BOX - Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the Box, Inc. Fourth Quarter Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator that being advised conference today's be recorded. is Please Instructions]. [Operator Thank you. like hand would over to I conference your to Ms. the now today, first speaker Hiponia. Cynthia Ma'am, please go ahead.

Cynthia Hiponia

fiscal Relations. welcome quarter I'm and Box's Hiponia, XXXX full-year Cynthia Investor afternoon, call. earnings President, Good Vice conference to and fourth

today, Aaron Levie, call and and Box CFO. have Co-Founder Box Smith, and we the Co-Founder CEO; On Dylan

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

only. audio be will webcast Our

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

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

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

Aaron Levie

cash plus cloud than our year native the a XX%, FY operating from we up points 'XX, we with product margin, revenue growth ultimately XX% worldwide platform significant delivering our flow to versus offering. XX% X% Box to to all and Cynthia, deliver We of ago. more We and integrations. We built made rate guidance growth, map margin product category our We've had basis workflow ecosystem and Box. a you original to in advancements content defining platform, today. annual free joining commitment non-GAAP XXX to going the leading XX% industry our year year over content of e-signature partner strengthened Thanks, call the exciting expansion above the at have for collaboration thank and cloud well Sign, We margin market leadership achieve forward. a continue And XXX,XXX of well security XX% and XX% our customers delivered continue XX%. phenomenal exceeded drove with a ago. In revenue road enhancements bring launch we significant to in compliance, an our on of a our

both margin and is operating consecutive strength and XX%, yet fourth indicator another than quarter Turning grew delivered and to important guidance. of we leading of year-over-year, which delivered RPO of of above a revenue is revenue strong business. QX, fourth greater accelerating delivering EPS our non-GAAP revenue quarter marking an We of results, XX% and of growth quarter our growth revenue the XX%

we Additionally, customer in results our of makeup in strong and expansions saw the wins QX.

stickiness X in retention over XXX% prior-year in by continued had from net Our was up rate We and year-over-year. grew and of million, respectively. deals the rates. $XXX,XXX-plus expansion and platform from from deals XXX over full And for driven XX% the our our up the XXX%, year, customer the nine and third quarter, deals XXX $XXX,XXX up XXX% $X fiscal

deals XX we deals which year-over-year. over $XXX,XXX, Suite fiscal full year-over-year. Finally, XX% up our over And a had sales, multiproduct plan, the record $XXX,XXX XXX% of now in includes Enterprise number with up our suite were our Plus year, suite for QX

able the digital-first QX all the employees focus cloud our from COVID of sciences forced enterprise's the security become fully produce new content, differentiate publishing, need content, customer delivered and the build app securely on single and trends the with this collaborate product banks is work. product systems manage use are collaboration, driving era, more, And to into a In and kept complex enabling are workflow overnight need 'XX more. with interacts and every offering and seamless analytics, digital Content anywhere, publishing, and creates to shift consumer a hit onboard compliance cycle that strong broad an and life ones powers Box's customers systems of with approach around new platform-oriented necessity all content. through be workflow is new consumers, safe are themselves. product key dealing And cases help our we partner including going dynamics workflow our the unsecured, e-signature, delivers and how every most fragmented, work around content. is key aligned companies important insights Our digital infrastructure, classification, Cloud to blockbuster on full content this automation, three all the cloud time that collaboration important The and movie and clients. and over profitability distributes of companies Yet strategy business leverage, underscore work. a pillars their around design working, In is how enterprises growing the a and accelerated these foundation focusing our emerge and ensure for this collaboration, only future that breakthrough next are highly and best as results by growth discover platform. business. FY is work studio our our creation, information of that automation, Content and center vaccines, and to invent in most to life process most to short, business important most customers' e-signatures, secure. and companies overly to is a their or is At that delivering they scalable enterprise-grade costly integrating the including content with our retention of

fall. life entire in capabilities, we of major content earlier, been automate cycle, once most e-signatures executed this integrations and the include Since in and have enhanced parts of advanced stated in we I document has and applications. tools the the global around These announced Box launch capabilities and Line launch, 'XX FY APIs that notably new features with developer third-party As a new Box custom workflow that processes Sign. power

