BOX - Earnings call transcript Q1 2022

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Operator

Good day and thank you for standing by. Welcome to the Box Inc., First Quarter Fiscal 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chris Foley, VP of Finance and Investor Relations. Thank you. ahead. go Please

Chris Foley

welcome earnings and first fiscal quarter Good call. to XXXX conference year afternoon Box’s

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

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

on strategies, achieve we On materially. statements download market and performance call. for of to Securities will pandemic and and our We’ll KKR-led May and @boxincir. also our and risk partnerships, update of our of on website. stock. billings, and financial be we supplemental call planned being margins, our for will pricing may on operating materially Form from events we today’s common Our and the our on potential this and and markets actual made currently only, the the recent factors as and products, the webcast at and factors on and our statements, future and investment date. timing slides investments results be known QX are our cash profitability, including of our XXXX future any acquisitions change of new business be cause earnings press Box today, or making our report our and forward-looking market release of the highlights based FY the XXXX obligation differ us product are our Box from Commission, to adoption however the future reflect obligations remaining repurchase revise our fiscal our to leverage, statements financial guidance audio of offerings, judgment These to COVID-XX now ability periods, timing benefits call size unrecognized the These flow, uncertainties our Twitter results opportunity revenue results. and our free our and or available revenue, should this differ and margins, regarding the may operating refer gross best for risks actual targets, to regarding documents of expectations filed the products, post in to handle most Please including on expectations our The to of growth of Exchange from model operating other operating long-term impact impact made and impact they XXXX, XX-K annual the up any cease information XX, and with them that on statements forward-looking disclaim or our performance

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

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

Aaron Levie

previous and revenue joining of call basis incredibly the growth at growth FY today. And team point billings delivering our start the XXX for thanks in growth year-over-year. quarter, Chris. improvement I’m rate a Box and to our XX% XX% versus Thanks, everyone proud strong RPO XXXX, our in

growth to With operating achieve now momentum in and confident the and accelerated our strong ability we’re are in driving, the years higher margin we ahead.

customers go and hand full our over value the to brings strong the to like impact before more seeing market about as As we’re our to it year. strategy, the financial our result positive Dylan I’d execution. are our results a I a talk our him, guidance over detail. of revenue the we and raising that in result, the guidance will Cloud for But in Content

the major strategy well work. future of Our that driving to are is aligned three trends

First, at leaders being recent by than to more environment. work continue the Gartner work some working employees they In a said XX% of surveyed hybrid study, to allow defined is of plan company least remotely time.

Even and get and back will amongst done will blur to distributed from physical work with traditional anywhere. collaboration open teams, empower customers to as offices and both virtual boundaries suppliers up, need to enterprises internally continue externally and partners,

the cyber Second, in employees integrity from important be security, a workflows breakthrough a across will every digitally enterprise simply application, access increasingly network and and There future we content of across legacy that fragmented value automating they data the to with data billions Pipeline just platform attacks, in comes content content and single tens and critical and spend using multi-cloud year Colonial new the Content finally, these their as must get the challenges storage, and of the that and are approaches. interaction the threatens to are to onboarding And Customer systems, lifeblood of That’s shown, can to sales know irreversible damage made. with and customer partner And productivity business where These Content threats store Today, content. all the is creating best is have get of companies of how will the new Governments the delivered dollars workflows management document cybersecurity enterprises ever. the in. is than drive business function unified events pitches compliance multiple ensure an enterprises, absolute success. valuable movies environment content and like market? company recent of requirement. is to manage no most significant are systems. and How to a content privacy the cause has the requirements way is ideated marketing that Great remain executed done? privacy Box such have At campaigns and more enacting product is heart be how work disruption. how affecting any next of enterprise. ultimately the cloud SolarWinds as How breach digital partners. security world first. can and is business that with cloud-based engagement? is

designed offers than for multi-cloud more seamless solution critical environment platform in experience Our work other hybrid functionality any today. user the in the a market secure

leading the building for are We Content enterprises. Cloud

complete lifecycle. enables from first, highly content a Our through anywhere, to platform strategy the integrate work our moment created thrive power, entire workflow and the in automate in content a the that digital content single to is is customers insecure world. From

