and prospective customers reducing budgets for services that we offer.
Our Business Model
Our business model focuses on maximizing the lifetime value of a customer relationship. We make significant investments in acquiring new customers and believe that we will be able to achieve a positive return on these investments by retaining customers, cross-selling our add-on products and expanding the size of our deployments within our customer base over time. In connection with the acquisition of new customers, we incur and recognize significant upfront costs. These costs include sales and marketing costs associated with acquiring new customers, such as sales commission expenses, substantially all of which are deferred and then amortized over a period of benefit, and marketing costs, which are expensed as incurred. We recognize revenue as we satisfy our performance obligations to customers. Accordingly, due to our subscription model, we recognize revenue for our subscription services ratably over the term of the contract.
We experience a range of profitability with our customers depending in large part upon their current stage. We generally incur higher sales and marketing expenses for new customers and existing customers who are still in an expanding stage. For new customers and for customers who are expanding their use of Box, our associated sales and marketing expenses typically represent a higher portion of revenue for the initial subscription term for new customers or the remaining subscription term for existing customers. For customers who are renewing their Box subscriptions, our associated sales and marketing expenses are significantly less than the revenue we recognize from those customers over the term of the renewed subscription. These differences are primarily driven by the higher compensation we provide to our sales force for new customers and customer subscription expansions compared to the compensation we provide to our sales force for routine subscription renewals by customers. We have experienced, and expect to continue to experience, lower sales and marketing expenses as a percentage of revenue as our existing customer base grows over time and a relatively higher percentage of our revenue is attributable to renewals versus new or expanding Box deployments.
Key Business Metrics
We use the key metrics below for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these key metrics provide meaningful supplemental information regarding our performance. We believe that both management and investors benefit from referring to these key metrics in assessing our performance and when planning, forecasting, and analyzing future periods. These key metrics also facilitate management’s internal comparisons to our historical performance as well as comparisons to
certain competitors’ operating results. We believe these key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help analyze the health of our business.
Remaining Performance Obligations
Remaining performance obligations (RPO) represent, at a point in time, contracted revenue that has not yet been recognized. RPO consists of deferred revenue and backlog. Backlog is defined as non-cancellable contracts deemed certain to be invoiced and recognized as revenue in future periods. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty is due upon cancellation. Short-term RPO consists of the portion that is expected to be recognized within the next 12 months. While Box believes RPO is a leading indicator of revenue as it represents sales activity not yet recognized in revenue, it is not necessarily indicative of future revenue growth as it is influenced by several factors, including seasonality, contract renewal timing, average contract terms and foreign currency exchange rates. Box monitors RPO to manage the business and evaluate performance.
RPO as of January 31, 2026 was $1.71 billion, an increase of 17% from January 31, 2025. As of January 31, 2026, short-term RPO was $913.7 million, an increase of 12% from January 31, 2025, and long-term RPO was $797.0 million, an increase of 22% from January 31, 2025. The increase in RPO was driven by expansion within existing customers as they broadened their deployment of our product offerings and the conversion to multi-product Suites, the timing of customer-driven renewals, longer average contract terms, and the addition of new customers. RPO growth was favorably impacted by approximately 70 basis points due to fluctuations in foreign currency exchange rates.
Billings
Billings represent our revenue plus the changes in deferred revenue and contract assets in the period. Billings we record in any particular period primarily reflect subscription renewals and expansion within existing customers plus sales to new customers, and represent amounts invoiced for all of our products and professional services. We typically invoice our customers at the beginning of the term, in annual, multi-year, quarterly or monthly installments. If the customer negotiates to pay the full subscription amount at the beginning of the period, the total subscription amount for the entire term will be reflected in billings. If the customer negotiates to be invoiced annually or more frequently, only the amount billed for such period will be included in billings.
Billings help investors better understand our sales activity for a particular period, which is not necessarily reflected in our revenue given that we recognize subscription revenue ratably over the contract term. We consider billings a significant performance measure. We monitor billings to manage our business, make planning decisions, evaluate our performance and allocate resources. We believe that billings offer valuable supplemental information regarding the performance of our business and will help investors better understand the sales volumes and performance of our business. We do not consider billings to be a non-GAAP financial measure because it is calculated using exclusively revenue, deferred revenue, and contract assets, all of which are financial measures calculated in accordance with GAAP.
Billings for the year ended January 31, 2026 were $1.22 billion, an increase of 10% from the year ended January 31, 2025. The increase in billings was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings and the conversion to multi-product Suites, the addition of new customers, and the timing of customer-driven renewals. Billings growth was favorably impacted by approximately 170 basis points due to fluctuations in foreign currency exchange rates.
Our use of billings has certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue or an analysis of our results as reported under GAAP. Billings are recognized when invoiced, while the related subscription and premier services revenue is recognized ratably over the contract term as we satisfy a performance obligation. Also, other companies, including companies in our industry, may not use billings, may calculate billings differently, may have different billing frequencies, or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of billings as a comparative measure.
Over time, we expect to continue to normalize payment durations. In addition, as we have gained and expect to continue to gain more traction with large enterprise customers, we also anticipate our quarterly billings to increasingly concentrate in the back half of our fiscal year, especially in the fourth quarter.
A calculation of billings starting with revenue, the most directly comparable GAAP financial measure, is presented below (in thousands):
Year Ended January 31,
GAAP revenue
Deferred revenue, end of period
Less: deferred revenue, beginning of period
Contract assets, beginning of period
Less: contract assets, end of period
Billings
Non-GAAP Free Cash Flow
We define non-GAAP free cash flow as cash flows from operating activities less net capital expenditures (purchases of property and equipment less proceeds from sales of property and equipment), principal payments of finance lease liabilities, capitalized software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of our core business.
Non-GAAP free cash flow for the year ended January 31, 2026 was $312.9 million, representing an increase of 3% from the year ended January 31, 2025. The increase in non-GAAP free cash flow was primarily driven by the increase in cash flows from operating activities and the reduction in payments of finance lease liabilities due to our migration to the public cloud from our collocated data centers, partially offset by a decrease in proceeds from sales of property and equipment, an increase in capitalized software costs, and an increase in purchases of property and equipment. The year-over-year changes in cash flows from operating activities are described in more detail under Liquidity and Capital Resources below.
A reconciliation of non-GAAP free cash flow to net cash provided by operating activities, its nearest GAAP equivalent, is presented in the non-GAAP Financial Measures section at the end of Item 7 of this Annual Report on Form 10-K. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
Net Retention Rate
Net retention rate is defined as the net percentage of Total Annual Recurring Revenue (Total ARR) retained from existing customers, including expansion. We define Total ARR as the annualized recurring revenue from all active customer contracts at the end of a reporting period. We calculate our net retention rate as of a period end by starting with the Total ARR from customers as of 12 months prior to such period end (Prior Period Total ARR). We then calculate Total ARR from these same customers as of the current period end (Current Period Total ARR). Finally, we divide the Current Period Total ARR by the Prior Period Total ARR to arrive at our net retention rate. In calculating our net retention rate, we include only Total ARR associated with those customers who have subscribed to Box for at least 12 months. We believe our net retention rate is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our customer base. Net retention rate is an operational metric and there is no comparable GAAP financial measure to which we can reconcile this particular key metric.
Our net retention rate was 104%, 102%, and 101% as of January 31, 2026, 2025 and 2024, respectively. Our net retention rate continues to be impacted by heightened budget scrutiny, putting pressure on seat expansion within existing customers and increased partial customer churn. As our customers purchase add-on products or our bundled plans, we tend to realize significantly higher average contract values and stronger net retention rates as compared to
customers who only purchase our core product. We believe our go-to-market efforts to deliver a solution selling strategy and our investments in product, customer success, and Box Consulting, including our Box Shuttle migration offering, are significant factors in our customer retention results. As we penetrate customer accounts, we expect our net retention rate to remain above 100% for the foreseeable future.
Components of Results of Operations
Revenue
We derive our revenue primarily from three sources: (1) subscription revenue, which is comprised of subscription fees from customers who have access to our ICM platform including routine customer support; (2) revenue from customers purchasing our premier services package; and (3) revenue from professional services such as implementing best practice use cases, project management and implementation consulting services.
To date, practically all of our revenue has been derived from subscription and premier services. Subscription and premier services revenue are driven primarily by the number of customers, the number of seats sold to each customer and the price of our services.
We recognize revenue as we satisfy our performance obligations. Accordingly, due to our subscription model, we recognize revenue for our subscription and premier services ratably over the contract term. The duration of our contracts with customers ranges from one to three years or more, and we typically invoice our customers at the beginning of the term, in annual, multi-year, quarterly or monthly installments. Our subscription and premier services contracts are typically non-cancellable and do not contain refund-type provisions.
Professional services are generally billed on a fixed price basis, for which revenue is recognized over time based on the proportion performed. Professional services revenue was not material as a percentage of total revenue for all periods presented.
Revenue is presented net of sales and other taxes we collect on behalf of governmental authorities.
Cost of Revenue
Our cost of revenue consists primarily of costs related to providing our subscription services to our paying customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, public cloud hosting costs, depreciation of servers and equipment, security services and other tools, as well as amortization expense associated with acquired technology and capitalized software development. We allocate overhead such as facilities, information technology costs and employee benefit costs to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each of the operating expense categories set forth below.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of each category of operating expenses. Operating expenses also include allocated overhead costs for facilities, information technology costs and employee benefit costs.
Research and Development. Research and development expense consists primarily of employee compensation and related expenses, as well as allocated overhead. Our research and development efforts are focused on scaling our platform, building an ecosystem of best-of-breed applications and platforms, infrastructure, adding enterprise grade features, functionality and enhancements such as workflow automation, intelligent content management capabilities, advanced security, e-signature capability, native visual collaboration and whiteboarding, and artificial intelligence to enhance the ease of use of our intelligent content management platform. We capitalize certain qualifying costs to develop software for internal use incurred during the application development stage.
Sales and Marketing. Sales and marketing expense consists primarily of employee compensation and related expenses, sales commissions, marketing programs, travel-related expenses, as well as allocated overhead. Marketing programs include but are not limited to advertising, events, corporate communications, brand building, and product marketing. Sales and marketing expense also consists of public cloud hosting, data center and customer support costs related to providing our cloud-based services to our free users. We market and sell our intelligent content management services worldwide through our direct sales organization and through indirect distribution channels such as strategic resellers. Our sales and marketing expenses are generally higher for acquiring new or expanding existing customers than for renewals of existing customer subscriptions.
General and Administrative. General and administrative expense consists primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, recruiting, information systems, enterprise security, compliance, fees for external professional services and cloud-based enterprise systems, as well as allocated overhead. External professional services fees are primarily comprised of outside legal, accounting, audit and outsourcing services.
Interest Income
Interest income consists primarily of interest earned on our cash and cash equivalents and short-term investments. We have historically invested our cash and cash equivalents in overnight deposits, certificates of deposit, money market funds, U.S. treasury securities and non-U.S. government issued securities.
Interest Expense
Interest expense consists primarily of interest charges and the amortization of issuance costs for our convertible senior notes.
Other Income (Expense), Net
Other income (expense), net consists primarily of gains and losses from foreign currency transactions and foreign currency forward contracts not designated as cash flow hedges.
Benefit from Income Taxes
Benefit from income taxes consists primarily of U.S. and foreign income taxes and, as applicable, changes in our deferred taxes, related valuation allowance positions and uncertain tax positions.
