BOX - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Box, Inc.

Third Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised, be conference recorded. is Please Instructions]. [Operator hand over Head to I Investor would speaker conference to like Lopatto, now your the today, Relations. of Alice Thank you. Please ahead. go

Alice Lopatto

earnings Box's Good welcome third conference call. quarter afternoon, to fiscal and XXXX

On and Smith, CEO; Levie, Dylan today the our we call Aaron our have CFO.

is www.box.com/investors. for prepared our replay remarks, call Investor take will and Relations questions. will our webcast also at on Following Today's website we being be available

webcast will only. audio Our be

they We'll for and our @boxincir. opportunity, FY However, highlights markets investments performance positive operating strategies, statements, also XXXX and to reflect file market ability we and release results. supplemental website. known events statements materially. the the revenue the now currently refer with expectations and the from COVID-XX of future Twitter and These actual Securities expectations achieve size best from pandemic on our post impact regarding we factors pricing handle QX available business and may products, or timing regarding 'XX and to expected the and today's our and partnerships the press our of download differ will adoption us risk and fiscal new operating our differ or slides cash benefits and our unrecognized and and operating risks X, periods, judgment On margins, regarding on Please flow, documents call products, to and on market results factors our XX-Q our maintaining our any forward-looking report and based of These obligation guidance update including revenue timing December including our most our of revise as today, of our to be should financial materially. are our actual for of financial call and to forward-looking be at or XXXX, making our results planned expectations this information up cease model to on disclaim margins, change and to Exchange and billing, targets, quarterly long-term operating on gross profitability and are statements made them that date. free our our may other cause growth being the uncertainties Commission, future obligations Form recent our for we leverage, remaining performance

addition, measures. These financial measures during our discuss addition financial be or not from results. isolation In should for considered call, we today's a as GAAP non-GAAP will to, substitute in in non-GAAP

hand disclosures me comparable earnings let financial website. find our can measures Aaron. basis. over can indicated, including press our You additional Relations Investor GAAP the are all that, references non-GAAP PowerPoint otherwise related Unless with regarding on release GAAP these and With be of results, in in a page to which reconciliations measures, the on found to presentation, it

Aaron Levie

drive our and the teams support Alice, to staying for I families We continuing year. joining healthy. product our Box your strive thanks of Thanks, and continue for are to all call for during provide safe customers challenging be everyone proud today. to who our and tremendous hope globally a you innovation at and

negative $X.XX year year-over-year. non-GAAP million, up our EPS Teams, growing revenue XX% $X.XX of above about joined more. integrations, suite Non-GAAP network we XX ago applications. significantly breed Slack at and our QX, collaboration a of ago Microsoft Our enterprises This evident digital compliance, where security with customers a growing and around was is cloud in including virtually In well content product transformation XX%, guidance. of up us from up year margin operating X% and $XXX best BoxWorks to and management workflow innovations are gaining and our building of a of from many that of delivered thousands conference and demand prioritizing just momentum Annual learn partner

secure rely We demand Air a of Growing adoption, Box on wins improvement Insurance, and in cases deals. use customers and saw year Box critical products just $XX expansions also in of $XX the rate our few for versus Shield ago. Murata like closed to share million generated QX deals. XX% leading Manufacturing, positive business than the To power XXX,XXX attach in a including an and suite drove in for including more flow, collaboration six-figure InXIT Suite million [ph], cash now we and Over QX, And free processes. with examples organizations a more USAA US Box we Nationwide Force. Relay

Box can of management, shifting IT are use content full challenging external teams, to product who have of partners. with secure they and new use services solutions business and now file country's digital mobile since our focusing strategies including SharePoint internal variety including major more which operations. on-premise expanded seven-figure collaboration GXP from and its also and of customer virtual cases, claims migrating of Box, remote is And sharing, in company and a re-imagining technology for fit XXXX times One of currently the development. companies use an virtual the and characterized financial the agencies by to several a These better like environment. legacy more normal along primarily purchase purchased with its early agency to efforts own offering can the secured secure new A the team the a Box processes more a to selected manufacturing collaboration, cases ELA suite. has and Box records replace to Box's a highlighted vaccination COVID-XX been cloud broadly systems multinational the support secured customers of access pandemic work support strength on support government leading ELA processing a in critical so

for to have macro services we business from this in mentioned which created have that of adverse immune customers has this and not were business year, our our both room face. for we as see professional we And smaller of large environment to While effects customers, evident expansion, business, earlier an QX. softness enterprises tailwinds in are especially the our uncertain that expected

suite full drive us well profitability years. the an the product in growth coming Looking of in put forward, to position our is we believe even will initiatives stronger and our positioned differentiation improved