Sign Box power to even more now customers move capabilities, new advanced these processes, helping their transactions more signature-based cloud. With of the can

environment. customer their with services access their Sign fourth leading use include We Box that use of and a quarter change HR and Sign expanded employee the renewals contracts management. moved QX global QX of using in Americas on Plus expanded in use And adoption and help been enabling they're Box Box Sign they easier Enterprise enterprise standardizing in with license Box Plus, and agreement and to processes. our for will solution, unlimited will U.S.-based Box to will Sign use services with since be Sign deal a their Box manage which three-year API to as Enterprise Box finally, since hybrid cut are department with Box company-wide Sign throughout in their who And a for of work insurance customers and plans Box six-figure Sign a allow customer for provider new company to it policies A their onboarding, has agency adding marketing contract employee XXXX, to a in of moved access Box, e-signature costs. pleased already financial

enhanced map to are Analyst Sign, to wait and several ever. of to In made upcoming scanning protect alerts auto and important share security added Box as can't Day. as new our advanced and machine classification more and started capabilities within we content product we Box than flow our well our year, We security new Shield Box getting also privacy with ransomware, at just remain with combat deep the We've as features the security about help capabilities enhancements to more road Financial data features compliance updates. past learning-based malware

an recently, the and new integration experience the in availability ever are More solution than for Box as to the customers their we making Box enhanced in content content Teams further And Included in for in that investments January, leadership as FY in enables collaborate strategy their Box announced reducing content partnerships with data Content one this enhanced select release it leading Microsoft Box in strong enables management technology governance customers' reasons most to our on area. landscape. Cloud, partnerships extend We legal the enhanced to these also of many Webex, our included governance updates support Microsoft product Zoom, will to critical leverage meaningful Cisco is made prudent A document environments. the to integration cloud Box the in customers and features the general capabilities announced Microsoft compliance, native needs to of environment. Teams functionality pathway for reaccelerate critical continue further 'XX, and the that security, Microsoft Box part customers cloud interoperability Slack that improved easier Slack Teams make our companies we to customers use to Content their help Cloud we and of hold Box position ServiceNow, the with others. IBM, In privacy retention across choose our to default across fragmentation build environment. remaining, and growth

As cloud addressable customers value double we expand and going core into we differentiators, advance content, product workflow forward building 'XX continue full open by beyond, to life every capabilities cycle a content and an collaboration will compliance, investments market. and frictionless add to Box's focusing three integrated FY total our application. and our look to the seamless on down FY power to In 'XX, we're and of more our into platform and capabilities on that's the that security

Now turning go-to-market. to

'XX Our land scale, go-to-market by strong results our motion. and were FY driven expand

services, in net have increased bring worked repeatable higher Our years, high-value our on these drives for And market government most life as rate. digital that differentiate regions results and expand platform and bringing larger to stickiness, more. expansion relevant ensure Box customers system offering renewal know as more contract all industries and sciences, growth. use on well to we've we market the greater segments for partners customer as bring our full expanded and we're federal to over average this down efforts and optimize our and couple To our the ecosystem target the values to our we financial value to Box, customers, we of and to in past focus cases key our for retention channel focus the notion, as of for our is and integrators double such ensuring Box of of entirely enterprises this customers key leveraging power drive

strategy enterprise. in Box packaging our ensuring and take can of their the pricing about the full of our customers all advantage power platform Finally, is

customers Our existing called has Box's suite more Enterprise capabilities. access to latest full offering of and multiproduct Plus new driven

in reflected of You see efforts expansions. success can the our clearly go-to-market QX customer

content and simplicity customer merger anywhere. Box and For a of prioritized central a 'XX, bring content biotech management a ability invest for platform. provision used optimize to group teams that and power to the customers a Box Box regulated are of will in use expanded plan increased of them Enterprise for And a customer define acquisitions, major Box we and They and with we we Enterprise be strategic them. requiring Overall, the company in external expansion, six-figure Box and its government will execution summary, go-to-market deal, Plus mission-critical Plus Enterprise become Box to content primary of our company. value training ecosystem to deal alongside cloud represents the a to financial full higher-value continue for being The from expanded since U.S. client upgrade. the with and FY In also go-to-market XXXX up-to-date instance, the here, decision-makers use as collaboration of members, Plus use Plus will moved with future has Salesforce global happy to services with was the seven-figure at critical content work service Enterprise very and to and their as a is onboarding. manage Federal to helping its our Box This 'XX. been Box, use be enabling our to at shift of cases to partner Department various the banking of FY efforts the use Box the we're and it. to six-figure and all more

to the demands world execution Our this the our how meet our Dylan. our of turn FY together. they in testament couldn't that, be strong our age. customers to new it mission FY to in I the and ability works a delivering need 'XX more confident platform goals With over results to are I'll of to achieve powering and further 'XX

Dylan Smith

In had operational excellence deliver Aaron. and for growth, us. To and key joining afternoon, to financial expand allocate on prudently our our accelerating thank three value in Good revenue margins XXXX, through shareholders. everyone, to we order return to you Thanks, capital objectives. fiscal focus to

these to We have of three objectives. are proud all delivered against

results our For of tailwind year's XX%. our the basis growth 'XX, roughly X% XX the which In guidance XX% from rate we currency, foreign and growth exchange acceleration of strong full-year came FY constant represents annual of growth to point includes of prior in rates. above revenue initial a XX%, an delivered from well

target XX%, revenue We XX% flow the also the plus our recorded significant and improvement cash exceeding a growth achieving delivered in we from free prior of margin initial XX% year.