Results of Operations
The following tables set forth our results of operations for the periods presented (in thousands, except per share data):
Year Ended January 31,
Consolidated Statements of Operations Data:
Revenue
Cost of revenue (1)
Gross profit
Operating expenses:
Research and development (1)
Sales and marketing (1)
General and administrative (1)
Total operating expenses
Income from operations
Interest income
Interest expense
Other income (expense), net
Income before income taxes
Benefit from income taxes
Net income
Accretion and dividend on series A convertible preferred stock
Undistributed earnings attributable to preferred stockholders
Net income attributable to common stockholders
Net income per share attributable to common stockholders
Basic
Diluted
Weighted-average shares used to compute net income per share attributable to common stockholders
Basic
Diluted
Includes stock-based compensation expense as follows:
Year Ended January 31,
Cost of revenue
Research and development
Sales and marketing
General and administrative
Total stock-based compensation
Comparison of the Years Ended January 31, 2026 and 2025
Revenue
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Revenue
The $87.1 million, or 8%, increase in revenue during the year ended January 31, 2026 was primarily driven by seat growth, net of churn in existing customers and continued strong attach rates of our multi-product Suites offerings, particularly Enterprise Plus and Enterprise Advanced. The increase was also impacted by the strengthening of foreign currency exchange rates, which positively impacted our revenue growth rate by approximately 80 basis points.
Cost of Revenue
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Cost of revenue
Percentage of revenue
Gross margin
The $16.5 million, or 7%, increase in cost of revenue during the year ended January 31, 2026 was primarily due to a $13.7 million increase in amortization of capitalized software, a $7.9 million increase in public cloud infrastructure costs, and a decrease of $4.5 million in gains related to the sale of data center assets due to the completion of our migration to the public cloud from our collocated data centers. This increase was partially offset by a decrease of $4.8 million in subscription software contract expense and decreases of $4.1 million in bandwidth and data center related expense and $1.3 million in contractor related costs due to the completion of our migration to the public cloud from our collocated data centers. Cost of revenue as a percentage of revenue decreased approximately 10 basis points year-over-year.
Over time, we expect our cost of revenue to increase in absolute dollars but decrease as a percentage of revenue as we invest in public cloud hosting service optimization.
Research and Development
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Research and development
Percentage of revenue
The $29.7 million, or 11%, increase in research and development expense during the year ended January 31, 2026 was primarily due to increases of $18.4 million and $6.6 million in employee related costs and stock-based compensation expense, respectively, driven by a 5% increase in headcount. The increased employee headcount and related costs are primarily driven by the growth in lower cost regions. Additionally, we had increases of $4.8 million in workforce reorganization expenses, $4.7 million in subscription software contract expense, $3.3 million in office related costs, and $2.5 million in public cloud infrastructure costs. The increase was partially offset by an increase of $10.6 million in capitalized internally developed software costs. Research and development expenses as a percentage of revenue increased approximately 100 basis points year-over-year.
We expect our research and development expenses to increase in absolute dollars but decrease as a percentage of revenue over time as we continue to make significant improvements to our product offerings and services and increase headcount in lower cost regions.
Sales and Marketing
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Sales and marketing
Percentage of revenue
The $23.8 million, or 6%, increase in sales and marketing expense during the year ended January 31, 2026 was primarily due to increases of $10.6 million and $1.4 million in employee related costs and stock-based compensation expense, respectively, driven by a 5% increase in headcount, $3.1 million in workforce reorganization expenses, and $2.0 million in subscription software contract expense. Additionally, we had increases of $1.9 million in office related costs, $1.8 million in commission expenses, $1.7 million in consulting services, and $1.6 million in marketing expenses. Sales and marketing expenses as a percentage of revenue decreased approximately 100 basis points year-over-year.
We expect to continue to invest in capturing our large market opportunity globally and capitalize on our competitive position with a continued focus on our profitability objectives. We expect our sales and marketing expenses to increase in absolute dollars but decrease as a percentage of revenue over time as our existing customer base grows and a relatively higher percentage of our revenue is attributable to renewals versus new or expanding Box deployments and as we continue to focus on improving sales productivity.
General and Administrative
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
General and administrative
Percentage of revenue
The $13.5 million, or 10%, increase in general and administrative expense during the year ended January 31, 2026 was primarily due to increases of $6.3 million and $3.4 million in stock-based compensation expense and employee related costs, respectively, driven by a 4% increase in headcount. Additionally, we had increases of $1.3 million in workforce reorganization expenses, $1.0 million in subscription software contract expense, and $1.0 million in litigation expense. General and administrative expense as a percentage of revenue remained flat year-over-year.
We expect our general and administrative expenses to increase in absolute dollars but decrease as a percentage of revenue over time as we benefit from greater operational scale and efficiency.
Interest Income
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Interest income
The $1.0 million increase during the year ended January 31, 2026 was primarily due to an increase in interest income on cash and cash equivalents and short-term investments due to higher average cash and short-term investment balances, partially offset by lower interest rates on our investments.
Interest Expense
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Interest expense
The $4.6 million increase during the year ended January 31, 2026 was primarily due to an increase of $5.4 million in interest expense related to the 2029 Convertible Notes, which bear interest at a rate of 1.50% per year compared to the 0.00% convertible notes that matured in 2026 (the "2026 Convertible Notes" and together with the 2029 Convertible Notes, the "Convertible Notes").
Other Income (Expense), Net
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Other income (expense), net
The $13.6 million increase during the year ended January 31, 2026 was primarily due to the convertible debt inducement expense of $10.1 million recognized during the year ended January 31, 2025 and an increase of $3.1 million in net foreign currency gains.
Benefit from Income Taxes
Year Ended January 31,
$ Change
% Change
(dollars in thousands)
Benefit from income taxes
The $142.8 million decrease during the year ended January 31, 2026 was primarily due to a one-time $177.6 million net benefit from the release of the U.S. valuation allowance in the year ended January 31, 2025, partially offset by a $48.4 million net benefit from adjusting our federal research and development (R&D) credits carryforwards and related uncertain tax positions (UTP) in the year ended January 31, 2026. Additionally, we had increases in foreign and U.S. income taxes resulting from increased profitability, partially offset by the benefit of the current year R&D credit and favorable shift in the mix of our jurisdictional earnings.
Liquidity and Capital Resources
As of January 31, 2026, we had cash and cash equivalents, restricted cash, and short-term investments of $479.6 million. During the year ended January 31, 2026, we generated operating cash flow of $356.5 million. Since our inception, we have financed our operations primarily through equity financing, cash generated from operations and debt financing. We believe our existing cash, cash equivalents, and short-term investments, together with our credit facility, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and beyond. Our long-term capital requirements will depend on many factors including our growth rate, subscription renewal activity, billing frequency, public cloud obligations, repayment or refinancing of our debt obligations, settlement of our convertible senior notes and convertible preferred stock, the timing and extent of spending to support development efforts, the expansion of international activities, the introduction of new and enhanced service offerings, and the continuing market acceptance of our services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
Cash Flows
For the years ended January 31, 2026, 2025, and 2024, our cash flows were as follows (in thousands):
Year Ended January 31,
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Operating Activities
The $24.2 million increase in net cash provided by operating activities for the year ended January 31, 2026 compared to the year ended January 31, 2025 was primarily due to a $152.4 million increase in non-cash items and a
$1.0 million increase in net cash provided from changes in operating assets and liabilities, partially offset by a $129.2 million decrease in our net income.
The $152.4 million increase in non-cash items was primarily due to a $139.7 million decrease in deferred income tax benefit, a $14.7 million increase in stock-based compensation expense driven by an increase in headcount, and a $10.8 million increase in depreciation and amortization expense driven by an increase in amortization of capitalized software, partially offset by a decrease of $10.1 million in induced conversion expense recognized during the year ended January 31, 2025 related to the 2026 Convertible Notes.
The $1.0 million increase in net cash provided from changes in operating assets and liabilities was primarily due to a $19.2 million change in deferred revenue due to the timing of revenue recognition, a $2.1 million change in other assets due to the timing of prepayments, and a $2.0 million change in operating lease liabilities due to recurring lease payments. These were partially offset by a $16.7 million change in accounts receivable due to the timing of our cash collections, a $4.1 million change in deferred commissions resulting from capitalization of incremental commissions paid to our sales force, and a $1.7 million change in operating lease right-of-use assets due to amortization.
Investing Activities
The $19.5 million increase in net cash used in investing activities for the year ended January 31, 2026 compared to the year ended January 31, 2025 was primarily due to a $20.9 million decrease in maturities and sales of short-term investments, an $8.1 million decrease in proceeds from sales of property and equipment, and a $7.5 million increase in capitalized software costs, partially offset by a $17.0 million decrease in purchases of short-term investments.
Financing Activities
The $507.2 million increase in net cash used in financing activities for the year ended January 31, 2026 compared to the year ended January 31, 2025 was primarily due to nonrecurring activities that were recognized during the year ended January 31, 2025, including $447.8 million in proceeds from the issuance of the 2029 Convertible Notes, net of issuance costs and $30.3 million in proceeds from the settlement of capped calls related to the 2026 Convertible Notes (the “2026 Capped Calls” and together with the 2029 Capped Calls, the “Capped Calls”), partially offset by $191.7 million paid for the partial repurchase of our 2026 Convertible Notes, $52.5 million for the purchase of 2029 Capped Calls, and $30.0 million used for principal payments on our secured credit agreement. Additionally, the decrease was driven by $205.0 million used for remaining principal payments upon the maturity of the 2026 Convertible Notes during the year ended January 31, 2026, a $78.8 million increase used for repurchases of our common stock, and a $17.6 million decrease in proceeds from the exercise of stock options.
Debt
In September 2024, we issued $460.0 million aggregate principal amount of 1.50% convertible senior notes due September 15, 2029. The 2029 Convertible Notes are senior unsecured obligations and bear interest at a rate of 1.50% per year payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025. Each $1,000 principal amount of the 2029 Convertible Notes will be convertible into 23.0102 shares of our Class A common stock, which is equivalent to a conversion price of approximately $43.46 per share, subject to adjustment upon the occurrence of specified events. Upon conversion, we will satisfy our conversion obligation by paying cash up to the aggregate principal amount of the 2029 Convertible Notes to be converted and we will pay or deliver, as the case may be, the conversion premium in cash, shares of common stock or a combination of cash and shares of common stock, at our election.
In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. In September 2024, using proceeds from the issuance of the 2029 Convertible Notes, we entered into separate and privately negotiated transactions with certain holders of the 2026 Convertible Notes to repurchase $140.0 million aggregate principal amount of the 2026 Convertible Notes. Upon maturity in 2026, we settled in full the $205.0 million outstanding principal amount in cash.
In June 2023, we entered into an amended and restated secured credit agreement (the “June 2023 Facility”) and in December 2024, we entered into Amendment No. 1 to the June 2023 Facility to provide for a $75.0 million revolving loan facility with a $45.0 million sublimit for the issuance of letters of credit. As of January 31, 2026, we had no debt outstanding on the June 2023 Facility.
Refer to Note 9 in Part II, Item 8 of this Annual Report on Form 10-K for detailed descriptions of the Convertible Notes and the June 2023 Facility.
Series A Convertible Preferred Stock
On April 7, 2021 we entered into an Investment Agreement with KKR and certain other investors relating to the issuance and sale of 500,000 shares of our Series A Convertible Preferred Stock, par value of $0.0001 per share, for an aggregate purchase price of $500 million, or $1,000 per share (the “Issuance”). Refer to Note 10 in Part II, Item 8 of this Annual Report on Form 10-K for a detailed description of our Series A Convertible Preferred Stock.
Share Repurchase Plan
Our Board of Directors has authorized a share repurchase plan to opportunistically repurchase shares of our outstanding Class A common stock in open market transactions. On December 2, 2025, we announced that our Board of Directors authorized a $150 million expansion of the share repurchase plan. During the year ended January 31, 2026, we repurchased 9.7 million shares at a weighted average price of $30.35 per share for a total amount of $292.9 million. As of January 31, 2026, $59.2 million remained authorized and available for additional repurchases.
