BOX - Earnings call transcript Q1 2023

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Operator

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Box First Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] Thank you. Cynthia Hiponia, you may begin your conference.

Cynthia Hiponia

to quarter welcome conference XXXX and call. afternoon Box’s fiscal first earnings Good Hiponia, Relations. President, am Vice I Cynthia Investor

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

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

Our webcast will be audio only.

available website. However, our supplemental from slides for download are now

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

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

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

Aaron Levie

Cynthia you thank and joining today. for Thanks, all call the

fiscal consecutive fifth a representing and growth. quarter are of in our revenue above strong to off ‘XX, XX% guidance quarter We of first growth a start accelerating revenue delivering

product of collaboration strong execute in a XXX% Shield. of our our continuing partners is impact technology several logos. and FX, and our We a key our year resulted focus continuous our solution, range power Dylan customer up the virtual our relationships of map Because Box platform $XXX,XXX, security and of success the with on their significant and fiscal rate midpoint rate. was market fiscal compliance new as XX% platform Box expanded we suites, working. as rate in we whiteboarding expansion ‘XX. the Our first Canvas, strong our operating add our and attach and ways of a enhancements we sign, deepened Cloud to EPS large we from quarter, native integrations driven customers metrics deals, Relay QX, QX our deals to raising guidance address road for for XX Box XXX Workflow we new ago. new strong had XX%, businesses more launching in In shortly, our with announced the opportunity. profitability with over XX% Box had we margin momentum, with basis from from year, of The the In year. are will XX% margin on a billion revenue are which and and visual across while describe prior in to this points XXX%, in shown transform $XX retention guidance non-GAAP customer of strategy and customer full leveraging operating raising even up customer We Content while net up And detail by product our rate of also of continued attach

U.S. We of attach improvements attach in our EMEA continue see to rates healthy Japan. rates and in the with

are Companies more Our to trends a our the future and dealing hybrid that organization. the business strong distributed today more security workplace driving processes customer their as and transformation challenges of implement work. and that are metrics of with face QX that across fiscal growth the the increasing strategy digital results working and we are they is aligned and underscore key

a Our these Content trends content platform. to building out Cloud power life full by addresses the in of capabilities cycle single

our expand add these In to will QX, double a product our our we of and to with continue Cloud announced Box’s allowing to fast-growing we down major market platform. new Content we element Canvas, additional customers value TAM. enter more capabilities on with an and Box investments, As us

is now critical. part content of prevalence of to the hybrid on nearly work and any the remote every ability permanent With type of a collaborate seamlessly business,

Sign Cloud. as their Box providing customers even a Box’s bundles, move new value e-signature built of and across huge new product solutions, powers design, delivered and plans the on that and capabilities customers organizations. more. whiteboarding announced experience from into compliance will win-win be It’s more. security, from of drives capabilities, is transactions an Content product Box. to included content Box plans, more this new helping disparate customers advanced to in consolidate Box position as adding for subscriptions move while help diagrams Sign launch project benefit their fall, processes, integrations retire companies from products form we past tools, our features. leveraging tier from signature-based ROI strength of power for officially systems our and our Box benefit as content remains and the collaboration a in we flow like more to our free and much couple to charts, all storyboards as additional as well spend getting it of instantly. technologies, included later Box increase collaboration have Box to a the collaborate companies customers strong higher Box to more With that point core across and Over year, launching IT of tools intuitive Canvas customers of developer Notes management upside various collaboration Since more With the from Canvas, directly Especially this have Box Canvas all governance visual up to visual to seen enabling plans looking Box use in and cases major and look even enhanced years, enterprise in value