legacy automating through applications, by the integrations using work workflows between customers beyond to Teams. are Salesforce moves their apps Cloud like management and systems Content cloud-based Microsoft done, with Our our content get

key the content advanced solution the as We’re with areas building of workflow lifecycle, Box Relay, and deep our Sign. in such Box e-signatures functionality with

our and move built the We stays with platform, so we’re that And advanced Shuttle. they Box intuitive content ever box customers’ productivity Box cloud-first safe provides content content for with the to our architectures. users time in platform than security cloud-based wherever that work into making drives without simple is seamless, now customers across approach, compliant. only easier Box our the are. in and experience to Combined it applications have natively that a customers and every fragmented enables for

growth whether on year-over-year of and the in our project more vision collaborating consistent a the by Salesforce, strategic for and the This or importance $XXX,XXX. in integrity, availability Our customers. customers QX Cloud illustrated a are XX% with closing product with they’re Zoom, content Content More in Autodesk. is quarter deals recognizing over a building using resonating new enterprise is

customers and strength, our Additionally, are leveraging adopting Cloud multi-product our our suite sales Content of more with gaining functionality.

in this, the $XXX,XXX deals, continuing growth of have suites in of transform we how enterprises we anticipate future. QX, content cloud and on management, leadership a our continued proof rate record our XX% to our As multi-product of quarter this the and In experienced build work. in we plus attach plans position

First, our to This value and cases Box additional natively the levels have us electronic our end access while Sign enabling higher also will to develop expected available our included will portfolio expanded with the and SignRequest, API’s. company all plans, embedded to functionality this summer. advanced in functionality Sign, Box in being that signature leading business is available we be Box the with be Box, enterprise Sign. suites. the a cloud-based leverage e-signature use all plans Box to monetize acquisition enable of product subscription customers of to of of in It in

of exciting Another all in Box announcement was we new the QX Shuttle. made availability the

faster cost content has cloud some than cost can to many at new a organizations has the of environments and lower and a complexity migration scale to been major large impediment the been of but migrate complex Box Shuttle a management The cloud content and adoption. ever. most moving the priority, For

which We risk also the potential our Box’s product Box security proactively and fastest announced history. remains helps in this reduce accounts, updates significant spring. threats customers insider products identify growing to or compromised Shield,

We innovate customers technology Box continue protect learning important machine to our Shield to most rapidly help advanced on IP.

announced we Finally, Microsoft partnerships and Cisco. both updated with

our hit Office integrations Information Teams, Microsoft with enhance continue Microsoft to suite. We and Protection

other a need with management our platforms. it helps Microsoft to create Cisco work two our of that bridge Webex applications. users we’ve platforms. easier Box and they strategy, content content And make workflows adopt and with customers multi-cloud As access between across even partnership range for to a Similarly, to updated span

their of businesses how some figure with organizations embedded Turning drive to productivity in and a to a leader such seven our run expansion are customers, utilizing Box global QX. financial its seen in we to examples into as Box deeper sector through have the business outstanding

between Box business XXX,XXX well we financial security. standards to across to delivery Penguin and advisors privacy, their its manages public Davidson Motors collaboration work and Power protection as Box selected processes on customers leading sharing environment, IQVIA, hybrid while Box critical D.A. data such enterprise Secure of a in sharing agency government organizations Isuzu Random research. And in its critical the close And encrypted leading with this rely to and content wins Companies, and at clients QX QX. of Secure organizations critical who Over Power drive for document the their processes empowers health as expansions For House. scale, to and and business as collaboration highest adhering