Off-Balance Sheet Arrangements
Through January 31, 2026, we did not have any relationships with unconsolidated entities that have, or are reasonably likely to have, a material effect on our financial statements.
Contractual Obligations and Commitments
Our principal commitments consist of (i) obligations under operating leases for office spaces, (ii) purchase obligations not recognized on the consolidated balance sheet as of January 31, 2026, which relate primarily to public cloud hosting services and IT software and support services, and (iii) debt, including obligations under our June 2023 Facility and 2029 Convertible Notes. For more information regarding our obligations for leases, purchase agreements, and debt, refer to Notes 7, 8, and 9, respectively, in Part II, Item 8 of this Annual Report on Form 10-K.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the temporary differences between the financial statement and tax basis of assets and liabilities using the enacted tax rates in effect for the years in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce deferred tax assets to the amounts we believe are more likely than not to be realized. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character, within the carry-back or carry-forward periods available under the applicable tax law. In assessing our need for a valuation allowance, we consider available evidence, including past operating results, expirations or limitations of tax attributes, estimated future taxable income, and the feasibility of tax planning strategies. Our judgment regarding future estimates may change due to many factors,
including future market conditions and the ability to successfully execute our business plans and tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our provision for income taxes would increase or decrease in the period in which the assessment is changed. A release of a valuation allowance would result in the recognition of certain deferred tax assets and material income tax benefit in the period of release. As of January 31, 2026 and 2025, we evaluated all negative and positive evidence and determined that our net deferred tax assets, with the exception of those in California, are more likely than not to be realizable.
Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Significant judgment is required in determining the technical merits of an uncertain tax position, such as taking into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities.
Recently Adopted and Issued Accounting Pronouncements
Refer to Note 2 in Part II, Item 8 of this Annual Report on Form 10-K regarding the effect of recently adopted and issued accounting pronouncements on our financial statements.
Non-GAAP Financial Measures
Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measure of non-GAAP free cash flow (as defined above) meets the definition of a non-GAAP financial measure.
We use non-GAAP financial measures and our key metrics for financial and operational decision-making (including for purposes of determining variable compensation of members of management and other employees) and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures and key metrics provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures and key metrics in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures and key metrics also facilitate management’s internal comparisons to our historical performance as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures and key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributable to common stockholders, and non-GAAP net income per share attributable to common stockholders.
We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, acquired intangible assets amortization, and as applicable, other special items. Although stock-based compensation is an important aspect of the compensation of our employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. Management also views amortization of acquired intangible assets, such as the amortization of the cost associated with an acquired company’s developed technology and trade names, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense that is not typically affected by operations during any particular period. We exclude the following expenses as they are considered by management to be special items outside of our core operating results: (1) expenses related to certain litigation, (2) expenses associated with a non-recurring workforce reorganization, consisting primarily of severance and other personnel-related costs, and (3) expenses related to acquisitions. In addition to these expenses, we exclude the following items
to calculate non-GAAP net income attributable to common stockholders: (1) amortization of debt issuance costs, (2) induced conversion of convertible notes, (3) the income tax benefit from the release of a valuation allowance on deferred tax assets, (4) non-recurring benefits of federal R&D credits carryforwards and related UTP, (5) the income tax effects of non-GAAP adjustments, and (6) undistributed earnings attributable to preferred stockholders. Non-GAAP operating margin is defined as non-GAAP operating income as a percentage of revenue. Non-GAAP net income per share attributable to common stockholders is defined as non-GAAP net income attributable to common stockholders divided by the weighted-average outstanding shares.
Non-GAAP Free Cash Flow
We define non-GAAP free cash flow as cash flows from operating activities less net capital expenditures (purchases of property and equipment less proceeds from sales of property and equipment), principal payments of finance lease liabilities, capitalized software development costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of our core business. We specifically identify adjusting items in our reconciliation of GAAP to non-GAAP financial measures. We consider non-GAAP free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. The presentation of non-GAAP free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
Limitations on the use of non-GAAP financial measures
A limitation of our non-GAAP financial measures is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.
We compensate for these limitations by reconciling non-GAAP financial measures to the most comparable GAAP financial measures. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures.
Our reconciliation of the GAAP to non-GAAP financial measures for years ended January 31, 2026, 2025 and 2024 are as follows (in thousands, except per share data and percentages):
Year Ended January 31,
GAAP operating income and operating margin
Stock-based compensation
Acquired intangible assets amortization
Acquisition-related expenses
Expenses related to litigation
Workforce reorganization
Non-GAAP operating income and operating margin
GAAP net income and net income per share attributable to common stockholders, diluted
Stock-based compensation
Acquired intangible assets amortization
Acquisition-related expenses
Expenses related to litigation
Workforce reorganization
Amortization of debt issuance costs
Induced conversion expense (1)
Benefit from the release of a valuation allowance on deferred tax assets
Benefit from federal R&D credit
Income tax effects of non-GAAP adjustments (2)
Undistributed earnings attributable to preferred stockholders
Non-GAAP net income and net income per share attributable to common stockholders, diluted
Weighted-average shares used to compute GAAP net income per share attributable to common stockholders, diluted (1)
Weighted-average shares used to compute non-GAAP net income per share attributable to common stockholders, diluted
GAAP net cash provided by operating activities
Purchases of property and equipment
Proceeds from sales of property and equipment
Principal payments of finance lease liabilities
Capitalized internal-use software costs
Non-GAAP free cash flow
GAAP net cash used in investing activities
GAAP net cash used in financing activities
For the year ended January 31, 2025, weighted-average shares used to compute GAAP net income per share attributable to common stockholders, diluted exclude weighted-average shares related to the induced conversion of the 2026 Convertible Notes because the impact was antidilutive.
Non-GAAP tax provision for the year ended January 31, 2026 uses a long-term projected tax rate of 25%, which reflects currently available information and could be subject to change.
Item 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We had cash and cash equivalents, restricted cash, and short-term investments of $479.6 million as of January 31, 2026. Our cash and cash equivalents and short-term investments primarily consist of overnight cash deposits, money market funds, U.S. treasury securities, certificates of deposit and non-U.S. government issued securities. We do not enter into investments for trading or speculative purposes.
Our cash and cash equivalents have limited exposure to market risk for changes in interest rates because they have a short-term maturity and are used primarily for working capital purposes. Our portfolio of short-term investments is subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a raise in interest rates. Accordingly, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we sell securities that decline in market value due to changes in interest rates. However, because we classify our short-term investments as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are caused by expected credit losses.
A hypothetical increase or decrease of 100 basis points in interest rates would not have a material impact on the market value of our portfolio of short-term investments as of January 31, 2026. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
In September 2024, we issued $460.0 million aggregate principal amount of 1.50% convertible senior notes due September 15, 2029. The 2029 Convertible Notes have fixed annual interest rates and therefore we have no financial or economic interest exposure associated with changes in interest rates. However, the fair value of the 2029 Convertible Notes fluctuates when interest rates change. Additionally, the fair value of the 2029 Convertible Notes can be affected by fluctuations in our stock price. We carry the 2029 Convertible Notes at face value less unamortized issuance costs on our consolidated balance sheets, and we present the fair value for required disclosures only.
Foreign Currency Risk
A pproximately 40% of our revenue is represented by customer contracts denominated in foreign currencies, which include the Japanese Yen, Euro, and British Pound. As our foreign operations continue to grow, specifically in Japan, we have increasing exposure to fluctuations in foreign currency exchange rates.
These fluctuations can result in fluctuations in our total assets, liabilities, revenues, operating expenses and cash flows that we report for our foreign subsidiaries upon translation of these amounts into U.S. dollars. For the year ended January 31, 2026, revenue growth was favorably impacted by approximately 80 basis points compared to the corresponding prior period due to fluctuations in foreign currency exchange rates. For the year ended January 31, 2026, total operating expenses were unfavorably impacted by approximately 60 basis points compared to the corresponding period due to fluctuations in foreign currency exchange rates.
Additionally, our international subsidiaries maintain certain asset and liability balances as well as operating expenses that are denominated in foreign currencies other than the functional currency and as a result, may cause us to recognize transaction gains and losses in our statement of operations impacting our operating expenses which are recognized in other income (expense), net on our consolidated statements of operations.
To mitigate risks associated with fluctuations in foreign currency exchange rates, we have entered into foreign currency derivative contracts to economically hedge unrealized gains and losses from remeasurement resulting from net outstanding monetary assets and liabilities that are denominated in currencies other than the functional currency of the entities in which they are recorded. For all periods presented, foreign currency exchange gains and losses were not material. We have also entered into foreign currency derivative contracts designated as cash flow hedges to mitigate the impact of fluctuations in foreign exchange rates on future cash flows and earnings.
Item 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
BOX, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 )
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Regist ered Public Accounting Firm
To the Stockholders and the Board of Directors of Box, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Box, Inc. (the Company) as of January 31, 2026 and 2025, the related consolidated statements of operations, comprehensive income, convertible preferred stock and stockholders’ deficit and cash flows for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 9, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion .
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue recognition – evaluation of contract terms and conditions
Description of the Matter
As discussed in Note 2 to the consolidated financial statements, the Company derives its revenues primarily from subscription services, premier services packages and professional services. The Company determines revenue recognition following a five-step framework in line with ASC 606.
Auditing the Company's revenue recognition required significant effort in the evaluation of terms and conditions in contracts that may impact revenue recognition.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the internal review and assessment of terms and conditions within contracts that would impact revenue recognition in accordance with ASC 606.
Our substantive procedures included, among others, testing the completeness and accuracy of management’s identification and evaluation of terms and conditions within contracts, reading executed contracts for a sample of revenue transactions and evaluating whether the Company appropriately applied its revenue recognition policy to the arrangements based on the terms and conditions therein. We additionally assessed the appropriateness of the related disclosures included in Note 2 in the consolidated financial statements.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2012.
San Francisco, California
March 9, 2026
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Box, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Box, Inc.’s internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Box, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2026 and 2025, the related consolidated statements of operations, comprehensive income, convertible preferred stock and stockholders’ deficit and cash flows for each of the three years in the period ended January 31, 2026, and the related notes and our report dated March 9, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Francisco, California
March 9, 2026
BOX, INC.
CONSOLIDATED B ALANCE SHEETS
(In thousands)
January 31,
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Deferred commissions
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets, net
Goodwill
Deferred commissions, non-current
Deferred tax assets
Intangible assets, net
Other assets, non-current
Total assets
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable, accrued expenses and other current liabilities
Accrued compensation and benefits
Debt, net, current
Deferred revenue
Total current liabilities
Debt, net, non-current
Operating lease liabilities, non-current
Other liabilities, non-current
Total liabilities
Commitments and contingencies (Note 8)
Series A convertible preferred stock, par value of $ 0.0001 per share; 500 shares authorized, issued and outstanding as of January 31, 2026 and 2025
Stockholders’ deficit:
Class A common stock, par value $ 0.0001 per share; 1,000,000 shares authorized; 140,911 and 144,113 shares issued and outstanding as of January 31, 2026 and 2025, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ deficit
Total liabilities, convertible preferred stock and stockholders’ deficit
See notes to consolidated financial statements
BOX, INC.
CONSOLIDATED STATEM ENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended January 31,
Revenue
Cost of revenue
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Total operating expenses
Income from operations
Interest income
Interest expense
Other income (expense), net
Income before income taxes
Benefit from income taxes
Net income
Accretion and dividend on series A convertible preferred stock
Undistributed earnings attributable to preferred stockholders
Net income attributable to common stockholders
Net income per share attributable to common stockholders
Basic
Diluted
Weighted-average shares used to compute net income per share attributable to common stockholders
Basic
Diluted
See notes to consolidated financial statements
BOX, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year Ended January 31,
Net income
Other comprehensive income (loss):
Foreign currency translation gain (loss)
Change in cash flow hedges, net of tax
Other, net of tax
Other comprehensive income (loss), net:
Comprehensive income
See notes to consolidated financial statements
BOX, INC.