We with Sign. and are pleased the adoption Box we seeing are in momentum customer use of

trust investment agreements. a services global secure plans biopharma Enterprise deal been deep of for across capabilities. internal to scans matters Box and the this the documents. Box moved moved Box Box network files leading for security, year, as driver compliance new with malware A and U.S. and the Office customer for along release and and our and also support global a compliance security extend in to to collaboration boilerplate leases. include drugs organization Plus a with which First QX company they and a new most quarter more to Box’s we and privacy will Sign, a critical lawyers to XXXX, provider remain commercial protecting governance of external deployed provide to content in with in will capabilities to its why scale, who And Shield, customers Sign Microsoft options e-signature secure launched content based finally, to Data Sign for legal our on that affordable the to work purchased ever. Box classified with critical advanced order company, than its sensitive QX security, choose Content signing security Box has customers adding who QX, data continue collaboration real watermarking since the Box to around ability estate apply use continues remain to market. Cloud. important capabilities automatic cloud, be Throughout we in solution our In including X-figure

that part for access across of for Finally, with make also of for the the Slack, even strategy. integrate X,XXX to easier Google, We launch integration two an announced app users major channels the Box, Box’s Zoom, deep our partnerships other together Microsoft, we technologies. chat and Zoom, QX, destination deeply work the Zoom integral a the and landscape the admins power seamlessly of ability Center, SaaS a discover all-new than announced users, App is integrate to many deepened it Box developers product In and to applications to ServiceNow, titling the recently platforms. across the with easily IBM more WebEx, with Box with

‘XX, biggest As be it ever. innovation we FY will look year forward in believe Box’s we

three open full seamless frictionless continue of more retiring application. only customers we our build platform. onto that collaboration is that the reinforce are compliance, of early Above And that to will to continue save workflow we to our flywheel derive by lifecycle We content as and and and all, will each and integrated the other data ensure other, their customers that’s innings powering we model of of and more a tools. empowering they will our core an value security more in business differentiators products our from possible. every virtuous what’s on our move This platform drives Box money into and focus

of we strength packaging is land our Turning optimized and a result to discussed Analyst go-to-market included as business late undertaken pricing in number our These initiatives our and momentum a scale of have motion. to we with Enterprise go-to-market, offering, our expand quicker we that latest ramp launched have for a March, Day during the Enterprise than our last of more multi-product since Plus achievement and In much year launch July Plus. our remarkable of first in when a accounted suites. saw of XX% EPlus suite deals, multi-product we QX, than in

fact servers trials as agency medicines purchased the life-transforming new an they key finally, our invents the This solve modern a include Our partners. new expansions Box QX and medicines is Plus people and and and for to external content customer Plus Plus And wins internally makers build Their Enterprise automotive including Box from they in apps, deal, together use major for the across clinical now security with that The biotech eliminate KeySafe will simplify customer use compliance this regulated United Enterprise issues. deal. look as the Box vaccines experience leading cloud them move was Box, platform via and Box currently a new carried approval e-mail, with Box will Nations of that of out the Box to for of diseases and that a company. globe. externally DVDs, Salesforce secure using that file centralize file with on-premises at Enterprise Plus and By Enterprise they a X-figure high-value to and with purchased other with on selection content a with serious to better USB and digital GxP management sticks company for parties a with work replacing decision paper, servers company supports enabling process internal X-figure cases. be to critical collaboration both provides offering and

account Content customers. our we total to our and adopts sales Our process. power net multi-product efficient higher the that know value, a strategy margin aims customer of to greater Cloud retention, the higher we bring offerings, more full see when gross And a a

to double all on helping adoption of with transform efforts deployment, and truly We are customers continuing Box. our around our also down

summary, work. more. future margin work Content here, that never hybrid, drive positioned The scaling our completely to to of platform seeing hand trends a operator are have execution further position, such, business, gross new the easier in strong I on we to makes initiatives improving same continue the our we redesigned revenue is deliver that, to direct QX, we steadfastly our results the continued platform momentum focus annual sell to trends portfolio, first our of macro across With As organization we over will team distributed and these we remain Cloud of execute the capitalize in achieve better has that these it In and Consulting launched Box. on and our continued the Despite acceleration. time, and the to empower locations, been customer ensure Content any currency and digital-first highest goals. in critical and to focusing on Box their success result program at Cloud business quarter to will expanding impacts, ROI margins is Cloud lower-cost to it the Content of the services by At Dylan. and committed