XXth the management cloud external three workflow; and Over of the and customers of Zoom. the API's platform, like focused the of USAA. Battelle, in few speakers, incredible category-defining Box security built fully collaboration ServiceNow, and CEOs brought which years, this together as mentioned, QX, Box content I attendees IBM, Electric world-class differentiators: on and compliance; integrations past application. BoxWorks Rescue Okta, And value of Nike, internal International Slack into Schneider we've frictionless we hosted And our an key slate including virtual Annual conference that extend methodically with and Committee, year, seamless any thousands and Cisco, and

making together also business risk, and We new announced and ever Box, work improving easier content bringing to capabilities collaboration processes on to done get and reducing than integrations help it customers securely.

collaborate time on introduced For in make for we annotation capabilities new across real distributed teams it example, all to to the content easier [indiscernible].

connect custom Box ServiceNow, like custom create that For Box enables as the customers applications Salesforce applications. in templates API announced well their and Relay, or we to expanded own users as can extensibility workflows or built

Box's information [ph]. an For Box with the our information exception Q-Radar ecosystem. and finally, capability IBM, of with Microsoft integrating Shield, with new partnership XXX expanded we to And integration between flow deeply protection more protect the and we policy announced Microsoft

users Importantly, including differentiator key app. content share easier that we that ensure unify Box securely of a incredibly for Microsoft the features to integration Box We're access about stack. in announced securely. their new make content their this use Enterprises seamlessly. from Box. going applications. we've doing platform, Zoom by integration connects users layer increased to or more of Teams, for Slack, This to and customers find to source to their to to and across are content than integrations we content open access momentum continue teams industry that And enhancements for Teams is content singular our follows single integration their experience with Slack all Microsoft work from and their seamless Teams single these the excited ever need enables XXXX where a to our creating have This WebEx and can into their that a get across interoperable before platform been access IT over it apps the Slack content on as any and Box customers other and channels work need truth With content customers. applications done from to to more to SalesForce, expand a they're those applications their multiple the such for within going

in evaluated has Content result market. of XX is market Gartner legacy the of named system to were platform vendors. taken last once Magic share years, customers with recognized again, growth collaboration of vendors market Box. vendor rate out Box innovation, a XX% our we three continued a the the as In and was in In the Gartner's leader for tools product month, from now also Platforms, Services Box it all Quadrant highest willing As past quickly having by choice as customer recognized of for Content Gartner content recommend October Services the

will map continue road new enable ways. enhancements in that adoption work and our innovation customers exciting to an of to have we drive ahead, Looking all and

profitability Now, our foundation growth and improve 'XX our business we balance for the year laid to and Last model. turning beyond. between to FY

business. efficiently more cost significant and growth the delivering on was focus in implementing discipline Our

on has in our commitment. To drive our this we resellers. deliver by with landing repeatable continue on more revenue a and leveraging on into new sales key strategy. expand focusing efficiency customers and this which and growth We're us digital motion drive COVID benefited our to efficient our best enhanced partnerships environment continue experiences to and with through strategy multi-product We consistent execute land

are markets. on well key spend. public focused greater logo and expansion areas continuing improving our acquisition based driving efficiently Our expand shifting the gross Suites, to approach all initiatives: on with strategy as expenses; by cloud; product accounts adoption margins drive we optimize seat in taking Box of To as to is existing key by workforce focused and driving ROI profitability growing add-on an new toward more three

the greater across is operating our discipline throughout and improvements cash business margin, in We flow this and cost the significant have gross margin evident implemented year.

to discipline see have on efficiency reported operating these our efforts. year, XX% our margin of in the you from well least cost are X% fiscal operating been the operating at to margin delivering FY now up significantly XX% overall we margin QX, XX% previous With executing for approach from versus goal rigorous As XX% to committed in 'XX. can our we full we of

equity, talk accountable responsibility. high Before and we pay and diversity social implementing I remotely, ourselves inclusion are I will pay hired and reviewed our to a enabling about moment empowering Communities investor improvements of gender Vice companywide by they our to customers' through a or as hold standard commitment Impact to recently, programs we President with teams business Nominating ESG in our Governance want Box.org, to take will progress Committee. our conclude, work continuity a ESG. profits and of to partnership Whether commit on analysis and to relations we who be Most lead legal conducting the

front further launched content continued to section progress delivering To also Box, markets of market our the long-term profitable of and security that progress our cloud you power At are and in recently to us to never on I've the we in in been attacking of the going total management, of while on works which customers. also With excited highlights QX we've the our the spend addressable world competitive demonstrated can I'll a value about strengthening our the differentiation market, made together. content execute data how billion in platform. with after to drive more website it the find over corporate cloud-based storage software, on front, that, $XX and website. market we increased largest in we're our the significant leading strategy hand Us management in collaboration, growth the We Dylan. this opportunity conclude, one in ESG making About