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
(In thousands)
Series A Convertible Preferred Stock
Class A Common Stock
Additional
Paid-In
Accumulated
Other Comprehensive
Accumulated
Total
Stockholders'
Shares
Amount
Shares
Amount
Capital
(Loss) Income
Deficit
Deficit
Balance as of January 31, 2023
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes
Stock-based compensation related to stock awards
Accretion and dividend on series A convertible preferred stock, net of dividends paid
Repurchases of common stock
Other comprehensive loss, net
Net income
Balance as of January 31, 2024
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes
Stock-based compensation related to stock awards
Accretion and dividend on series A convertible preferred stock, net of dividends paid
Repurchases of common stock
Induced conversion of 2026 Convertible Notes
Purchase of 2029 Capped Calls
Settlement of 2026 Capped Calls
Other comprehensive loss, net
Net income
Balance as of January 31, 2025
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes
Stock-based compensation related to stock awards
Accretion and dividend on series A convertible preferred stock, net of dividends paid
Repurchases of common stock
Settlement of 2026 Convertible Notes upon maturity
Exercise of 2026 Capped Calls
Other comprehensive income, net
Net income
Balance as of January 31, 2026
See notes to consolidated financial statements
BOX, INC.
CONSOLIDATED STATEM ENTS OF CASH FLOWS
(In thousands)
Year Ended January 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation expense
Amortization of deferred commissions
Deferred income taxes
Induced conversion expense
Other
Changes in operating assets and liabilities:
Accounts receivable, net
Deferred commissions
Operating lease right-of-use assets, net
Other assets
Accounts payable, accrued expenses and other liabilities
Operating lease liabilities
Deferred revenue
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments
Maturities of short-term investments
Sales of short-term investments
Purchases of property and equipment
Proceeds from sales of property and equipment
Capitalized internal-use software costs
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of 2029 Convertible Notes, net of issuance costs
Partial repurchase of 2026 Convertible Notes
Purchase of 2029 Capped Calls
Settlement of 2026 Capped Calls
Principal payments on borrowings
Principal payments upon maturity of 2026 Convertible Notes
Repurchases of common stock
Payments of dividends to preferred stockholders
Proceeds from exercise of stock options
Proceeds from issuances of common stock under employee stock purchase plan
Employee payroll taxes paid for net settlement of stock awards
Principal payments of finance lease liabilities
Other
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of period (1)
Cash, cash equivalents, and restricted cash, end of period (1)
Restricted cash is included in other current assets in the consolidated balance sheets for the periods presented.
See notes to consolidated financial statements
BOX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Description of Business and Basis of Presentation
Description of Business
We were incorporated in the state of Washington in April 2005, and were reincorporated in the state of Delaware in March 2008. Box provides the leading Intelligent Content Management (ICM) platform that enables organizations of all sizes to securely manage cloud content while allowing easy, secure access and sharing of this content from anywhere, on any device.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements are prepared in accordance with GAAP and include the consolidated accounts of Box, Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Certain prior period amounts reported in our consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect revenue, income from operations, or net income .
Note 2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ from these estimates. Such estimates include, but are not limited to, the fair value of acquired intangible assets, the useful lives of intangible assets, the incremental borrowing rate we use to determine our lease liabilities, uncertain tax positions and the valuation allowance of deferred income tax assets. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities .
Segments
Our Chief Executive Officer is our chief operating decision maker (CODM). Our CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, we have a single reporting segment and operating unit structure. As part of the review, our CODM uses consolidated net income to measure segment profit or loss. Our CODM does not evaluate segment performance using asset or liability information. Since we operate as a single reporting segment and operating unit structure, financial segment information, including profit or loss information and significant segment expenses, can be found in the consolidated financial statements .
Revenue Recognition
We derive our revenue primarily from three sources: (1) subscription revenue, which is comprised of subscription fees from customers who have access to our content cloud platform which includes routine customer support; (2) revenue from customers purchasing our premier services package; and (3) revenue from professional services such as implementing best practice use cases, project management and implementation consulting services.
Revenue is recognized when control of these services is transferred to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those services.
We determine revenue recognition through the following steps:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue as we satisfy a performance obligation
Subscription and Premier Services Revenues
We recognize revenue as we satisfy our performance obligations. Accordingly, due to our subscription model, we recognize revenue for our subscription and premier services ratably over the contract term.
We typically invoice our customers at the beginning of the term, in annual, multi-year, quarterly or monthly installments. Our subscription and premier services contracts generally range from one to three years in length, are typically non-cancellable and do not contain refund-type provisions. Revenue is presented net of sales and other taxes we collect on behalf of governmental authorities.
Professional Services
Professional services are generally billed on a fixed price basis, for which revenue is recognized over time based on the proportion performed.
Contracts with Multiple Performance Obligations
Our contracts can include multiple performance obligations which may consist of some or all of subscription services, premier services, and professional services. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration discounting practices, the size and volume of our transactions, the customer demographic, the geographic area where services are sold, price lists, our go-to-market strategy, historical standalone sales and contract prices.
Deferred Revenue
Deferred revenue consists of billings in advance of revenue recognition generated by our subscription services, premier services, and professional services described above.
Cost of Revenue
Cost of revenue consists primarily of costs related to providing our subscription services to our paying customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, public cloud hosting costs, depreciation of servers and equipment, security services and other tools, as well as amortization expense associated with acquired technology and capitalized software development. We allocate overhead such as facilities, information technology costs and employee benefit costs to all departments based on headcount.
Deferred Commissions
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for new contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have estimated to be five years . We determined the period of benefit by taking into consideration the duration of our customer contracts, the life cycles of our technology and other factors. Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the related
contractual renewal period. Amortization expense is included in sales and marketing expenses on the consolidated statements of operations.
We deferred sales commissions costs of $ 56.1 million, $ 52.0 million and $ 44.5 million during the years ended January 31, 2026, 2025 and 2024 , respectively, and amortized $ 53.0 million, $ 52.5 million and $ 54.2 million of deferred commissions during the same periods respectively.
Certain Risks and Concentrations
Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. Although we deposit our cash with multiple financial institutions, our deposits are often in excess of deposit insurance coverage limits.
We sell to a broad range of customers. Our revenue is derived primarily from the U.S. across a multitude of industries. Accounts receivable are derived from the delivery of our services to customers primarily located in the U.S. We accept and settle our accounts receivable using credit cards, electronic payments and checks. A majority of our lower dollar value invoices are settled by credit card on or near the date of the invoice. We do not require collateral from customers to secure accounts receivable. We believe collections of our accounts receivable are probable based on the size, industry diversification, financial condition and past transaction history of our customers. As of January 31, 2026 , no customer accounted for more than 10 % of total accounts receivable and as of January 31, 2025 , two resellers, who are also customers, accounted for more than 10 % of total accounts receivable. No single customer represented over 10 % of revenue in the years ended January 31, 2026, 2025 and 2024.
We serve our customers and users from public cloud hosting operated by third parties. In order to reduce the risk of down time of our subscription services, we have public cloud hosting services established in various locations in the U.S. and abroad and we have internal procedures to restore services in the event of disaster. Even with these procedures for disaster recovery in place, our cloud services could be significantly interrupted during the implementation of the procedures to restore services.
Geographic Locations
For the years ended January 31, 2026, 2025 and 2024 , revenue attributable to customers in the U.S. was 62 %, 64 % and 66 %, respectively. For the years ended January 31, 2026, 2025 and 2024 revenue attributable to customers in Japan was 25 %, 23 % and 21 %, respectively.
The following table summarizes long-lived assets by geographic location, which includes property and equipment, net and operating lease right-of-use assets, net (in thousands):
January 31,
United States
Poland
United Kingdom
Other
Total long-lived assets
Foreign Currency Translation and Transactions
The functional currency of our foreign subsidiaries is the local currency in which the foreign subsidiary operates or the U.S. dollar. Adjustments resulting from translating foreign functional currency financial statements of our foreign subsidiaries into U.S. dollars are recorded as part of a separate component of the consolidated statements of comprehensive income. Foreign currency transaction gains and losses are included within other income (expense), net, in the consolidated statements of operations for the period. Monetary assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date and nonmonetary assets and liabilities denominated in foreign currency are translated into U.S. dollars using historical
exchange rates. Revenue and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates.
Cash and Cash Equivalents
We consider all highly liquid investments with an initial maturity of 90 days or less at the date of purchase to be cash equivalents. We maintain such funds in overnight cash deposits, money market funds, and certificates of deposit.
Fair Value of Financial Instruments
We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We define fair value as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1—Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.
Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation. There were no level 3 financial assets or liabilities for the periods presented.
Short-Term Investments
Our short-term investments are primarily comprised of U.S. treasury securities and certificates of deposit. We determine the appropriate classification for our short-term investments at the time of purchase and reevaluate such designation at each balance sheet date. We have classified our short-term investments as available-for-sale securities as we may sell these securities at any time for use in operations or for other purposes. We record such securities at fair value in our consolidated balance sheet, with unrealized gains or losses reported as a component of accumulated other comprehensive loss. The amount of unrealized gains or losses reclassified into earnings is based on specific identification when the securities are sold. We periodically evaluate if any security has experienced credit-related declines in fair value, which are recorded against an allowance for credit losses with an offsetting entry to other income (expense), net on the consolidated statement of operations.
Derivative Instruments and Hedging
We use derivatives such as foreign currency forward contracts to protect our business against the impact of fluctuations in foreign exchange rates on future cash flows and earnings. These derivatives are designated as cash flow hedges. Gains or losses from derivatives designated as cash flow hedges are initially deferred to other comprehensive income (loss), net and are subsequently recognized in revenue in the same period the hedged item impacts earnings. The maturities of these forward contracts are generally no more than 24 months.
We also use derivatives to economically hedge gains and losses from remeasurement of monetary assets and liabilities denominated in non-functional currencies. These derivatives generally have maturities of 12 months or less. Gains or losses from derivatives not designated as cash flow hedges are recognized immediately in other income (expense), net in the consolidated statements of operations.
The fair value of all of our derivatives are classified in the consolidated balance sheets in other current assets and accounts payable, accrued expenses and other current liabilities for derivatives maturing within 12 months after the balance sheet date and other assets, non-current and other liabilities, non-current for derivatives maturing beyond 12 months after the balance sheet date. Cash flows arising from maturities of derivatives both designated as cash flow hedges and functioning as economic hedges are classified as operating activities in the consolidated statements of cash flows.
We executed master netting agreements with the respective counterparties of the foreign currency forward contracts, subject to applicable requirements, and are permitted to net settle transactions of the same currency with a single net amount payable by one party to the other. These derivatives are not subject to any credit contingent features negotiated with the respective counterparties. We are not required to pledge nor are we entitled to receive cash collateral related to these contracts. As of January 31, 2026 , the potential effects of these rights of setoff associated with our foreign currency forward contracts were not material.
Accounts Receivable and Related Allowance
Accounts receivable are recorded at the invoiced amounts and do not bear interest. We maintain an allowance for accounts receivable based upon expected collectability. We assess the collectability of the accounts by taking into consideration the aging of our trade receivables, historical experience, reasonable and supportable forecasts of future economic conditions, and management judgment. We write off trade receivables against the allowance when management determines a balance is uncollectible and no longer intends to actively pursue collection of the receivable.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years . Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining lease term. Depreciation commences once the asset is ready to be placed in service. Construction in progress is primarily related to the construction or development of property and equipment which have not yet been placed in service for their intended use.