Dylan Smith

afternoon, Thanks, financial excellence Good joining returns. start revenue ‘XX, expanding and for had against us. prudently XXXX, all optimize X allocating of everyone operating and to focus X In We you growth, accelerating these capital our delivering objectives: strong have a FY Aaron. to we year-over-year thank on operational objectives. shareholder margins fiscal through key

the deal of we result, QX, guidance was and year-over-year, higher our a are operating $XXX margin fifth guidance by guidance our $XXX EPS midpoint As strong expected high quarter and full consecutive outperformance end This million, the a of our and growth we raising for of the of revenue and nonrecurring delivered pacing driven In accelerating year. revenue. than of million. up XX% fiscal revenue guidance raising above

Our revenue versus impact includes from rate of percentage our expectations. FX growth QX incremental an negative X initial point

deals. to for deals, We our XXX,XXX-plus demand suites of platform. continue XX% strong were which In closed Content Cloud XX we see QX,

increase of with to $X.X our increase. advanced obligations, exceptional percentage our performance As a now XX capabilities, is adopting remaining have products revenue of QX increasingly customers more ended who point XX% RPO, are an with a XX% roughly year We ago. suites, year-over-year billion, customers attributable XX% purchased or from

Our points negatively percentage impacted was from RPO X growth FX. by

billings year-over-year. to QX than our next XX We over months. recognize of of the X% million RPO expect more $XXX XX% grew

Our by points incremental billings due impacted currency our to versus percentage initial negatively growth was expectations an X headwinds.

points prior QX Our the was up net from XXX the XXX% retention of in XXX%, at basis rate end year.

customer rate expect ago. FY up at came year our annualized $XXX see XX.X%, XXX of QX our churn still profit of million a basis rate to retention X%. We in strong stable continue XX% remain XX.X% basis points. We by up growth XXX expansion rate gross and consistent full to net a from full was roughly margin throughout ‘XX. revenue exceeding points a year-over-year Gross

diluted our improve a margin recorded profile. operating we XX.X% public on XX% strategy, million, our basis ago. We the delivering and are we margin unlocking leverage year-over-year We up $X.XX QX operating non-GAAP includes year QX was ago negative points balance profitability cash from non-GAAP of from we EPS million, year $X.XX a cash up turn impact currency up sheet. now flow delivered QX, operations headwinds. a period. EPS XX% ago. from delivered flow In the in our I’ll of to from $X.XX of material XX.X% income via to from to cloud $XX additional leverage long-term remain gross and increased XXX $XXX QX, migration and focused our year

cash including $XX XX%. strong We We in payments, of expected QX our record free million, free large from included lease very to we in cash last free flow from million, in which a driven operations of were million by down QX. calculation, also cash generated flow payments $XX flow $XX QX, of cash year. in generated several flow had year-over-year collect and that collections, improvement we Capital

compared combined full ‘XX, revenue ‘XX the for continue of of to CapEx as roughly FY payments of For to we revenue year and expect X% QX of in be of full X% the to FY and year capital last roughly lease year. X% revenue

our strategy. and cash turn allocation investments. cash $XXX with to short-term We equivalents, the now capital million in ended restricted Let’s cash, quarter

use product strong and while sheet road our generating we approximately repurchases. X.X repurchased shareholder also additional for M&A expect we $XXX As to shares our disciplined balance we’ve cash to In execute stock via map strategy and returns generation increasing free been enhance a to million our flow doing, QX, accelerate million.

turn shareholders. of As we our had remaining XXXX. to of With would million like the end of buyback to we QX, to capital for approximately I capacity, our and QX and $XXX committed returning guidance opportunistically to remain that, fiscal