Our revenue billings in addition strategy is to quarter our our growth improvement working, including by very strong this demonstrated growth. in the results, in RPO the as strong

rate margin of of to targets committed XX% in to the We XXXX growth a operating are in FY XX% to delivering XX%. range XX% of our

in total addressable is We storage the of capabilities, security billion on $XX getting spend e-signature annually. are the of a market our and larger. after attacking over of with collaboration, in content management, largest addition one going only And markets market software data

and the We’re Directors Board significant opportunity and this of we advantage shareholder of confident full forward. have also right take that drive going team to value

expertise and have year, the John software of software and highly With and Content high of who or current three SaaS CEOs, directors including operators CFOs. former Cloud. Park, KKR, independent two the investing will our addition continue this and are profitable to and public we companies, build industry-leading resources Throughout current significant software brings former we out public growth who experience of growth eight enterprise or former

We exciting insights XXX,XXX and can analytics, with our roadmap will automation. collaborate customers enable publish expand data a out and migration With compliance and most Box security that and our strategy so data ways customers to already content. results. over the deeper enhance content offerings, on their get and yielding workflow platform, of and new on Go is and

to that, driving I’ll building With are of management content hand cloud Dylan. and phase in on leadership the We growth. over our it next

Dylan Smith

Aaron. to afternoon, have metrics. are joining Good exceeded all for And Thanks, you QX, key guidance everyone. pleased across our we In us. thank

the Our trajectory demonstrates clearly operating acceleration billings growth, our in the RPO revenue strong business. of growth, and profit growth,

delivered from the a are full-year We we guidance. XX% points our quarter. up the year-over-year, raising X% we As basis previous delivered $XXX result, improvement revenue growth revenue million a of XXX in

demonstrated with as QX. resonating growth Cloud traction add-on product the strong we by Content large increasingly are achieved in and Our offerings deal our customers,

make early we’re this Aaron excited generally mentioned, we’re e-signature Box capabilities and available track on the As Box, to response and native customer summer. Sign by in demand for

is worth purchased capabilities, one advanced deals XX% have $XXX,XXX year at are who now our our XX% ago. QX, products In from XX% customers a year-over-year. least revenue XX product increasingly customers up of up adopting more attributable than more As additional we to with closed

stickiness RPO growth, XXXX by a agreements new and customers of offerings, of Importantly, growth We us XX% growth, XX% prior and remaining points sign as revenue XX% content acceleration growth record rate. performance product six-figure continue the Box’s basis term up multi or deals of support growth with strategies. of one quarters XX% demonstrating for our from backlog ended an significantly up a our we QXs from these is deferred suite RPO exceeding longer XX% ago. comprised to QX million, and revenue year-over-year, year our to included $XXX obligations RPO

than over up We from million This million XX% RPO of months. renewals expect of to $XXX result from $X year-over-year, early our were of customers a reflects XX set significant XX% growth recognize renew who rate. shifting impact a billings roughly the QX’s and more QX. to in the QX, QX billings been improvement next in to had few QX from

to we’re retention of net deliver retention course in customer net customer full a end in over rate this Based momentum, by X%. at seeing and driven strength expansion the churn of QX. additional Our rate up was year. in of XXX%, expansion retention, XXX% This our in was on the rate result stable QX expect strong improvement and from the we annualized

to line gross was with XX.X% same a gross in our QX our profit million with Turning non-GAAP period in consistent year-over-year margins, ago. of revenue up at $XXX XX% came growth. the year margin

We deliver for full the increase expect gross to year continue efficiencies. margin as to infrastructure the year over and it for of roughly come this at in course XX% we to

improvements to profitability focus are growth through disciplined bottom-line delivered off. profitable efforts management. we expense ongoing paying improve In QX, Our and our significant on continued

in turn basis operating out which Center over in of XXX income our investments margin year-over-year building improvement QX Engineering QX points XX.X%. a drive help leverage million, to in additional and Poland $XX our operating operating will Additionally, doubled us time. efficiencies in to drove Excellence

period. million, As the to cash flow operations from strong and a $X.XX turn and QX, record high above end a delivered XX% from sheet. of QX, $X.XX EPS we our our flow from the balance in $XX we non-GAAP a year year result, improvement guidance delivered I’ll of of In ago XX% cash now up ago.