Turning to QX.

again delivered pleased QX record above XX% We our accelerating quarter in end growth continued fourth up of accelerating was are and rate, our to guidance. and margin. a retention have of of exceptionally million strong results, revenue consecutive operating net once year-over-year, high $XXX by marked improvements the growth, revenue

momentum remaining of billion, pacing than and quarter. year-over-year strong again faster outperformance deal revenue RPO We QX increase Our revenue. $X.XX driven was a Suites and with by once ended by obligations within or XX% very growing the performance

average which year, to driven backlog higher saw volume contract contributed our of to deals, a strength by long-term past lengthen customer in continued we strategic the Over the growth. durations has

to of our months. Fourth We high QX XX more million quarter X% $XXX and billings year-over-year the over recognize was at high growth than of of growth. expect single-digit the RPO XX% end of expectations our represented next

seven full billings the of and we delivered above year. revenue full-year fiscal our prior growth percentage the the rate For from improvement growth of XXXX, XX%, point

and annually, plus key our up $X million cases, has Suites $XXXK customer in use expansion than we have our million improvements than our closed Suites prior throughout the $XXX,XXX year. $XXXK retention and QX, customers paying expansion from year-over-year deals XXX, increased year and year, in more year-over-year. to a and a deals In XX% X driving XXX we As ago, adoption rates. ago. Aaron XX% XX% paying turn stickier accelerating This catalyst the customers now Due mentioned, versus X,XXX more up in momentum been enabling XXX QX, annually, in year momentum versus X deals plus plus customer a customer $X strong

customers advanced Suites, revenue purchase customers XX% significant As attributable ago. our adopting is a year who increase to increasingly a with are our now of capabilities, products more XX% from

at Our in XXX% rate. our year up We've improve was rate point net And X% retention improvement the XXX% basis from a from to X%. in continued QX, ago period. our net end XXX QX of rate the and from XXX% a QX to expansion annualized churn full in improved

continued expanded QX our year-over-year expect profit our public and points net roughly to growth points. Gross by 'XX. remain cloud XXX margin up footprint center our infrastructure. FY rate data In XX% throughout year-over-year, We retention exceeding XX.X%. by we QX, rate $XXX gross of million revenue to XXX was basis basis to optimize consistent

'XX, million gross and point increased the XX% XX.X%, land at year-over-year than continue majority and performing FY XX% we XX% the $XX Research million the to we FY sales focus we which margin force expenses and line sales 'XX. rate in revenue, $XX basis investments. income million. quota-carrying the In XX.X% that of employees Sales engineering low of In intend 'XX, the of our on an in marketing in innovation expect revenue, 'XX from 'XX, margin vast with product excellence FY in driver from to center the $XX basis percentage year. expect sales higher down from to development range, grow with FY improve representing of of to enabling benefited location. to exceeded XX% QX FY in improvement in our our expenses to year were We Poland, FY we R&D to a we quarter is percentage in enhanced mid-teens a In XX% portfolio and generate segments. in as our leverage geographies operating year. representing our R&D QX points of in operating and ago. record were growth Box marketing Poland, 'XX, prior scaling or XXX productivity, leverage. to the continued the product additional XXX year generated full-time force slightly our ahead our XXX more a deliver going in range improvements hiring forward double-digit ending came important prior a of be in with goal from increased and In

a of with revenue million and administrative X% year costs or general Our line were ago. in $XX

and We and workforce in as leverage the high location year. our EPS end of further In up million will sheet. the guidance to $XX operations evolve from diluted continue of flow flow period. year-ago a expect cash ago. delivered in $X.XX in non-GAAP QX, I'll cash drive coming our our in to million, G&A year turn we we discipline operating down delivered We QX, the balance and $X.XX of from above now from $XX

from generated year. million also million free strategically decision QX $XX $XX QX public cloud flow and the down We our was cash our and to million of infrastructure both prepay by impacted in to in flow partners. cash seasonality our $XX prior invest by

FY payments, free Capital our which similar and flow cash fiscal of prepay operations million the calculation, in XX%, and year. last were XX% down for included thereafter. and $XX we from lease We flow million, a from to free outflows in $XX cash were Even up respectively. this 'XX for amount our investment XXXX expect normalize cash QX our to for accounting infrastructure full-year

additional plans lease to move as to to cloud strategy. as we capital hybrid against workloads infrastructure the our steadily our payments Our execute part of continue decrease