Box X, currencies has business, headwind a of earnings resulting the FX know, you the versus announcements transacts in our prior U.S. larger-than-expected QX ‘XX. dollar the to XXXX, which both our and year FY on March international in strengthened As since full

a business FX following strength U.S. The one-third of the As reminder, and approximately generated and revenue expected is impact of includes headwinds. the guidance outside reflects our momentum the any of of underlying our also

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

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

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

full fiscal ending XXXX. For XX, year the January

EPS initial of and to year. the range midpoint As despite FY a are the We guidance margin of we anticipated the to $XXX expect growth from be currency XX% for of now end fiscal percentage we result of operating we the full to strong the when raising now range X our approximately $XXX the at high our and we points. revenue impact million ‘XX FX guidance, headwinds revenue impact year-over-year range. be in this headwinds our headwinds, million, our ‘XX and full revenue gave the results QX of FY FY estimate up raising FX to guidance ‘XX Including

growth investments cost our initiatives and focusing prudently business. long-term across our compelling the disciplined savings efficiencies are generating We opportunities on are

As last our XX.X%, year’s basis results a guidance approximately result, are XXX of XX%. and non-GAAP representing we raising guidance a roughly an to be from operating margin previous of point improvement over XX.X% our improvement

range our million to in EPS approximately year. and ‘XX $X.XX shares non-GAAP diluted from $X.XX up raising of the prior the be to are XXX on in We FY $X.XX

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

Our FY $X.XX from guidance initial versus ‘XX approximately expected includes of ‘XX and our non-GAAP FY GAAP an impact FX incremental EPS guidance.

full expected year. approximately billings expect growth billings ‘XX For ‘XX, growth to in expect the rates be we revenue to billings with range Directionally, renewals. growth exceed of large we line revenue rate the the in be the the We prior to expected the of in are rate year FY growth, to billings with FY QX, rate X in our continue our headwinds dynamics to due points. of roughly growth to quarterly currency variability percentage and half while on our year of comparisons estimate to rates the customer second timing growth mid-single-digit growth be

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

accelerating execution saw flow point to we least growth our improvement year’s last year last continue be at summary, momentum rate of the our outcome delivered basis ‘XX continued growth revenue while free cash and combined expect with revenue margin profitability in we improving we Finally, QX FY XXX as In strong year-over-year. business XX%. a XX%, from ‘XX to FY

years happy that In that, I Content our leadership in a Operator? the take be for With allocation strong as execution questions. Cloud Aaron addition, position. your we to on strategy us shareholder-friendly to we remain capital build would dedicated and ahead positions

Operator

of Ader comes [Operator Instructions] you. Jason Your first Blair. today line question with from William the Thank

open. Your line is now

Jason Ader

your first how baking we Thank given a fare you I about And are would kind moderation type enter the you, in operator. guess environment? Hi, especially seat-based any you of do do demand guys. if of the downturn, you macro feeling some think demand model? current is how you Are environment? in

Aaron Levie

Sure. Jason. Aaron. Yes, I’ll This that, is hey, take

pipeline the customer and activity. So We pretty that processes, got strong security to we spend be side good positioned to various and more well pipeline overall, current environment. businesses into the business are positioned e-signature, across efficient, point platform automate have If operations demand seeing we’re and would signal and are and just that think We our consolidate looking remains visibility from even solutions or healthy, think capture drive retire expenses. for the we’ve collaboration, about well workflow, into continue the more gone compliance. is more to digital believe of

terms transformation how our macro single platform So of the I just work in well. think, I ability as positions consolidate into well think as expenses and we us hybrid a model, on tailwinds positioned the of digital combination are to

Jason Ader

about then fact by one or bit been growth investors that How work with do then Okay, to that get more great. current once Plus. upsell of you through be base driven you growth low-hanging respond asked And quick have harder. just the fruit, some could to your could follow-up, Enterprise that me worried a thesis? And some

Aaron Levie

Yes.