our record million calculation, which we million flow payments, versus We flow were in $XX year-over-year include of of free cash free year. also improvement QX of $XX in generated lease Capital last a XX%. million $XX cash

our efficiencies partnerships. liabilities to our as expect cloud the we decreasing years drive in and reminder, steadily we and a capital to leverage continue As lease public continue payments coming infrastructure

of payments, SignRequest. of and million the FY roughly year full Cash continue the CapEx to driven we investing payments by reflects $XX For in lease XXXX, be M&A QX expect capital of X% revenue. combined related primarily from to acquisition in

million As a result, we and equivalents in ended the quarter cash, cash with investments. short-term $XXX

result I’d this like stock via impact combined tender a that current on self guidance, discuss to accounting the treatment turn the common from expect impacts. for of This Due accounting resulting repurchase I Before month, our launch the will to which the the to required issuance preferred EPS we transactions offer, our these stock we earlier in expectations. following anticipated based week. closed with next

we First shares and of dividend, common due which until $X.XXX stock on stock. stock stock related settling anticipate basis, a to of reduction the the are roughly quarterly conversion to preferred non-cash accounting impact the the preferred common and

and a share these due elevated will the Note guidance. note completion $X.XX our full share per and and during Second our preferred P&L net preferred and to QX full raising dividend FY XXXX. are our strong no that I EPS QX QX we net to Based our items reduction in the income for fiscal share Combined, in in for year. that, forecast, reduction a on to guidance and a issuance EPS below FY temporarily have Box’s income. recent appear repurchase. accompanying impact year to turn This our in revenue like $X.XX to period financial XXXX QX stock line reduction count and would results between With $X.XX will statements. the a our the will of earnings this stock the anticipated result for on

are XXXX our Our underlying profitability initial expectations. higher expectations FY than now for also

For quarter $XXX we the year-over-year revenue fiscal representing anticipate $XXX to of growth. second of XXXX, XX% million million

of $X.XX range the basis a in sequential the this be to at discussed. just margin operating impact of non-GAAP expect I range. high improvement end to We XX.X%, representing the points XX% XXX Including

in non-GAAP of and $X.XX, million $X.XX shares approximately $X.XX to the expect EPS XXX be the respectively. $X.XX GAAP range and EPS on of negative to million to range our negative be in to We XXX

billings expect I million result range, revenue mid growth in first year. includes $X We would the in roughly this an billings in XXXX renewals our ahead FY acceleration growth be of with single-digit year-over-year mentioned which earlier. first from of billings strong our growth that of our the half of XX% impact for the half growth and early last to the rate from Combined results, billings QX

XX, For the XXXX. year, January ending full

guidance are to range FY end revenue XXXX raising $XXX to of expect and $XXX year revenue We our be of the our approximately growth representing the million, at range. XX% in this high we now full year-over-year million

to non-GAAP of XXXX results operating in a to initial XX.X%. range margin the last improvement We year’s XXX FY expect high this XX.X% of represents from basis be XX% range of point expectations. our The end above

stronger performance expectations same our guidance. preferred for reduction the stock full $X.XX versus the for EPS FY our previously. At improvement accounting that business time, drives mentioned year guidance incorporates initial Our the I a EPS in charges our XXXX $X.XX

factors, various range the As $X.XX on EPS FY of be $X.XX expect million of non-GAAP to now to a result XXX approximately in we diluted these shares. XXXX our

to expected the approximately on be shares. of negative $X.XX million is to EPS GAAP Our XXX $X.XX in range negative

the growth with full be year roughly to billings the of half revenue line XXXX be continue for XXXX FY to FY in growth back of growth. billings and slightly should revenue above We expect growth for our

fiscal was QX deals an and momentum rates. RPO year to fueled billings excellent FY for attach and start growth both outpace suites expect revenue strong large growth our to by XXXX. of year We in full the

margin that working with indicates RPO placing clearly and value revenue Our strategy content. emphasis their results, more operating most accelerated our are significant the notably improvements, of as customers combined growth, billings is on

uniquely a of variety As the Box leading high to is value wide customers. Content use Cloud, solve positioned for our cases

on FY rate of I As from for questions. leadership targets position, this to years margin achieving open that, our XX% the XX% of growth it to like we’re to Operator? would With now we and very XXXX two build XX% XX%. in range in confident a operating up