Dylan Smith

content from momentum you thank today. we us Good In full Aaron. and cloud offering. for revenue QX, management strong growth, driven afternoon, delivered our everyone, by Thanks, joining

of $XXX.X margin, We XX% United a in improvements margin from QX, EPS achieved million this XX% ago, and fueled flow, cash came outside in continued the revenue strength and in year-over-year. workforce also cost operating optimization of regions of from improved discipline. XX% year overall by expense revenue States, Japan. up by up We significant gross the driven delivered

driven RPO or revenue XX% by longer-term obligations contract strong RPO that backlog, of we performance in as with contracts expect backlog of up year-over-year, $XXX.Xmillion, deferred Our We deals. periods. our remaining represents recognize future metric This assets. revenue from QX non-cancelable consists growth offset to ended strategic and by in

XX our XX% months. We the expect next of RPO approximately over recognize to

million, quarter growth. came representing in X% Third at year-over-year billings $XXX.X

impacted to many to than due a deals of deals, in $X the challenges services $XXX,XXX, seven million, over versus was durations XX versus over with which increasing billings as QX, of was ago environment pressure our slightly coming pressure year line continue driven as in the current ago. their Box our new we Our than deals in require pandemic. worth line well as In view expansion, even ago, less which expected. greater critical that a are is component customer in year by XX economic and long-term consulting customer bookings our Note to that, the deals result also services with closed $XXX,XXX This the by facing been we professional a current three from tend year a as more proportion a have customers IT of customers contract sales strategy. greater

with rate QX. as were XXX%, a ago X% was rate Importantly, pleased our net QX an We line the a to churn In we ended full QX XXX% ago mentioned, achieve X% on year retention from annualized basis, down of annualized from year with and period. robust and XXX% improvement an in extremely deal. and attach our for across Aaron in an suites QX, six-figure rate XX% in

and Turning XX.X% gross in from year up at QX. margin line XX.X% roughly points a in with XXX to margins. came in Non-GAAP ago XX.X%, basis

gaining leverage scale growth XXX is from $XXX.X revenue, In we once of profit and of several was by outpacing Total business and improvement infrastructure off. our year initiatives, year-over-year cost of costs operating by infrastructure point XX% economies basis point. significant optimizing and a represented ago. expenses. paying up reducing gross on focus QX on XX% our expenses Our QX a XXXX million revenue across again XX% QX, drove primarily reduction workforce the productivity basis executing around and

year-over-year, versus a result, QX we in in point that from X% year our generated in XX% XXXX points XX% of million, our prior includes this were ago. in improvement person. and marketing at coming the in $X savings down customer XX% margin Sales $XX.X expenses digitally million representing operating As roughly quarter the XXXX an basis BoxWorks revenue, basis year-over-year versus roughly a non-GAAP from Note hosting in in annual year. conference

in We by by of We're improvements of achieving were in down $XX.X expenses capabilities in QX the which points going higher to prior XXX and digital our R&D driven Poland, differentiate marketing also to year. exception Box enterprise from generating in as even Research established ability basis Excellence segment success development our while achieved policy our the efficient in We our We further productivity, are overall in additional or leverage continuing contribute of Engineering XX% this forward. seeing and in our such revenue, in to sales million platform built Shield. leverage our with focus toward investments resources reallocation shifting custom templates from leverage generate Center Relay XX% offerings more regions. the recently higher-performing and channels. Box increased will

administrative Our a million year general basis X% revenue, costs ago. were or down points and XX% from of $XX.X XXX

of the Non-GAAP operating workforce $X.XX a $X.XX leverage our improvement recorded end third through quarter We from EPS ago. high well this location a strategy strong negative EPS year greater as and scale. our very drive expect in to discipline non-GAAP at in we guidance; and the evolving G&A of came represents above

the cash. We cash million equivalents quarter our balance now and in $XXX.X with restricted to cash me Let and flow. ended cash, sheet move on

were a $XX paid revenue from $X.X at lower which payments QX. million QX CapEx our million data ago. This we improvement cash to quarter lease ago. year-over-year of $XX year million which payments, year X% XXX% CapEx ago. a the cost related impacted Cash center liabilities Capital last activities. credit, capital we flow from on and year revolving was migration was into year's strong the $X.X line million our $XX.X million $X.X calculation impact million a lease higher increase million cash During a capital $X.X of or in financing $XX.X Total back in flow operations locations. very million from lease Combined of to versus factor were versus reflects free QX,

head we see As in lease minimal payments. to we to expect new next capital

As capital in lower terms expect our balance to versus payments be older is both of liability the year's we capital gradually sheet, roll dollar as and revenue this a payments. percentage off lease lease

roughly the of lease in and CapEx combined 'XX. and X% of X% to revenue be for FY year expect of capital We QX, payments revenue full roughly

delivered $X.X year-over-year million flow free our free now cash we negative $XX.X the was cash quarter improvement a exceptionally flow third With guidance. of the year let's $XX.X Finally, recorded in million ago. to million. from up strong, The that, turn

anticipate For professional in of the facing newer seeing which and XXXX Suites roughly the expectations overall to that fiscal SMB $XXX we're million. services our demand, our given headwinds in the we're in experienced prudent revenue persist. macroeconomic strong business million and in revenue this That in our both We the of enterprise business may products. challenges bookings factors which headwinds from fourth to benefit million our guidance professional recovery growth lower past with customers previously, we expectations year quarter the services seeing creates should that This of a $X are noted continued $XXX said, we and in the our remain the in strength of momentum impact a quarter. fourth our revenue we

to rate our and growth course fiscal year. expect throughout of stabilize result, our upcoming the revenue a As we improving QX begin