frankly, comment on by by maybe in seat be our really is much at look is able transition more overall, within that not to the and count customer in we’re XXX,XXX-plus drive for existing for from have, use if maybe us just which, moving there head driven potential more the But overall. we the them. within driven to I’ll at logos again, both think Dylan customers upside the cases available we we that significant let kind expansion, upsell of then customers, base ePlus. plans But it’s So more where by value

At the moving we’re our Enterprise the expansion, our Plus upside APIs, platform new drive their as think bringing of content Content in even really Cloud their great we across well to base. same wins organization of customers into as very, are current had that on continuing in that provides transformation to time, from We’ve elements very customers in cases. platform QX a bring seat customer use monetizable strong logos. between digital to So committed

Dylan Smith

is Dylan. Yes. And this

that that quantify opportunity the have. and continued on build expansion we to Just

roughly of just they population. seat if in you on paid our today we have current purely Xx worker knowledge of then at XX% majority looking that, seats be of sales, the up at customers significant ago, have a expect a a today, seats our total XX% makes on opportunity to the As revenue suites. very And momentum top year customers have that of our while and over number our expansion we strong with look reminder, we seen suite now versus versus time,

point So about that we’re from cross-sell ahead and both the seat customer opportunity, logos on, a have growth to bringing view expansion addition within new of continued in the our good we base. feel the very we

Jason Ader

Good Alright. luck, guys. thanks,

Aaron Levie

Jason. Thanks,

Operator

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

Your line is open. now

Brian Peterson

Hi, gentlemen. for Thanks taking for the questions. taking

seen But two customer the them change to Aaron, you made one some your was about quarters? more that last expanding maybe consolidate in you have in Does the comments legacy in you’re their terms your of conversations looking platform. looking value the the that footprint. I of terms of use increase of know and maybe So retire the solutions? to IT cases customers of

Aaron Levie

Yes.

been So I years. replatform general think their with the we’ve to few content past customers environment for management looking dealing the now trend of

been so legacy things data those more that’s and And really quite we’ve And so why cloud the Shuttle focused or so that on to like the And to migrating with cloud. network that that’s help we moving to – file environments migration. Box have document SharePoint shares bit. and a been on,

provides customers platform. just you independently new Sign and to collaboration buy when value that with Box now I and into overall virtual additional provides it have otherwise think money categories with visual Canvas, spend of on, with addition the two that e-signature Box the

biotech able kind cases with and from one that ultimately strong called So we champion use of very finance was usage up a Box, the a ended that Box of really drive a get the platform had I the be standpoint. deal of more to we example out, to company having solved software looking sort department from

more addition our of personas And now more so value finding process, we’re seeing platform. sort of within sales our the with

also deliver savings. side, how cost it’s So the it’s we information digital but not can just

We into our had of get consolidate number the can platform. fall, even as Box opportunity and already doesn’t have customers they addition that which from of Box a value this spend where with Canvas, until see another more rollout

So hybrid to tailwinds that well I from that work challenges us that and that’s going in that’s and environment we’re companies the think of already to macro the clearly the the in We addition, cybersecurity digital for case. to face. sets transformation, the a standpoint. continue And think remote be

Brian Peterson

Good follow-up public to on curious the what gotten good a a Obviously, And you Sign just be in maybe environment. here the hear. M&A correction obviously, traction. I’d M&A of some pipeline? Box in And see seen we’ve has the really terms do market.

just I’m So curious side? seeing guys. Thanks, private what you’re maybe the on

Aaron Levie

as clearly very about We help our for on to you Yes. look our public platform that happening speaking, think, generally pretty accelerate M&A capabilities when a surgical. need of strategy, private to the result the we it’s think market I Well, correction is through scale say, to going broad a go would roadmap. that in bring to the side. I

not of we is technologies, kind happening but flow are balance we buy. of focus of paying the we’re relative in the as often that as around were kinds kind that and on very, the cash already And our that focused very selective come on prices a sheet. basis, and possible very market specific exorbitant the prices existing result just on the of kind so it extremely we of a technologies are down It’s

I prices our it So will change think appetite. down, doesn’t but come

the to and as surgical, for very up appropriate acquisitions value just will kind of we tuck-in customers. on our bolster focus the to continue We’re

Brian Peterson

Aaron. Thanks,

Operator

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

Your line now is open.