Operator

[Operator from question comes Iwanyc Instructions] from George first Oppenheimer. Your

George Iwanyc

Thank you for question. taking my

you showing investment, maybe of kind more are sales can So you where feel with be success, the us and maybe a you your whether can a verticals, you you’re the with little how particular and you on point about selling Aaron, think a give at suite, sense hiring aggressive and of expansion? focusing regional bit

Aaron Levie

Yes, thanks for the call.

seeing year-over-year, definitely are And on can really the which growth healthy selling. multi-product with plus as our acceleration nearly few stat that out $XXX,XXX think, years. the I we XX% recall call highest metrics the least I things like is deals past We in

that on So it’s start a year of really front. great the

As do and capacity. drive investment, be of called to relates and look this us. seeing rates, an our opportunity to where segments line growth. you incrementally going area and invest standpoint, in this obviously bottom regions in But to definitely see increasing sales Dylan top from focus we’re In is profitable we’re to for quarter; another efficient in out at particular, we high investing the, we want a key and, last productivity verticals, obviously, sales guidance more and that’s as

then, in the public any global level at tremendous sector, life kind business level, state like sciences, large financial kind really momentum even both services, federal collaboration. of and doing So, of see we areas and

manufacturing, for technology us. So professional attractive very been the services, sector has global

high around verticals workflows protecting invest matters, us the is to see you’ll security and critical. growth enabling think incredibly I content data where incrementally where and So, these in continue collaboration

be making further areas. in those will we investment So,

Dylan Smith

strong to And continue before, forward. force force. on a And Dylan SMB, the we We was is year. build saw that to this as increase. modest those improvements sales for sales, sales a expectations up expect both do more that last do and that of said bit. for grow improvements, our And expect we have overall enterprise in productivity continue making to for We trends Aaron mentioned, the productivity even improving just we you XX% going as QX rate and while

George Iwanyc

as that you that, you anticipating that also the up, the saw tick type productivity in growth Difficulty] year? Do of that of ticked early that XXX% [Technical last with back kind level can XXX%, see feel that’s of you’re the up year. rates you to part maybe your have something the and later get retention

Aaron Levie

say that the based trends or do that let’s we we So, from continuing churn improvement deliver net this we’ve and year. been a rate rate, retention seeing, expect to that on expansion the customer

making year-on-year – So, then playing expectation continue over end this certainly certainly we’re do see rate a that, there our of about trends net if that’s we’d retention how and upside we to points be a couple that year-over-year these year, currently. of to set a so the to time. But could improvement thinking XXX%, some out,

George Iwanyc

Thank you.

Operator

Baer from next Your Josh Morgan question comes Stanley. from

Josh Baer

question. looking was was actually, sales the this you’re quarter for last on that Thanks I teen. I hiring hoping from force in growth what mentioned to Dylan the year, low to think double-click do

wondering there’s some hearing longer time how right update I’m been definitely environment the about hiring and challenging, We’ve been there. that’s So, That’s to tracking. there. just an if ramp seeing companies number, still

on So for update an efforts? hiring just looking your

Aaron Levie

goal will intend Aaron. be that metric we’re the that this and Yes, that still be on is to the executing year. for We throughout

environment it’s in and and that an sales attractive definitely, the run. aggressively we think a hiring opportunities there’s for on opportunity been great overall, side we’ve pretty where, talent, we have very So really up ramping

So to we metric. that do intend hit

Josh Baer

acceleration And and it. year. with setting an Got in those year, for see of and growth billings growth the revenue up sort outpaced around this metrics in RPO revenue the following growth commentary to billings

Aaron Levie

up XX% backlog deferred XX% Yes. year-on-year. up [Technical Difficulty] revenues year-on-year,

part because including over months. over say the seeing RPO in growth XX lot an confidence a healthy the that backlog time. to we’re of overall definitely have growth, RPO, our that be and our long-term what we does and necessarily we’re improving momentum the from long-term next that’s impact revenue RPO, driven that rates short-term doesn’t of we’d the that trends indicate in So, and leads the most seeing backlog, year-on-year But of over, XX%

Josh Baer

Great, thanks.