Leases
We determine whether an arrangement contains a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To determine whether a contract is or contains a lease, we consider all relevant facts and circumstances to assess whether the customer has both of the following:
The right to obtain substantially all of the economic benefits from use of the identified asset
The right to direct the use of the identified asset
We recognize lease liabilities and right-of-use assets at lease commencement. We measure lease liabilities based on the present value of lease payments over the lease term discounted using the rate implicit in the lease when that rate is readily determinable or our incremental borrowing rate. We estimate our incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own and adjust our incremental borrowing rate to reflect the corresponding lease term. We do not include in the lease term options to extend or terminate the lease unless it is reasonably certain that we will exercise any such options. We account for the lease and non-lease components as a single lease component for all our leases.
We measure right-of-use assets based on the corresponding lease liabilities adjusted for (i) prepayments made to the lessor at or before the commencement date, (ii) initial direct costs we incur, and (iii) tenant incentives under the lease. We evaluate the recoverability of our right-of-use assets for possible impairment in accordance with our long-lived assets policy. We do not recognize right-of-use assets or lease liabilities for short-term leases, which have a lease term of twelve months or less, and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term. Operating leases are reflected in operating lease right-of-use assets, accounts payable, accrued expenses, and other current liabilities, and operating lease liabilities, non-current on our consolidated balance sheets.
We begin recognizing rent expense when the lessor makes the underlying asset available to us. We recognize rent expense under our operating leases on a straight-line basis. Variable lease payments are expensed as incurred and are not included within the lease liabilities and right-of-use assets calculation. We generally recognize sublease income on a straight-line basis over the sublease term.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Impairment Assessment of Long-Lived Assets, Including Goodwill and Other Acquired Intangible Assets
We evaluate the recoverability of property and equipment for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of property and equipment is not recoverable, the carrying amount of such assets is reduced to fair value. We have not recorded any significant impairment charges during the years presented.
Acquired finite-lived intangible assets are typically amortized over the estimated useful lives of the assets, which is generally two to seven years . We evaluate the recoverability of our intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. We have not recorded any such impairment charges during the years presented.
We review goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the quantitative goodwill impairment test will be performed. The quantitative goodwill impairment test identifies goodwill impairment and measures the amount of goodwill impairment loss to be recognized by comparing the fair value of our single reporting unit with its carrying amount. If the fair value exceeds its carrying amount, no further analysis is required; otherwise, any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. No impairment of goodwill has been identified during the years presented.
Legal Contingencies
From time to time, we are subject to litigation and claims that arise in the ordinary course of business. We investigate litigation and claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Because the results of litigation and claims cannot be predicted with certainty, we base our loss accruals on the best information available at the time. As additional information becomes available, we reassess our potential liability and may revise our estimates. Such revisions could have a material impact on future quarterly or annual results of operations.
Research and Development Costs
Research and development costs include personnel costs, including stock-based compensation expense, associated with our engineering personnel and consultants responsible for the design, development and testing of the product, and allocated overhead for facilities, information technology, and employee benefit costs.
Capitalized Software Development Costs
We capitalize costs to develop software for internal use incurred during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Once an application has reached the development stage, qualifying internal and external costs are capitalized until the application is substantially complete and ready for its intended use. Capitalized qualifying costs are amortized on a straight-line basis when the software is ready for its intended use over an estimated useful life, which is generally three years . Internal-use software costs also include third-party on-premises software, which is amortized over the license term. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Advertising Costs
Advertising costs are expensed as incurred and are included in sales and marketing expense. Advertising costs for the years ended January 31, 2026, 2025 and 2024 were $ 28.7 million, $ 27.1 million and $ 17.5 million, respectively.
Stock-Based Compensation
We determine the fair value of stock options and purchase rights issued to employees under our 2015 Equity Incentive Plan (2015 Plan) and 2015 Employee Stock Purchase Plan (2015 ESPP) on the date of grant using the Black-Scholes option pricing model, which is impacted by the fair value of our common stock as well as changes in assumptions regarding a number of variables, which include, but are not limited to, the expected common stock price volatility over the term of the awards, the expected term of the awards, risk-free interest rates and the expected dividend yield. We use the market closing price of our Class A common stock as reported on the New York Stock Exchange for the fair value of restricted stock units granted after our initial public offering (IPO).
We recognize compensation expense for stock options and restricted stock units, net of estimated forfeitures, on a straight-line basis over the period during which an employee is required to provide services in exchange for the award (generally the vesting period of the award). We estimate future forfeitures at the date of grant and revise the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We recognize compensation expense of purchase rights granted under our 2015 ESPP on a straight-line basis over the offering period.
For performance-based restricted stock units that vest based upon continued service and achievement of certain performance conditions established by the Board of Directors for a predetermined period, the fair value is determined based upon the market closing price of our Class A common stock on the date of the grant; compensation expense is recognized over the requisite service period if it is probable that the performance condition will be satisfied based on the accelerated attribution method.
For market-based restricted stock units that vest based upon continued service and achievement of certain market conditions established by the Board of Directors for a predetermined period, the fair value is determined using a Monte Carlo simulation model. The Monte Carlo simulation model requires the use of various assumptions,
including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period. Compensation expense is recognized over the requisite service period based on the accelerated attribution method.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the temporary differences between the financial statement and tax basis of assets and liabilities using the enacted tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in income tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts we believe are more likely than not to be realized.
We elected to account for the income tax effects of global intangible low-taxed income (GILTI) as a period cost in the year the tax is incurred.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon settlement.
On July 4, 2025, the OBBBA was enacted, which includes provisions for the immediate expensing of domestic research and development costs, enhanced deductions for capital expenditures, and modifications to U.S. tax on foreign earnings. Our ability to immediately expense domestic-incurred research and experimental (R&E) costs as reinstated by OBBBA resulted in a reduction in the U.S. taxation of profits derived from our foreign operations, which benefited our effective tax rate.
Workforce Reorganization
During fiscal year 2026, we conducted a workforce reorganization effort to better align our resources with our strategic priorities. This resulted in charges of approximately $ 10.6 million for the year ended January 31, 2026 , primarily consisting of severance and termination benefits, continuation of employee health benefits, and other personnel related costs.
Recently Adopted and Issued Accounting Pronouncements
In September 2025, the FASB issued Accounting Standards Update (ASU) 2025-06, Targeted Improvements to the Accounting for Internal-Use Software , which clarifies and modernizes the accounting for costs related to internal-use software by eliminating project stages and requiring capitalization once a project is (1) authorized with committed funding and (2) is probable of completion. This ASU is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted as of the beginning of an annual reporting period. We are currently evaluating the impact of this new standard on our consolidated financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires disclosure of disaggregated information about the types of expenses (including employee compensation, depreciation, and amortization) in commonly presented expense captions in the statement of operations. For interim and annual reporting periods, entities will be required to provide this information in tabular format in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this new standard on our consolidated financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09 , Improvements to Income Tax Disclosures , which requires greater disaggregation of tax information on the rate reconciliation and income taxes paid disclosures. This ASU is effective for fiscal years beginning after December 15, 2024. We adopted this new standard, effective January 31,
2026 , on a prospective basis. The adoption resulted in disclosures with additional disaggregated tax information. Refer to Note 13 in Part II, Item 8 of this Annual Report on Form 10-K for detailed income tax disclosures.
There were no other recently adopted or issued accounting pronouncements that had a material impact on our consolidated financial statements for the year ended January 31, 2026 .
Note 3. Revenue
Deferred Revenue
Deferred revenue was $ 656.7 million and $ 608.6 million as of January 31, 2026 and 2025, respectively. During the years ended January 31, 2026 and 2025 , we recognized $ 588.4 million and $ 568.3 million of revenue that was included in the deferred revenue balance as of January 31, 2025 and 2024, respectively.
Contract Assets
Contract assets were $ 6.5 million and $ 4.2 million as of January 31, 2026 and 2025, respectively, and are included in accounts receivable, net in the consolidated balance sheets.
Transaction Price Allocated to the Remaining Performance Obligations
As of January 31, 2026 , we had remaining performance obligations from contracts with customers of $ 1.71 billion. We expect to recognize revenue on approximately 53 % and 78 % of these remaining performance obligations over the next 12 and 24 months on a cumulative basis, respectively, with the balance recognized thereafter.
Note 4. Fair Value of Financial Instruments
Fair Value Measurements of Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities subject to the fair value disclosure requirements were as follows (in thousands):
January 31, 2026
Level 1
Level 2
Total
Cash equivalents:
Money market funds
Short-term investments:
U.S. treasury securities
Other current assets:
Forward contracts designated as cash flow hedges
Total current assets
Other assets, non-current:
Forward contracts designated as cash flow hedges
Total assets
Other current liabilities:
Forward contracts designated as cash flow hedges
Forward contracts not designated as cash flow hedges
Total current liabilities
Other liabilities, non-current:
Forward contracts designated as cash flow hedges
Total liabilities
January 31, 2025
Level 1
Level 2
Total
Cash equivalents:
Money market funds
Short-term investments:
U.S. treasury securities
Total cash equivalents and short-term investments
As of January 31, 2025 , forward contracts were not material .
There were no material differences between the estimated fair value and amortized cost of our cash equivalents and short-term investments.
As of January 31, 2026, remaining contractual maturities of our cash equivalents and short-term investments were as follows (in thousands):
January 31, 2026
Due within one year
Due between one to five years
Total
As of January 31, 2026, we do not consider any portion of the unrealized losses to be credit losses.
Fair Value Measurements of Other Financial Instruments
The Convertible Notes are recorded at principal less unamortized issuance costs in the consolidated balance sheets but are measured at fair value on a quarterly basis for disclosure purposes. The estimated fair values of the Convertible Notes, which we have classified as Level 2 financial instruments, were determined using observable market prices. The net carrying amounts and estimated fair values of the Convertible Notes were as follows (in thousands):
January 31,
Net Carrying Amount
Estimated Fair Value
Net Carrying Amount
Estimated Fair Value
2026 Convertible Notes
2029 Convertible Notes
Total
Refer to Note 9 for detailed calculations of the net carrying amounts of the Convertible Notes. We settled the 2026 Convertible Notes in full at maturity.
Note 5. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
January 31,
Leasehold improvements
Computer-related equipment and software
Furniture and fixtures
Construction in progress
Total property and equipment
Less: accumulated depreciation
Total property and equipment, net
Depreciation expense related to property and equipment was $ 8.3 million, $ 8.2 million and $ 37.0 million for the years ended January 31, 2026, 2025 and 2024, respectively.
Intangible Assets
Intangible assets, net consisted of the following (in thousands):
January 31,
Internally developed software
Acquired developed technology
On-premises software
Total intangible assets
Less: accumulated amortization
Total intangible assets, net
Intangible assets are amortized on a straight-line basis over the useful life. Amortization expense for intangible assets was $ 31.2 million, $ 17.1 million, and $ 16.6 million for the years ending January 31, 2026, 2025, and 2024, respectively.
As of January 31, 2026, expected amortization expense for intangible assets was as follows (in thousands):
Years ending January 31:
Total
As of January 31, 2026 , we capitalized internally developed software of $ 46.9 million for numerous projects that were not yet ready for their intended use. The majority of these projects, which generally have a useful life of three years , are expected to commence amortization in fiscal year 2027 .
Note 6. Derivative Instruments
The notional amounts of our outstanding foreign currency forward contracts were as follows (in thousands):
January 31,
Forward contracts designated as cash flow hedges
Forward contracts not designated as cash flow hedges
Total
Pre-tax gains (losses) associated with foreign currency forward contracts were as follows (in thousands):
Year Ended January 31,
Forward contracts designated as cash flow hedges
Gain recognized in other comprehensive income (loss), net
Gain reclassified from accumulated other comprehensive loss into net income
Total gain
Forward contracts not designated as cash flow hedges
Loss recognized in net income
Net Gain
Pre-tax gains (losses) associated with foreign currency forward contracts were not material for the year ended January 31, 2025.