George Iwanyc

Iwanyc. Hi, it’s George actually

point, pricing putting the or value your that us discounting perspective the ability add Could So leverage prices? some perspective you’re on you into platform. maybe raise from up following to either on less at your give this

Aaron Levie

Yes.

call slow philosophically, think too led add-on we this Enterprise we then of suite. customers, and the that some multiyear lot so evolution kind sales of to the motion. building, we and think are all you had a that we to to on And a I gone where and had through products suites as then core So, that in single individual the then know, and know, folks that we of Box, we ultimately, I platform heard have as value the moved super is from this inefficiency think you adopt Plus core

think you And the get platform, is us you are customers into we we time. are our proposition from to that and and more so going more over to continue value offering innovation buy

that So, over last drive security that’s up-sell. year, vector And we was one front. this into automation. lot more to we platform It’s Box lot are doing the time, able as innovation then It’s that a and of Box of a workflow around seats year, Sign Canvas. the are on

are able seat applications. a command the some development sort basis to the kind API many higher to of due of able of like-for-like for point, discounting less we on features monetize to, these are volume of on and We more price your of to per custom

take price being customer of more we into earn said, that really in kind of us That we really, And are with not quite value point make value we is consideration. think environment, our the the with That’s But create comfortable goodwill. a So, – multiple give are right more we of for it for sure given and is this win-win. in the are right really we of right customers bit more our model particular, make platform pricing I we we and vectors to going list a the satisfied think customers, see where at leveraging mode sort do use cases. a that with stickier expect philosophically, a now, of monetization. of now. where always what feel relative But will macro certainly you how to of ultimately sort opportunity that and maybe that

you you So, Dylan, I in will if chime like. let

Dylan Smith

it. on what past our they increasingly would No, trends been see only over The we covers to driven the in getting mostly have business out where are continuing continue the I is laid Box. reasons for year-on-year, at Analyst X% pricing suites, we about that recently get value Day to the think continue we to that able by they the into our play customers from the customers and based more more what mentioned to increase trends are using the out in were year, same I by the thing we business add and seeing that and are

George Iwanyc

Dylan, your this for some other an on And drive you and on hiring that areas following point you us your up margin at operating to then the give update of can thoughts efficiencies? looking maybe comments, are

Dylan Smith

Sure.

And plans So, is would raise I in making terms margin to year. to of really operating by basis guidance be on start focused are to that progress XX.X%. continue us say, business, our would out very leverage we say versus what of at pleased by across points initial driving our the allowed I this XX which the we the guidance the laid

percentage the our force majority in Poland, do sales So, scaling grow mid-teens our looking hiring engineering of to low which in is to range nicely. significant the and really

also seeing note cloud I we that to strategy entering the showing Analyst say of financial So, are our strategy remains would from center at of public would up executing the well year we lower increasingly data the that impact upside things our are that some the and kind results. cost and that Day as out like our laid location strategy strategy of in the we impact as migration

George Iwanyc

you. Thank

Operator

of from Your line Josh the Stanley. Baer next comes with Morgan question

is line now open. Your

Josh Baer

as when new ‘XX just years of and enhanced yet, being quarter. Great. about far this talk most smaller versus a of innovation how completely pillars biggest you which your the Thanks for should question one on really key on? congrats product And about the are think focused innovation modules as we good features? Aaron, you FY

Aaron Levie

Yes.

a pillars, compliance, which workflow this our know and our are is kind three across and security collaboration of I answer, lame but platform. So,

value even them just not of of for sort that is importance the because we customers. investment shared them, sort delivering always our relative of are the across dollars that our While are