Operator

Your Alex from Carr Raymond from next comes question James.

Alex Carr

Great, you what pipeline outset at the from seen you’ve business. touched some thank remarks your with existing terms the prepared on far either of propensity work Box. solutions in your you. so early-stage customers to terms a buy or potential driver late-stage to I’m of has return curious in Aaron, being of incremental or of for newer

Aaron Levie

so the the an lot Yes, slowdown; most like think of that’s with saw businesses services globally. us cases, cases. we were QX professional would really remote where of customers been And work periods coming the file be work, slowdown And were just kind the, that access To for to backdrop that basic and capture triage I year, customers remote to saw, we have two first the use with, as things lower sharing example. use a half. this for economic we an in, of at disruption SMB into kind was of we’ve of dealing really last some it extent mode the obviously, leading

As into around QX term strategy. certainly transformation trends we conversations aligned that customers year, year, we our more much and think longer digital to went our are of with this and QX IT of last

be to managing with able partners their work. and from working benefit companies all they’re world. need of moving the to from Box around how look The that are employees and from collaborate be again So, and able to their going are they the from multiple at clients work as more really for anywhere remote employees need to is content as into locations to hybrid that work office

initiatives last the starting rapid we’re our fire to much so as longer term, IT we kind emerge year. of triage within And to that pipeline, transformation just saw see opposed

up in growth being QX more I XX%, plus are $XXX,XXX, IT that’s So could content when good about that up their customers the about that moving in nearly put strategic as long-term, shutting much more evidence right we think architectures shows the to as you strategy, work, as center deals, now look metric set at at of security think moving ever and new really manage cloud, these legacy megatrends and hybrid that we and we’re to remote down Box, first really more digital driving of fragmented content. being of and to experiences way for a compliance, of data

Alex Carr

Okay, we’ve been product strength on later, you’ve does little great. it’s and know incrementally things already And more then with some of internationally. Box previously. of strategic source it coming But channel. portfolio the of as bit a here, just Sign maybe I – typically, kind expanded channel the for or just partner one looking the incremental curative, about, talked partnership and a looking less than did the

Aaron Levie

Yes, definitely a more us. strategic for looks lot

been we very strong particular partners it’s Japan, an So, in of where international, has kind in where very have environment strong global there.

investments As throughout we us think come comes particular in to and basis. where and new industry focus platform as as that both that that’s things functionality that’s this global Europe And, area new a market to continues sign market, to and have year, around well. will we have whether in and a a workflow look, as I of you’ll see have, in in like President, on on integrators kind onboarding, system incremental focus

important space life partnerships services, and you’ll even be integrator as other As deeper we sector, that that financial more system see our industries to go like well sciences, public strategy.

Alex Carr

you. Okay. Great, thank

Operator

from Jason Your Ader comes William next question Blair. from

Jason Ader

the Yes. segment? Thank you, commercial the And well plus guys if segment, figure talk $XXX,XXX sub with you’ve about you did in very deals? $XXX,XXX deals. recovery what’s of seen kind any happening with you a also, seven Can

Aaron Levie

Yes.

seven the on basis. on this year-over-year figure basically So a steady deals

of wanted move more more expand focusing attention QX; total we’re thresholds we in and a motion. think of what pointed indicative on land customers. the our With to value we account to that’s and think what just I certain to because we

much a and plus buckets is deals So XX% moves total into it $XXX,XXX different because size an as example, that spend. growth meaningful more metric and customers

So, excited mind second we’re Do you part the repeating about question? that. the very of

Jason Ader

deals the $XXX,XXX Yes, segment? kind just commercial to of the sub

Aaron Levie

and Yes, very I the headwinds, environment. strong there SMB? economic commercial momentum think last noted, segment, year, as some we the in around were mostly