As of January 31, 2026 , we expect to reclassify $ 5.3 million of pre-tax gains out of accumulated other loss into earnings within the next twelve months.
Note 7. Leases
W e have entered into various non-cancellable operating lease agreements for certain of our offices with lease periods expiring primarily between fiscal years 2028 and 2037 . Certain of these arrangements have free or escalating rent payment provisions and optional renewal or termination clauses. Our operating leases typically include variable lease payments, which are primarily comprised of common area maintenance and utility charges for our offices, that are determined based on actual consumption. Our operating lease agreements do not contain any residual value guarantees, covenants, or other restrictions.
We sublease certain floors of our Redwood City and London offices. Our current subleases have total lease terms ranging from 24 to 39 months that will expire at various dates by fiscal year 2029 .
The components of lease cost, which were included in operating expenses in our consolidated statements of operations, were as follows (in thousands):
Year Ended January 31,
Operating lease cost, gross
Variable lease cost, gross
Sublease income
Other
Total lease cost
Supplemental cash flow information related to leases was as follows (in thousands):
Year Ended January 31,
Cash paid for amounts included in the measurement of operating lease liabilities
Right-of-use assets obtained in exchange of operating lease obligations
The weighted-average remaining term of operating leases was 5.38 years and 4 .0 years as of January 31, 2026 and 2025 , respectively. The weighted-average discount rate used to measure the present value of our operating lease liabilities was 6.01 % and 6.03 % as of January 31, 2026 and 2025, respectively.
As of January 31, 2026, maturities of our operating lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):
Years ending January 31:
Operating Leases (1)
Thereafter
Total lease payments
Less: imputed interest
Present value of total lease liabilities
Non-cancellable sublease proceeds for the years ending January 31, 2027, 2028, and 2029 of $ 4.9 million, $ 5.1 million, and $ 1.8 million, respectively, are not included in the table above.
As of January 31, 2026, we had one operating lease for an office space that has not yet commenced. This operating lease has aggregated undiscounted future payments of $ 11.4 million and a lease term of approximately 10 years . This operating lease is estimated to commence during the first half of fiscal year 2027.
Note 8. Commitments and Contingencies
Letters of Credit
As of January 31, 2026 and 2025 , we had letters of credit in the aggregate amount of $ 12.3 million and $ 11.2 million, respectively, in connection with our operating leases and voluntary disability insurance (VDI) program, which were primarily issued under the available sublimit for the issuance of letters of credit in conjunction with a secured credit agreement as disclosed in Note 9.
Purchase Obligations
Our purchase obligations relate primarily to public cloud hosting services and IT software and support services costs and have terms ranging from two to five years . As of January 31, 2026, future minimum payments under non-cancellable contractual purchases, which were not recognized on our consolidated balance sheet, are as follows, shown in accordance with the payment due date (in thousands):
Years ending January 31:
Total
Legal Matters
From time to time, we are subject to litigation and claims that arise in the ordinary course of business. We investigate litigation and claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of litigation and claims cannot be predicted with certainty, we believe there was not at least a reasonable possibility that we had incurred a material loss with respect to such loss contingencies as of January 31, 2026.
Indemnification
We include service level commitments to our customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that we fail to meet those levels. In addition, our customer contracts often include (i) specific obligations that we maintain the availability of the customer’s data through our service and that we secure customer content against unauthorized access or loss, and (ii) indemnity provisions whereby we indemnify our customers for third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have not incurred any material costs as a result of such commitments.
Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any material liabilities related to such obligations in the consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.
Note 9. Debt
Convertible Senior Notes
2029 Convertible Notes
In September 2024, we issued $ 460.0 million aggregate principal amount of 1.50 % convertible senior notes due September 15, 2029 . The 2029 Convertible Notes are senior unsecured obligations and bear interest at a rate of 1.50 % per year payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025 . Each $ 1,000 principal amount of the 2029 Convertible Notes will be convertible into 23.0102 shares of our Class A common stock, which is equivalent to a conversion price of approximately $ 43.46 per share, subject to adjustment upon the occurrence of specified events .
The 2029 Convertible Notes are convertible at the option of the holders of the 2029 Convertible Notes at any time prior to the close of business on the business day immediately preceding June 15, 2029 , only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on January 31, 2025 (and only during such fiscal quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five -business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2029 Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A common stock and the conversion rate for the 2029 Convertible Notes on each such trading day; (3) if we call the 2029 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.
On or after June 15, 2029, holders of the 2029 Convertible Notes may convert all or any portion of the 2029 Convertible Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, we will satisfy our conversion obligation by paying cash up to the aggregate principal amount of the 2029 Convertible Notes to be converted and we will pay or deliver, as the case may be, the conversion premium in cash, shares of common stock or a combination of cash and shares of common stock, at our election.
We may not redeem the 2029 Convertible Notes prior to September 20, 2027. We may redeem for cash all or any portion of the 2029 Convertible Notes, at our option, on or after September 20, 2027, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2029 Convertible Notes, which means we are not required to redeem or retire the 2029 Convertible Notes periodically.
Upon the occurrence of a fundamental change (as defined in the indenture governing the 2029 Convertible Notes) prior to the maturity date, subject to certain conditions, holders of the 2029 Convertible Notes may require us to repurchase all or a portion of the 2029 Convertible Notes for cash at a repurchase price equal to 100 % of the principal amount of the 2029 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
As of January 31, 2026, the conditions allowing holders of the 2029 Convertible Notes to convert were not met.
2026 Convertible Notes
In January 2021, we issued $ 345.0 million aggregate principal amount of 0.00 % convertible senior notes due January 15, 2026 . In September 2024, using proceeds from the issuance of the 2029 Convertible Notes, we entered into separate and privately negotiated transactions with certain holders of the 2026 Convertible Notes to repurchase $ 140.0 million aggregate principal amount of the 2026 Convertible Notes for an aggregate amount of $ 191.7 million of cash. The repurchase was accounted for as an induced conversion. We recognized $ 10.1 million of induced conversion expense, representing the fair value of the consideration paid to certain holders of the 2026 Convertible Notes in excess of the value to which they were entitled to receive pursuant to the original conversion terms. This expense was recognized in other income (expense), net on our consolidated statements of operations. The remaining consideration of $ 42.6 million, after accounting for the induced conversion expense and carrying value of the 2026 Convertible Notes on the date of repurchase, including unamortized debt issuance costs of $ 1.0 million, was recorded as a reduction to additional paid-in capital.
The 2026 Convertible Notes became convertible at the option of the holders on October 15, 2025 , in accordance with the conversion privilege in the indenture governing the 2026 Convertible Notes. On January 15, 2026, we settled the outstanding $ 205.0 million aggregate principal amount in cash and the conversion premium by issuing 1.1 million shares of our Class A common stock.
The net carrying amount of the Convertible Notes consisted of the following (in thousands):
January 31,
2029 Convertible Notes
2026 Convertible Notes
2029 Convertible Notes
2026 Convertible Notes
Principal
Unamortized issuance costs
Net carrying amount
Issuance costs are being amortized to interest expense over the term of the Convertible Notes using the effective interest rate method. The effective interest rate used to amortize the issuance costs of the 2029 Convertible Notes is 2.06 %. The effective interest rate used to amortize the issuance costs of the 2026 Convertible Notes remained was 0.56 % through the maturity date. Interest expense recognized related to the Convertible Notes for the year ended January 31, 2026 was $ 10.4 million, and was no t material for the years ended January 31, 2025 and 2024.
Capped Calls
In connection with the pricing of the 2029 Convertible Notes, we entered into privately negotiated capped call transactions with certain counterparties. The 2029 Capped Calls each have a strike price of approximately $ 43.46 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2029 Convertible Notes. The 2029 Capped Calls have initial cap prices of $ 66.86 per share, subject to certain adjustments. The 2029 Capped Calls cover, subject to anti-dilution adjustments, approximately 10.6 million shares of our Class A common stock. The cost of $ 52.5 million incurred in connection with the 2029 Capped Calls was recorded as a reduction to additional paid-in capital .
The Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the Convertible Notes (or, in the event a conversion of the Convertible Notes is settled in cash, to offset our cash payment obligation) with such reduction or offset, as the case may be, subject to a cap based on the cap price. The Capped Calls are separate transactions, and not part of the terms of the Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ deficit and are not accounted for as derivatives.
In connection with the pricing of the 2026 Convertible Notes, we entered into privately negotiated capped call transactions with certain counterparties. In September 2024, in connection with the repurchase of the 2026 Convertible Notes, we entered into agreements to unwind a portion of the 2026 Capped Calls and received approximately $ 30.3 million, which was recorded as an increase to additional paid-in capital. Upon maturity of the 2026 Convertible Notes, we exercised the remaining outstanding 2026 Capped Calls, which offset the shares issued from settling the conversion premium by 1.1 million shares.
Line of Credit
On June 30, 2023, we entered into an amended and restated credit agreement and on December 19, 2024, we entered into Amendment No. 1 to the June 2023 Facility. The amendment, among other changes, (a) decreases the revolving commitments from $ 150.0 million to $ 75.0 million and (b) amends the conditions that prevent early maturity of the revolving loan facility so that the maturity date is the earlier of (i) June 30, 2028, (ii) October 16, 2025, except to the extent that our liquidity (as determined in accordance with the June 2023 Facility) is greater than or equal to the outstanding principal amount of our existing 2026 Convertible Notes as of such date, and (iii)
February 11, 2028, only in the event that any of our Series A Convertible Preferred Stock remains outstanding as of such date.
The revolving loans accruing interest at a rate per annum equal to, at our option, (a) an adjusted term Secured Overnight Financing Rate (SOFR) (based on one, three, or six-month interest periods) plus a margin ranging from 1.35 % to 1.85 %, (b) a daily simple SOFR rate plus a margin ranging from 1.35 % to 1.85 %, or (c) a prime rate plus a margin of 0.35 % to 0.85 %. The June 2023 Facility provides for a commitment fee of 0.15 % to 0.25 % per annum, determined based upon our senior secured leverage ratio, on the average daily unused amount of the revolving committed amount, payable quarterly in arrears. Borrowings under the June 2023 Facility are collateralized by substantially all of our assets. The June 2023 Facility requires us to comply with a maximum leverage ratio and a minimum liquidity requirement. Additionally, the June 2023 Facility contains customary affirmative and negative covenants.
As of January 31, 2026 , we had no debt outstanding on the June 2023 Facility and were in compliance with all financial covenants.
Note 10. Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Common Stock
The holder of each share of Class A common stock is entitled to 1 vote per share . As of January 31, 2026 and 2025 , we had authorized 1,000,000,000 shares of Class A common stock, par value of $ 0.0001 per share. 140,910,671 and 144,112,756 shares of Class A common stock were issued and outstanding as of January 31, 2026 and 2025, respectively.
Preferred Stock
As of January 31, 2026 and 2025 , we had authorized 100,000,000 shares of undesignated preferred stock, par value of $ 0.0001 per share. 500,000 shares of Series A Convertible Preferred Stock were issued and outstanding as of January 31, 2026 and 2025.
Treasury Stock
As of January 31, 2026 and 2025 , we held an aggregate of 3,107,809 shares of common stock as treasury stock.
Series A Convertible Preferred Stock
O n April 7, 2021, we entered into an Investment Agreement with KKR relating to the issuance and sale of 500,000 shares of our Series A Convertible Preferred Stock, par value $ 0.0001 per share, for an aggregate purchase price of $ 500 million, or $ 1,000 per share. The closing of the Issuance occurred on May 12, 2021 (the “Closing Date”).