I you of up see when So, areas. from each sheer will pillars extremely us. But across innovation of capabilities biggest capabilities because am just that the are showing I year, about these it’s that excited of those kind in of breadth three the said

our for So, customers protection privacy data cases advancements significant that security Shield use into. across are and running Governance and advanced data

throughout will quite collaboration that on announcements work So, bit you happening and see workflow. year of the in front, a

of entering same run new capability. a an rate kind just time, new, large to And Box are enhancements functionality our that of as just Sign came our market see going then At course, help advanced being So, enhancements we for fast-growing well that workflow some to net in to to are suite. Box Canvas improvements we entirely our the use you collaboration Sign, as announced major major QX very more as with out customers cases.

Microsoft drive our map on variety to and integrations, Sign vendors force, And cases retire course, into legacy aligned is use with with of partnerships helping deepening more their our of road of work with there. our deepening a customers deep e-signature platform. going very So, Box really processes slack, e-signature across of the sales our Box, then, well work entire

going a are value going our to our all those tremendous see you and fronts, amount investment customers. targets, of to to obviously for we across add baked of into are So, continue

Josh Baer

for Dylan, guidance. just then impact income in currency about for ask And non-recurring quarter? especially FX to contribution or follow-up, last Aaron. operating the and Thanks One FX all wondering the Thank the breakouts, the wanted you broke thank also incremental out revenue since you you. just if constant

Dylan Smith

Sure.

on called operating EPS we had on what side. to pretty fronts, the So, similar trends the margin out

really call. execution completed had And our from last we of X% so then just our impact roughly what total to a non-recurring So, about we FX for percentage incremental I be FX the of business. then operating margin. milestones point to X saw operating expect ‘XX, to FY margins, a out Consulting for points lot view, X the impact on about year had point percentage revenue QX, a called from of full Box And to

our the definitely are a to Box growth professional not material in on of overall it’s recognize that did have able business, nice was but X% impact our see we Consulting. revenue just revenue revenue, as total our about from it uptick So, services to

Josh Baer

you. Thank Awesome.

Operator

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

now is line open. Your

Nick Mattiacci

you the lower for you the Chad speak Hi. all market at seeing are recently to Bennett. This of quarter what going our for end in your taking just thoughts Maybe for could changed Thanks questions. if ago? on is from have growth Nick at SMB a the market forward if and

Aaron Levie

Yes.

in results team broadly. SMB very of commercial and we kind momentum QX, in segment drove strong the the and fantastic So, saw

frankly, I SMB an think with from a proposition think about we if macro workflow that space. standpoint needing very very the of e-signature a in we the with are one business we single automation, all bundle, is of demands security, environment have strong think mean you I in platform everywhere. cognizant the value But SMB with advanced

ton forward momentum with, upside that the that’s as a think you available expansion so, to continuing expansion about drive of plan is to again, seat when And as well the product us.

Nick Mattiacci

X-point help you year then, could FX in comparison impact billings to in full just it. the Got And the reconcile the quarter to Dylan, me the X-point in guide? headwind if

Dylan Smith

Sure.

would of balance note impact in X reason the that revaluation year to roughly the our of which impact X-point clarify expectations, FX due for on that QX, I the see that is you more points versus is a of what an impact to QX a is impact versus revenue versus would also how in in the FX wanted was difference full our points. first what sheet. between we of by X see expect FX incremental deferred to So, impact because an total impacted drives say we was And QX that initial the

we because calculated our on balances first an deferred therefore revenue impact exchange movement see currency in a quarter. material billings So, rates in did outsized the had pretty in QX that and

Nick Mattiacci

you. Makes sense. Thank

Operator

RBC. comes Your with of from the next question Jaluria line Rishi

Your line now is open.