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

million we our Last plan. we this M&A fund million. 'XX earlier generated expect to while QX, for shareholder stock Including $XXX and strategic approximately a generating strategy. use additional free plan and in to we also million, roadmap, million increasing repurchased $XXX flow plus of accelerate 'XX, we we to authorized our announced repurchase the stock shares FY repurchases. we cash flow returns allocation year, FY free X.X in turn via cash our with new common the cash in million quarter, investment. $XXX ended now Let's capital cash In $XXX to

of approximately shares financing preferred repurchased more issued that than equity in in we the FY QX. For million, full-year million XX.X 'XX, the our we for $XXX offsetting shares

authorized of As of plans. repurchase had $XXX January under million we buyback capacity our remaining XX, approximately

following expectations movements on like Before turn we share constant and a I'd in reported the to a Yen exchange to versus XXXX. be expect some Euros, context fiscal would past 'XX FY rate they Due what currency for we FX year, the on our impacts to guidance, basis. our to results over rates further primarily behind have

point. anticipate than revenue more top-line, 'XX impact of the our X billings a we downward and On little growth FY percentage rates on a

roughly On the a EPS. impact line, bottom and operating downward $X.XX anticipate of we roughly X% margin at to

our P&E driving unlock 'XX, incur events with profitable incremental further facilities, FY fiscal steadfast deliver environment. expenses profitability remain we to our to I loosen We in for hybrid our restrictions these guidance growth. office-based in we also leverage With as and focus turn as to and improved XXXX. would impacts, and expect to in and QX Even a return And pandemic we operating will like that, model. on

million high range. XXXX, the $XXX quarter this at of $XXX XX% revenue of first we end to growth year-over-year For of representing the million, anticipate fiscal

be to point XX%, year-over-year. improvement expect basis approximately operating margin non-GAAP a XXX representing We our

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

revenue at full a of anticipated of acceleration ending in the growth XX% year-over-year we high FX even expect to be $XXX of this This revenue represents XX, end after XXXX, the accounting for headwinds. For million 'XX from last million, the range $XXX year XX%, fiscal to January further year's FY range. the up

improvement XX%, of operating our approximately non-GAAP expect more basis representing We XXX points than margin be year-over-year. to an

on $X.XX range up the 'XX be deliver a in of to throughout diluted approximately the XXX prior $X.XX and expect in non-GAAP improvement our margin FY year. to EPS We of We from FY operating the anticipate shares in million steady $X.XX course to 'XX.

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

in of basis full-year customer to our billings based we on prior rate on rate line in billings expect the do rate the our the billings in growth dynamics and revenue of We roughly the with growth. For FY a be expect quarterly 'XX, variability the year expect comparisons we growth to single-digit exceed for in be to our half QX Directionally, billings renewals. revenue large of second growth year. in high QX the range growth and of timing growth and

We RPO expect growth exceed our billings rates. our to 'XX growth revenue FY and anticipated full-year

margin our our confident FY with we remain free expect Finally, XXX more our operating be a 'XX higher improvement expansion a rate of growth accelerating least target previous cash revenue flow excellent and than growth basis operational revenue In cash XXX basis by revenue plus We FY FY target highlighted XX%. points outcome 'XX XXX from of year-over-year. year's at execution, and margin summary, achieving flow points year of last in FY than combined of growth XX%. least free 'XX our to point 'XX was basis of XX%, at margin

strategy by with net and basis Cloud point demonstrated Suites customers, resonating rate. significant our retention Content improvement a is momentum XXX in Our strong

positioned we profitable Cloud ahead on deliver the position. growth years build well We our in to are Content as leadership

few to for closing hand I'll it Aaron a remarks. conclude, back we Before

Aaron Levie

as will you executives platform strategy deep Day hearing execution continued our margin Thanks, be Wednesday, March and we for I'd into today. The 'XX. our strategy, efforts, dive our from this like further Financial Dylan, FY will you model. annual Cloud event, Analyst expansion do continued long-term At financial product and be strategy Content will workforce XX. everyone, of that acceleration to in again, on joining remind our and us revenue Virtual everyone go-to-market a drive thank

in the we've are and ahead. roadmap ability seeing confident these the been customer on market achieve total our to our We based opportunity and product results momentum

Before to to also address we situation it Q&A, like the open up would in Ukraine. I

all with are the companies in carefully. Europe, situation with As monitoring business very we technology

to And for proud our to customer well-being and by to and Box.org priority Boxer and call directly Operator? Boxer those that of partner already continues thoughts your and for be am out and happy be now today. safety this And affected. given are Boxers again this. globally Thanks any top to anyone go Our affected Dylan every us I efforts for for relief questions. I joining take would

Operator

Instructions]. [Operator

question. Your first Ader from question Blair. William your proceed with of Jason comes with Please the line

Jason Ader

Yes, Hey ones I guys. me. a for you. guess of couple thank

to First, the NRR, improvement. on which nice just continues show

it of consistent about what you're some good are traction to if year. to Suites continue know, here? -- being what Plus, higher pressure see my talked this You of guess throughout don't I are going I Enterprise the points could from from going and the is, question with some that prevented