The Series A Preferred Stock rank senior to our Class A common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Box. The Series A Preferred Stock initially have a liquidation preference of $ 1,000 per share. Holders of the Series A Preferred Stock are entitled to a cumulative dividend (the “Dividend”) at the rate of 3.0 % per annum, compounding quarterly, paid-in-kind or paid in cash, at our election. For any quarter in which we elect not to pay the Dividend in cash with respect to a share of Series A Preferred Stock, such Dividend will become part of the liquidation preference of such share, as set forth in the Certificate of Designations designating the Series A Preferred Stock (the “Certificate of Designations”).
The Series A Preferred Stock is convertible at the option of the holders thereof at any time into shares of Class A common stock at an initial conversion price of $ 27.00 per share. At any time after the third anniversary of the Closing Date, if the volume weighted average price of our Class A common stock exceeds 200 % of the conversion price set forth in the Certificate of Designations, for at least 20 trading days in any period of 30 consecutive trading
days, including the last day of such trading period, at our election, all of the Series A Preferred Stock will be convertible into the applicable number of shares of Class A common stock.
Holders of the Series A Preferred Stock are entitled to vote with the holders of our Class A common stock on an as-converted basis. Holders of the Series A Preferred Stock are entitled to a separate class vote with respect to, among other things, amendments to our organizational documents that have an adverse effect on the Series A Preferred Stock, authorizations or issuances by us of securities that are senior to, or equal in priority with, the Series A Preferred Stock, increases or decreases in the number of authorized shares of Series A Preferred Stock, and payments of special dividends in excess of an agreed upon amount.
At any time following the fifth anniversary of the Closing Date, we may redeem some or all of the Series A Preferred Stock for a per share amount in cash equal to: (i) the sum of (x) 100 % of the then-current liquidation preference thereof, plus (y) all accrued and unpaid dividends, multiplied by (ii) (A) 105 % if the redemption occurs at any time on or after the fifth anniversary of the Closing Date and prior to the sixth anniversary of the Closing Date, (B) 102 % if the redemption occurs at any time on or after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, and (C) 100 % if the redemption occurs at any time on or after the seventh anniversary of the Closing Date.
At any time following the seventh anniversary of the Closing Date, each holder of the Series A Preferred Stock will have the right to cause us to redeem, ratably, in whole or, from time to time, in part, the shares of Series A Preferred Stock held by such holder for a per share amount in cash equal to the sum of (x) 100 % of the then-current liquidation preference thereof, plus (y) all accrued and unpaid dividends.
Upon prior written notice of certain change of control events involving Box, the shares of the Series A Preferred Stock shall automatically be redeemed by us for a repurchase price equal to the greater of (i) the value of the shares of Series A Preferred Stock as converted into Class A common stock at the then-current conversion price and (ii) an amount in cash equal to 100 % of the then-current liquidation preference thereof plus all accrued but unpaid dividends. In the case of clause (ii) above, we will also be required to pay the holders of the Series A Preferred Stock a “make-whole” premium consisting of dividends that would have otherwise accrued from the effective date of such change of control through the fifth anniversary of the Closing Date.
We have applied the guidance in ASC 480‑10‑S99‑3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities and have therefore classified the Series A Preferred Stock as mezzanine equity. The Series A Preferred Stock was recorded outside of stockholders’ deficit because the shares may be redeemed at the option of the holders and that redemption option is not solely within our control. Upon issuance, we recorded the Series A Preferred Stock, net of issuance costs. We have elected to accrete the issuance costs through the date the shares can first be redeemed at the option of the holders, which is the seventh anniversary of the Closing Date using the effective interest rate method. During the years ended January 31, 2026 and 2025, accretion recognized was not material.
During the years ended January 31, 2026 and 2025 , we paid cash dividends to our Series A Preferred Stockholders in the amount of $ 15.0 million in both periods. As of January 31, 2026 , we had accrued dividends of $ 1.3 million on the Series A Preferred Stock. Accrued dividends are recorded against additional paid-in capital due to our accumulated deficit.
Share Repurchase Plan
Our Board of Directors has authorized a share repurchase plan to opportunistically repurchase shares of our outstanding Class A common stock in open market transactions. On December 2, 2025, we announced that our Board of Directors authorized a $ 150 million expansion of the share repurchase plan. We periodically enter into pre-set trading plans adopted in accordance with Rule 10b5-1 to effect repurchases under our share repurchase plan .
During the year ended January 31, 2026 , we repurchased 9.7 million shares at a weighted average price of $ 30.35 per share for a total amount of $ 292.9 million. During the year ended January 31, 2025 , we repurchased 7.6
million shares at a weighted average price of $ 27.90 for a total amount of $ 211.5 million. As of January 31, 2026 , $ 59.2 million remained authorized and available for additional repurchases.
Note 11. Stock-Based Compensation
Employee Equity Plans
In January 2015, our Board of Directors adopted the 2015 Plan, which became effective prior to the completion of our IPO. Awards granted under the 2015 Plan may be (i) incentive stock options, (ii) nonstatutory stock options, (iii) restricted stock units, (iv) restricted stock awards or (v) stock appreciation rights, as determined by our Board of Directors at the time of grant. Generally, our restricted stock units vest over four years and, (a) for employee new hire restricted stock unit grants, twenty-five percent vest one year from the vesting commencement date and continue to vest 1/16th per quarter thereafter; or (b) for employee refresh restricted stock unit grants, 1/16 th per quarter vest from the vesting commencement date . On July 2, 2024, our stockholders approved the amended and restated 2015 Plan. Subject to the adjustment provisions, the maximum number of shares that may be issued under the 2015 Plan is (a) 9,000,000 shares of our Class A common stock, plus (b) any shares subject to awards granted under our 2011 Equity Incentive Plan, as amended, and the 2015 Plan that were outstanding on or prior to the approval of the amended and restated 2015 Plan, and that subsequently expire, are forfeited to or repurchased, or otherwise terminate without having been exercised or issued in full, up to a maximum of 20,228,040 shares. As of January 31, 2026 , 9,021,758 shares were reserved for future issuance under the 2015 Plan.
In January 2015, our Board of Directors adopted the 2015 ESPP, which became effective prior to the completion of our IPO. The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount of up to 15 % through payroll deductions of their eligible compensation, subject to any plan limitations. The 2015 ESPP provides for 24-month offering periods beginning March 16 and September 16 of each year, and each offering period consists of four six-month purchase periods.
On each purchase date, eligible employees may purchase our stock at a price per share equal to 85 % of the lesser of (1) the fair market value of our stock on the offering date or (2) the fair market value of our stock on the purchase date. In the event the price is lower on the last day of any purchase price period, in addition to using that price as the basis for that purchase period, the offering period resets and the new lower price becomes the new offering price for a new 24 month offering period. As of January 31, 2026 , 7,591,319 shares were reserved for future issuance under the 2015 ESPP.
Stock Options
The following table summarizes the stock option activity under the equity incentive plans and related information:
Shares Subject to Options Outstanding
Weighted-
Weighted-
Average Remaining
Average Exercise
Contractual Life
Aggregate
Shares
Price
(Years)
Intrinsic Value
(in thousands)
Balance as of January 31, 2024
Options exercised
Balance as of January 31, 2025
Options exercised
Balance as of January 31, 2026
Exercisable as of January 31, 2026
Shares Subject to Options Outstanding Weighted-Average Weighted-Remaining Average Exercise Contractual Life Aggregate Shares Price (Years) Intrinsic Value (in thousands) Balance as of January 31, 2019 Options granted Option exercised Options forfeited/cancelled Balance as of January 31, 2020 Options granted Option exercised Options forfeited/cancelled Balance as of January 31, 2021 Vested and expected to vest as of January 31, 2021 Exercisable as of January 31, 2021 9,096,961 $9.01 4.97 $ 108,731 577,082 19.89 (659,34) 9.05 (242,110) 17.63 8,772,585 $ 9.48 4.27 $ 60,221 31,666 12.48 (1,994,667) 5.14 (192,547) 10.73 6,617,037 $ 10.773.77 $ 48,098 6,554,892 $ 10.68 3.74 $ 48,092 5,348,780 $ 8.59 2.87 $ 47,974
The aggregate intrinsic value of exercisable options as of January 31, 2026 is calculated based on the difference between the exercise price and the current fair value of our common stock. The aggregate intrinsic value of exercised options for the years ended January 31, 2026, 2025 and 2024 was $ 1.5 million, $ 14.8 million, and $ 1.6 million, respectively. During the years ended January 31, 2026 , 2025, and 2024, realized tax benefits in connection with stock options exercised were no t material. No stock options vested during the years ended January 31, 2026
and 2025 and the aggregate estimated fair value of stock options that vested during the year ended January 31, 2024 was no t material. There were no options granted to employees during the years ended January 31, 2026, 2025 and 2024.
Restricted Stock Units
The following table summarizes the restricted stock unit activity, inclusive of performance-based and market-based restricted stock units, under the equity incentive plans and related information:
Number of
Weighted-
Restricted
Average
Stock Units
Grant Date
Outstanding
Fair Value
Unvested balance - January 31, 2024
Granted
Vested
Forfeited/cancelled
Unvested balance - January 31, 2025
Granted
Vested
Forfeited/cancelled
Unvested balance - January 31, 2026
er of Weighted- Restricted Average Stock Units Grant Date Outstanding Fair Value Unvested balance - January 31, 2019 18,098,707 $ 19.35 Granted 12,436,586 18.81 Vested, net of shares withheld for employee payroll taxes (4,166,907 ) 19.92 Forfeited/cancelled (4,560,279 ) 19.77 Unvested balance - January 31, 2020 21,808,107 $ 18.85 Granted 10,702,574 15.82 Vested, net of shares withheld for employee payroll taxes (5,100,239 ) 18.28 Forfeited/cancelled (13,079,764 ) 17.87 Unvested balance - January 31, 2021 14,330,678 $ 17.68
The total fair value of vested restricted stock units for the years ended January 31, 2026, 2025 and 2024 was $ 249.4 million, $ 226.9 million, and $ 214.6 million. During the years ended January 31, 2026 and 2025, we realized tax benefits in connection with the vesting and issuance of restricted stock units of $ 46.2 million and $ 42.1 million, respectively . The tax benefits realized in connection with the vesting and issuance of restricted stock units during the year ended January 31, 2024 were not material. As of January 31, 2026 , there was $ 366.4 million of unrecognized stock-based compensation expense related to outstanding restricted stock units, inclusive of performance-based and market-based restricted stock units, granted to employees that is expected to be recognized over a weighted-average period of 2.54 years.
Executive Bonus Plan
We use performance-based incentives for certain employees, including our named executive officers, to achieve our annual financial and operational objectives, while making progress towards our longer-term strategic and growth goals (the “Executive Bonus Plan”). Based on a review of our actual achievement of the pre-established corporate financial objectives and additional inputs from our Compensation Committee, the Executive Bonus Plan for fiscal year 2025 was determined, settled and paid out in the first quarter of fiscal year 2026 in the form of fully vested restricted stock units and cash. During the first quarter of fiscal year 2026, our Compensation Committee also adopted and approved the performance criteria and targets for the Executive Bonus Plan for fiscal year 2026, which is expected to be paid out in the form of fully vested restricted stock units and cash in the first quarter of fiscal year 2027.
During the years ended January 31, 2026 and 2025, we recognized stock-based compensation expense related to Executive Bonus Plans in the amount of $ 15.9 million and $ 13.4 million, respectively. The unrecognized compensation expense related to the ungranted and unvested Executive Bonus Plan for fiscal year 2026 is $ 3.4 million, based on the expected performance against the pre-established corporate financial objectives as of January 31, 2026, which is expected to be recognized during the first quarter of fiscal year 2027.
Performance-Based and Market-Based Restricted Stock Units
During the years ended January 31, 2026, 2025 and 2024 , we granted performance-based restricted stock units to our named executive officers. The performance-based restricted stock units are subject to vesting based on the achievement of both performance-based and service-based conditions. The performance-based restricted stock units vest annually over a period of three years from the date of grant, subject to the executive's continued employment.