EPS range in to year of be on million XXXX. XX, to negative in GAAP of We the $X.XX approximately XXXX the full expect ending XXX negative to XXX range respectively, $X.XX the EPS $X.XX million and $X.XX of and shares, for our non-GAAP January fiscal

to FY at the We revenue in to range. midpoint $XXX $XXX 'XX be million, of this million year-over-year our expect the growth range representing roughly of XX%

range our in the FY approximately to $X.XX We shares. expect non-GAAP $X.XX diluted of 'XX be EPS to million on $XXX

is last committed margin be XXX at of our shares. $X.XX this GAAP margin flow of remain to provided expected in the an now non-GAAP from to $X.XX of Our our and We on range least We growth XX% range achieving call. operating XX% EPS XX% revenue, be approximately negative free to XX% to the negative rate expect revenue improvement a XX% plus cash next on we that earnings year combined year. million to

making Going several forward, growth, against by long-term deliver the sales, revenue savings. we product To and growth further to will improve strategy continue in we on to initiatives on efficiencies productivity sales momentum we've continued driving profitable efficient been improve our to and deliver offerings. to expect executing by our consistent to enhancements building cost drive Suite

will segments. We we approach investments take headcount in continue to and allocate by to ROI-based rigorous how performing our higher a geographies sales focusing

to engineers, digital we've To expect end drive efficiencies. investments also greater primarily be to the more making XXX to we channels expect in our drive in Poland. full-time will next benefit employees, been profitability, in locations from lower with cost We we revamped than year increasing and hiring

scale providers additional cloud. continued as deliver public cloud gross datacenter to new, improvement We as our expect infrastructure, workloads while you also into move relationships increasingly efficient with to the our leveraging margin more we

spend we highlighted continue benefit financial the this margin the and a in QX summary, XX%. investments to results will been areas system we all of by expect making In in rigorous we from operating we've to Lastly, of strong year delivered apply automation. approach

improvements remote position. up growth put on deliver for innovation leadership like continue opportunity business to profitability would Operator? open that, strong model healthy revenue build our we market a work, resilient us as in I product to With and long-term Our around large questions. to and position it

Operator

Instructions] Josh your line Stanley. first [Operator And of from Morgan question comes from the Baer

line Your open. is

Josh Baer

seeing. growth demand question the for that you're in on question. thanks Great, taking My is

grew revenue, impacts, XX%. grew XX%, is based pro-serve X%, So RPO the RPO billings with obviously, XX% some but bookings then there impacts, digits, grew single current pro-serve billings grew

underlying demand business? in Box wondering your that just you're about the for I'm think how you seeing in So growth the

Aaron Levie

tailwind Yes. a kind I'll I unusual I has and in and and at lot the the especially, kick Dylan a When had the this environment been a well. quarter. you model. of different think, I'll they of, larger deals Box, in let are plus attach is, deals that or talked look Overall, Overall, suites. XXX-k number biggest into puts our you tailwinds about -- of year, expand buying the we rate midsize on super then just have this see or because larger think with headwinds that and are chime did as obviously XX% enterprises kind we adopt off within for us as takes we've we big -- to of continuing

time, healthy So there federal a of are from, we've noted of bit more financial simply we areas customers for with guidance, professional has At can some expanding are a from less is especially, consulting the seeing standpoint. life as as you QX a like in government. services because a really sciences, we services, services obviously, advanced same that from Box the for kind as expansion see created have the of need headwind us, of customers and

international different and from some seen segment a standpoint. an challenges little bit have We based

very we So that at going to we demand that's cloud But, shift this overall, confident obviously, management lot legacy feel I very, we a we're more to the look broad to growth especially drive wanted have able think systems, to would year. content growth. moderated and that, the environment put the when up from

think, I right I'll we're macro the view that of But kind the now. Dylan let on further build seeing that. that's, in So business

Dylan Smith

Yes.

a So to drill that bit.