Rishi Jaluria

Thanks lot Dylan. good have into off like not you coming Microsoft, for so But talking us little platform, Zoom, also some larger strategy so including Just on I players about and Cisco, some Aaron other kind value to want there? there. taking maybe your full questions. right, by opportunity nice and to a monetization much you getting with Box my space, through Canvas. mention can point and of introduction the to walk start standalone Hey features of given a this, out solutions. that Seems

this to going us help a have maybe got understand, different follow-up. with monetization is Sign, more I analogous So, like there your a strategy then strategy? Box is And be to

Aaron Levie

Yes, sure.

in way of different So, said, players. we inverted I very we end-to-end Content an we think of of are very, trying ask fit ourselves, that broader market, it. is the kind understanding our way competitive And slight That products cognizant think we to about which – build where think relative landscape And the I content. sort Cloud. and to on mean research we to the are to what their sort and do being of of And a of Cloud. e-signature. customer value what about of do collaboration workflow figure more is build more tremendous terms job we and looking our has as process when do out trying with to enterprise our that, and about market enterprises and a our then think to Content business do a elected to use want we is amount

And documents. more a and you and so that Box for project called taking is and sort can Notes. us, we do already linear of of product note document strategy you meetings management Box have do a Notes

that to And do. of this of that is the a Notes. visual you of of strategy sort second kind Box enterprise obvious management act want Box part able All very more sort the be because is of the to also Canvas kind of within of within knowledge for collaboration it’s

So, it’s for need content the meeting review visual workflow. and to or design process the brainstorms, you it’s diagram a a for a business a

So, kind applicability really case. a horizontal Notes, visual the same use content more as for has of but

kind was And so to going native our us, it customers. is say, okay, of the and users capability for available platform. literally this to just to be actually all to going straightforward It’s a on very of be

to leads for And add more you do And trying a and know we value from experience. specifically our areas, our customer about you many are then experience more more What that to that Box. of product whiteboard we is just all not usage monetize and governance that and tier has to on trying every we So, security other seat Canvas. are when plans. of adoption, compliance, doing more into the are think collaboration when comes that up-sell differentiation now virtual higher and with

our not value player really it customers, needing compete particular more explicitly much don’t So, think are for as charging partly because as as adding we for with it we any to separately. about

going do your Box of to value within some versus So, there when a a Canvas work other is solution. just item have more platform. of that budget to the you more not compare It’s sort a is customer

So, does that answer the question?

Rishi Jaluria

you to Yes. I follow-up, wanted then about as super that’s Absolutely, just ask a stock helpful. comp. And

of stock mix peers. XX% kind has comp thinking can cash? philosophically, are comp stock relatively up about how and is at on options So, I high your know better I and help of of you obviously just think most maybe significantly us of held that SaaS going takes than still, your forward about versus puts But the you there is I revenue. metric. know And stock understand RSUs

down SBC XX% of the maybe about a feed, Your very help be and in philosophically mix that forward? we are just stock is going us standpoint. situation the of not you. enviable so should how thinking But you kind from Thank

Dylan Smith

Sure.

of years. of percentage a indicator expect the is pretty So, The by the past little rate, comp come do year a steadily down more than we percentage I as down would over revenue point. stock-based did trend a coming equity that the say to even which that leading in burn

lower-cost as of which to At that in repurchase we equity locations consistent the the with what while past, done say in the see that compensation. in of drivers show more same dilution offsets so scaling past, are have cash leverage. the us plans, versus very talked the what about on capital our would largely ongoing focused to of we overall hiring the focus our allows needed we philosophy allow some equity us growth our to is have through from that And any pretty returning time, shareholders share and on

Aaron Levie

Yes.

that, very landscape. I just kind be build take something us of relative we see especially on software – think you is seriously. And think strong this the will incredibly to I to on

on our focus So, we this. kind happy are super about of

Rishi Jaluria

much guys. Thank you so helpful. Really

Operator

questions to time. further call this no at will I are back over Ms. Cynthia There turn you. the Hiponia,

Cynthia Hiponia

you, forward Thank to and here next earnings joining look Great. we you our again for everyone updating us Emma. Thank on you call. today,

Operator

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

now may You disconnect.

Box (BOX) 26 May 222023 Q1 Earnings call transcript