Dylan Smith

Sure. Jason, this that. I'll take is Dylan.

get equation at is rate and So is over the year XX% improvements year the of to XXX%. retention of we seen net improved X% which last recently that the the where comprised to ending we've expansion, we also the side churn

huge the trends as we more year. is just net driving comparisons You're that to see those our spot been expect be Suite momentum sales more a continued to going that normalized We and last of rate on we challenging that, note would to in over there retention and continue. momentum also have expect driver

that So net momentum strong definitely remain seeing in should confident show retention our in Suites up overall rate. really

Jason Ader

Got to rates you. on expansion chance the Is there? I there rates that attach the Suites? better guess what trying if at be could I'm conservative is just rise it be getting given you a are

Dylan Smith

prudent those. Yes, we want with we so expectations definitely with said, be do always, the to as

of really called as the we've like Suites. that driving a that also net bit note then impact retention our out in have see So momentum little rate a laid metrics given top-line to that out, good upside we FX we've impact that some but targets would I And been about an -- some will other the do downward feel we there. of well, the

Jason Ader

And And you into a had there? customers the customers, just the you then how revenue approach? Aaron, speaks XXX% a you with I are allowing What to quarter but more you Thanks. really guess. do doing NRR, that on kind right. than with versus Or QX, you Is had differently think land that's expand of then, the have new on All Awesome. of do kind new beyond? success 'XX and balanced the high growth it one about success is it read guys to in you rate other?

Aaron Levie

it to Day, approach Suites. Plus on. expand how think kind land Analyst especially in Enterprise as we'll and goes our continue it, we've I of And the time been Yes, included our the talk balanced we with mechanics be at a do motion our of is about and optimizing plan, will which

can both as their QX, of the release a with government in strong that also a quarter did had. major the terms the just we in a that some very from our example, postal One Japan of quarter new agency Post, Japan press we wins you win obviously, strong around yesterday leading tell powers but So service. metrics, upselling, in

So government, great across quarter platform ePlus and industrial for companies as fantastic large capabilities. the a financial well our new logos new coming services, into just as on expansion and

scale. and that of the bringing going But that on is working give again we'll continue to Analyst balance growing existing we're at how model of customers overall, expand just to perspective logos and on as that we Day. So land new -- focus

Dylan Smith

year, ahead in is as Yes, to reminder, past this Dylan, range new existing that to to our well. that's XX% year and we and from see the bookings the roughly a customers, as that, see expect tended just over the we've on XX% roughly coming to build of

Jason Ader

also? what in that's QX And was it

Dylan Smith

from with new the contribution Yes, generally a again, versus QX, been strong the for of strength we in very the Yes did type in saw bit deal seeing little revenue we've But line range. in quarter. and that get existing the net customers. of pacing that that also from general

Jason Ader

luck you, Thank good guys.

Dylan Smith

Thanks.

Operator

Oppenheimer. question question. your next from Ittai with proceed comes of with the Your Kidron Please line

George Iwanyc

George actually it's Hi, Iwanyc.

And a with on So maybe And Maybe how digging penetration? on you you Shield expansion can with well? into give you then sense are a as Sign seeing the little of the your from Jason's about question larger leverage getting Box are already us kind bit side, you adoption? feel what NRR. of user the customers,

Aaron Levie

Yes. Thanks.

of increase QX, can license the count do see large I So continue agreements. in seat even in number low still a enterprise organization. scale customer upside on But customers QX, very, total potential with enterprise for within Box our had that. their percentage of where thousands that elected we of customers. we of those to very, we a in And the buy certainly to we the healthy we very a mean of very it's that entire transacted terms

a and vectors licensing, our plan with even growth three now installed from of have seat -- of potential and So we our volume lot the base. Plus expansion API existing really for Enterprise

our monetized. for as So can move Box. customers was we get can use per platform, using plans volume can price a had in Plus And expand Sign seat in just of which Sign We independently increased Box we where QX great cases that more we six-figure leveraged cases to deal the on APIs Enterprise Box to of new APIs our get continue up use a like example seats the drive for and edition, quarter.

and out base to from your of fully even on then globally. growth our point the was the quarter Box customers. even where QX levers And installed while So largest the first was product Sign, overall, multiple

great our to of focus today. as being We with order of to be really as this coming the is Sign. base as customer signs of more result deals across the are adoption much features six-figure product rollout Box drive is that nearly initial I going portfolio, possible our now, in what's signs But now part map Box And a the than as as adoption product of and road the are the are fantastic. magnitude Sign of of early year transaction. in traction mentioned, seeing a well right in coming that as core And

very So excited come. about to what's we're very,

George Iwanyc

one Aaron, just And maybe more question. right. All

pricing. pricing largely us doing? Can discounting the of give is a you Or productivity seeing, you're pretty strong? are gains now much you you and You've able hold the sense mentioned environment are what how right sales to what's