the midpoint demand we in demand kind are the with continued we pre-COVID although still recovery of through pretty QX, levels. to strength sales. couple business the over in customers, which pleased I've last at especially in this with customers, and As underlying and over are our are of business lot the new the recent that enterprise saw quarter seeing we we we're continued what product similar the trends from Aaron been a mentioned the in mentioned, of seeing this of that's we're of end quarters QX, really that into momentum smaller tail in that seeing Suites a most year,

a last the around deals note quarter to sales, in six-figure our of Suites, prior the which make particularly were from And new above watermark, So you only kind and by high XX% renewed due as volume Suite up I'll mid that's asked low about strategic XX% is of year-on-year the to about that. strength we healthy primarily then, -- other is that long-term the signed dynamics, very driven a third or our deals RPO backlog in XX% and 'XXs that quarter. particular long-term either in backlog to in the of

kind up backlog if So with revenue up about year-on-year you apart, that piece X% deferred XX% year-on-year. of about was

Josh Baer

strong And just dots strength when getting bands Suite, of really attach are With, in those number of the I that follow-up in kind think, between those larger, connecting I and That's the deals rate metrics, RPO factor of size? the can flat like if bookings. you large great. some within relatively deal deal

Dylan Smith

right. Yes, exactly that's

So while and deal would this was were big supports is deals QX solid come again the those and are have the contract seeing values outcomes. we which billings year overall in we case as in RPO higher strong QX, that liked, quite as larger counts of those what average

Josh Baer

much. very you Thank Great.

Operator

Your Brian next question James. of line Peterson from from Raymond comes the

open. Your line is

Unidentified Analyst

Hey, guys. Brian. Kevin thanks on [ph] here for

As I think longer-term framework. your margin about

room targets. to growth some expense those the having structure, about regardless flex past the meet the rate in talked to you've of think revenue I

areas how work variable remind you in guess, as down your think the you can those see expenses you So flexing key targets? And more you us mix or structure? that up the cost about towards are what I of could

Aaron Levie

Sure.

head point in have. the seeing of targets just of the majority going we rate and the that a those Analyst And underlying investing to count going [ph] the to achieve remain months are laid in right. it particular, as the to to confident from where of terms committed we're and and view, what of So be And kind sales that's tied we're which flex exactly few our performance relates The of ability to we demand, be Day areas And side. we dial growth the at out our closely a go-to-market on ago. to lot in they're is that the rate scale buying. But are is be biggest the to as up around we're spending and customer and and what to like other about think lever going mean, or of down size between to profitability certainly directly the to to continue force. biggest that of location things base where growth that's the I balance that's related improve healthy is on so doing going that a on and sales infrastructure that lever. we're productivity depending trends; we up our going there things of our be and putting we're and growth the what growing

Unidentified Analyst

And follow-up. just that. a thanks for quick Okay,

remind us term? any enterprise renewal And in near for to SMB can of here would expect you activity mix between ratio fourth for the the the the changes quarter, typical that and you look we see segments? As to

Aaron Levie

terms mix dramatically but in that volume for not the if enterprise of change the volume periods. or of just and XX% from enterprise, very from we different more proportion real a typically to of So, or business SMB you overall seasonality, customers. online. little versus renewal of the more historical don't types in XX% expect that a businesses and revenue the given the of those are we in composition, less of our dynamics the up a than think terms from be customers the different QX, coming the QX size think overall and about and then the this pronounced if than have in And And that's coming little little about you bit

Unidentified Analyst

Great. Thanks, guys.

Operator

comes of line question the & Company. from next from Kidron Oppenheimer Ittai Your

line open. is Your

Ittai Kidron

use me. secure needs be cycles Thanks. Aaron, in you've motion to the about a with the from file me Help little to migration case of cloud. Does extend to or a this same Few the sales a from the unchanged? sharing talked potentially standpoint? bit from change go-to-market

Aaron Levie

Yes.

largely the think unchanged. motion I is

people we obviously of secure being video what throughout more that obviously that working set have in of to they been work of the months on think and a was able way the to initial settle of sort up. I environment attention point and of burst this into had that's saw year the sort of remote of pandemic just of more with infrastructure that first couple of communication

in provider we're more transactions deals we toward look not to push urgent sciences. legacy services a think I really users, of that actually is at broader These having traditional large with the their did about able now, to content to up did move transformation of the multiple customers So move systems the our motion, life around or a large which this financial doing or back what be about sales I broader of is, digital conversation moving cloud. business. the of the at management to is off being in to we work able standing remote sort were If

classic our a motion. more actual So sales of bit

of way. I think industries the budget in environment the all is particular serve fact the same we environment, necessarily unique can't go headwind the the in and that same just this really around

government, expenses the right that we professional concentrated spending higher industries obviously operating are in life now, growth more on services, financial much sciences are federal So, some of services.

a obviously, hospitality, we're more getting seeing are on travel, growth sectors, less where nothing obviously some So the demand basis etcetera. in in of and from consumer really those relative almost

Obviously, had probably than with And then. with macro just tailwinds months to I XX had those much a dealing portfolio kind of maybe business, and ago. we nine what environment. on the based stronger think or similar So, then really we what headwinds the sales product in cycle