In Not kind really we that meaningful So, lot in cases, noted segment churn some that and IT we’re the dealing of QX, of in business. impact momentum higher But with the about recovery, mean, of market. think COVID. I saw of, infrastructure. really QX, the kind the a happier as the on of starting low end mid couldn’t of don’t be spending we I SMBs in we in QX, just market rates that saw, you kind had SMB we in long-term

we that’s threshold. segment fire market Obviously, SMB So out in part $XXX,XXX mid right but very really, for on a below think And really strong suit momentum. sales deal plus cut the again, the market of the that’s the $XXX,XXX band, us meaningful, I now. only really, and

Dylan Smith

Dylan. only I’d add this contribution, there where XXXK, counts those a we year is from a that very ago. that Yes, plus mid pretty was segments even from material in up were deal XX%, market year-on-year, and SMB up is dramatically The even

that at end larger So those suites, we customers for because driver was largely, especially that force of that sales serves of the that the saw. segment, higher a strength with where the or that are the big ends, of

Jason Ader

get XX% quick growth investor to are this Great. XX% you do around of from the bridge, articulate growing to rate the an kind follow-up. And the revenue you XX% how you then one hope year, to XX%-ish to? guys Aaron that to current

Aaron Levie

rate did Yes, we in growth year. sure. around of for XX% just the Well, guidance coming firstly,

bridge. first the that’s So

call which did obviously was professional much professional really in we last where quarter’s didn’t year year that growth this headwind a customers that last services. need from bookings into noted, Second, turns we flow have services, revenue, through services, a on headwind as professional around

it’s evident whether to rate current rate. we market something suites performance carrying when the strategy. going growth deal plus obviously very, opportunity, the into this continue growth, growth, that’s rates. be to to we the moving achieving that it’s as XX% And in And growth we segments, XX% that $XXX,XXX we’re but year our so want look with very achieved relates that at our expand obviously, confident it long-term we’re in those after very to customers But QX billings on growth can feel

Jason Ader

Thank you. luck. Good

Aaron Levie

you. Thank

Operator

KeyBanc Your next question Capital comes Markets. from Steve from Enders

Steve Enders

you any were there for the any understanding in forward the Okay, would drove what of that better a quarter, or I of being the the early not I guess XQ? just new you want mentioned in – was pull kind capabilities get great. quarter question. it Thanks guess was this any incentives to in of contracts product that in sold taking drove consider instead that I that billings my

Dylan Smith

Sure.

So, contracts those they which the is sold and really the products I get of really desire the to faster. on within no to catalyst capabilities value and early being quarter, that a have, of renew those of overage renewals, of on the of, have billings renewed capabilities ultimately really and growth upsize QX. of had think these fee strong ordinarily couple would given specific that is have those who just companies to into and of and advanced combination in an out cases, what of just those kind call drove earlier expected some just – adopting customers some second main and QX in drove these demands, million QX, yet $X of they suites didn’t movement then what were a from would kind incentives the And customer but more where you’d as

Steve Enders

just kind just That’s a in. the side, this Okay, guidance then a guess you’re that touch the our there. seeing that, on, margin might to uptick little on point the above of that’s on of or we what’s leading more are that And margin on expecting I or gotcha. coming the And helpful. – consensus providing what upside bit front op wondering just was but an kind what

Aaron Levie

based stronger the outlook driven of expense expenses, the lot those well lot revenue kind our of of we’ve we’re and of really combination workforce with year a on as pleased infrastructure kind initiatives, around really been a management savings. of as seeing, that the and so especially for momentum as Yes, the

what that’s in expectations. that, translates so improvements margin And into that X% roughly operating our

Steve Enders

Okay, great. Thank you.

Operator

next Berenberg. Your Brett from comes question from Knoblauch

Brett Knoblauch

for more thinking thanks guess, taking how that, have sizable guys, from guess I think going question. M&A Hi, your there. the capital KKR or are cash maybe allocation, reserves about do be shares. you should that, beyond repurchase a help strategy look outline know use driven, that from to But on we repurchase the sheet, I as funds we guys maybe driven, I my balance more to

Aaron Levie

Sure.