Aaron Levie

think of our -- think is, as expand pricing I increasing -- portfolio. customers I both to the Yes, Content our great Cloud had I holding quarter think remains price competitiveness and find And what to as a metric relative strong. move higher-tier you'll additions. very out we our we We

might areas relay single from other coming categories two Box Sign years one multiple to significant product now Shuttle we us all categories consolidate bundled Box Shield year, Analyst to some as more can in to Financial or couple in time of we're over That of share a seeing Day. because year. now is exciting gives then you're that spend worth Box some ePlus, move access at be into And with from last offering. IT prior pretty What that Box technology pricing year, you and we'll of three have price you in last leverage for this the now in a software now of So approach. uplift going investing that

exact pricing And us time so our value go out of to delivering as to market I customers. continued the the we same more kind of give at leverage think

within pricing. we're So categories able but of have money less to value we're to a going kind downstream IT win-win customer where going cases bunch results, the the it's that perfect in, gross drive actually they our from improved the to cause of margin. And on content that to overall be also ultimately spend leads use more to

productivity to stickier retained You as ultimately, and of our continued mentioned then customers. sales Suites more that's a improve and result

George Iwanyc

Thank you.

Operator

you. Thank

with line KeyBanc Your with Steve comes your proceed Capital Markets. the next of from Enders question question. Please

Steven Enders

of questions the think in and I here. come Okay, guess great. start, growth Thanks for taking billings. for maybe expecting out called you're RPO I you ahead revenue both to the to guide,

duration that? factor? of about giving a part guess the are say you contract should part is environment guess, that And I what out of demand I seeing in as the we the confidence of So you that, kind to that think as how

Dylan Smith

Sure.

if we a we a near-term And kind seeing seeing that of terms then to into is that healthy metrics more demand around and that provide that the of up we're So the of the are definitely those deferred of in the the over more the at continued of of look durations. impacts flows revenue a one it be ultimately lot momentum which But guidance and environment incrementally gave very that is all drivers indicator including those is to of the independent representative revenue. growth, that tends RPO growth top-line of leading outsized backlog contract past side has levels, pretty been the of contract duration, year. in at have different healthy durations particular, you on RPO, lengthen components see we of hence

really So about we in seeing business. that underlying the we're feel good the demand the environment and momentum

Steven Enders

I is to assumed little that pretty guess what's being kind consistent put going in finer a in is here just that there? guide point deals the are we to XXXX, of stay duration on assuming

Dylan Smith

today. do we but we expect stable, where -- are the to be expect in slight durations is Yes, those may of lengthening, they see that we'd fairly terms

Steven Enders

gross margin Okay, the -- perfect. what guide, I where a point the are you are then for least And where we in at about full-year. about in coming the on guess is to the there? the kind of And efficiency kind 'XX. guess where investments areas about think of I drive you as for coming guide out-margin of improvement from are there in the XQ,

Dylan Smith

Sure.

host. managing of down the on the the margin combination been to what leverage lot of infrastructure we expecting gross efficiently we've we're that So comes front, more a where and forward going seeing

we the efficiency continue look makes making, a incremental drive to that pretty workloads public services. hardware gross up been move amount it deliver more that leases as optimize capital And down And also view, those the to significantly we're of so able also you a the doing expansion. that if cloud infrastructure. shows sense lot steadily just and to really partners, which time, margin point simplifying and those trended the way at have that of software we've our and allows same some from with And at us where payments

Suites, earlier, customers point then seeing about more more of and those to going higher translates talking well. value So for pricing but an Box and for not of customers And that adopting also was that for infrastructure see higher those as margin everything of kind increasingly back that's from Aaron the view. gross in out paying just example, Solutions and we do as pricing

Steven Enders

taking Okay, questions. the thanks for

Dylan Smith

touch Okay, been that the we just operating well. investments say approach the has past nothing talked the different that to thanks. about this was We margin year we've to going expect I working too taken over briefly year. really make side, and next from you on

And low the that most that so as we but to mentioned, capacity force exciting lower in going road in doing cost product mid-teens to expect continue do invest in a have, really to range, to also we sales of percentage map locations. grow

through the leverage year. really we're business driving good coming feel across about move that to we the we the going So be as

Steven Enders

Thanks perfects. Okay, again.