Ittai Kidron

I in six-figure attach a number, I if XX% don't it's I it. to but know reality, then it's Got number. good mean, And rate the guess, a Suites regarding deals. good of

think rate of be? me need think your You willing to it target or end sort Suites do about are like to I need was -- next of the relative to of fiscal to -- tell to year to attach the of internal this at put What end the 'XX? what you you needs

Aaron Levie

question. a Yes. It's great

I think Dylan. -- sorry, go ahead

Dylan Smith

ahead, Aaron. Go

Aaron Levie

Suites. want I -- XXX-k we say, the in general, majority plus of I we think, coming in would deals through our

can year. you especially, but into the specific to I imagine push next frame, going give that's that obviously, -- the that So hesitate we time have,

is terms the that reason number of right In not large why now.

up, that current because just are expanding -- existing customers the on they which to deals, platform. those in more coming have, the that And are larger that plan. of overall, bundling the means full some that through stay deals we those results Suites year. is would say I and we've going by have going But incredibly some cases, it And been large think changed just obviously line to to either motion cases with has kind that do really I of within multiproduct of want majority up of of that happy helping the a customers Suites of certainly the drive think encouraged or having we our have sales to percentage to incrementally continue going in see use they the multi-product that product next users purchasing would I value we've are motion. that I into characteristic positive

Ittai Kidron

great. That's

Dylan Smith

build just newer products. and seeing traction We'd If a that kind pleased that are we're with with the on say Suites our certainly we of with I bit. can that

Shield sale deal and has these that the just fueling how a of the these talked coming stickier of the trajectory out of of to traction And the products, it's more add-on seen our which is sophisticated metric strongest that really mentioned, attention another much Suites. solution, how business add-on high in we've of past we've of selling continued is and kind products. how from lot As any coming And is customers is perform -- to percentage about ever of we our to just the as kind who sense from of we're seeing a are growth. pay that a give value using newer actually overall when pretty clearly of much and directly momentum

coming If from product you revenue our of those by the and add-on products of of total that's directly of about XX% versus XX% a kind total ago. XX% kind all collectively, about generated look revenue year at our year-on-year up now

continue of So with kind very numbers trajectory up as the throughout are early we've increasing, still put those but days we this pleased course Aaron certainly year. and mentioned, to expect the that we of

Ittai Kidron

so you potentially to that close figure out have it and we me be to under is understandable concern help is front. understand fully I you're me the one That's mean investing internally on medicine? Help margin Maybe if somehow, would somewhere, How you've me correlating watch? what from What at the side. great. great. is a -- for understand or That's not? very look completely that, investment under push you're higher are that on your The investing that job that exploit last done good you metric

Aaron Levie

both of quickly levels then also certainly spend as that in program things pretty by at ultimately at. close efficiently marketing relative in key our take watch to and we able marketing we're deciding biggest most how and approach in all trends the is we're and the generate the demand. ramping how that the by how looking of view as biggest with we areas ROI take through we a lot couple spend. regions, are in of some programs, program very targets then those that right other we're performing of successfully, thing a on force of we categories the of are that kind a sales of of other seeing closely and the say investment such terms is supporting around on they're basis, Those and And sales of -- geography granular focus productivity areas thing our a look to segment-by-segment, rigorous a geography our sales of I'd is the the what how kind

Ittai Kidron

All right, Good Thanks, guys. cool. luck.

Aaron Levie

sales bring I'll we talk for somebody I'm up. And but that let else surprised about Ittai. Slack, Thanks, didn't

Operator

Your Company. next from Rishi of the Davidson question from & comes Jaluria DA line

open. is line Your

Unidentified Analyst

for [indiscernible] the is for Rishi. taking this Hey, question. Thanks

margin. help maybe improvements let's us are or on virtual benefits, changes appreciate So term expansion QX mix? pro-serve structural the lasting further continued initiatives. short benefits and you like the in the color long Can business to driven how see operating selling saw versus you COVID of much I through, think

Aaron Levie

Yes.

enterprises as say of dynamics benefits talk the like given especially, platforms. when kind workforces, most the that would needs our to I kind accelerating workflow of automation in think of do the the customers you are and their I solutions, increasingly how enabling more and increasingly also to So capabilities of tailwind, more their companies more work security that adoption serves seem distributed kind we're Box all they're the of to they're durable about seeing breed think environments all but of from of as we and both remote integration introducing best

resiliency mean, look demand addition and I underlying confident And in very the the to strength forward, we're the we business in so, our as of model.

the has are the so, to how customers. a And up kind we cycles of trends in kind and that year we have overall pick throughout the and enterprise, of in saw that particular, these various from just given course beginning kind of to of continued tailwind deal close and point visibility we

be We subside are increasingly sorts confident this a when back going more that tailwind of not one-time these is shift to bit and normal. get then things a little to

Unidentified Analyst

All right. Thank you.