of capital the certainly to allocation look lens what’s most deliver the through So, our going at to shareholders. value we

including did growth to ourselves for have week, flexibility. and on million offer strong raise details preserving makes the an still market expect already conversations But balance fuel because we mentioned, seeing, launch when the to that the strong all the And balance around we’ll sheets, as capital and of us, now, is regularly it also tender board. with share our and a business recently, $XXX we’re why capture use of next top sheet time. we sense we announce primarily expect our M&A like then ahead We that of strategy, do repurchases at more our to and of it opportunity things while those strong because of flow cash generation

Brett Knoblauch

coming Box thanks. how guide, annual and Maybe revenue Very your Sign one in from follow-up just I on guess much SignRequest? SignRequest. is revenue

Dylan Smith

Sign summer. certainly becomes in from SignRequest a very from immaterial is that’s the virtually nothing’s once generally to and On Box the available at revenue, introduced

of have, impact in very you think But contribution about optimistic business, standalone very adoption type about that the the of suites. of the We’re can immaterial. terms and could as especially

Brett Knoblauch

Is currently be that Box your current an of guide, or just your updated in upside guidance? to would Sign kind

Dylan Smith

our into current incorporated is That guidance?

Brett Knoblauch

Appreciate guys. Thanks, Understood. it.

Operator

comes next from Your Chad Bennett Craig-Hallum. from question

Chad Bennett

question. Great, thanks for taking the

the with indicated half. front, your normalized just So growth XX% billings a first billings

a would second seems something first would it there standpoint metric I considering the the I in it sounds like and secondary So why, that easier seen, with you’ve growth ancillary – in had comp you’re decelerate from tax half? be Why but everything half bit and like accelerating. successes because suites are billings rates understand, is products. guess

that would on kind anything And or or that? of cause kind so of any indication seasonality comps

Dylan Smith

just terms that nothing continue the in is the lot be in. more timing but year. of the optimistic there near confidence and more seasonality, business just have back very underlying a half about that influences so of trajectory everything predictability cycles did last point, and the say and also, given not challenging And the see I on, Sure, we in then to your to that comps would terms of billings sales I the in is business

to we’re upside terms we year. exceed seeing do for the business revenue we growth billings nothing there’s that the that growth full do see But drives and in of that. to growth in expect So, that underlying trends the certainly

Chad Bennett

quick, growth Is of Okay. any performed maybe I one quarter? bookings how give real And like last I update quarter, to then think could follow-up that metric? net XX%. you think something a it spoke there this kind Dylan, was of you new

Dylan Smith

you’re clarify do typically for overall. talk don’t metric bookings you which referring what sure Not to, we the business our about

Chad Bennett

guess, of of in I quarter? the that indication kind Yes, trying to logo new how net trended getting bookings and

Dylan Smith

consistent yes, with that’s few past the been pretty been Okay, quarters. what’s

that strong I in we back, in large particularly XX% did wins. think callout about coming some bookings coming from well XX% of and it’s QX, of customers. where Japan, see it’s our new SMB And net to existing that was and because normal we both so as levels, pretty tend our about as net or it customers in from new

Chad Bennett

much. so you thank Okay,

Operator

Erik JMP question Suppiger Securities. next from from comes Your

Erik Suppiger

question. my for Yes, taking thanks

anticipate context growth? how’s be that the going in First give faster or here. How the going difference that progress than the that will But know evolve? we this billings some us that – to as first you around forward? off, be you meaningful growth you was is would that that revenue Can than difference and the will to the flavor quarter is

Dylan Smith

in revenue consistent would that of think about for the say in would with back this I our half. year fairly the back we growth to billings Yes, now, half the be growth

slightly our shaping the then color half XX% more and setting billings that so as for growth next we’re into year. based expectation on higher we’ll the half into back are we the year-on-year up move that the And are certainly, head we’ve seen. of And first quarter, give expectations

Erik Suppiger

Okay, good. you. Thank very

Operator

last time, will I back our presenters. question. this At was the the over call that turn to And

Aaron Levie

looking Well, thank following We and QX all again with excited you. Great. up about in soon. a very momentum of to forward you

Operator

today’s participating. conference Thank concludes call. for you This

Box (BOX) 28 May 212022 Q1 Earnings call transcript