Operator

with Raymond proceed from comes Please question James. Peterson with of next your line question. Your the Brian

Alexander Chase Donovan

results the Hey we Sign's can Brian. from really M&A Chase driver come adjacent for about for I early taking a this questions. guys, Donovan what of that. kind on Thanks is indices for of encouraging product could as in perspective, else fit Box curious the out for it an was business? look

Aaron Levie

Yes.

how range industries, results traction use to that street very that very, to happy we're more going very Great overall, cases updates Sign we're Box across So adopted. and follow-up the with being to and around about wide and the been more seeing. continue of a product early performing we're and is

of I about without think accelerate where product it sense technology our with as organically. of vast kind Content majority makes new our example. in Cloud next is of going We see as you're time, this expansion roadmap. goes tuck-in continuing to expand relates both years. come But going it us year and at disciplined M&A, couple the But and the very out to on the product would and areas, same the to to innovation As say an to from acquisitions certainly

that in various way where it's about are content into any to platform. continue If content There cycle ingested is you that all then the the that Box cycle moment in adjacent security to where new and on life into collaboration doubling additional think expand down platform. components from life compliance we retained around content that think we integrated deep all areas into can sense we're we going makes markets and be where either our spaces and in show to and

a single Throughout that on complete as the sharing content bit tuned. having making this cycle front their little it's without Financial platform But stay a as really to Day. well updates that complete at year, can be on all have our about fragmentation of more customers life content. sure of So Analyst a preview we'll

get insights architecture. single how create, and So a how you from you you collaborate content and all share, in how publish

come more on So to that front.

Alexander Chase Donovan

Thanks, Aaron. helpful. Very

Aaron Levie

Yes, thank you.

Operator

your proceed JMP. Please Suppiger the question from Your comes next of question. with line Erik with

Erik Suppiger

Congrats with that's One of sense existing how Sign. you're getting doing customers good quarter. Curious versus Yes. a on customers. new on just a Box if

And think areas lower cloud-based public existing with where have fruit long infrastructure? How terms far in there? the are curious how overlapping any paying process along transition infrastructure. just in are to you that was And you? still I secondly, hanging your for update initially, then of customers, but double you

Aaron Levie

Yes.

in focus XXX,XXX get Box our So we which of have Box of over customers, of core is one customers. number Sign front, existing all hands the well on Sign the

signed. the that's what company So or new compliance that go sort case documents content, customers talking we time, on. of whether about contracts into the use new how around and sort that spending a with to wedge the PX of for energy their At around we're same of becomes transformation great it our NDAs or get can driving they're digital that's need majority

we're say becomes very drive of in customer But is cases going yet the another that new on from. can early terms product results overall customer adoption But that today, we assume being that set and the to it's showing demand shown go you up it we're I'd certainly can use Sign So case every talked use about Box and that. after. in of

And and signal kind of set I early, conversations question from the that build pipeline around there. of So great over cloud. then think, second public

a that is had. multi-year journey this we've So

a and in to globally, us to to more able allow then Just we a made using decision ultimately platform it to as cost-effective for way. a cloud the we've for more and been scale over deliver reminder, significantly be the well public innovate faster, customers our very decade. efficiently, leveraging even leverage But

architecture of infrastructure, parts have sort unavoidable more of cloud of more methodical to as of about areas very, job been It's public cloud. of infrastructure over leverage limited spend have which the which teams again, the very But some due to unavoidable existing double in move but leases moving have So of see the really a its to and the and in on getting the to more sequence the an the best to incredible and of of of core some done public possible. our and We as we've public next challenge more more tried years, reduce that Box commitments spend we us the sort more on in you'll hardware. couple But infrastructure element. the double kind more again, cloud. -- of and and managed off wind our

Erik Suppiger

Very you. good. Thank

Aaron Levie

you. thank Yes,

Operator

you. Thank

Craig-Hallum. with comes the Your of proceed Mattiacci from Please question your next Nick line with question.

Nick Mattiacci

this for taking Hi, on Chad is Nick questions. our Mattiacci for Thanks Bennett.

and are in this are SMB guidance And on then the could of baked end curious into environment seeing just in guys of related you what any aware provide lower SMB customer on that demand the Any rates, I'm going So retention market. year? commentary the the assumptions should market. the you we be

Aaron Levie

Yes.

frankly, very for FY I the was that demand would 'XX. quarter on SMB has buildup the year. strong, that share been really kind but front, throughout was qualitatively, just us So another milestone of throughout QX

with were complicated we dealing furloughs obviously or was in was of by I a as they and layoffs XXXX And saw impacted hiring quickly, or weren't government calendar our in COVID. think XXXX what stimulus respects most really SMBs many kind matter. fiscal

last business, 'XX what global saw strategy much XXXX so our now real about this SMB our we've we but And is segments. well calendar And saw on that fiscal call. not mid-market been as for that still on kind I a back momentum. think segment that really the back into up chatting of as a we year, put parts had of we reduction commercial We in commercial to growth resurgence tuned of anticipated. and our Coming and year,