Operator

Your comes JPMorgan. from line the of from next Coss Matt question

line Your is open.

Matthew Coss

additional increased see IBM, partnership your their And some similar of or an you that Hi, with contributions to? or a update partnerships good something Can opportunity you on Fujitsu waned? to AT&T. on changed of you Particularly, hope provide or Horizon on type either do or then, has reseller like afternoon guys. working be have or

Aaron Levie

Yes.

we But mixed number Box. go In of to of channel key environment. that kind key success have a very channels, resellers. to had I those large IBM direct momentum with continuing top a like partners strong obviously little prefer value with Box. the and are of bit lot A on a see, can other of We deployment it's especially of add from we the of customers think, have US, in Japan, and

their obviously, that in have of for relationships. with one as that And strongest market on of security we we very we them co-sale then some So your capabilities and mix well. data both solutions between advanced that we're And technology able radar do the with obviously classic cloud have basis, system is IBM, infrastructure, where with Q IBM, classifications to an successfully. them international type integrator

but overall, that expect volume think, So we percentage the standpoint. stable I channel from remain healthy to front, relatively a on

on less more terms So side. doing in of no the or channel shift in the strategy

Matthew Coss

helpful. expectations temper Thank that's then Great, for us sort maybe margin can year. And you. of next help expansion you

clearly the it You've a like we saw improving sort guessing, function won't I'm year. for laid we further, see year this next step but out opportunities of

terms like help look forward? maybe about of our expansion what us operating So going think in margin model should

Aaron Levie

Yes.

well outcome color in we'll granularity as call. both QX and So I of of as details would kind free lot kind remain more improvement committed cash that growth so say, XX% we combined say the plus of on margin of that, I our kind certainly margin X% year, would delivering revenue is flow What growth provide year-on-year. to solid a next a of for

to this targets. of kind very trajectory much step in and we're margin bottom to in And as support -- of function profitability that going that we've the the how that on terms the doing Although certainly been saw order confident not in of a things line on, those we year. be of we're higher driving where kind

giving we've year margins that in centers year expectations Poland that increasing are move into to OP the next end course half in our was have efficient talked margin expectations now, things least XXX improvements driven the we past we've XX% related the we're plus I of dynamics to throughout for cloud you we our we employees. low I mentioned expect us new COVID. of full-time laid of is by of much thing while lever be the I'd step I in leverage partnerships scale a kind then, this bottom XX% more of the we cost under of if of seeing at year. which on the line more next and about entering ground would same for increase sort that and won't because of that services that we driven of more around not continue expect is from function that say data that year is to COVIS. by the cloud. the that well the note kind as our gross which the of First do to X% at to employees a full-time that, view final And the that, the leverage out look bridging point of from public as Again, improving we and people locations as and

X% So bit to improvement and programs pre-levels. this returns expect those more world's the year And of don't T&E even to of less areas then operating coming facilities, margin state, a marketing normal fully once we return kind areas such. the from than like a to is

So driving all those expect business. leverage continue we the do of to areas across

Matthew Coss

much. Thanks very

Operator

of the from Bennett comes question line next Chad Your from Craig-Hallum.

Your line is open.

Chad Bennett

for quantified the service thanks quarter It fourth billings impact dollar the for if in real us on one actual a professional taking was quick Great, maybe guide. impact Can great give you quarter you just the you. the that my was Dylan, questions. this enough? it meaningful amount

Dylan Smith

in I that ballpark quarter. billings that's the it's say the in revenue of roughly Yes. and kind on the bookings third the QX of would the impact

So a couple of million dollars.

Chad Bennett

six-figure quarter in one you of Got up made wasn't six-figure quarter. the the our third deals on you I was headway done quarter, those And mentioned or it, count expectations. last think thank year-over-year of early quarter. it because either. of the to I in I you think deals you. expected just quarter. second that deal improve the follow-up then, performance indicated And in figure on I And last maybe deals to count some slip this the deal in think indicated six And deals performance know weren't materially, you on that pretty call you in some your actually,

me what close deal there of rate linearity type help the count? of of kind quarter and color a any the understand of just happened kind kind six-figure behind So and of from

Dylan Smith

great Yes. question… a It's

Aaron Levie

healthy drive as Box. some especially that -- financial seeing sciences, enterprises sectors services, I life I are we of from demand like we're more larger seeing mentioned, of existing in kind think expansion the Overall,

SMB of we cases, that see those has in the We some might on on come region. seen same see other mixed categories performance have some in And international international a of little deal volume particular come the there then been high-end we basis and normally and kind where XXX-K softness in in of market, even volume. of an the bit didn't depending level --

expanding, of say able with. of There has that that kind about the been relative overall to count softness big expand just while logos deal our would that to happy I the demand expectations. we're general that we're in has customers on So terms that are the trends some