The number of shares that can be earned ranges from 0 % to 150 % of the target number of shares granted based on the relative performance of the company compared to the specific performance metrics. In order to vest, the performance condition is only required to be met in the first year following the grant date.
In December 2024, we granted 600,000 market-based restricted stock units, subject to vesting based on the achievement of both market-based and service-based conditions. The market-based restricted stock units are eligible to vest based on the achievement of stock price goals over a performance period that ends on the fourth anniversary of the grant date. The total number of market-based restricted stock units is divided into three equal tranches with each tranche subject to both a stock price goal and a minimum service requirement.
The $ 20.59 average grant date fair value per market-based restricted stock unit was determined using a Monte Carlo simulation model and stock-based compensation expense is recognized over the requisite service period based on the accelerated attribution method, even if the Price Hurdles are not met.
During the years ended January 31, 2026, 2025, and 2024, stock-based compensation expense related to performance-based and market-based restricted stock units was $ 11.7 million, $ 5.5 million, and $ 2.8 million, respectively.
2015 ESPP
As of January 31, 2026 , there was $ 14.3 million of unrecognized stock-based compensation expense related to the 2015 ESPP that is expected to be recognized over a weighted-average period of 1.53 years.
Stock-Based Compensation
The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations (in thousands):
Year Ended January 31,
Cost of revenue
Research and development
Sales and marketing
General and administrative
Total stock-based compensation
Year Ended January 31, 2021 2020 2019 Cost of revenue $ 18,936 $ 16,769 $ 14,065 Research and development 61,145 62,565 45,189 Sales and marketing 42,015 38,030 36,864 General and administrative 32,196 28,624 23,178 Total stock-based compensation $ 154,292 $ 145,988 $ 119,296
During the years ended January 31, 2026, 2025 and 2024 , we capitalized $ 13.3 million, $ 10.6 million, and $ 7.0 million, respectively, of stock-based compensation expense related to eligible capitalized software development projects.
Determination of Fair Value
We estimated the fair value of 2015 ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions:
Year Ended January 31,
Employee Stock Purchase Plan
Expected term (in years)
Risk-free interest rate
Volatility
Dividend yield
Year Ended January 31, 2021 2020 2019 Employee Stock Options Expected term (in years) 5.8 5.5 – 5.8 5.5 – 5.8 Risk-free interest rate 0.6% 1.8% 2.8% – 3.1% Volatility 46% 45% 45% Dividend yield 0% 0% 0% Employee Stock Purchase Plan Expected term (in years) 0.5 – 2.0 0.5 – 2.0 0.5 – 2.0 Risk-free interest rate 0.1% – 0.4% 1.7% – 2.5% 2.0% – 2.8% Volatility 44% – 54% 34% – 55% 37% – 50% Dividend yield 0% 0% 0%
The assumptions used in the Black-Scholes option pricing model were determined as follows:
Fair Value of Common Stock. We use the market closing price for our Class A common stock as reported on the New York Stock Exchange to determine the fair value of our common stock at each grant date.
Expected Term . The expected term represents the period that our share-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options and 2015 ESPP purchase rights.
Expected Volatility . We estimate the expected volatility of the stock option grants and 2015 ESPP purchase rights based on the historical volatility of our Class A common stock over a period equivalent to the expected term of the stock option grants and 2015 ESPP purchase rights, respectively.
Risk-free Interest Rate . The risk-free rate that we use is based on the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options and 2015 ESPP purchase rights.
Dividend Yield . We have never declared or paid any cash dividends on our Class A common stock and do not plan to pay cash dividends on our Class A common stock in the foreseeable future, and, therefore, use an expected dividend yield of zero .
Note 12. Net Income per Share Attributable to Common Stockholders
The following table sets forth the computation of basic and diluted net income per share attributable to common stockholders (in thousands, except per share amounts):
Year Ended January 31,
Numerator:
Net income
Accretion and dividend on series A convertible preferred stock
Undistributed earnings attributable to preferred stockholders
Net income attributable to common stockholders, basic and diluted
Denominator:
Weighted-average number of shares used to compute net income per share attributable to common stockholders, basic
Dilutive effect of awards issued under employee equity plans
Dilutive effect of shares related to the convertible senior notes
Weighted-average number of shares used to compute net income per share attributable to common stockholders, diluted
Net income per share attributable to common stockholders, basic
Net income per share attributable to common stockholders, diluted
The dilutive effect was computed using the if-converted method for convertible instruments and the treasury stock method for all other potential common shares.
The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net income per share attributable to common stockholders for the periods presented because the impact of including them would have been antidilutive (in thousands):
Year Ended January 31,
Options to purchase common stock
Restricted stock units
Employee stock purchase plan
Shares related to convertible preferred stock
Shares related to the convertible senior notes
Total
Note 13. Income Taxes
The components of income before income taxes were as follows (in thousands):
Year Ended January 31,
United States
Foreign
Total
The components of benefit from income taxes were as follows (in thousands):
Year Ended January 31,
Current:
Federal
State
Foreign
Total
Deferred:
Federal
State
Foreign
Total
Benefit from income taxes
A reconciliation of the benefit from income taxes to the amount computed by applying the 21 % statutory U.S. federal income tax rate to income before income taxes for the year ended January 31, 2026, after the adoption of ASU 2023-09, is as follows (in thousands):
Year Ended January 31, 2026
Tax at statutory federal rate
State and local income taxes, net of federal benefit (1)
Foreign tax effects:
Japan
Statutory rate difference between Japan and United States
Other
United Kingdom
Statutory rate difference between United Kingdom and United States
Stock-based compensation windfalls
Intra-group transfer of intellectual property
Other
Netherlands
Prior period examination adjustment
Other
Other foreign jurisdictions
Effect of cross-border tax laws:
Global intangible low-taxed income
Subpart F income inclusion
Tax credits:
Research and development tax credits
Nontaxable or nondeductible items:
Non-deductible stock-based compensation
Stock-based compensation windfalls
Other
Changes in unrecognized tax benefits
Other Adjustments
Total benefit from income taxes
The states that contribute to the majority (greater than 50%) of the tax effect in this category include Illinois, New Jersey, New York, and Massachusetts .
A reconciliation of the benefit from income taxes to the amount computed by applying the 21 % statutory U.S. federal income tax rate to income before income taxes for the years ended January 31, 2025 and 2024, prior to the adoption of ASU 2023-09, is as follows (in thousands):
Year Ended January 31,
Tax at statutory federal rate
State taxes, net of federal benefit
U.S. tax on foreign earnings
Foreign rate difference
Nondeductible expenses
Induced conversion expense
Research and development credit
Change in reserve for unrecognized tax benefits
Stock-based compensation
Change in valuation allowance, including the effect of tax rate change
Other
Total benefit from income taxes
The significant components of our deferred tax assets and liabilities were as follows (in thousands):
January 31,
Deferred tax assets:
Net operating loss carryover
Capitalized research and development
Depreciation and amortization
Operating lease liabilities
Tax credit carryover
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Operating lease right-of-use assets, net
Deferred commissions
Goodwill with indefinite life amortization
Other
Total deferred tax liabilities
Net deferred tax assets
We assess the realizability of deferred tax assets by considering whether it is more likely than not that some portion or all the deferred tax assets will not be realized. As a result, we continue to maintain a valuation allowance against our California deferred tax assets to the extent they are not offset by liabilities from uncertain tax positions.
During the year ended January 31, 2026 , the valuation allowance increased by $ 38.1 million, primarily due to the increase in our California research and development tax credits. During the year ended January 31, 2025, the valuation allowance decreased by $ 202.2 million.
Provisions enacted in the 2017 Tax Cuts and Jobs Act related to the capitalization for tax purposes of R&E expenditures became effective for tax years beginning after December 31, 2021. For the years ended January 31, 2023 through January 31, 2025, we capitalized and amortized R&E expenditures over five years for domestic research and 15 years for international research rather than expensing these costs as incurred. On July 4, 2025, OBBBA was enacted, which includes provisions for the immediate expensing of domestic R&E costs. As a result, we immediately expensed domestic R&E costs incurred in the current year. Additionally, our ability to immediately expense domestic-incurred R&E costs as reinstated by OBBBA resulted in a reduction in the U.S. taxation of profits derived from our foreign operations, which benefited our effective tax rate. We recorded a net deferred tax asset of $ 64.0 million and $ 90.2 million, respectively, related to the capitalization requirement during the years ended January 31, 2026 and 2025.
As of January 31, 2026 , we had federal, state, and foreign net operating loss carryforwards of $ 111.1 million, $ 462.6 million and $ 239.9 million, respectively, available to offset future taxable income. The federal net operating loss carryforwards generated prior to fiscal year 2019 will expire at various dates beginning in 2037 , if not utilized. We have federal net operating loss carryforwards of $ 119.2 million, which can be carried forward indefinitely. The state net operating loss carryforwards will expire at various dates beginning in 2027 , if not utilized. The foreign net operating loss carryforwards do not expire. In addition, as of January 31, 2026 , we had federal and state research and development tax credit carryforwards of $ 93.3 million and $ 79.8 million, respectively. The federal research and development tax credit carryforwards will expire beginning in 2027 , if not utilized. The state research and development tax credit carryforwards do not expire.
Utilization of the federal and state net operating loss may be subject to substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. We completed a Section 382 ownership change analysis through fiscal year 2026 tax periods, which concluded that our net operating losses are not permanently limited. Subsequent ownership changes may further affect the limitation in future years but we do not expect that the annual limitations will significantly impact our ability to utilize net operating loss or tax credit carryforward.
We evaluate tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. We believe that we have provided adequate reserves for our income tax uncertainties in all open tax years.
A reconciliation of the gross unrecognized tax benefits is as follows (in thousands):
Year Ended January 31,
Unrecognized tax benefits—beginning of period
Reductions for tax positions related to prior year
Additions for tax positions related to prior year
Additions for tax positions related to current year
Unrecognized tax benefits—end of period
As of January 31, 2026 , the balance of unrecognized tax benefits was $ 66.5 million of which $ 38.1 million, if recognized, would affect the effective tax rate and $ 28.4 million would result in an adjustment to deferred tax assets with corresponding adjustments to the valuation allowance. As of January 31, 2025, the balance of unrecognized tax benefits was $132.6 million, of which $69.1 million, if recognized, would affect the effective tax rate and $63.5 million would result in an adjustment to deferred tax assets with corresponding adjustments to the valuation allowance. The gross unrecognized tax benefits, if recognized, would not materially affect the effective tax rate as of January 31, 2024.
In the year ended January 31, 2026, we recognized a $48.4 million net benefit from adjusting our federal R&D credits carryforwards and related UTP.
Our policy is to classify interest and penalties associated with uncertain tax positions, if any, as a component of our income tax provision. Interest and penalties were not significant during the years ended January 31, 2026, 2025 and 2024.
We file tax returns in the U.S. for federal, California, and other states. All tax years remain open to examination for both federal and state purposes as a result of our net operating loss and credit carryforwards. We file tax returns in the U.K. and other foreign jurisdictions in which we operate. Tax years ending on January 31, 2022 and onwards remain open to examination for the U.K. Certain tax years remain open to examination under the statute of limitations of the respective countries in which our other foreign subsidiaries are located.
The amounts of cash paid for income taxes, net of refunds received, were as follows (in thousands):
Year Ended January 31,
State
Foreign:
United Kingdom
Japan
Netherlands
Poland
Other
Cash paid for income taxes, net of refunds received
The amount of cash paid for income taxes, net of refunds received, for the years ended January 31, 2025 and 2024 was $ 13.6 million and $ 8.5 million, respectively.