If or XXX XXX person few business, XX XXX a smaller maybe to employees. hundred a to you're and

if your you exact that supply a you're the same are organization. fewer about content a challenge and those want needs you as needs resources you You as Fortune in exact maybe in with. budget to large organization, have compliance, I XXX to security, chain, have have mean, don't systems to concentrated work a a all yet is life manage And you're folks vendors all the data around relatively you're But have of XX demand then if sciences, enterprise. management, might for government if IT large same very handful dealing constraints investment have obviously, of that collaboration sort enterprise. the you your the bank, an IT different running are

get don't that of economies in You sense. really scale

content bundle, security by your that and So platform, e-signature that single all very everything management in very, becomes of manages content a compelling. the content and one workflow having single cloud from and a

'XX, the of and continue. seen we've results of to in just FY that so that our trend results expect And we set throughout

Dylan Smith

in that other holds past a just our question. some double-digit And our our our both on in sales SMB for mentioned for year, business gains percentage the that had force to productivity, prepared business. and that of enterprise generated bit this your parts remarks we We build true of

terms economics do definitely in the to churn So healthy all higher about, of seeing rates. smallest growth across that tend And parts. customer our then see a slightly you customers asked while

lot expect, because you'd actually enterprise Aaron and of SMB comparable and mentioned. are retention pretty As a between rates of the strong the expansion that dynamics net the

Nick Mattiacci

Great. Thank you.

Operator

the question line Baer Please next your with Stanley. with you. comes of Morgan Thank The question. Josh proceed from

Josh Baer

we've guide. a having. strong questions to and the double-click and conversations couple been year the I Good Great. wanted on to end of a margin

pricing and and we've margins, infrastructure the that talk through seen and continues of expansion the So like 'XX the into on gross efficiencies. sort

high how back for XX% they the you is gross like And they were margins go? around So question can IPO? plus guys to can your get

Dylan Smith

Yes.

see So we as strategy Aaron continued execute we about earlier. talked especially upside, migration the that against do

see caps 'XX. on continue work to efficiencies margins and So expanding is FY we to out, do and migration we'll additional that XX% beyond not continue that where driving

Josh Baer

FY target there's the But about and expansion. then coming inflation and wage investments. you gross OpEx on the show of talked impact some sales actually FX expenses And I surface, Okay. of travel on doesn't about operating strong back? the 'XX leverage the because it margin increases 'XX the like margin marketing assume then talked

any impacting be there of helpful? Thanks. And OpEx the lines. different some of quantification are just other would any those some is of So color factors or additional context that

Dylan Smith

Sure.

of FX P&L. on on margin year. And to expect operating think break the dynamics items that across that line the next to to be of side you roughly nailed And impact So those percentage I exactly. apart up really things, the one shows that, point all

understates in we those in in that terms like driving into the to So events as was some the true realized the of basis then the expenses say I savings we facilities. that kind environment, XXX would of business. moved of XXX range. this leverage And point that T&E,

cost We not back expect of have some we of focus the that discipline. that continued to come because on but all of it

you the more a can this bit basis size approach depend So office-based then a about looks back in what little going it operating of the And on the half kind year, sort impact. is to the deliver XXX of like. that thing to of I'd do And within our expand we the actual note versus half. our is to consistently than then see the point higher return operating margin margin last year, across think to so the front course hybrid as expect

Aaron Levie

Yes. that, seconds. And on to build for five just Josh,

noted, as see focused of unmistakably additional are that's business. that forward, up growth a core it's And going We kind something Dylan we trend ours on profitable as of will leverage in which the sure show you'll drive well. making as seasonality forward. going focus But

Josh Baer

Thanks. Awesome.

Operator

session. Please question-and-answer I'm go any back to ahead. our turning call this speakers And for our you. the concludes closing Thank remarks.

Cynthia Hiponia

look so registration you Great. a as reminder, much. just fiscal us website. our our We Analyst Dylan IR for are quick afternoon. this Thank Financial it's forward you. on earnings you 'XX XX, and next updating And we our mentioned, everyone, And thank joining Aaron on and on to Thank you, call. Day, as available is March virtual, both hosting

Operator

This participating. concludes Thank for call. today's Thank you. you conference all

You may disconnect. now

Cynthia Hiponia	Vice President of Investor Relations
Aaron Levie	Co-Founder and Chief Executive Officer
Dylan Smith	Co-Founder and Chief Financial Officer
Jason Ader	William Blair and Company
George Iwanyc	Oppenheimer & Co.
Steve Enders	KeyBanc Capital Markets
Alexander Chase Donovan	Raymond James
Erik Suppiger	JMP Securities
Nick Mattiacci	Craig-Hallum Capital Group
Josh Baer	Morgan Stanley & Co.

Box (BOX) 3 Mar 222022 Q4 Earnings call transcript