XXX-K wanted, of the we We year performance the value haven't are into we driving given then, plus see this mentioned, shaped that drive at saw Dylan But that we obviously benefit is continuing in did next next a quarter. positive QX, gotten certainly year levels deals the And obviously, least some we XXX-K obviously contract macro this going pipeline, deal especially, higher was average we we quarter to committed growth of of the that year. very the look year. as to at on kind environment a massive for headwinds. within as that category us those remain and, still And in overall, the plus

Dylan Smith

one couple that nor add not we sort any just of in quarter of opportunities, addressing you -- pacing thing close we've terms the unusual both of different actually we when when third we're rates Chad as see deals deterioration seen of a do win that, of the We asked about. then I'd terms things third see in in did quarter. any in And sort Yes. stable working through what those fell actually

Chad Bennett

Dylan. if quick, I one, Okay. Then one last maybe may for

historically the this see sequential typically seasonality you a terms standpoint fourth Thanks. in from you difference fourth in of and Just that quarter billings increase quarter? any see Dylan, the in deferred do in

Dylan Smith

No.

seasonality in overall relative expect business don't of in and fourth quarter. weighting that of kind the kind billings to of different historical closed we the terms bookings amount of versus I too of quarter. and fourth business anything of the the in the the So see

Chad Bennett

much. you Thank

Operator

Suppiger Erik from question from Your comes next the line of JMP Securities.

line open. is Your

Erik Suppiger

and secondly, end can have business, some you taking softness comment in areas some year strength? Yes, any off Was pipeline? of you saw extended just saw on at thanks employees And like or your what does a that challenges healthy Couple of that that getting then that? question. you deals, driven with the larger things being with -- Fed logistics procurement with them by driven in is with home fiscal your where questions. was more Or One, sign the you for did or by cycles more there demand?

Aaron Levie

Yes.

especially did a, have a software that in the the in lot I on plugging federal agency think, year-end SalesForce, business So transactions and at other least is government. large government out of the a very QX, that solutions healthy And quarter September Fed we with into the etc. obviously, one SharePoint large the like did with we replacing of called on-premises I

Fed about. So quarter we are within we that pretty in meaningful some the that very transactions within did -- happy

healthy kind of In I large we way terms amount is, of deals, I it the would demand. of the definitely of a number think had overall characterize

and you little a the is to us, $XXX,XXX at to more a the So means And quarter. tend through much unusual Obviously, obviously, would kind want scrutiny that yet to of ROI in the different that more not to budget greater which how have have something level of of much that that that of We're remote clearly getting pipeline able have less the just demand not COVID. say business of the seeing the less obviously it's of out, stages are and we always maybe a and start would customer transactions channels. pipeline, deals steps more through be over been XX happened the we of bit happening did through. environment is work of proven more same on above purchases for but it's and some degrees accelerated way. about more to that's I goes work the in we more And done even so better, of have budget just that pass scrutiny a of aspect

COVID that down saw businesses. there going of trying to to bit impact going last be we region a that unexpected markets to were because can that how a So companies was and process how in their that long because slowdown, is we maybe evaluate just things of always that saw different our rhythm we in wave or one in that but have were of the

demand based and that's see a QX that is in to an in standpoint. expect we -- return region where on macro doing So from area how that

So have had seeing with, the I obviously, a drive a where with punches the this been just to year we're think lot that it strong in performance continue we've has obviously process. of rolling -- different

Erik Suppiger

Very you. good. Thank

Operator

Your from next Capital Knoblauch the line comes Berenberg question Markets. of from Brett

open. Your is line

Brett Knoblauch

two. thanks for questions. I taking guys, Hi have my

as First, I'm quarter? growth has in you remained what then to that mix XXXX said secondly, but sure you constant? if not free or margin changed closer got the all cash the And at had this, paying fiscal kind Has regarding target. user year revenue XX% was relatively and that the of flow growth

Aaron Levie

bit from Yes. of paying are certainly have customers. for we in of business sequentially it's largely able as shift, seen on or of the about the terms so of are it million slowdown, number saying total XX.X which I and and talking total QX overall number topline to a that been bottom paid XX users. paying users reasons that users, say outperformance of The then we up the a is some we've now relates of in expansion would driven kind about the the a million we've to businesses the of margin And deliver. sort from COVID been line [indiscernible],

the of materially mix that about that more line target. changed versus free expect say on delivering versus from pandemic cash see I come we're thinking how that to the revenue to can overall So terms would ago side. Recently, growth although, we against from we'd several were bit has say the bottom the prior a in shifts not quarters to of the flow margin where

Brett Knoblauch

much Thanks guys. Perfect. so

Operator

concludes Box Thank earnings Ladies you this participating. for third fiscal and conference call. gentlemen, Inc.'s XXXX quarter

You may now disconnect.

Box (BOX) 1 Dec 202021 Q3 Earnings call transcript